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Natural Gas WhoseResource?

Mangala Mishra (427)

Sanish Nair (428)Ranjit Raichurkar (435)Sujan Salian (440)Darshit Sanghvi (442)

Rohan Tamanekar (454)Sub:EEBProf : V. DateDiv : D Group 10

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The Energy Snapshot

Fuel of the 21st Century

Efficient and Cost Effective

India Produces - 87 mmscmd

Major Players : ONGC OIL

PSC : Private Players

NELP : Mkt Gas @ Mkt Price

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87 MMSCMD ?? What

next? Internal Consumption

Extraction of LPG

74 mmscmd Sell Consumers

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Primary Energy Resource

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Net Import

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NELP (1999) Objective:

Intensive Exploration

To bring in state of art technology

Attributes:

Fiscal Stability

No customs Duty on imports

No Mandatory State participation

Equality to all the companies participating Transparent bidding system

Freedom to the contractor

No cess on crude oil production

Exemption of Tax for 7yrs

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NELP Comparison

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MoU and GSMA:

MoU Signed between : Ambani Brothers

Quantity and Price Fixed Gas not for commercial trade

GSMA Signed between : RIL vs Subsidaries(RNRL

later)

Quantity Fixed but Price not fixed

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Pricing and Foreign Players

Ministry of Petroleum and Natural gas

Directorate General of Hydrocarbons(DGH)

New Exploration Licensing Policy (NELP)

Production Sharing Contract (PSC)

Cairn India,Exxon Mobil,Royal Dutch

Shell etc

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Money Game

PricePer mBtu

Sales$bn

CapitalExp.$bn

OperatingExp.$bn

Net CashFlow$bn

Govt$bn

RIL$bn

IncomeTax$bn

$2.34 21.35 9.41 1.59 10.35 3.84 7.81 1.3

$4.20 38.36 9.41 1.59 27.3 8.44 16.28 4.25

EGoM : -Authority to decide pricing policy

-Gas prices depends on crude oil prices

-Price Natural gas between $2.4 & $4.2 per mBtu

Expected Production KG D6 block- 80 mmscmd

Expected Loss of Government if RIL sales gas at $2.34 per mBtu

is $8.4 bn ~ INR 40,000 crores

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Govts Say

Ambani brothers are fighting over somethingthat does not belong to them

Article 297: petroleum as a resource :India

authority RIL cant sell it unilaterally

Price of $4.20 was approved by EGoM

Govt. cant approve of the price lower than $2.34

Has objections regarding the MoU

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Various Scenarios Scenario 1 : Mukesh should compensate the govt. for loss

of revenue from the supply of gas to Anil at $ 2.34/mmbtu.

Downside : Power companies currently buying gas at $4.20 could object over this.

Scenario 2 : RNRL gives up its demand for $ 2.34 butcontinues to have claim on 28 mmscmd gas share from KGBasin as well as 40% share in future discoveries by RIL.

Downside : Government of India has objections over Anilsclaim on future discoveries.

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Various Scenarios Scenario 3: Allow complete freedom to RIL to price gas thereby

repealing the govt. approved gas pricing formula.

Downside : RIL could supply gas to certain buyers at a price morethan $ 4.2.

Scenario 4 : The Supreme court could annul the provisions of theMoU. It could ask RIL to compensate RNRL for non-supply of gas at$ 2.34/mmbtu.

Downside : ADA groups new gas based plants are going to facedelays.

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Meanwhile

Global investment inflow

Foreign Players

Concerned new investors

Govt decision to be done for the Profit ofthe Nation

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Thank you