Business Development Activities in GAIL

GAIL Training Institute Noida September 3, 2011

OUTLINE
Primary Energy Mix Indian Gas Sector

Overview -GAIL (India) Ltd.

GAILs Strategy GAILs Business Portfolios GAILs Global Footprints GAILs JVs, Subsidiaries & Associate Companies

Objective of BD Group
Role of BD Group Focus Areas of BD Group

PRIMARY ENERGY MIX

WORLD
Nuclear Hydro 5% 6% Renewables 1%

INDIA
Hydro Nuclear 5% 1% Renewables 1%

Oil 34%

Oil 30%

Coal 30% Coal 53%

Natural Gas 10%

12,002 MTOE Per capita: 1.7 TOE NG CAGR(10 yrs): 2.9%

Natural Gas 24%

5th Largest Energy Consumer 524 MTOE Per capita: 0.4 TOE NG CAGR(10 yrs): 5.1%

INDIA FAST GROWING NATURAL GAS MARKET

Source : BP Statistical Review 2011

INDIAN GAS SECTOR : SUPPLY

Avg. Daily Supplies (June, 2011)
MMSCMD

CURRENT SUPPLY SOURCES

Domestic Sources KG-D6 Long term RLNG Imports Spot RLNG imports Total Supplies
Source: Infraline

72.67 47.17 25.13 21.20 166.17

CAMBAY
TRIPURA DAHEJ HAZIRA MUMBAI OFFSHORE RAJASTHAN ASSAM

KG

Domestic Reserves : 38.5 TCF R/P : 35 Years

CAUVERY

Domestic Sources LNG Import

CURRENT DOMESTIC SUPPLIES ARE LIMITED AND SCATTERED

INDIAN GAS SECTOR : CONSUMPTION

Avg. Sector wise Gas Utilization (June, 2011)
CGD- Commercial & Industrial 4% Sponge Iron LPG 4% Petrochemicals 4% 3% Internal Consumption 1% Others 7% Power 37%

Refineries 12%

CGD 5%

Fertilizer 23%

Source: Infraline

Total consumption: 166 MMSCMD

POWER AND FERTILISER ANCHOR MARKETS INDUSTRIAL AND CITY GAS GROWING MARKETS

INDIAN GAS SECTOR : PROJECTED DEMAND SUPPLY GAP

In MMSCMD

2011-12

2016-17

Total Supply (Domestic Gas + LNG) Conservative

Demand Demand-Supply Gap (Conservative Scenario) Total Supply (Domestic Gas + LNG) Optimistic Demand Demand-Supply Gap (Optimistic Scenario)
Source: As per XI - XII Plan, In-house data

249.58
326.64 (77.06) 269.08 326.64 (57.56)

326.15
485.53 (159.38) 341.55 485.53 (143.98)

INDIA WILL CONTINUE TO REMAIN GAS DEFICIT MARKET

OVERVIEW OF GAIL (INDIA) LIMITED

GAIL - SNAPSHOT Indias Number One Gas Company

Integrated Natural Gas Company 25+ Years of Experience & Expertise Government of India Majority Stakeholder Listed in BSE, NSE & London Stock Exchange 10 Years Turnover CAGR 13% 10 Years PAT CAGR 10% Employees Around 3800 Rated as Asias top Gas Utility Company for 2010 by Platts
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GAILS VISION & MISSION

MISSION To accelerate & optimize the effective use of Natural Gas & its fractions to the benefits of the national economy

VISION
Be the leading company in Natural Gas & beyond with global focus, committed to customer care, value creation for all stakeholders & environment responsibility

GAILS STRATEGY

GAILs BUSINESS PORTFOLIO

GAS PIPELINES 8644 KMS (170 MMSCMD) 11 States LPG PIPELINES 2038 KMS (3.8 MMTPA) GAS PROCESSING 7 Plants (1.4 MMTPA) PETROCHEMICALS 410,000 TPA (PE) Being upgraded to 900,000 TPA.
UPCOMING PETROCHEMICALS BCPL (JV) 280,000 TPA (PE&PP) OPaL - 1.44 MMTPA (PE & PP)
RAJASTHAN RAJASTHAN PATA PATA VIJAIPUR VIJAIPUR VAGHODIA VAGHODIA USAR USAR LAKWA LAKWA

GAILs Assets Location

TRIPURA TRIPURA

VSPL VSPL

KG BASIN KG BASIN GAS PIPELINE NATURAL NATURAL GAS PIPELINE LPG PIPELINE LPG PIPELINE LPG PLANT LPG PLANT PETROCHEM PLANT PETROCHEM PLANT

