Maruti to launch CNG vehicle :- Ananlysis of Indian CNG Markets

Maruti is going to launch a CNG variant of the famous ALTO, the people's car..............

On the other hand IGL ( Indraprastha GAs ltd.) had increased the prices of CNG by Rs. 2.10 in New Delhi.....

Obviously, the demand is fuelling increases in the price of LNG. But there's another factor at work as well: the chronic gas shortages and the uncertainties related to international pipeline gas projects- Iran-Pakistan-India and the Myanmar-Bangladesh-India pipelines are still in the air.


ONGC and IOC had planned their Import terminals........At Dabhol, NTPC and Gail, which own the power plant and the attached LNG facilities, are planning to sell the plant to an LNG operator such as Petronet LNG.........this makes economic sense as Petronet has got good contracts for LNG supply abroad ................

In turn, Petronet is considering doubling the plant's capacity from 5 MMTPA to 10 MMTPA and is involving Qatar gas for a stake in turn for supplies.......


One big supurise is Africa (mainly Nigeria, Algeria, Angola and Egypt) could also become a major source of LNG. CEIBS seems to have placed their bets on Ghana rightly by opening a campus there.

Biggest advantage with LNG - its SCM- it can be transported from any where to anywhere........

Indian CNG market is growing by 50-70 % annually a robust growth by any standard.........and is poised to touch 4 times in next 4 years.......

Though power and fertilizers will be having robust growth......the real addition will be from the nascent sectors such as the Automobile fueling and industrial heatings......

KG basin and GSPCL will be the new additions to the Indian Kitty.....and other such additions could make the country a less deficient destination.......

The first demand driving factor for LNG was the replacement of Naptha and other Carbon chains from the Fertilizer manufacturing plants..........I remember Naptha was blackmarketed in remote places like Dhule and Nandurbar in northern Maharastra........

There were so many local heavy weights in that business of Naptha and solvents plants of Nandurbar........and rest is history........

There are lot of global factors which are going to have stains on the Indian Market in terms of the price escalation......

For Example the Drama over the cancellation of the Shell Environment contract in Shakhalin II project in Russia have significant effect over the Futures of the LNG contracts..........


Conclusion :-
1. Indian demand for CNG is here to stay and increase furhter
2. Supply is not showign any major development in near future of 5 years.
3. Sectors other than Fertilizers and Power are going to real growth drivers.

Hence, Marketiers and suppliers should engage in long term contracts.....to get a price advantaage and stable supplies in future.......

One of my Hero - Atul Punj

Well I worked with Punj Lloyd for 2 years and I was really impressed with the growth the company was making in all feilds such as HR, IR, Technical Competency Improvement and what not .......i think it was moving ahead in the value chain in almost all aspects of business.





Following is an interesting peice of article, I found about Atul Punj

http://www.forbes.com/global/2008/1222/035_2.html

Guangdong Liquefied Natural Gas (LNG) Terminal, China

Found a very good source on net......

http://www.hydrocarbons-technology.com/projects/guangdong/


Enclosing the same for benfits of all........

Order Year2002Construction Started2003Project TypeLiquefied Natural Gas (LNG) terminal and pipelineLocationGuangdong Province, ChinaEstimated Investment$900mCompletionPhase 1 - on stream June 2006; Phase 2 - 2008Production and AimSupply of cities and power stations around the Pearl River delta and Hong Kong with five million tons a year of LNG by 2008Full specifications
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This project involves the construction of China's first Liquefied Natural Gas (LNG) terminal and associated high-pressure gas pipelines to supply Guangdong Province with 3.3 million tons of LNG a year (four billion cubic metres a year of natural gas) by 2008.

Guangdong province is currently the largest importer of Liquefied Petroleum Gas (LPG) in China and the new LNG terminal is expected to impact greatly on the LPG market and other fuels currently used in the Province.

The project was first launched in 2002 and is due to be constructed in two phases. Phase 1 was completed in 2006 (first LNG was onstream by the end of June 2006) and Phase 2 by 2008. The project is in joint development and is shared by:

China National Offshore Corporation (CNOOC) - 33% share
Guangdong Province consortium (includes Shenzen Investment Holding Company, Guangdong Electric Power Holding Company, Guangzhou Gas Company, Dongguan Fuel Industrial General Company and Foshan Municipal Gas General Company) - 31% share
British Petroleum Amoco - 30% share
Hong Kong Electric and Light Company - 3% share
Hong Kong and China Gas Corporation - 3%
Jones Day were the advisors on the project. The project will cost an estimated $900m to construct.

LIQUEFIED NATURAL GAS CONTRACTORS AND CONSTRUCTION
The Feasibility Study Report (FSR) was submitted to the National Development and Reform Commission (NDRC) of the Provincial Government in April 2003. The Environmental and Social Impact Assessment (ESIA) was carried out by Atkins of Hong Kong. The FSR and budget were passed by the Provincial Government during the second quarter of 2003, allowing the appointment of contractors for the Phase 1 construction to be started.

