iii
TABLE OF CONTENTS
LIST OF ABBREVIATIONS ........................................................................................................... v
APPROXIMATE CONVERSION FACTORS .............................................................................. vi
1. Introduction .................................................................................................................................... 1
2. Energy in the Indian Economy ..................................................................................................... 4
3. Political Economy and the Development of the Hydrocarbons Sector ..................................... 8
4. Supply and Demand ..................................................................................................................... 12
4.1 Domestic Supply ...................................................................................................................... 12
4.2 Domestic Demand .................................................................................................................... 15
4.2.1 Sector Demand ................................................................................................................... 16
4.3 Need for Imports ...................................................................................................................... 19
4.4 Supply and Demand: Summary of Analysis ............................................................................ 21
5. Gas Utilisation Policy ................................................................................................................... 24
5.1 The Origins of Gas Allocation in India .................................................................................... 24
5.2 The NELP Production Sharing Contract .................................................................................. 26
5.3 The Revival of Gas Allocation under NELP ............................................................................ 27
5.4 Reconciling the Conceptual Conflict within NELP: Policy Provisions ................................... 30
5.5 Gas Utilisation Policy and Pipeline Infrastructure ................................................................... 32
5.6 Gas Utilisation Policy: Summary of Observations................................................................... 35
6. Pricing ........................................................................................................................................... 37
6.1 Pricing Regimes in the Indian Gas Sector ................................................................................ 37
6.1.1 Pricing under the APM and Discovered Fields Regime .................................................... 38
6.1.2 Pricing of LNG .................................................................................................................. 39
6.1.3 Pricing of NELP Gas ......................................................................................................... 39
6.2 Pricing in the Fertilisers Sector ................................................................................................ 42
6.3 Pricing in the Power Sector ...................................................................................................... 47
6.3.1 Power Sector Reforms ....................................................................................................... 49
6.3.2 The Competitiveness of Gas-Based Power ........................................................................ 50
6.4 Pricing in the City Gas Sector .................................................................................................. 53
7. Conclusions ................................................................................................................................... 56
BIBLIOGRAPHY ............................................................................................................................ 63
Books .............................................................................................................................................. 63
Government Reports....................................................................................................................... 63
Other Reports ................................................................................................................................. 64
Press Releases and Newspaper Articles ......................................................................................... 65
Websites ......................................................................................................................................... 65
LIST OF TABLES
Table 1: Primary Energy Mix, 2009 .................................................................................................... 5
Table 2: Share of Fuel in Total Installed Power Generation Capacity, 2010 ...................................... 5
Table 3: Percentage of Energy Use Met by Domestic Production ...................................................... 6
Table 4: Domestic Supply in 2012 (in mmscmd) .............................................................................. 14
Table 5: Status of Discoveries under NELP (1 April 2009) .............................................................. 15
Table 6: Demand Forecasts for Gas in India (in mmscmd) ............................................................... 16
Table 7: Total and Gas-based Captive Capacity ................................................................................ 17
Table 8: Demand for Gas by Consumer Sector – Eleventh Five Year Plan (in mmscmd) ................ 19
Table 9: LNG Supply Forecasts, 2012 ............................................................................................... 20
Table 10: LNG Supply by Terminal, 2012 ........................................................................................ 20
Table 11: Gas Consumption by Sector, 2008 (in mmscmd) .............................................................. 25