Part 3The following partner country profile is an excerpt from Chapter 5 of the publication Energy Supply Security 2014 and is not intended as a stand-alone publication.

ENERGY SUPPLY SECURITY 2014

CHAPTER 5: Emergency response systems of individual IEA partner countries

Recognising that oil consumption and net imports in some non-member IEA economies are increasing rapidly, the IEA promotes dialogue and information-sharing on oil security policies; it also shares information and experience about creating national emergency oil stocks with key transition and emerging economies, such as China, India and the countries of the Association of Southeast Asian Nations (ASEAN). Expanding international co-operation with all players in global energy markets to improve market transparency through the collection of more accurate and timely data is also a critical component of the work of the IEA towards greater energy security.

This chapter provides a profile of the emergency response systems of China and India, countries belonging to ASEAN and a detailed overview of Chile, an IEA candidate country. As in the previous chapter, much information in this chapter is based on Emergency Response Assessments (ERAs) or reviews conducted in several of the countries represented: notably Thailand (2010), Chile (2011) and India (2013).

The profiles are presented in the following general sequence, subject to the availability of data in particular cases:

Key dataKey oil data, 1990-2018Key natural gas data, 1990-2018Total primary energy source trend, 1973–2012

Infrastructure map

Country/regional overview

OILMarket features and key issuesDomestic oil productionOil demandImports/exports and import dependencyOil company operations

Oil supply infrastructureRefiningPorts and pipelinesStorage capacity

Decision-making structure

StocksStockholding structureCrude or productsLocation and availabilityMonitoring and non-compliance

Stock drawdown and timeframeFinancing and fees

Other measuresDemand restraintFuel switchingOther

GASMarket features and key issuesGas production and reservesGas demandGas import dependencyPorts and pipelinesStorage

Emergency policyEmergency response measures

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India

Key data

Table 5.4.1 Key oil data

1990 2000 2005 2010 2011 2012 2018*

Production (kb/d) 716.0 772.0 774.0 889.0 896.0 883.0 802.1

Demand (kb/d) 1231.0 2350.0 2573.0 3403.0 3526.0 3652.1 4364.1

Net imports (kb/d) 515.0 1578.0 1799.0 2514.0 2630.0 2769.1 3562.0

Import dependency (%) 42 67 70 74 75 76 82

Refining capacity (kb/d) 1067 2116 2674 4249 4377 - 4822

Oil in TPES (%) 19 25 23 22 22 - -

* Forecast.

Table 5.4.2 Key natural gas data

1990 2000 2005 2010 2011 2012* 2018**

Production (mcm/y) 12 766 27 860 31 325 51 220 46 455 40 416 55 522

Demand (mcm/y) 12 766 27 860 38 308 63 280 60 473 56 316 -

Net imports (mcm/y) 0 0 6 983 12 060 14 018 - -

Import dependency (%) 0 0 18 19 23 - -

Natural gas in TPES (%) 3 5 6 7 7 - -

* 2012 data are estimates. ** Forecast.

Note: This section was written by the IEA, based on information provided by the Government of India during the Emergency Response Assessment, public information, IEA statistics, press reports and reports from various energy analysts. It does not necessarily represent the official view of the Indian government. All errors and omissions are solely the responsibility of the IEA.

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Figure 5.4.1 Total primary energy source (TPES) trend, 1973-2012

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100 000

200 000

300 000

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1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

ktoe

Hydro/renewables/other

Nuclear

Natural gas

Oil

Coal

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Map 5.4.1 Oil infrastructure of India

This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Nepal

Sri Lanka

I N D I A

Delhi

Islamabad

DhakaMyanmar

Bangladesh

Bhutan

Tajikistan

China

Kochi

Kakinada

Karur

Mangalore

Madurai

Nagapattinam

Cuddalore

Chennai (Madras)

VishkhapatnamHyderabad

Pune

IndoreAhmadabadViramgam

KoyaliVadinarBogat

Kanpur

BarauniBongaigaon

Guwahati

PanipatBathinda

Jalandhar

Kota

Barmer

Mathura

Bina

Mumbai

Afgh.

