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Addressing Challenges in Gas Infrastructure Development: Hazira LNG Venture Insights

This roundtable discusses the challenges and opportunities in developing gas infrastructure, focusing on the Hazira LNG venture. The urgency of creating a long-term market position is underscored, with insights into demand projections and regulatory hurdles. Key issues include irrational procurement decisions and limited pipeline networks, which hinder growth. The session emphasizes the need for transparent subsidy arrangements, accountability in gas availability, and the importance of aggregators to connect geographically dispersed end-users. Recommendations are made for regulatory improvements to facilitate a robust gas market in India.

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Addressing Challenges in Gas Infrastructure Development: Hazira LNG Venture Insights

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Presentation Transcript

  1. Roundtable on Challenges to Development of Gas Infrastructure Perspectives of a commercial LNG venture

  2. Hazira – Creating a Long Term Market Position Target Market: Demand (7-30 mtpa) Delhi Middle East Hazira LNG Import Terminal: Dahej Hazira Mumbai Start up April 2005 Capacity up to 5 mtpa Expansion to 10 mtpa Asia Pacific Shell Gas & Power

  3. Issues Affecting Market Development • Stunted growth in the anchor market segments • Irrational fuel/feedstock procurement decisions by intermediaries • Regulatory bias in electricity market design – discourages gas based power projects based on commercial gas • Geographic dispersal and offtake size of end-users • Limited pipeline network systems Shell Gas & Power

  4. What needs to change • Subsidy arrangements in power and fertiliser should be direct and transparent – not provide an excuse for avoiding least cost fuel/feedstock procurement • Power projects to be selected for development on least life cycle cost basis rather than least marginal cost • Aggregators needed to develop pipeline networks to connect small offtakers that are geographically dispersed • Accountability regarding indications on incremental gas availability, price and timing Shell Gas & Power

  5. Key next steps • Early appointment of P&NG Regulatory Board • Capacity building within Regulatory body through dedicated staffing • Adequate attention to gas issues and development of pipelines • Early formulation of regulations for gas pipelines to be developed on Contract Carriage principles with non-discriminatory third party access • Development of Pipeline codes, Access codes and Affiliate Code of Conduct • Consultation with industry in the development of regulations and policy will avoid delays in implementation Shell Gas & Power

  6. Hazira – Key Messages • Leverages strengths of two global LNG majors • Hazira commercial architecture currently on “Merchant” model, can also accommodate traditional model • Competitive offering in the context of global market realities, encouraging response from markets • Market reach limited by pipelines • Long term commitment to providing energy to fuel Indian economic growth Shell Gas & Power

  7. Thank You Shell Gas & Power

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