Post on 05-Jul-2018
LNG Infrastructure & Development
K.K. Sinha
Director– Essar Ports Ltd.
2
Chabahar Port
HaziraPort
Gas in Global Energy Basket (2016)
4418, 33%
3204, 24%
3732, 28%
592, 5%910, 7%
420, 3%
Million tonnes oil Equ.
Oil Natural GasCoal Nuclear EnergyHydro Electric Renewables
▪ Natural gas contributes 24% in
world Energy basket
▪ Natural gas contribution is third
behind oil (33%) and coal (28%)
▪ Being cleanest among top three,
natural gas is expected to further
enhance its share
2460, 69%
1083, 31%
Gas Consumption (Domestic v/s Trade)
Gas Domestic Consumption Gas Trade
▪ More than two third of gas is
consumed domestically.
▪ Approx. one third is traded in
the form of gas through
pipelines and in the form of
LNG through ships
▪ Approx. two third of gas is
traded through pipeline primarily
within Europe and North
America
▪ Approx. one third of gas is
traded in the form of LNG
primarily to Japan, Korea, China,
India, Taiwan etc.
737, 68%
346, 32%
Trade Distribution (Pipeline V/s LNG)
Gas Pipeline Trade LNG Trade
Source: BP Statistical Review of World energy
Total: 13.3 Billion TOE
Total: 3,543 BCM Total: 1,083 BCM
Global - Liquefaction and Regasification Infrastructure
340
258
0
50
100
150
200
250
300
350
400
Capacity Demand
Liquefaction Quantity in MMT
795
258
0
100
200
300
400
500
600
700
800
900
Capacity Demand
Regasification Quantity in MMT
340
452
0
50
100
150
200
250
300
350
400
450
500
2016 2022
Proposed Liquefaction Quantity in MMT
▪ Capacity utilization of liquefaction plant is 75%
▪ Additional 112 MMT (35% increase) is expected to
be added by 2022
▪ Regasification capacity utilization is approx. 35%
▪ USA has regasification capacity of 129 MMTPA
and utilization is 1%
▪ 90 MMT of new Regasification capacity is under
construction
Source: IGU 2017 World LNG Report
Gas in India – Overview
213, 30%
412, 57%
45, 6%
9, 1% 29, 4%17, 2%
2016 - MillionTonnes Oil Equivalent in India
Oil Coal Gas Nuclear Hydro Renewable
▪ Natural gas contributes 6% in India
Energy basket while coal and oil
contributes 57% and 30% respectively.
▪ With focus on clean energy, gas share is
expected to increase substantially
▪ Fertilizer, power, refinery, city gas and
petrochemicals are the major user of gas
in India
▪ Gas demand has increased by 8.5% in
FY 17 and 4% in first nine months of FY
18.
▪ Although latent demand is huge, India is
yet to reach the inflexion point of the
faster growth.
Source: BP Statistical Review of World energy June 2017 Source: Crisil
44 42 45 45 40
31 2832 32
30
2019
20 2123
77
7 7 10
1413
14 15 1910
1110
1719
0
20
40
60
80
100
120
140
160
FY14 FY15 FY16 FY 17 FY 18
M
M
S
C
M
D
Sector Wise Natural Gas Demand
Others (Others/LPG/PLconsumption)
Refinery
Petrochemicals
CGD
Power
Fertilisers
126121
127
136 142
Total: 725 Million TOE
Demand and Supply of Natural Gas in India
5
▪ During last 3 years Natural gas demand has
increased from 121 MMSCMD in FY 15 to
142 MMSCMD in FY 18
▪ Domestic production has been stagnant
around 70 MMSCMD
▪ Natural gas import has increased from 48
MMSCMD in FY 15 to 71 MMSCMD in FY
18
73 69 70 71
48 58 6871
0
20
40
60
80
100
120
140
160
FY15 FY16 FY17 FY 18
M
M
S
C
M
D
LNG Consumption
LNG
Domestic
121 127138
142
Source: Crisil
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Chabahar Port
HaziraPort
▪ LNG prices have declined during FY 16 and FY17 with increase in the liquefaction capacity
and decrease in price of crude oil
▪ However, during last few months, price has strengthened due to rise in crude prices
▪ Currently LNG price is at approx. USD 10/MMBTU which is quite high
▪ Currently LNG and Fuel oil are trading at similar prices and only benefit for LNG are benefits
associated with the cleaner fuel
Price sensitivity of LNG
7
Chabahar Port
HaziraPort
Traditional LNG Termimal – Huge investment and long term
commitment from full value chain
▪ Land based terminal with huge investment of ~ USD 700 – 800 Million
▪ Tie up of full value chain – Liquefaction capacity, ships and end user
▪ Beneficial for large scale operations to cater to market size 5 MTPA or more
▪ Important for sectors with fixed demands and capability of long term commitments
▪ Worldwide, 106 land based LNG terminals are operational
New Concept – FSRU and FSU + Land based Regas
▪ LNG ship is used as storage unit instead of development of large tanks on land
▪ Regasification unit is on ship in FSRU and on land in case of FSU