Pakistan

Haldia

Paradip

Digboi

Numaligarh

Yangon

Jamnagar

Kandla

Radhanpura

Crude oil pipeline

Oil products pipeline

LPG pipeline

Refinery

Oil storage site

Oil field

Tanker terminal

Oil rigKm

Padur

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Map 5.4.2 Gas infrastructure of India

NEPAL

SRI-LANKA

I N D I A

Km

0 500250

Islamabad

Dhaka

MYANMAR

BANG.

BHU.

TAJIKISTAN

CHINA

Koch

Ratnagiri

Kakinada

Kayamkulam

Mangalore

Madhurai

Kanchipuram

Vishkhapatnam

HyderabadDabhol

Pune

BhopalAhmadabad

Koyali

Kanpur

Barauni

Bongaigaon

Guwahati

Jagdishpur

Shahjahanpur

PanipatBathinda

Jalandhar

Kota

RewariMathura

Mumbai

AFGH.

PAKISTAN

Haldia

Paradeep

Yangon

Jamnagar

SuratDahej

Chennai (Madras)

GAIL existing pipeline

GAIL proposed pipeline

RGTIL East-West pipeline

RGTIL proposed pipeline

GSPL existing pipeline

GSPL proposed pipeline

PNGRB EOI proposed pipeline

PNGRB future proposed pipeline

IOCL existing pipeline

GGCL existing pipeline

ESSAR porposed pipeline

Existing LNG terminal

Proposed LNG terminal

Gas field

Oil and gas field

This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

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Country overview India’s demand for oil and gas has been increasing significantly in recent years boosted by its rapid economic growth. By 2013, India had become the world’s fourth largest oil consumer, consuming 3.7 million barrels a day (mb/d). It is forecast to reach 4.4 mb/d by 2018, when it will overtake Japan as the third largest consumer of oil. This growth in oil demand has also made India the fourth largest oil importer since 2011, importing around 3.5 mb/d of crude. India’s limited oil production has been slowly declining and is expected to continue declining, thereby increasing its dependence on imports and allaying its concerns over energy security.

Oil accounted for 22% of India’s total primary energy supply (TPES) in 2011, with 40% powering the transport sector. The rapid growth expected in oil consumption in India to 2035 is driven primarily by the explosion of car ownership. Much of India’s crude oil imports originate in the Middle East – 69% in the fiscal year 2011/12 – and feed its 22 refineries, with an estimated combined capacity of 4.4 million barrels a day (mb/d). Indian refineries run at 4.3 mb/d with an estimated 1.3 mb/d of that production being exported.

During an oil supply disruption India would rely primarily on its Oil Industry Contingency Plan (OICP) to deal with the oil shortage. Nevertheless, in a severe disaster caused by a natural catastrophe it would invoke the Disaster Management Act, which is geared towards dealing with larger disasters and not specifically oil or gas disruptions. The OICP has as its objective to maintain uninterrupted supplies of petroleum products all over the country and specifically to priority sectors during crises. Even though it is apparent that industry regularly rehearses different disruption scenarios (such as fires at refineries), India remains vulnerable to severe external supply disruptions. Having identified this vulnerability, India’s Integrated Energy Policy (2008) recommended creating emergency oil stocks to cover 90 days of oil imports. India has been completing the first phase of its Strategic Petroleum Reserve (SPR), which comprises three sites with a total storage capacity of around 39 mb. The caverns should be ready for filling in 2014. A second more ambitious phase foresees the construction of additional storage sites with a total capacity of approximately 92 mb.

India’s natural gas demand reached 65 billion cubic metres (bcm) in 2011 and accounted for only 8% of India’s energy mix. As with oil, India’s natural gas reserves are considered to be quite small. It produced around 40 bcm of natural gas in 2012, and imports the remaining 17.5 bcm in the form of liquefied natural gas (LNG) from Qatar, mainly to its two terminals located off its western coast. India has a two-market structure for natural gas: the first tier is a regulated market for domestically produced gas which feeds power generation, fertiliser production, city gas distribution and the liquid petroleum gas (LPG) and steel industries; the second tier is an unregulated market based on imported LNG, sold at free pricing on a cost basis. As the price difference between the two markets is considerable, demand far outstrips supply with only certain sectors willing to pay the international LNG prices (in some cases willing buyers do not have physical access to this gas). Therefore the notion of natural gas emergencies differs considerably from that in International Energy Agency (IEA) member countries.

