A.P. Gas Distribution Corporation
(A Joint Venture of APGIC and GAIL Gas Limited)
Vizag
20 September
2014

2


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

3
The following presentation and views are for information purpose only and are express personal opinion of the speaker. These are not endorsed by GAIL
, APGDC or GoAP. Audience may independently verify before taking action and speaker does not held any responsibility for accuracy of information contained therein.

4

Successor States: Value unlocking in Oil & Gas Sector

Introduction of APGDC

Transmission & Distribution Infrastructure

Oil and Gas production infrastructure

LNG Import facilities

Refineries & Product / LPG Pipelines

Oil & Gas Infrastructure : Key enabler of growth

Key drivers and Challenges

5
To Bhilwara
To Ankot (Gujarat)
ENPL
Gangavaram
Kakinada
Offshore Gas fields
(RIL, ONGC, Cairn, GSPL)
GAIL KG Basin Network


Legends:
GAIL KG Network:
Krishnapatnam
EWPL (RGTIL) :
MVPL (under const):
Ennore
P/l under bidding :
LNG Terminals planned:
Gas Fields :




Successor States
Specific priorities in individual states
Focussed development
Industrial
Decentralization – towards inclusive growth
Deeper focus in Oil & Gas in
A.P.
: production, import,
Distribution & export to other states
Telengana : Acts as consumption centre as well as transit corridor
Paradigm change & New
Synergy with other states :
New product pipeline (from
Paradip), power transmission from Gujarat, Gas pipeline from Bangalore /Ennore

6





Population : 4.94 crores
Coastline : 972 km , Second longest in India, next to Gujarat
Gross State Domestic Product
(GSDP) : Rs.
2,35,930 Cr
(US$39 billion) in 2012-13
Industries : IT, Boitech, Pharma, Oil & gas, Power, Banking & Financial,
Tourism, Textiles, Retail, Leather
Oil & Gas : Oil & Gas reserves (KG
Basin) Refinery, Petroleum Import, pipelines, Gas Based IPPS

7

Population : 3.52 crores

Mineral-rich state, with coal reserves
Collieries at Singaerni

Gross State Domestic Product
(GSDP) : Rs. 3,35,018 Cr in
2012-13

Industries : IT, Boitech, Tourism

Power : Coal, Hydel based

8

9

APGDC Limited incorporated on 10.01.2011 by APGIC


Equity Structure: APGIC :50% ; GAIL Gas : 50% with each to offload 25% to Private/Public Investors


APGIC : Joint Venture of APIIC with 51% and APGENCO with 49%
GAIL Gas : Wholly owned subsidiary of GAIL (I) Ltd.

Authorized capital is Rs. 100 Crores and paid up as on date is Rs. 20 Crores. APGIC and GAIL Gas paid Rs. 10 Crores each.
Objectives and Business Plan, as developed through KPMG:
Development of Natural Gas regional pipeline grid across the state of AP; City Gas Distribution to cover various Major cities of AP.; and creation of LNG infrastructure in the East Coast for import of Gas, etc.

10

Objective :

To Design , Develop and construct Gas pipeline and gas distribution systems, Gas processing, Liquefaction, Regasification plants and to import, store, process, distribute natural gas transport,

To develop gas distribution networks in the state of Andhra
Pradesh
Vision
To be the leader in sourcing, transporting and distributing natural gas in Andhra Pradesh , and beyond by maximizing value creation for all stakeholders in an environmentally sustainable manner.

