“Role of Gas and LNG in Asian Economic Prosperity ”

B C TripathiGAIL (India) Limited23 March 2014

Presentation Outline

•Asia’s Energy Outlook

•Gas and LNG in Asia

• India’s Gas Scenario

•A Way Forward for Asia

Comparative Per Capita Consumption

IEA, UNESCAP

High Import Dependence in Asia

IEA, UNESCAP

Energy Challenges Facing Asia

IEA, UNESCAP

Gas and LNG in Asia

Gas as Primary Energy in Asia, Mtoe

2012

2035

Key Asian Importers Rely on LNG

Supply of Gas for Key Asian Importers(in BCM, 2011)

Source: BP Statistical Review 2013, Booz & Company

Asia Pacific was the largest global LNG importer (69% share)

Japan & South Korea have 74% share in total Asia Pacific imports and 51% share in global LNG imports

Unlike Europe (~87% imports through piped gas), limited piped gas import infrastructure reverses the situation in Asia Pacific where 80% of imports are through LNG

21%

137

103

225

119

50

20

2134

2121

ChinaSouth Korea

16

India

144

Japan

55

TaiwanTotal Supply

384

Supplied Primarilythrough LNG Imports

LNG imports

Domestic productionPipeline imports

Demand for LNG almost doubling over the next decade.

Asian LNG Demand Remains Robust

Source: WoodMackenzie

Limited Pipeline Connectivity

CAG Pipeline23 mtpa, 2011

, 1998

, 2013

Comparison of Regional Prices$ per MMBtu, 2000-2012

Platts JKM Marker versus NBP$ per MMBtu, 2010- Mar’2013

LT Price Premium

0

2

4

6

8

10

12

14

16

18

20

22

2000 2002 2004 2006 2008 2010 2012

$ /MMBTU

-3+14.0

BrentUS Henry HubUK NBPJapan (cif)

4

6

8

10

12

14

16

18

20

22

24

1 Jan 20141 Jan 20131 Jan 20121 Jan 2010 1 Jan 2011

+8

+2

NBP

JKM

Spot Market Premium

Note JKM and NBP values have been adjusted for shipping cost differencesSource: Platts, BP Statistical Review 2013, Booz & Company analysis

Price Premium for LNG to Asia

India’s Gas Outlook

Power And Fertilizer - Anchor MarketsIndustrial And City Gas - Growing Markets

Sector wise Gas Consumption

44 BCM (H1 2013-14)

36%

25%

12%

18%

9%

% Share of Consumption

Fertilizer

Power

CGD

LPG, Refineries,Petrochem & SteelOthers

Demand Outstrips Supply

Pricing Key to Unlock Demand

0 15 29 44 58 73 88 102 117 131 146 161BCM

What is the Way Forward for Asia?

Develop Regional Market Synergies

• Integrated Energy Market can multiply gains • Create Pan-Asia Energy Market by 2030

• Promote a regional Asian Cooperation Forum for dialogue and consensus

Develop regional pipeline interconnections: Asian Gas GridNeed to evolve an Asian Gas Price Hub/Index Collaborate to reduce Asian LNG Premium

LNG prices in the region to reflect current realities Price setting in a competitive and transparent manner

Collaborate to design innovative pricing methodologies• HH/Mixed Indices instead of Oil• Need for S curves

Swapping of LNG volumes to reduce and optimize shipping costs

Joint acquisition of assets in energy rich countries

Joint investment in infrastructure Import terminals, liquefaction terminals, FSRUs etc.

Technology and Gas Innovation Partnerships

Knowledge sharing in areas related to CBM, Shale Gas, UCG, gas exploration, pipelines, Energy efficiency, Clean Coal etc.

Partnerships are Key to Solve Asia’s Challenges

Thank You