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Oil

Market features and key issues

Domestic oil productionIndia had about 5.7 billion barrels of proven reserves at the end of 2012. Crude oil production in India during the fiscal year 2011/12 reached approximately 0.8 mb/d. The government’s 12th Five-Year Plan foresees a 20% growth in production to 2014/15, when production is set to reach approximately 0.92 mb/d, before gradually declining to approximately 0.83 mb/d at the end of the forecast period of the plan (2016/17). According to the World Energy Outlook 2013 (WEO 2013), India’s production rates are set to decline at a compound annual average rate of 1.4% from 2011 to 2035 when oil production is forecast to fall to around 0.6 mb/d. About 51% of India’s crude production was onshore in 2012.

In order to boost exploration and production against the backdrop of increasing domestic demand, in 1997/98 India introduced the New Exploration Licensing Policy to provide an equal platform for both public and private sector companies in the exploration and production of hydrocarbons, thus providing a level playing field for all players.

Oil demandBoosted by high growth rates, India’s oil demand has been increasing considerably since 2001. From 2000 to 2011, total oil demand grew at a compound annual rate of 3.6%, reaching 3.5 mb/d. The Indian 12th Five-Year Plan foresees demand reaching about 4 mb/d by 2016/17.

The WEO 2013 (New policies scenario) forecasts a compound average annual growth rate of 3.6% from 2012 to 2035. Therefore, by 2020 India is projected to consume 4.7 mb/d, overtaking Japan as the third largest global consumer of oil and responsible for almost 5% of world oil demand. It is also foreseen that by 2035, India’s oil demand will have reached 8.1 mb/d. It is also worth noting that the WEO 2013 sees India as being responsible for the largest share of incremental global oil demand over the period from 2020 to 2035, considerably exceeding Chinese incremental growth.

In terms of oil consumption by sector, IEA figures show that the transport sector accounted for approximately 40% of India’s total oil demand in 2011; this proportion has been increasing since the turn of the century. Transport is expected to be one of the key drivers of oil demand in the coming years, spurred on by an increase in India’s vehicle fleet.

In 2011, according to IEA figures, oil consumption in the industry, residential and non-energy (transformation, industry or energy) sectors each accounted for roughly one-fifth of oil consumption.

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Figure 5.4.2 Oil consumption by sector, 1973-2011

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Non-energy use

Agriculture/forestry

Residential

Transport

Industry

Imports/exports and import dependencyDuring 2012/13, India imported approximately 3.7 mb/d of crude oil and a little over 400 thousand barrels per day (kb/d) of oil products, primarily LPG. Some 2.3 mb/d, or about 62% of the crude imported into India came from the Middle East, with the large majority originating in Saudi Arabia (19.8%) and Iraq (13%). The rest (around 417 kb/d) came from Africa, primarily Nigeria and Angola. India’s dependence on Middle Eastern oil has been relatively stable since the turn of the century, fluctuating from 73.7% (2007/08) to 62.4% (2012/13).

Figure 5.4.3 Oil demand by product, 1998-2012

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1998 2000 2002 2004 2006 2008 2010

kb/d

Other products

Residual fuels

Diesel

Jet and kerosene

Motor gas

Naphtha

LPG and ethane

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Oil company operations India’s upstream production was predominately a government domain led by the Oil and Natural Gas Corporation (ONGC) and Oil India Limited. Although prior to 1999 there were some joint ventures between state companies and private companies, since 1999 deregulation through the New Exploration Licensing Policy has allowed the participation of private companies in the upstream sector. Today, mainly domestic Indian firms are represented in the sector: ONGC, Oil India Limited (OIL), Reliance, Essar Oil, Cairn Energy and Nikko.

Similarly to the upstream sector, both government-controlled Public Sector Undertakings (PSU) and private companies participate in India’s downstream sector. The main PSU players are the: Indian Oil Corporation Limited (IOCL); Bharat Petroleum Corporation Limited (BPCL); and Hindustan Petroleum Corporation Limited (HPCL). Essar Oil and Reliance Industries Limited (RIL) are the most important private Indian oil companies.