To Source natural Gas : through import or domestic
Mission
Making Andhra Pradesh a Natural Gas driven economy

11




MOU signed between APGDC and GOAP during
Partnership Summit, 14 Jan, 2012
To lay Dedicated natural gas pipeline from Kakinada to
Vishakhapatnam
To lay regional pipeline grid
GOAP would facilitate permissions and clearances



MOU Signed between GAIL Gas / APGDC and GOAP during Partnership Summit, 14 Jan, 2012
To set up of FSRU and On land terminal through APGDC.
GOAP would facilitate permissions and clearances

12

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

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

Division of A.P. State : Value unlocking in Oil & Gas
Sector
Introduction of APGDC
Transmission & Distribution Infrastructure :



Existing Pipelines
Transmission & Distribution Infrastructure
Unified AP Gas grid
Oil and Gas production infrastructure
LNG Import facilities
Refineries & LPG Pipelines
Oil & Gas Infrastructure : Key enabler of growth
Key drivers and Challenges

13
700
600 52,9
46,3
55,3
56,7
500
46,7
37,2
36,1
400
33,5
32,1
28,7
26,6
300
200
320,8
345,1
366,8
100
390
420,1
446,5
483,8
510,2
534,6
573,3
595

Share of Natural gas in the Energy
Basket : 24 %

There is marginal decline in 2013
0
2003 2004 2005 2006
Natural Gas (in Mtoe)
Total Energy (Mtoe)
2007 2008 2009 2010 2011 2012 2013

Share of Natural
Gas is in increasing trend in longer term
Data Source : B P Statistical Review 2014

14

Share of Natural gas consumption as part of total primary energy :
Slow but steady growth
12,00
10,00
8,00
Gas as % of Total Energy
8,29 8,32
8,75
8,59 8,59
8,33
9,65
11,11
10,34
9,23
7,78

Natural consumption sizable and significant role in longer term
Gas is
6,00
4,00
2,00
0,00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Data Source : B P Statistical Review 2014

A.P. natural gas demand: salient features



Market Study and Business Plan completed by M/s KPMG:


Existing shortfall:13.6 MMSCMD
Additional prospective demand (in existing plants): 12.4 MMSCMD
Due to drastic reduction in domestic gas production, huge
Investments made by power plants threatened to become stranded assets
Power is the first customer base in
AP:


Affordability of RLNG is a key issue,
Pipeline connectivity required to mitigate the risk of power shortage.
Existing Demand (in MMSCMD)
Sector
Fertilizer
Power
CGD
Ceramics, Glass,
Steel, and Others
Total
Contract ed qty.
3.3
14.0
0.10
0.9
18.3
Supply
Future Demand (in MMSCMD)
Sector Require ment
Fertilizer (RLNG ) 5.4
Power
CGD
Others
Total
10.0
2.0
2.0
19.4
2.6
2.8
0.11
0.2
5.7
GAP
5.4
3.0 *
2.0
2.0
12.4
15
GAP
0.7
12.2
-
0.7
13.6

16
To Bhilwara
To Ankot (Gujarat)
ENPL
Gangavaram
Kakinada
Offshore Gas fields
(RIL, ONGC, Cairn, GSPL)
GAIL KG Basin Network
Krishnapatnam
Ennore
Legends:
GAIL KG Network:
EWPL (RGTIL) :
MVPL (under const):
P/l under bidding :
LNG Terminals planned:
Gas Fields :

17
S no. Name of the P/L
1 GAIL KG Basin
Network
2 East West Pipeline
(EWPL)
3 Mallavaram Bhilwara pipeline (MBVPL)
From – To
Kakinada- Rajahmundry
– Vijayawada
Kakinada – Gujarat
Kakinada – Bhilwara
Capacity
(MMSCMD)
15
80-120
57
4
5
Kakinada Srikakulam pipeline and Ennore-
Nellore pipeline
Ennore Nellore
Kakinada to Srikakulam further to Haldia &
Ennore to Nellore further to vijayawada
Ennore - Nellore
20
36
Status
Existing
Existing
Under
Implementatio n
Under
Implementatio n
Awarded
6 Vijaywada - Nellore Viajywada – Nellore 10-15 Proposed

18

19
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Objective : to transform economy of
A.P. To gas based economy
APGDC has made demand assessment and feasibility studies across the state through M/s KPMG
Expression of interest (EOI) to PNGRB, on behalf of the GoAP , for following sections :



