Slide1 l.jpg
This presentation is the property of its rightful owner.
Sponsored Links
1 / 21

1 l PowerPoint PPT Presentation


  • 53 Views
  • Uploaded on
  • Presentation posted in: General

Energy I Real Estate I Agro I Metal & Minerals I Shipping I Power I Ports I SEZs I ICDs I Logistics. 1 l. Energy I Real Estate I Agro I Metal & Minerals I Shipping I Power I Ports I SEZs I ICDs I Logistics. Profit Gas & Free Market Development

Download Presentation

1 l

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Slide1 l.jpg

Energy I Real Estate I Agro I Metal & Minerals I Shipping I Power I Ports I SEZs I ICDs I Logistics

1l


Slide2 l.jpg

Energy I Real Estate I Agro I Metal & Minerals I Shipping I Power I Ports I SEZs I ICDs I Logistics

Profit Gas & Free Market Development

Rajeev Sharma

Chief Executive Officer – Adani Energy Ltd

2l


Slide3 l.jpg

Gas Scenario & Pricing

Profit Gas

Gas Utilisation Policy & Profit Gas “in Kind”

Public & Private Sector views

AEnL Perspective


Slide4 l.jpg

Gas Scenario & Pricing

Profit Gas

Gas Utilisation Policy & Profit Gas “in Kind”

Public & Private Sector views

AEnL Perspective


Gas scenario pricing l.jpg

Gas Scenario & Pricing

APM Gas

Non - APM Gas

(53 MMSCMD)

(50 MMSCMD)

Domestic Prodn

LNG

(24 MMSCMD)

(26 MMSCMD)

Pre-NELP Gas

NELP Gas

Term Contract Gas

(19 MMSCMD)

(5 MMSCMD)

(21 MMSCMD)

Spot Gas

(5 MMSCMD)

Free Market Prices

Administrated Prices

Market Linked


Gas scenario l.jpg

Gas Scenario

Non-APM

APM

APM

Non-APM

Share of APM Gas is set to reduce


Gas pricing l.jpg

Gas Pricing

  • Share of APM gas is to reduce substantially over next 5 years

    • Gas prices shall be evolved by players in the Market

  • Share of Gas in Private sector increasing

    • Pvt. Sector to hold majority of the gas in coming years

    • Role of Govt. in gas markets naturally fading

  • Move from administered pricing to market determined pricing mechanism in last decade

    • Increase in role of private sector

    • Process expedited by import of LNG, especially the spot cargoes

  • Evolution of Free market

    • Producers free to sell gas at market determined prices

    • “Arms Length” negotiations between related entities

Stage is set for Free Gas Market in India


Slide8 l.jpg

Gas Scenario & Pricing

Profit Gas

Gas Utilisation Policy & Profit Gas “in Kind”

Public & Private Sector views

AEnL Perspective


Profit gas l.jpg

“… Globally 40 ~ 50% gas comes as “Profit Gas. Most of it is taken in Value, but there are countries where Govt. prefers it in kind”

Profit Gas

“Profit Gas” is the fraction of gas that Private Players have agreed to share with the Govt. under the PSC

Profit Gas in “Value” (Cash) ?

Profit Gas in “Kind” ?


Need for profit gas in kind l.jpg

Need for Profit Gas in “Kind”

  • To secure gas supplies for its priority sectors

    • Power, Fertiliser units and CGD networks

  • To allocate gas for socio-economic development work

    • Allocation gas for development / support to specific industrial segment

  • To safeguard itself against price volatility

    • Govt. (through PSU units in Power & Fertiliser sector) is one of the largest consumers of gas

    • Provide stable price regime to its units

Gas in ‘Kind” means making Govt a player (seller) in the market


Impact of profit gas in kind l.jpg

Impact of Profit Gas in “Kind’

  • Makes Govt. a significant player (as seller & Buyer)

    • Becomes the preferred supplier for set of customers

      • Power & Fertiliser units in Public Sector

    • Limits options for free trade of gas for producers

      • Reduced market (non-PSUs)

      • Limits the ability to realise true value of gas

  • Govt. gets the ability to create benchmark prices

    • Tendency to create sub-market price

    • Creates ‘dual pricing’ mechanism as per current practice

      • Sub-market price – for Priority sector

      • Market determined – for others

    • Makes price determination and price visibility difficult

  • Uncertainty on producer’s share of gas

    • Back & forth switching from “in Kind” to “in Value”