Figure 5.4.4 Crude oil imports by origin, 2011-2012

Middle East69%

Africa18%

Latin America10%

Other3%

Oil supply infrastructure

RefiningSince 2002, India’s refining capacity has been expanding considerably, at least three-fold from around 70 million tonnes (Mt) (or 1.4 mb/d) to 215 Mt (4.4 mb/d) in 2013. At the end of 2012, there were 22 refineries in India with a combined refining capacity of 4.4 mb/d. The PSUs control around 59% of the refining capacity, while the private sector holds the remaining 41%. The three largest refineries are privately owned. Two of them are owned by RIL and are situated in Jamnagar (western India) on the bay of Kutch. This complex had a refining throughput of 1.3 mb/d in 2012. Apart from these refineries which are primarily export-oriented, most other refineries are located close to the major consumption centres. The largest government-run refineries are: Panipat (IOCL) with a throughput of 300 kb/d, which is situated north of Delhi; and Koyali (IOCL), in the Gujarat region. Both are fed by imports arriving in the Jamnagar/Vadinar area. Koyali has a refining throughput of around 275 kb/d. The 2013 Medium-Term Oil Market Report foresees an expansion in India’s refining capacity reaching 4.8 mb/d by 2018.

India produces a surplus in the majority of its refined products except LPG, which it imports. Since the turn of the century India has been refining much more diesel, gasoline and naphtha than it consumes domestically.

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Ports and pipelinesThere are 12 major crude oil ports in India, with a total handling capacity of around 5.5 mb/d. The major crude oil ports are in Vadinar (1.3 mb/d), Jamnagar (1.2 mb/d) and Jawahardeep in Mumbai (865 kb/d). There are also 16 major oil ports handling finished products around the coast of India. These ports have a combined handling capacity of around 2.8 mb/d.

India has a substantial number of crude oil pipelines throughout the country, although there are no linkages between the east and west, or south and north. The largest pipeline has a capacity of 420 kb/d, and serves both Mathura and Panipat refineries from Vadinar. There is a large network of pipelines in the west of India around the Gujarat region going north past Delhi. Most crude pipelines are owned by the ONGC. The IOCL owns the three longest ones, two serving the Panipat refinery (north of Delhi). India’s crude oil pipelines have an estimated combined capacity of 2 mb/d.

Oil product pipelines are also numerous in India and are owned by seven different companies, with IOCL controlling the large majority. Most of these pipelines are rather small in capacity with the largest having a capacity of 107 kb/d. India’s three LPG pipelines have an estimated capacity of around 123 kb/d.

Storage capacityBecause of the expansion of the refining sector, the storage of crude and refined product throughout India has had to increase. As of April 2013, combined commercial stocks at refineries throughout India stood at around 70 mb. On average, that is enough to keep refineries running for about 16 days. Storage is located at 20 locations throughout the country, but there is some considerable variation in crude storage levels. As of May 2013, in refineries with a capacity of over 150 kb/d, days of cover ranged from 8 days to almost 34 days. There are however a few inland refineries with very limited storage and days of cover. India has no public crude storage sites but will finalise the first phase of its SPR Plan by 2014.

India’s total storage capacity for major refined oil products, namely motor gasoline and high-speed diesel is around 17.6 million litres or 110 mb in 2012. In addition to this, there is about 9 mb of capacity for LPG in an underground cavern in Visakhapatnam. Storage of crude oil is located around the main refineries throughout the country.

Given current oil product demand, as of May 2013 days of cover for each product range from 12 to 27 days for the selected oil products. It is worth noting that the utilisation of storage capacity varied considerably by fuel type; from 65% for LPG to under 40% for other products.

Decision-making structure

The Government of India sees its emergency response policy for oil as being a multi-pronged strategy. The National Crisis Management Committee, headed by the cabinet secretary, co-ordinates responses to emergencies. Each ministry is tasked with developing a crisis management plan which outlines the organisational structure and decision-making process.

Furthermore, in 2005 the Indian government passed the Disaster Management Act (DMA) which has created the National Disaster Management Authority (NDMA), headed by the prime minister; State Disaster Management Authorities (SDMAs) headed by the chief ministers; and District Disaster Management Authorities (DDMAs), headed by the collector or district magistrate or deputy commissioner as the case may be, to spearhead and adopt a holistic and integrated approach to disaster management. This mechanism is cited by the government as one of its key tools to deal with all emergencies, not specifically to deal with oil or gas supply disruptions.