CAUVERY BASIN CAUVERY BASIN

GAILs BUSINESS PORTFOLIO

GAILs Assets Location
OFC CONNECTIVITY 13,000 KMS E&P 27 blocks (2 Overseas) & 1 CBM block

R-LNG PLL- Dahej (10 MMTPA) RGPPL- Dabhol (Upcoming- 5MMTPA) PLL Kochi (Upcoming-2.5 MMTPA) Subsidiary GAIL Gas Ltd (City Gas, CNG corridor & related infrastructure) Gas Retailing (8 JV) IGL,MGL,BGL,CUGL,GGL, MNGL, TNGCL, AGCL Power 156 MW GSEG, Hazira 2150 MW RGPPL, Dhabol

OFC E&P Blocks Myanmar Block DAHEJ LNG

GAS INFRASTRUCTURE EXISTING & UPCOMING

NANGAL BHATINDA DELHI

GURGAUN MATHANIA AGRA

BAREILLY AURAIYA LUCKNOW

JAGDISHPUR KANPUR

DISPUR PATNA

DAHEJ I & II 10 mmtpa*

BARMER GWALIOR

PHOOLPUR

KOTA
RAJKOT UJJAIN
AHMEDABAD

JHANSI VIJAYPUR BHOPAL

VARANASI

GAYA

AGARTALA

BOKARO KOLKATA

HAZIRA 2.5 mmtpa

LNG Existing Upcoming

BHARUCH

BARODA SURAT

CUTTACK

DAMRA BHUBANESHWAR
RAJAMUNDRY

MUMBAI

PUNE SOLAPUR

DABHOL 5 mmtpa

KRISHNAPATNAM KAKINADA

Transmission Pipelines
GAILs Existing Pipeline GAILs Planned Pipeline RILs East West Pipeline RILs Planned Pipeline GSPCs Planned Pipeline

KOLHAPUR GOA

HYDERABAD

VIJAYAWADA NELLORE HASAN

BANGALORE

MANGALORE 2.5 mmtpa

MANGALORE

CHENNAI

ENNORE 2.5 mmtpa

City Gas/ CNG

KANJIKKOD
COIMBATORE

TIRUCHCHIRAPALLI

KOCHI 5 mmtpa 13

Existing Planned LNG Terminal

TUTICORIN

TRANSMISSION CAPACITY TO GROW SIGNIFICANTLY IN COMING YEARS

GAILS OTHER BUSINESS INITIATIVES

Aggressive Plans to diversify into Renewables & Power Sector - Focus on :

Wind Energy & Solar Energy Gas based Power Plant

Participating in Myanmar China Gas Pipeline Project. Pursuing Transnational pipeline Projects Pursuing business opportunities in Gas Rich Countries in areas of Shale Gas E&P Farm-in LNG Projects Gas based petrochemicals. Gas Processing. City Gas distribution.

GAILS GLOBAL FOOTPRINTS

OVERSEAS EGYPT EQUITY IN 2 GAS RETAILING COMPANIES OVERSEAS OFFICE IN CAIRO

PRESENCE CHINA EQUITY PARTNER IN CHINA GAS 50:50 JV WITH CHINA GAS SINGAPORE

MYANMAR
PARTNER IN A1, A3 E&P BLOCKS PARTICIPATION IN MYANMAR CHINA PIPELINE

100% SUBSIDIARY, GAIL GLOBAL SINGAPORE (PTE) LTD

GAIL- JVS & SUSIDIARIES

Joint Ventures: City Gas Distribution
MGL(BG) AGL (HPCL) BGL (HPCL) CUGL (BPCL) GGL (IOCL) IGL (BPCL) MNGL (BPCL) TNGCL TNGCL

GAIL Gas Limited

Wholly owned subsidiary of GAIL. Incorporated for smooth implementation of CGD projects in the country. Authorized by PNGRB to implement CGD projects in Sonepat, Kota, Dewas and Meerut. Future Plans: Commitment for Highways to Greenways. CNG corridors along major highways. Investment in potential cities

GAIL- JVS & ASSOCIATE COMAPNIES

Petrochemical JVs Brahmaputra Cracker & Polymer Limited ( BCPL ) Petrochemical Project at Dibrugarh, Assam GAILs equity share 70% ONGC Petro-additions Ltd. (OPaL) Associate Companies Domestic: GSEG International NATGAS (Egypt) Fayum Gas Company (Egypt) China Gas

JVs (Others) Petronet LNG Limited. Ratnagiri Gas and Power Pvt. Ltd. (RGPPL) International JVs GAIL China Gas Global Energy Holdings Ltd. South East Asia Gas PL Co. Ltd.