    • Inability to commit long term gas

Profit Gas in “Kind” creates indirect regulation in market


Cash as alternative to kind gas l.jpg

“Cash” as alternative to “Kind” Gas

  • Higher Govt. revenues

    • Large revenue stream in ‘high price’ era

  • “Cash” can support various socio-economic activities in different sectors

    • Funds can be utilised for non Oil and gas activities also

  • Market Determined pricing

    • “Single” pricing

    • No need for creating sub-market prices

  • Helps in making priority sectors develop business models to sustain market prices / conditions

    • Way to remove subsidies

  • Subsidies (if required) to priority sectors can be supported through allocations from “Cash” earnt

    • Higher accountability and transparency

“Cash” can substitute “Kind” without affecting Govt.’s priorities


Slide13 l.jpg

Gas Scenario & Pricing

Profit Gas

Gas Utilisation Policy & Profit Gas “in Kind”

Public & Private Sector views

AEnL Perspective


Gas utilization policy profit gas in kind l.jpg

Profit Gas in “Kind”

Objective is to:

Secure gas for priority sector

Support socio - economic developmental activities

Safeguard against high prices and volatility

Gas Utilization Policy

Objective is to:

Strengthen core sectors of economy

Optimal utilization of scarce resource

Power, Fertiliser, Domestic use to be accorded high priority for gas allocation

Gas Utilization Policy & Profit Gas in “Kind”

“Gas Utilisation Policy” achieves the same objectives as “Kind” Gas - Do we need both?


Free market development hurdles l.jpg

Free Market Development - Hurdles

  • Profit Gas makes Govt. a large player (Seller) in market

Whom to Sell?

  • Profit Gas means gas sales by Govt. at sub-market prices

How much to Sell?

What Price to sell at?

  • Govt. Directions for allocation of gas (through Gas Utilization Policy)

Profit Gas in “Kind” alongwith Gas Utilisation Policy can create indirect regulations & impede market development


Slide16 l.jpg

Gas Scenario & Pricing

Profit Gas

Gas Utilisation Policy & Profit Gas “in Kind”

Public & Private Sector views

AEnL Perspective


Public vs private views l.jpg

Public Sector view

It’s a Govt. right which is known to Contractor before submission of bids

Producer’s share (after deduction of Govt.’s share) can be forecasted in narrow range and hence does not create any uncertainty

Preventing Govt. from taking gas in Kind” is to have complete control on the marketing and making additional margins by selling gas at premium

Profit Gas “in Kind” is common in South East countries

Reduces Producers risk of market

Private Sector view

Gas in “Kind” is being taken to sell it at sub-market prices

Govt.’s right / ability to switch back & forth between “in kind” and “in value” creates uncertainty

Most Govt.’s prefer profit gas in “in value”

Restricts market for producers and limits premiums based on market conditions – leading to indirect price regulation

Seen as hurdle to market access – one of the reasons why big players are not seen in NELP rounds

Public vs Private views


Slide18 l.jpg

Gas Scenario & Pricing

Profit Gas

Gas Utilisation Policy & Profit Gas “in Kind”

Public & Private Sector views

AEnL Perspective


Aenl s perspective l.jpg

AEnL’s Perspective

  • Share of APM Gas is set to reduce

    • Share of gas in private sector increasing with Govt.’s encouraging policies

    • Leading to free market place

  • Profit Gas “in kind” has potential to :

    • Make Govt. a large player (as seller)

    • Create market at sub-market prices

      • Contradicts Govt.’s efforts to free the market

    • Limit marketing freedom of producers

  • Gas Utilization Policy can achieve the objectives & obligations of Govt.

    • Priority allocation to key sectors

      • Power, Fertiliser & CGD

    • Price based on “market determination” / “arms length” negotiations

No “U –Turn” – Let the good work continue


Slide20 l.jpg

Energy I Real Estate I Agro I Metal & Minerals I Shipping I Power I Ports I SEZs I ICDs I Logistics

For free Gas Market

20l


Slide21 l.jpg

“Everything that is really great and inspiring is created when one can labor in freedom”

….Albert Einstein

Thanks


  • Login