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Natural Gas Pricing – A New Paradigm?

Natural Gas Pricing – A New Paradigm?. Challenges Before LNG Players. Competitiveness with Domestic Gas. (Approx). Price under APM - - - - - - - - - - - - - - - - - - - - - - - 3.00$/MMBtu JV Price (Panna Mukta) - - - - - - - - - - - - - - - - - - 3.49 $/MMBtu

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Natural Gas Pricing – A New Paradigm?

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  1. Natural Gas Pricing – A New Paradigm? Challenges Before LNG Players Infraline Energy Research & Information Services

  2. Competitiveness with Domestic Gas (Approx) Price under APM - - - - - - - - - - - - - - - - - - - - - - - 3.00$/MMBtu JV Price (Panna Mukta) - - - - - - - - - - - - - - - - - - 3.49 $/MMBtu Private Parties (RELIANCE) - - - - - - - - - - - - - - - 3.27 $/MMBtu (NCV) NIKO-Hazira - - - - - - - - - - - - - - - - - - - - - - - - - - 4.63 $/MMBtu LAKSHMI to GPEC - - - - - - - - - - - - - - - - - - - - - 4.68 $/MMBtu R-LNG (PETRONET) - - - - - - - - - - - - - - - - - - - - 4.87 $/MMBtu (NCV) Infraline Energy Research & Information Services

  3. Competitiveness with Domestic Gas Taxation • Declared Goods Status - Uniform Sales Tax on LNG • Optimize Sales Tax by Purchasing at High Seas Infraline Energy Research & Information Services

  4. Will Consumers Wait and Watch? Segment-wise PLL’s Offtake Power and Fertilizer - End Consumer Pricing Regulated Fertilizer - Beyond 2004, Stage-II (Buy at 3$/MMBtu or Close Shop) Other Industries where demand is not critical  Infraline Energy Research & Information Services

  5. Will Consumers Wait and Watch? Options Available • Domestic Consumption • Captive Power Generation • Transportation Fuel • Air-conditioning Cost Competitiveness with other Fuels • Fuel Oil/LSHS • HSD/LDO • Diesel/Petrol (Cars) • Naphtha • LPG Infraline Energy Research & Information Services

  6. Pressure to Pull Down R-LNG Prices Scenario 1 ONGC/OIL/JVs/RIL Keep Gas Price Below 3 - 3.2 $/MMBtu Infraline Energy Research & Information Services

  7. Pressure to Pull Down R-LNG Prices Scenario 2 Differential Pricing • Power/Fertilizer - 3-3.2 $/MMBtu • Others - 4-4.5 $/MMBtu Infraline Energy Research & Information Services

  8. Would customers want to enter long-term agreements? • ToP Quantity and Volume Flexibility • Reasonable and Consistent Prices • Acceptable Price Volatility and Suitable Linkages • Acceptable Price to Ensure Undisrupted Supply Infraline Energy Research & Information Services

  9. How to make R-LNG More Competitive • Gas Price Deregulation • Find an Anchor Load Customer Couple with Differential Pricing • Downward Integration (Power Generation) • Identify Pockets and Create New Demand • International Experience Infraline Energy Research & Information Services

  10. Natural Gas Pricing – A New Paradigm? Let’s Talk Infraline Energy Research & Information Services

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