Implications of Natural Gas Pooling on Natural Gas Infrastructure & Market in India

March 2015 | 98 pages | ID: I6EC7659FD2EN
Infra Insights

Abstracts

Research Case:

Domestic natural gas sector continue to disturb market sentiments

• Domestic gas pricing still partially announced
• Supply disruptions to gas based power sector to enter its 2nd year. Still no hopes of a turn-around in domestic gas supply in the foreseeable future
• NELP fields unlikely to contribute incrementally for the next two years
• Fresh NELP rounds look a distant dream
• Global downfall in crude prices likely to create a downward impact on the domestic gas prices that have been linked to global LNG indices

What seems to be changing in the gas sector in India?

• Drop in spot LNG prices in India, recently seen at under USD 10/MMBtu
• Oil prices may contain the LNG prices, specially the spot and short term LNG prices
• Attractive Spot-LNG prices to off-set existing term LNG prices. However, by mid 2017 term prices may also get lighter
• Imported LNG risk diversification through natural LNG portfolio expansion
• GAIL and other LNG importers in India likely to respond on these attractive prices by way of increasing off-take
• Domestic gas price linked to global LNG indices likely to reduce instead of increase the gas price in the next revision
• Critical gas consuming segments, especially the installed gas based power sector, are expected to raise their voices towards supply of gas and off-take of power by the discoms
• Incumbent government is pro-growth and has been voicing its vision to solve the power crisis and also increase gas pipeline network in the country

Pooling of natural gas is being discussed as the natural way-forward in the present industry context. But why?

• Any incremental domestic gas in the next 4 years to go to power sector. Clear objective to increase the PLF of gas based power plants
• Trimming of Re-gasification charges and gas pipeline tariff & marketing margin may be seen which may bring volumes
• Much more: Customs duty wavier, Scrapping of CST & VAT, Swapping of Gas, etc

Overall Objective

The report is tailor-made to facilitate decision making. The key objectives of the report are:

• To evaluate the impact of price pooling on key gas consuming sectors and their downstream market
• To identify the likely drivers & barriers for pooling of gas in India
• To identify the key beneficiaries of the pooling of gas price and how these beneficiaries will be positively impacted?
• To identify the growth prospects for the overall Gas Sector/Natural Gas Value-Chain in India based on the gas pooling
• To discover the most optimum gas pool quantum and price range
• To sensitize the stakeholder's on the likely future business prospects emanating from Indian natural gas market, especially in the context of LNG penetration in India.

The research report will also give an insight on the mechanism and implementation of pooling of gas, as well as, its impact on the domestic gas sector.

Key Questions Answered:

• What necessitates the relook on gas price pooling by the government in the present context?
• What will be the outlook of power discoms towards pooling of gas in power sector?
• Who will be the key beneficiaries of the pooling of gas price? Who will be at a disadvantage?
• How will gas price pooling impact the development of gas transportation and distribution infrastructure in India?
• What is the likely overall quantum of gas pool that will be available for different sector?
• How will gas price pooling impact the penetration of LNG in India?
• What will be the impact of gas pooling on gas based power generation assets in India? The one's having PPA and the one's still waiting to be commissioned
• What will be the implications of gas pooling on the existing gas allocations and supply arrangements of the domestic gas?
• What will be the impact of pooling on power tariff, CNG & PNG prices, fertilizer prices, etc?
• What will be the impact of gas pooling on the future of E&P sector in India?

Report Highlights

• All about Gas Price Pooling
• Key Drivers for price pooling option in India
• Identifying implications of gas price pool on different end-user segments
• Implications on power tariff
• Implications on fertilizer prices
• Implications on PNG & CNG Prices
• Impact of global crude price decline on the prospects of gas pooling
• Identifying whether it is the right moment to include gas price pooling in the gas sector?
• Impact of gas price pooling on the growth of E&P sector in India
• Impact of gas price pooling on LNG penetrations and development of RLNG terminals in India
• Impact of gas price pooling on natural gas pipelines, national gas grid, etc in India
• Likely opportunities and challenges due to gas price pooling

Contents

1. NATURAL GAS SHORTAGE: KEY DRIVER FOR GAS POOLING

2. UTILIZATION OF NATURAL GAS INFRASTRUCTURE AND INVESTMENTS MADE BY GAS END-USERS

Utilization of RLN Terminals
Utilization of Gas Pipelines
Market penetration & market conversion by CGD & CNG
Major Upstream gas projects stuck or waiting to produce
Idle & Stranded Gas based Power Plants

3. POOLING OF NATURAL GAS: DRIVERS AND ENABLERS

The concept and the objective
Issues and Challenges
Incentives and Opportunities
Whether the timing of introducing pooling finally right?
Why Government will push for pooling?

4. LATEST UPDATE ON GAS SECTOR DEMAND & GAS MARKET PROFILE

Existing gas consumption by different sectors
Existing un-met gas demand
Ranking of gas consumer segments based on price appetite
Ranking of gas consumer segments based on gas priority principle
Ranking of gas consumer segments based on investments locked up
Gas demand at different price levels for different end-user segments

5. SCENARIO ANALYSIS: INDUCTION OF GAS POOL TO POWER SECTOR

Only those plants with PPA signed ~ 16,000 MW
Pooling for all commissioned gas based power plants ~ 21,000 MW

6. IMPACT OF POOLING OF GAS ON DIFFERENT END USER SEGMENTS

Impact on PNG & CNG Sector
Impact on Power Sector
Impact on Fertilizer Sector
Impact on other important sectors: Industry, Steel, Refinery, etc

7. IMPACT OF POOLING OF GAS ON DIFFERENT STAKEHOLDERS IN GAS INDUSTRY

Impact on Gas Pipeline Sector in India
Impact on RLNG/FSRU Sector in India
Impact on PNG & CNG Sector in India
Impact on conventional E&P projects in India
Impact on marginal gas fields in India

8. GAINERS/LOSERS?

What it means for gas industry stakeholders such as: ONGC, OIL, GAIL, BPCL, HPCL, Cairn and RIL
What it means for players engaged in RLNG infrastructure/LNG supply in India, such as: Shell, GDF Suez, GSPC, etc
What it means for power producers, such as: NTPC, GSECL, ESSAR, GVK, GMR,etc

9. HIGH-LEVEL PROSPECTS OF POOLING

To whom it benefits the most
To whom it may hit badly
What are the risks & gains for the gas infrastructure sector
Whether the pooling concept will be able to turn around the gas sector/market in India?

10. DISCUSSION ON THE LIKELY INCENTIVES WHICH MAY COME ALONG WITH POOLING OF GAS

Rebate in taxes & duties
Rebate in pipeline and marketing tariff
Policy intervention in power charges

11. CONCLUSION