Early site preparation by CNOOC was underway in May 2003 with the cooperation of the Shenzen Planning Bureau, Land and Resources Bureau, Construction Bureau and the Logistics Department of Guangdong Military Zone. The Front End Engineering Design (FEED) contract was awarded to Halliburton KBR and JGC Corporation of Yokohama, Japan. The conceptual design was carried out by MW Kellogg Ltd in London, UK.

The STTS Group, a French / Italian joint venture comprising Saipem, Technigaz and the engineering companies Tecnimont and Sofregaz, was awarded the Engineering, Procurement, Construction (EPC) lump sum turnkey contract for the project. This contract is worth $240m with Saipem receiving a 60% share worth $145m.

FIRST PHASE

The first phase of the project involves the construction of the LNG import terminal, two LNG storage tanks, regasification plant, the associated marine engineering works and a 300km trunkline system. The LNG terminal is being constructed at Ping Tou Jiao on the Dapeng Peninsula in Dapeng Bay. The trunkline is being constructed on the eastern side of the Pearl River delta to supply Pingshan, Dongguan, Guangzhou and Foshan.

"The project will cost an estimated $900m to construct."The trunkline has two lateral branch pipelines to connect to two new gas fired power stations and three recently converted oil fired power stations in China. In addition there is a lateral pipeline to deliver LNG to a gas fired power station owned by Hong Kong Electric and Light Company and also to the Hong Kong and China Gas Corporation.

SECOND PHASE

The second phase will see an increase in the capacity at the LNG terminal and the extension of the trunkline by a further 182km past Foshan to supply other cities in the Pearl River delta, including Zhuhai, Zhongshan, Jiangmen and Heshan.

The import capacity of the terminal will then be increased by a further two million tons of LNG a year to five million tons a year. It is expected that the LNG transmission system will also be also be able to accommodate a further 1.5 billion cubic metres of natural gas a year expected from reserves in the South China Sea. The second phase supply contract is still out to tender and was not due to be awarded until late 2006.

LIQUEFIED NATURAL GAS SUPPLY CONTRACT FOR THE FIRST PHASE
Bids were invited for the supply contract for the new LNG terminal in Guangdong province from September 2000 by the Provincial Government. The supply contract was awarded to North West Shelf Venture (NSW), an Australia-based consortium, in August 2002. The export deal is worth AU$25bn over the supply period which has been set at 25 years (3.3 million tons a year).

The consortium includes Woodside Energy Ltd (the operator), BHP Billiton (North West Shelf) Pty Ltd, Japan Australia LNG (MIMI) Pty Ltd and Shell Development (Australia) Pty Ltd. All members of the consortium hold an equal share of the concern. It is likely that CNOOC (oil and offshore gas producing unit) will seek to acquire a participating interest in the North West Shelf Venture.

The fulfilment of this supply contract will require NSW to construct additional processing trains and a second trunkline from the North Rankin A platform to shore in Western Australia.

"Guangdong province is currently the largest importer of LPG in China."There are three existing processing trains at the Karratha LNG liquefaction plant on the Burrup Peninsula, each with a capacity to produce 2.5 million tons a yar of LNG. A fourth is being constructed with a capacity of 4.2 million tons a year, which should come onstream in mid 2004. A fifth train is also now planned. The combination of the fourth and fifth trains will more than double the output of the Karratha plant.

NSW will ship the LNG in conjunction with two Chinese partners, COSCO and China Merchants. This will require three new LNG transport vessels. NSW currently has a fleet of eight vessels to serve existing customers with a ninth under construction by Daewoo of South Korea. The construction of three new LNG vessels will be commissioned in due course.

LNG Boom in India

IN 2003, NTPC dropped deals at around 4-5 per MBTU

It was summarily turned down as an "overpriced" and "unviable" offer. Less than three years later, potential buyers from India -- including those who passed on the $4.5 offer -- are scrambling to buy LNG even at $7 or $8. It's a steal at that price: countries like Japan and South Korea are buying LNG at $11 and $20.

It's taken just three years to turn the market dynamics of the LNG industry on its head. With demand in India and China growing at 6-7 per cent a year, suddenly LNG is a suppliers' market.

But it's no party for suppliers, either. Between buying gas at respectable prices from producers across the world and India, to selling them to customers like power plants and fertiliser companies at a profit-generating rate, the suppliers have their work cut out.

This isn't a temporary situation. Natural gas is a clean fuel and given the rising costs of emission control equipment, Indian power generators are increasingly switching from coal-fired to gas-fired plants. As are auto makers.

Supply Chain Case - Dhabhol PLant

Supply Chain Case - Dhabhol PLant

Quick facts.......

1. Ratnagiri Gas and Power Pvt Ltd - RGPPL - Full name
2. Location :- No presence of Breakwater - Docking of Tanker ships in Mansoon Impossible.
3. Fuel - NG
4. Stake Holders - GAIL NTPC and Government + Promoter PEtronet

Enron was the initial promoter and my earstwhile firm Punj Lloyd was a major contractor.......and is currently looking after maintainance of the same......Atul Punj has his mind at it......they got the simmilar project in Indonesia......

Now, what are the options for RGPPL ...............

Should they build up for new Storage terminals..........or should they employe costly docking arrangements...........?????????