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During an oil supply disruption, the OICP would be invoked. The oil industry has formulated the OICP with the key objective being to maintain uninterrupted supplies of petroleum products to all parts of the country and specifically to the priority sectors during crisis situations (utilities, the transport sector). The latest policy was formulated in 2008 and is updated regularly.

In addition, during a crisis, the central government can invoke Section 43 (1) of The Petroleum and Natural Gas Regulatory Board Act 2006, which allows the government to take over control of the entire downstream sector. The same act stipulates that before doing so, the government should consult the affected entities. However, “in case of any urgency or in cases where the circumstances do not permit serving of notice”, the opportunity of a consultation may be dispensed with in order to maintain an uninterrupted supply of petroleum.

This power is akin to what is found in many IEA member countries, where governments have the ultimate power to take control and manage oil and gas supplies; however, these powers tend to be reserved for war-time use, or exceptional circumstances going well beyond a disruption in the supply of oil or gas.

It is worth noting that this additional tool is not considered an option in most cases and is therefore not necessarily regarded as part of the government’s immediate strategy to deal with oil and gas disruptions.

National emergency security organisation structureThe Government of India has no specific national emergency security organisation (NESO). During a large-scale national disaster the NDMA, the nodal agency for responding to all emergencies and disasters in India, would be activated.

India’s NDMA and its structure are very robust, although it is more intuitively geared towards dealing with major natural disasters, rather than specifically with oil or gas disruptions.

Stocks

Stockholding structureIn January 2004, the union cabinet of India officially decided to establish an SPR. In 2008, the government approved the construction of the first phase of its Indian SPR. The first phase envisaged the construction of 5.33 Mt (39.3mb) of strategic storage of crude oil reserves at three locations.

The construction of the sites is conducted under the auspices of the Oil Industry Development Board (OIDB). To implement and manage the proposed strategic crude oil storage projects, a Special Purpose Vehicle (SPV), the Indian Strategic Petroleum Reserves Limited (ISPRL) was formed in June 2004. ISPRL is owned by the OIDB, and headed by a board of directors comprising the secretary of the Ministry of Petroleum and Natural Gas (MoPNG), the additional secretary of the MoPNG, the joint secretary (Refining) of the MoPNG and the secretary of the OIDB.

In December 2011, the secretary of the MoPNG stated that the Indian government was planning to significantly expand the 39 mb stockpile under construction by building an additional 92 mb (12.5 Mt) of storage capacity. The government has been considering establishing four new crude oil storage facilities. The detailed feasibility study for construction of the facilities is being prepared by ISPRL. The new sites are expected to be located in the southern state of Karnataka, in western Gujarat state, in eastern Orissa state and in Rajasthan in the northwest.

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To make decisions regarding the release and replenishment of stocks, the government foresees the creation an empowered committee constituted of government officials. This committee would be chaired by the secretary of the MoPNG.

India places no obligation on its industry to hold a specific amount of stocks.

Crude or productsAll stocks are expected to be held in the form of crude oil.

Location and availabilityThe reserves are being built in underground caverns at Visakhapatnam on the eastern coast of India, in Mangalore on the southwestern coast and in Padur near Mangalore.

Financing and feesIn 2006, the Cabinet Committee on Economic Affairs decided that the filling of the storage would be funded by receipts for the Oil Industry Development Fund under the OIDB Act of 1974 or through a combination using OIDB funds, surcharges on petroleum products and a 2% increase in customs duty. In 2011, in light of the substantial increase in crude oil prices, MoPNG began looking at different options.

Other measures

India has no policy to reduce demand during an oil supply emergency. During an emergency the government could invoke the Essential Commodities Act of 1955 to maintain equitable distribution of petroleum products. The government recognises that the provisions of this act would allow it to control the supplies of certain products to the forecourts but India has no set demand restraint plan which could be set in motion during a supply disruption.

With respect to surge production, given that production rates have been declining, and are expected to continue declining, it is not considered a measure that would bring additional barrels to the market during an oil supply disruption.

Other measures, such as fuel switching or switching away from oil in a disruption have not been studied sufficiently to allow for estimates of this potential and there are no legal instruments for the initiation of such actions. Nevertheless, given that a large amount of backup generation runs on diesel, there could be some potential to reduce the demand for this product, or at least to restrict its purchase during a supply disruption, so that diesel is not diverted to power generation.