GAIL - SUBSIDIARIES
GAIL GLOBAL SINGAPORE PTE LTD (GGSPL)
Overseas investment arm of GAIL. GAIL looking to utilize GGSPL to pursue international business opportunities Strategy Limit business risk exposure to parent company Short Term approach as holding company & Business Development Medium Long Term approach - undertaking business activities. Trading, E&P Farm-In, International Alliances, M&A

GAILS FINANCIAL PERFORMANCE

Consistent growth
in Top & Bottom Lines
Revenue In Million US$

10 years CAGR for

Revenue : 13 %

10 years CAGR for

PAT : 10 %

TRACK RECORD OF STEADY GROWTH

Profit After Tax

BUSINESS DEVELOPMENT ACTIVITIES IN GAIL (INDIA) LIMITED

OBJECTIVE OF BD GROUP

To explore and identfy business opportunities in India & abroad along the natural gas value chain in line with strategic objectives of GAIL. Type of business activities pursued by GAIL : Greenfield Projects Equity Investments Farm-In Opportunities Business Diversification Mergers & Acquisitions

ROLE OF BD GROUP

Identification of business opportunity In-house Environment scanning. Interaction with companies, investment banks & trade chambers in India & abroad. Interaction with MoP&NG & Indian missions abroad. Signing of various agreements for sharing information / deciding terms of cooperation CA, MoU, SoU etc. In-house analysis of the business opportunity. Putting proposal to GAILs management for pursuing the opportunity

ROLE OF BD GROUP

Submission of EoI / Indicative Bid expressing intent to participate. Carry out due-diligence for existing projects or assets Carry out PFR / DFR for new project Transaction related negotiations Obtaining Investment Approval from GAIL Board Finalisation and execution of Participation Documents / Deeds. Monitoring performances of GAILs domestic & overseas investments.

FOCUS AREAS OF BD GROUP

E & P Farm-In (Gas Blocks Overseas) M&A Shale Gas acreages, Integrated LNG Liquefaction Terminals Gas Sourcing LNG Projects LNG Regas Terminals / Equity LNG / FSRU

Transnational Pipelines

Midstream

Natural Gas Pipelines (Overseas)

FOCUS AREAS OF BD GROUP

Downstream

Gas Processing Projects

Gas based Petrochemical Projects

Overseas City Gas Projects

Diversification

Gas based Power (domestic)

Renewable EnergySolar, Wind

SHORT TERM MILESTONES 2012-13

Acquisition of shale gas assets in US

Finalization of location of FSRU

Gas Sourcing

Equity stake in integrated LNG Project

Signing of GSPA & Other important Agreements related To TAPI

SHORT TERM MILESTONES 2012-13

P/L project in Ghana

Overseas CGD project- Egypt

Midstream & Downstream

Gas Processing Ghana & Nigeria

Domestic Petrochemical projects

SHORT TERM MILESTONES 2012-13

Investment approval For gas based power Project

Diversification
Solar PowerParticipation in Bidding process under JNNSM phase II & solar project in Rajasthan

Small Scale LNG Project

Thank You

GAS SOURCING
Exploration & Production (E&P) Participation in Bidding Rounds - (NELP) / CBM Explore participation in international E&P opportunities
M&A Opportunities Looking to acquire Shale Gas acerages Farm-In - Producing Gas Blocks Explore equity participation in integrated LNG project overseas for sourcing equity gas LNG Projects LNG Sourcing / LNG liquefaction / FSRU Sourcing of LNG from upcoming LNG projectsshort, medium & long term basis Expansion of domestic RLNG capacity Exploring possibilities of gas supplies by FSRU on East Coast Transnational Pipelines Pursuing TAPI pipeline project

MID-STREAM
Natural Gas Pipelines Domestic opportunities Bidding for transmission pipeline projects invited by PNGRB

Construction of Spur lines joining main transmission networks

Natural Gas Pipelines International opportunities Pursuing participation in pipeline projects abroad

LPG Pipelines Expansion of existing LPG transmission capacity

DOWNSTREAM
Gas Processing Exploring gas processing opportunities in gas rich countries

Gas based Petrochemicals Domestic capacity expansion. Participation in greenfield projects Explore project opportunities in gas rich countries.

