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.

  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‚Äč
  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

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