Gas

Market features and key issues

Gas production and reserves Production from India’s gas fields has been largely stagnating in recent years. In 2012, supply was around 40 bcm. It is projected to increase to 62 bcm by 2020, and 98 bcm by 2035 (WEO 2013). According to Indian figures gas production in India stands at around 47.5 bcm (2011/12), having suffered from a fall in production in a basin off India’s east coast (the KG D6). Of the total 124 mcm/d produced in India in March 2012, ONGC

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contributed with 53%, OIL 6%, and private producers 41%. The Krishna Godavari Basin D6 (KG D6) field accounted for 26% of all Indian production. This large gas discovery in 2002 at the KG D6 field raised expectations for India’s future gas supply, but it proved to be short-lived and production fell dramatically soon after it started producing.

About 80% of India’s gas production comes from offshore fields. Onshore production is dominated by four states: Assam in the northeast, Gujarat in the west and Tamil Nadu and Andhra Pradesh in the southeast which jointly account for close to 90% of production. India produces slightly under three-quarters of its domestic gas consumption.

Gas demandConsumption in India is estimated at around 65 bcm according to official Indian figures in 2011/12 (56 bcm according to IEA figures). Based on the projections made in the 12th Five-Year Plan this figure is set to increase to about 172 bcm in 2016/17. Between 2012 and 2013, about 46% of gas consumption went to power generation, followed by 21% for the fertiliser industry and 18% to the petrochemical industry. The proportions are expected to remain relatively unchanged for the forecast period of the 12th Five-Year Plan.

Gas import dependencyImports accounted for almost 28% of India’s total gas supply in 2011/12, with the share of imports expected to increase to almost 42% by 2017 according to the 12th Five-Year Plan. This is due to stagnating domestic supply. However, actual usage of LNG regasification capacity will depend not only on providing the necessary transport infrastructure, but also on international LNG price development. Total regasification capacity is estimated at 27 bcm/year in 2012.

In 2012, India imported 13.98 Mt, or 19 bcm of natural gas in the form of LNG. According to government projections, LNG imports are set to continually increase in the coming years to meet rising demand in India. The 12th Five-Year Plan foresees LNG imports reaching 55 bcm in the 2016/17. As demand far outstrips supply, all natural gas produced is consumed; however import volumes of LNG remain relatively low as prices are much higher than for domestically produced gas.

Figure 5.4.5 Natural gas imports by source in 2011

Qatar84%

Egypt 4%Trinidad and Tobago 3%

United States 2%

Algeria1%

Other6%

Gas company operations The gas sector was fully opened to private investment in 1999. India’s natural gas supply from domestic fields was about 111.3 mcm/d in 2012/13. The main producers of gas are

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government-owned public sector companies, ONGC and OIL, and, in the private sector, RIL (RIL has two foreign partners: BP and Nikko). Through joint ventures the following companies also produce gas: BG Group, Reliance, Cairn Energy and ONGC.

The majority of gas transmission in India is carried out by a public sector company, GAIL India Ltd.

PricingIndia’s natural gas prices are regulated and set at different levels for gas originating from different producers. Gas from fields allocated to PSUs by the government is sold at prices set by the government under the Administrative Pricing Mechanism (APM). Joint venture gas producers are paid based on a formula pegged loosely to international prices according to their production sharing contracts but the government maintains close oversight of price adjustments. Gas prices in these JVs cover a wide band; they range from USD 3.5/MBtu (British thermal unit) to 5.65/MBtu. Gas from NELP fields was supposed to be sold at market prices set through a price discovery process. Following the first gas price discovery process, the price for NELP gas was fixed at USD 4.2/MBtu in 2009 based on an oil-indexed price formula. This has since been revised, with new price effective as of April 2014.

However, the price of regasified LNG is based on different supply contracts, long and short-term supplies as well as spot prices. Short-term supplies and spot cargoes carry substantially higher prices than domestically produced gas and long-term supply contracts for LNG. According to some reports, India paid between USD 9/MMBtu and USD 12/MMBtu for LNG imports in 2012/13.

Gas supply infrastructure

LNG terminals India has four LNG terminals:

� The Dahej Terminal, belonging to Petronet LNG Limited (PLL), has a nameplate capacity of 10 Mt, or 13.6 bcm/y. The Dahej Terminal will be expanded to 12.5 Mt (or 17.2 bcm) by 2013 and to 15 Mt (or 20.6 bcm) by 2016.