City Gas / CNG Participation in upcoming domestic city gas projects through GAIL Gas / JVs with Oil PSUs

DIVERSIFICATION
Gas Based Power Plants Exploring gas based power opportunities

Renewable Energy Projects Renewables- focus areas for GAIL Focus on solar, wind & biomass projects

Small Scale LNG Pursuing SSLNG to develop small / stranded gas fields

INDIAN GAS SECTOR - AN OVERVIEW

GAILS STRATEGY
. . . Focused on four areas
Protect NG Business NG Trading
2 4

Upstream

NG Transmission
Upstream integration

Move upstream
1

Trading

Downstream integration
Organic & Inorganic Growth

Protect NG business

Transmission

Explore international Opportunities Integrated Players or Select parts of value chain

Global diversification across value chain

Retail

Diversify downstream presence

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LNG INFRASTRUCTURE IN INDIA

2 operating terminals.

LNG

regasification

Petronets LNG Terminal at Dahej with a capacity of 10 MMTPA .

Terminal at Hazira with a capacity of 3.3 MMTPA being operated by Shell & Total. A LNG terminal at Dabhol with a capacity of 5 MMTPA is expected to be commissioned later this year. PLL is also working on another terminal at Kochi with initial capacity of 2.5 MMTPA & with a provision of expansion upto 5 MMTPA.

DOMESTIC GAS SUPPLY OUTLOOK

(FIGURES IN MMSCMD)

Supply Sources ONGC (Firm + Indicative) Oil Pvt. / JVs (As per DGH) Projected Domestic Supply Conservative Additional RIL GSPC Additional Gas Anticipated Total Projected Supply Optimistic

2007-08 47.19 10.00 22.21 79.40 0.00 0.00 0.00 79.40

2011-12 51.65 10.00 102.57 164.22 2.00 4.50 13.00 183.72

2013-14 49.00 10.00 101.00 160.00 2.00 4.50 10.00 176.50

2016-17 42.36 10.00 99.09 151.45 3.20 4.50 7.70 166.85

Based on revised estimate of ONGC (Firm + Indicative) and DGH

Source: As per XI - XII Plan, In-house study

LNG SUPPLY OUTLOOK

(FIGURES IN MMSCMD)

LNG Terminal Dahej Hazira Dabhol Kochi Mangalore

2007-08 6.50 2.50 -

2011-12 12.00 2.50 5.00 2.50 -

2013-14 12.00 5.00 5.00 2.50 -

2016-17 12.50 5.00 5.00 5.00 -

Ennore
Mundra Total LNG Supply (MMTPA) Total LNG Supply (MMSCMD)

9.0 36

22 85.36

2.50 24.50 95.06

27.50 106.70

New terminals: Ennore, Mangalore Mundra Expansion: Hazira and Kochi

Source: As per XI - XII Plan, In-house study

OTHER SUPPLY SOURCES

India is pursuing transnational pipelines like Iran Pakistan India (IPI) & Turkmenistan Afghanistan Pakistan India (TAPI) Pipeline projects.

Pipeline IPI TAPI Total

2013-14 30 38 68

2016-17 30 38 68

TOTAL GAS SUPPLY OUTLOOK

(FIGURES IN MMSCMD)

2007-08 Total Domestic Gas + LNG + Intl Pipelines (Conservative) 114.32

2011-12 249.58

2013-14 323.06

2016-17 326.15

Total Domestic Gas + LNG + Intl Pipelines (Optimistic)

114.32

269.08

339.56

341.55

Source: As per XI - XII Plan, In-house study

CONSOLIDATED SECTOR WISE DEMAND PROJECTIONS

(FIGURES IN MMSCMD)

Sector

2007-08

2011-12

2013-14

2016-17

Fertilizers
Power City Gas Industrial Petrochemical / Refineries / Internal Consumption Sponge Iron / Steel Total Assumptions: o o o

41.02
73.68 12.08 15.00 25.37 6.00 173.15

79.36
148.38 15.83 21.96 33.25 27.86 320.58

85.84
179.44 18.46 26.57 38.07 33.71 382.09

96.55
238.84 23.26 35.37 46.64 44.87 485.53

For power, fertilizer and steel sector, the projections are given by MoP and MoS respectively. For Industrial sector, annual growth rate has been taken from EIU estimates. For City Gas and Petrochemicals growth rate of 8%, 5% respectively are considered. For Steel sector growth rate of 6% is assumed after 2011-12.