Kakinada Srikakulam
Ennore Nellore Pipeline
Nellore Vijaywada pipeline
APGDC has emerged as successful bidder and has been authorized by
PNGRB to lay pipeline from Kakinada to Srikakulam
DBPL
Nellor e
Renigunta
Srikakulam
V’nagaram
Anakapalli
R’mundry
V’wada
Tuni
Kakinada
Vizag
Guntur
Ongole
GAIL P/L
EWPL (RGTIL)
APGDC Authorized P/L
P/L under biding
EOI Proposed
Existing CNG locations
Proposed CNG Locations

20




From Kakinada to Srikakulam
Total length : 301 km ( Main Line )
Sources :



Kakinada LNG
Gangavaram LNG
KG Basin ONGC/ RIL KG D-6 /
Ravva fields.
Demand Centres:




KG Basin, Kakinada SEZ, MBBVPL,
EWPL
Visakhapatnam, PCPIR
Vizyanagram, Bobbilee Ind. Area
Srikakulam

21

Bid invited by PNGRB:

Letter of Intent issued :
20 th June, 2013
05 th June, 2014

Performance Bank Guarantee: Rs. 10.13 crore
16 th July, 2014

Letter of Authorization Issued :

Now Open for booking of capacity by Consumers/ Customers

22
S no.
1
Activity
Critical Path :
Sep-14 Dec-14 Mar-
15
3 6 9
Jun-15 Sep-15 Dec 15 Mar-16 Jun-16 Sep-16 Dec 16 Mar-17 Jun-17
12 15 18 21 24 27 30 33 36
Authorization by PNGRB
2 Detail Route Survey
3 ROU, Land & Permissions
4
5
6
7
8
9
Process Design & Proj.
Engg.
Ordering
Manufacturing &
Delivery
Contracting
Construction
Testing & Commissioning

Andhra Pradesh Gas Grid: An early Imperative
23
Karnool
Srikakulam
V’nagaram
Anakapalli
V’wada
R’mundry Tuni
Vizag
Kakinada
Guntur
Ongole
Anantpur Nellore
DBPL
Renigunta
Chitoor
GAIL P/L
EWPL (RGTIL)
APGDC Authorized P/L
P/L under biding
EOI Proposed
Gas Sources/ Inputs:




Gas Sources/ Inputs:


Existing: KG Basin
Proposed : Kakinada,
Gangavaram,
Krishnapatnam,
Ennore, DBPL
Gas Grid to Cover all 13 districts of A.P.
Approx. Length :
1600 km
Approx. Investment :
4200 Cr.

24
4
5
S no.
1
2
3
6
Sector Approx.
Length (km)
Approx
Investment
(Rs. Cr)
800
Design Gas flow
(MMSCMD)
65-90
Gas
Transportati on Tariff
(Rs./
MMBTU)
4.5- 6 Kakinada -
Srikakulam
Kakinada –
Vijaywada
Vijaywada –
Nellore
Nellore - Ennore
Hindupur – Anantpur
– Karnool
Hindulpur -
Renigunta
300
250
(existing)
300
300
400
300
Existing
800
730
1000
800
10-15
15
36
10
10
5.6
7-10
8-11
10-12
8-10

25

Investment in Order of magnitude Cost : Rs. 4200 crore

Schedule :

Immediate : Kakinada – Srikakulam , Vijaywada –
Nellore , Ennore – Nellore

Next 3-5 years : Anantpur – Karnool- Renigunta

Linked with Gas availability, Landed cost

Transportation Cost : 5- 15 Rs./ MMBTU , Nominal compared to gas cost

26


Existing CGD :

Kakinada


Rajahmundry
Vijaywada
:
Proposed CGD and CNGS







Vizag
Viajayanagaram
Srikakulam
Guntur
Ongole
Nellore
Renigunta
DBPL
Nellor e
Renigunta
Srikakulam
V’nagaram
Anakapalli
R’mundry
V’wada
Tuni
Kakinada
Vizag
Guntur
Ongole
GAIL P/L
EWPL (RGTIL)
APGDC Authorized P/L
P/L under biding
EOI Proposed
Existing CNG locations
Proposed CNG Locations