� India’s second operational LNG terminal is a 3.6 Mt (or 5 bcm) facility owned by Shell in Hazira, which will be expanded to 5 Mt (or 7 bcm) by 2014 and to 10 Mt (or 13.6 bcm) by 2017. Hazira uses short-term sales contracts and sources LNG on demand.

� PLL’s second terminal in Kochi, with a capacity of 5 Mt (or 7 bcm), is operational since August 2013 and has secured 1.44 Mt (or 2 bcm) of long-term supplies from Australia’s Gorgon field, starting in 2016.

� The Dabhol facility of GAIL has a capacity of 1.2 Mt (or 1.6 bcm) and was commissioned in early 2013. Capacity may be expanded to 5 Mt (or 7 bcm) by 2014.

The 12th Five-Year Plan has ambitious expansion targets for seven LNG regasification terminals in India. It expects capacity to reach 68 bcm/y by 2016/17.

The southern and eastern parts of the country are not connected. A fully developed grid would allow gas-fired power generation and gas for industrial use to be spread throughout the country and to provide anchor load for other users such as city gas and Compressed Natural Gas. Many potential and solvent gas consumers are unable to access the gas because of a lack of regional infrastructure. India has no cross-border pipelines.

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Gas pipelinesIndia’s gas transmission infrastructure is mainly concentrated in the northern and western parts of the country, reflecting historical gas production and consumption centres. The entire natural gas network comprises 15 283 km, with a total capacity of about 400 mcm/d. Approximately 15 000 km of additional pipelines are to be put into operation during the 12th Five-Year Plan, increasing total natural gas pipeline capacity to 876 mcm/d. The government also envisages that by the end of the 13th Five-Year plan another 13 500 km of pipelines would be added, increasing capacity by 300 mcm/y. GAIL is the quasi-monopoly operator of cross-national pipelines with a network of almost 11 000 km. ONGC also owns a small proportion of the network, and only a small number of pipelines are owned by the private sector (joint ventures).

StorageThere are no stand-alone natural gas storage facilities in India, although there are very limited storage facilities at regasification terminals. In 2013, there were ten tanks with a storage capacity of around 1.5 mcm at the four terminals, or roughly 0.01% of imports.

Emergency policy

Natural gas represents only 8% of India’s TPES. This proportion is expected to increase only very moderately to 2035, when it is forecast to reach a little over 9% (WEO 2013, New policies scenario). Furthermore, India runs a dual-pricing model for natural gas: domestically produced natural gas is essentially directed to prioritised sectors; LNG, bought relatively freely, is expensive. The combination of these two pricing structures illustrates that demand will continue to outstrip supply. This would remain unchanged until these prices converge considerably, especially if the price of locally produced gas reaches a more comfortable level which would entice exploration and investment. This dual-pricing structure creates a situation unlike what is experienced in IEA member countries, where availability of gas dictates demand. For instance, although electricity scarcity is common in India there are a number of natural gas-fired power plants sitting idle as it is uneconomical to produce electricity with imported LNG. With the pricing regime being revisited, this could have positive implications for the appetite of industry to increase exploration in India, and could, potentially, lead to increased domestic supply.

In a study commissioned by the Petroleum Federation of India on the “Impact of Gas on Refining and Marketing” in 2011, one of the conclusions advanced was that India could theoretically displace around 44 Mt of liquid fuel by 2016/17 with a volume of about 140 mcm/d of natural gas. This would constitute 23% of the projected consumption of liquid fuel in 2016/17 and is a reflection of the potential of gas to reduce India’s oil import dependency.

As for oil, the government can invoke Section 43 (1) of The Petroleum and Natural Gas Regulatory Board Act 2006, allowing it to take control of gas supplies, but this seems to be much more pertinent in case of war or natural disaster than in relation to a disruption in supply.

There also seems to be some potential for fuel switching, as some industries, such as power plants (gas-oil-coal), fertiliser plants (gas-fuel oil) and the transport sector (gas-petrol) have the capability to switch fuel from natural gas to either oil, coal or to other fuels during a crisis. However, no formal analysis has been carried out and at present there is no legal instrument concerning fuel switching.