Source: As per XI - XII Plan, In-house study

DOMESTIC GAS SUPPLY OUTLOOK PROJECTION BY WORKING GROUP OF XI 5 YEAR PLAN

MMSCMD

Sources ONGC + OIL Pvt. / JVs (As per DGH) Projected Domestic Supply - Conservative Additional Gas Anticipated Total Projected Supply Optimistic

2007-08 57.28 23.26 80.54 80.54

2008-09 58.42 61.56 119.98 119.98

2009-10 55.69 60.28 115.97 74 189.97

2010-11 54.67 58.42 113.09 84 197.09

2011-12 51.08 57.22 108.3 94 202.3

LNG SUPPLY OUTLOOK PROJECTION BY WORKING GROUP OF XI 5 YEAR PLAN

LNG Supply Source Dahej Hazira Dabhol Kochi Mangalore Total LNG Supply (MMTPA) Total LNG Supply (MMSCMD)

2007-08 5 2.5 1.2 8.7 30.45

2008-09 5 2.5 2.1 9.6 33.6

2009-10 7.5 2.5 5 15 52.5

2010-11 10 2.5 5 2.5 20 70

2011-12 10 2.5 5 5 1.25 23.75 83.13

CONSOLIDATED SECTORWISE GAS DEMAND OUTLOOK PROJECTION BY WORKING GROUP OF XI 5 YEAR PLAN
MMSCMD

Sector Fertilizers Power

2007-08 41.02 79.7

2008-09 42.89 91.2

2009-10 55.9 102.7

2010-11 76.26 114.2

2011-12 76.26 126.57

City Gas
Industrial Petrochemical / Refineries / Internal Consumption Sponge Iron / Steel Total

12.08
15

12.93
16.05

13.83
17.17

14.8
18.38

15.83
19.66

25.37
6 179.17

27.15
6.42 196.64

29.05
6.87 225.52

31.08
7.35 262.07

33.25
7.86 279.43

OVERALL DEMAND SUPPLY BALANCE PROJECTION BY WORKING GROUP OF XI 5 YEAR PLAN

MMSCMD

2007-08 Total Supply I Conservative Total Supply II Optimistic Demand (MMSCMD) Demand Supply Gap I Conservative Demand Supply Gap II Optimistic 110.99 110.99 179.17 68.18

2008-09 153.58 153.58 196.64 43.06

2009-10 168.47 242.47 225.52 57.05

2010-11 183.09 267.09 262.07 78.98

2011-12 191.42 285.42 279.43 88.01

68.18

43.06

-16.95

-5.02

-5.99

GAIL - FUTURE EXPANSION PLANS

Unit USD bn Km mmscmd 2009-10 5.4 7847 150 2013-14 10 14000 300

Turnover NG Pipeline Length Transmission Capacity

Polymer Capacity E&P Revenue Generating Blocks Retail gas presence Manpower Overseas office

MT Nos
No of cities

4,10,000 1
15

8,00,000 3
50

Nos Nos

3700 1

4500 3

Projected Investment USD 9-10 bn in next 5 years

REGULATORY STRUCTURE IN OIL & GAS SECTOR

Ministry of Petroleum & Natural Gas

Director General of Hydrocarbons E&P

Oil Industry Development Board Sector Development

Petroleum & Natural Gas Regulatory Board Downstream Activities

E&P Cos

Gas Mktg Cos

Oil Refining Cos

Oil Mktg Cos

CGD PROJECTS- EXISTING & UPCOMING CITIES

Existing Infrastructure:

Covers 61 cities (41-Operating & 20 Under Construction) Total players: 23 CNG stations: 580 Households served: About 1.2 million Vehicles catered: About 1 million Gas volumes sales to CGD: 10-11 mmscmd Several CGD networks are proposed across the country. Over the next 2 3 years about 50-60 cities are likely to be awarded by the Regulator which is envisaged to go up-to 243 cities. In a short period of time the landscape for city gas is likely to stand altered dramatically.

Proposed CGD networks:

Potential Areas of Cooperation- Energy Sector

Market India offers an stable, large and growing market for Russian exports of oil and gas. Upstream Government of India has launched the IX rounds New Exploration Licensing Policy (NELP) on 15th October, 2010. Russian companies can join hands with Indian cos in bidding for oil & gas blocks. Downstream Opportunities exists for Russian companies to participate in downstream oil and gas projects in India particularly in green-field refineries & petrochemicals, City Gas Distribution projects etc. LNG Sourcing Indian companies will be keen to explore LNG sourcing opportunity with Russian companies & also the opportunity to participate in LNG liquefaction projects.