▪ Capex is lower than land based terminal ( ~ USD 400 – 600 Million) for FSRU and USD 200-300 million
for FSU + land based regas
▪ Better option compared to land based terminal if demand is not very high up to 3-4 MMTPA
▪ Breakeven at lower traffic of 1.0 to 2.0 MMTPA
▪ Long term commitment for full value chain is not required beyond the anchor customer
▪ Worldwide, 26 FSRU and one FSU based LNG terminals are operational at present
Floating Storage and Regasification (FSRU) Floating Storage Unit (FSU) and Land based Regasification
9
Chabahar Port
HaziraPort
LNG Regasification infrastructure in India
Location Ownership Stake
Existing
Capacity
(MTPA)
Incremen
tal
Capacity
(MTPA)
Utilisat
ion
Dahej Petronet LNG 100% 15 2.5 97%
HaziraShell Gas B.V. 74%
5 76%Total 26%
Dabhol
GAIL 25.5%
5 (1.6 due to
lack of
breakwater
56.3%
NTPC 25.5%
MSEB and
Financial
institutions
49.0%
Kochi Petronet LNG 100% 5 ~ 5 %
Total 26.6 2.5
▪ Currently, India has approx. 27 MTPA of
regasification capacity from Petronet
Dahej, Petronet Kochi, RGPPL Dabhol &
Shell – Total Hazira import terminals
Location Ownership Capacity in
Phases I
Expected
Commissioning
Mundra GSPC and Adani Port 5 2018
Ennore IOCL 5 2018
ChharaHPCL and Shapoorji
Pallonji Group5 2021
DhamraAdani Port, GAIL and
IOCL5 2021
Jafrabad Swan Energy 5 2020
HaziraUltra LNG Limited and
Essar Bulk Terminal4 2020
Total 29
Existing Regasification Terminals
Upcoming Regasification Terminals
▪ Approximately 30 MMT LNG
regasification terminal is under
development in India
▪ 4 terminals are on land based – Ennore,
Mundra, Dhamra and Chhara
▪ One FSRU – Jafrabad
▪ One FSU + Land based at Hazira
Hub Spoke Model and Small Scale LNG
▪ Pipeline connectivity to all the demand centers is going to be a challenge
▪ Several small capacity LNG terminals might be a better solution compared to few large terminals
▪ Hub and Spoke model can be implemented where one large terminal will cater to a large demand
center and also provide transshipment facility for few smaller terminals.
▪ Bangladesh and Sri Lanka market can also be captured through hub and spoke model
▪ Road movement of LNG for smaller distance will be another source of transportation of LNG
LNG as auto fuel and bunker – potential demand centre
▪ With tighter emission rules for the maritime sector from 1st January 2020, potential to use LNG as
bunker fuel is increasing.
▪ Antwerp, Amsterdam, Rotterdam, Zeebrugge and Stockholm ports already have LNG bunkering
infrastructure. LNG can be bunkered at several Norwegian ports.
▪ LNG prices are almost same as that of fuel oil hence shifting into LNG will not lead to additional fuel
cost, however, ship engines need to be modified
▪ LNG is better than CNG due to its higher density hence larger quantity can be stored in the
automobile fuel tanks
▪ LNG and solar powered vehicles are solution for the future transportation as they are cleaner
compared to other fossil fuels
▪ India consumed 76 MMT of diesel during 2016-17
▪ Demand of diesel has increased at CAGR of 3.3% during last 5 years
▪ Assuming similar trend in future diesel demand is expected to be 90 MMT by FY 2022
▪ If 25% of diesel in FY 2022 is replaced by LNG, LNG demand will increase by 22 MMT which is
higher than the current import of LNG in the country.
LNG as Auto Fuel Infrastructure Required
▪ Due to cryogenic state, LNG cannot be moved through pipelines for longer distance
▪ LNG movement will require separate infrastructure in terms of LNG depot and LNG
filling stations
▪ For economical movement of LNG to the depots, LNG can be moved by railway through
pressurized double walled tanks
▪ LNG can also be moved by LNG semi trailer and LNG iso-containers
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Chabahar Port
HaziraPort
LNG Financing
Important factors for financing of LNG Infrastructure:
▪ Long term take or pay contracts with customers providing revenue visibility and
stable cash flows resulting in financial viability of the project
▪ Lower LNG prices are critical for financing of LNG projects
▪ Indian market is highly price sensitive
▪ Many industries like power cannot afford high LNG prices as they have to
compete with alternate sources of energy like coal, solar etc.
▪ Lower cost and longer duration loan are critical for sustenance of LNG infrastructure
projects
▪ Procurement of equipment from established vendors with past track record to ensure
quality and reliability of the LNG infrastructure