27
EWPL
MBVBPL
VSPL (LPG)


2 Major Gas grids passing through the state:

EWPL(RIL) , MBVBPL
(GSPL)

Ramgundam : Gas based
Fertlizer
City Gas Distribution and CNG stations

Currently at Hyderabad

Notified for bidding :
Nalgonda, Khamam,
Medak Rangareddy

28









Division of A.P. State : Value unlocking in Oil & Gas
Sector
Introduction of APGDC
Transmission & Distribution Infrastructure
Oil and Gas production infrastructure
LNG Import facilities
Refineries & LPG Pipelines
Oil & Gas Infrastructure : Key enabler of growth
Supports from State Govts and Central Govt.
Key drivers and Challenges

29


Production in 2013 :33.7 Billion Cu m equivalent to average of 92.3
MMSCMD
Reserve to production ratio of 40.2, vsa-vis world average of 55.1
Data Source : India Pet & NG statistics 2012-13
Production (BCM)
60
50
40
30
20
10
0
29,5 29,2 29,6 29,3 30,1 30,5
39,2
50,8
46,1
40,3
33,7
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

30

Krishna Godavari Basin in Andhra Pradesh :

Oil and Gas
Discoveries

Onshore and Offshore

Production by Private and Govt Companies

More exploration in progress
DBPL
Srikakulam
V’nagaram
Anakapalli
R’mundry
V’wada
Tuni
Kakinada
Vizag
Guntur
Machlipatnam
Ongole
Nellore
Renigunta
Krishnapatnam

31

More than 225 prospects have been probed by drilling of more than 557 exploratory wells.

Hydrocarbon accumulations have been proven in 75 of these prospects


Oil : 22
Gas : 53
Source : DGH

32


Onshore
141 prospects have been probed by 375 exploratory wells by
ONGC,

11 oil & gas pools

31 gas pools have been discovered
Most of them are on production.




Offshore:
84 prospects have been probed by 182 exploratory wells .
Hydrocarbon accumulations have been proved in 33 :

11 oil & gas and 22 gas prospects
3 discovery by ONGC in the block KG-DWN-
98/2 within Plio-Pleistocene sandstone of
Godavari formation and
About 19 discoveries have been made by
Pvt./JV companies so far in NELP blocks



15 Dhirubhai discoveries by RIL in blocks KG-
DWN-98/3 and KG-OSN-2001/2,
3 discoveries by Cairn Energy Pty. Ltd. (CEIL) in block KG-DWN-98/2 within Mio-Pliocene,
1discovery by GSPC in block KG-OSN-
2001/3 within Lower Cretaceous).

33








Division of A.P. State : Value unlocking in Oil & Gas
Sector
Introduction of APGDC
Transmission & Distribution Infrastructure
Oil and Gas production infrastructure
LNG Import facilities
Refineries & LPG Pipelines
Oil & Gas Infrastructure : Key enabler of growth
Key drivers and Challenges

34
Digha
Paradip
Gangavaram
Kakinada
Krishnapatanam
Ennore
Karaikal
FSRU (In progress)
FSRU (Planned)
Land based LNG terminal
LNG Terminals planned in East Coast:
FSRU based :




Kakinada (2 nos.)
Krishnapatanam
Paradip
Digha

Karaikal
Land based terminal:


Gangavaram
Ennore

10
5
0
20
15
13.41
5.47
1,49
20.36
FOB Price &
Other
Taxes Transportation Total Cost
LNG un loaded on the West Coast & delivered in AP
18
16
14
12
10
4
2
0
8
6
14.00
2,03
0,40
15.68
FOB Price &
Other
Taxes Transportation Total Cost
LNG un loaded in East coast & delivered in AP
LNG Import on the East Coast
 In case the LNG Import facility is located on the East Coast in AP, then the delivered price will be lower at least by 4 US Dollar due to the avoidance of additional taxes and transportation charges
 Therefore, an LNG Import facility on the east coast can meet the demand shortfall economically when compared to the RLNG terminals on the West coast
 Further, towards open access of terminal, power plants can make high sea purchase, where tax component becomes nil, and no customs duty, thereby making more viable

36
Onshore
Receipt
Facility
Offshore
Pipeline
Fishing harbor
FSRU Basin
Break Water
K
D
W
P
Widening of
Channel
Existing Channel

FSRU : Configuration vis-à-vis Jetty ,
Jetty
FSRU
LNG Carrier

38
 land based Liquified Natural Gas (LNG) Terminal at
Gangavaram Port

Petronet LNG Limited (PLL) signed a firm and binding term sheet with Gangavaram Port

Initial capacity of 5.0 MMTPA expandable to 10
MMTPA

MoEF Environmental Clearance ObtainedSchedule : 4-5
Years

39





Close to Vizag Market- but no gas based Industry at present
Breakwater : does not exist for Isolated LNG berth
Availability : Dedicated LNG berth, if made outside harbour is operable only for
250 days.
Land availability : Adequate land not available. Area to be re-claimed from sea and hill cutting involved
Pipeline Connectivity : None

40








Division of A.P. State : Value unlocking in Oil & Gas
Sector
Introduction of APGDC
Transmission & Distribution Infrastructure
Oil and Gas production infrastructure
LNG Import facilities
Refineries & Product / LPG Pipelines
Oil & Gas Infrastructure : Key enabler of growth
Key drivers and Challenges

41
Refineries & Product/LPG Pipelines
Machlipatnam





Vizag Refinery (HPCL)


Capacity 8.3 MMTPA
Petrol, HSD, LPG, FO, lubricants
VSPL LPG Pipeline (GAIL : 600
Km, 1.4 MTPA
VVSPL Product P/L (HPCL)
Bottling Plant, POL Terminals
(OMCs) – Vizag, V’wada,
S’bad
Proposed :


Refinery & Petrochem :
Machlipatnam
PCPIR – Viazg - Kakinada
Existing Refinery
Planned Refinery & pet.chem
LPG/ Prduduct P/L Corridor
PCPIR

42








Division of A.P. State : Value unlocking in Oil & Gas
Sector
Introduction of APGDC
Transmission & Distribution Infrastructure
Oil and Gas production infrastructure
LNG Import facilities
Refineries & LPG Pipelines
Oil & Gas Infrastructure : Key enabler of growth
Key drivers and Challenges

43
Oil & Gas
Infrastruct ure

Fertilizer

Power

Petrochemicals

City Gas Distribution

CNG & Transportation

Ceramics, Glass

Other Industries

44

Should be efficient and cost effective

Available

Affordable

Environment friendly

Sustainable

To meet Govt Priorities
Oil & Gas
Infrastructu re : Key
Characteris tics

45








Division of A.P. State : Value unlocking in Oil & Gas
Sector
Introduction of APGDC
Transmission & Distribution Infrastructure
Oil and Gas production infrastructure
LNG Import facilities
Refineries & LPG Pipelines
Oil & Gas Infrastructure : Key enabler of growth
Key drivers and Challenges

46




Industry and market Demands
Moderate and sustainable Crude and LNG price regime in
International Market
Private sector participation and FDI
Govt Facilitation:

Approvals

Land availability and acquisition ease

Taxation regime – Equitable to gas sector and long term growth oriented

Allocation / allotment of domestic gas to local / State Govt

47

Higher prevailing LNG pricing : impediment to import

Power Plants : Power tariff capped- hence gas price has to be competitive

Huge initial Capital Investment

PNGRB Bidding in gas pipelines : Assymatry , unhealthy competition

48