NATURAL GAS

Presented ByMihir Kaulgi 103Pratibha Sharma 134

NATURAL GASFlow Of Presentation

• Introduction• Manufacturing Process• Consumption • Production

– Reserves

• Trading Centers & Bourses• Influencing Factors• Contract Specifications (MCX-Futures)• Future Outlook

NATURAL GAS

Typical Composition of Natural Gas

Methane CH4 70-90%

Ethane C2H6

0-20%Propane C3H8

Butane C4H10

Carbon Dioxide CO2 0-8%

Oxygen O2 0-0.2%

Nitrogen N2 0-5%

Hydrogen sulphide H2S 0-5%

Rare gases A, He, Ne, Xe trace

What is Natural Gas ?

NATURAL GASManufacturing Process

Extracting

Processing

Transporting

Distributing

Quality Control

NATURAL GASManufacturing Process

NATURAL GAS

Natural Gas Consumption ( 2006 - 2030)

0 5 10 15 20 25 30

USA

Russia

Canada

Mexico

Japan

Australia/New Zealand

South Korea

China

India

Other non-OECD Asia

Trillion Cubic feet2006 2030

Consumption

NATURAL GASProduction

World Natural Gas Production

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2006 2030 Avg Annual % Change

NATURAL GASWorld Reserves

NATURAL GASDemand & Supply in India

NATURAL GASRegion wise Production & Consumption

NATURAL GASProduction

NATURAL GASSector wise Demand

NATURAL GASInfrastructure in India

NATURAL GAS

Sr no.Pipeline Company Expected year of completion

Length (kms)

1 Dadri-Bawana-Nangal pipeline GAIL 2010-11 459

2 Chainsa-Gurgaon- Jhajj ar-Hissar pipeline GAIL 2011-12 449

3 Jagdishpur-Haldia pipeline GAIL 2012-13 2,050

4 Dabhol-Bengaluru pipeline GAIL 2012-13 1,370

5 Kochi-Kanjirkkod-Bengaluru/Mangalore pipeline GAIL 2012-13 1,110

6 Kakinada-Basudebpur-Howrah gas pipeline RGTIL 2012-13 1,100

7 Vijaywada-Nellore-Chennai pipeline RGTIL 2012-13 650

8 Chennai-Tuticorin pipeline RGTIL 2012-13 670

9 Chennai-Bengaluru-Mangalore pipeline RGTIL 2012-13 660

Source: CRISIL Research

Infrastructure in India

NATURAL GASProduction by India

Gas type 2008-09 E 2013-14 P

Price Vol Price Vol

$/mmbtu % share $/mmbtu % share

APM 3.3 60%   4.8 18%

Pvt/JV 6.2 20%   6.0 64%

CBM 4.6 0%   5.7 5%

LNG - firm 5.2 20%   8.7 14%

Weighted average firm supply

4.3 100%   6.2 100%

E: Estimate; P: Projected      

Note      

Firm gas supply is estimated at 93.2 mmscmd in 2008-09 and projected at 215.2 mmscmd in 2013-14.

Source: CRISIL Research          

NATURAL GASProduction by India

NATURAL GASTrading Centers and Bourses

• New York Mercantile Exchange (NYMEX)– Price is based on delivery at the Henry Hub in

Louisiana

• Natural Gas Exchange (NGX), Canada • International Petroleum Exchange (IPE), UK• Multi Commodity Exchange of India Ltd (MCX),

India– World’s 2nd Largest exchange in terms of Natural Gas

futures contract (volume) traded – Almost 25% of volume of NG, NYMEX

NATURAL GASFactors influencing Market Price

Global Factors:◦ OPEC output and supply◦ Dollar fluctuation◦ US Natural Gas Inventory data◦ Geopolitics◦ Global Demand particularly from emerging sectors

Domestic Factors:◦ NELP policy by GOI◦ Demand from power and fertilizer sectors; the share is

expected to grow from the current level.◦ The sponge iron sector will have a share of 54% (by

2012), up from about 40% now. ◦ The transport sector is another important sector, as

use of CNG is expected to grow many folds.

NATURAL GASContract Specifications MCX Futures

NATURAL GASContract Specifications MCX Futures

NATURAL GASContract Specifications MCX Futures

Commodity Symbol

Contract Expiry

Unit PCP (Rs) Volume (in Lots)

OI (in Lots)

Natural Gas 25JAN2010 1 mmBtu 264.40 110 132

Natural Gas 28DEC2009 1 mmBtu 261.40 2897 645

Natural Gas 23NOV2009 1 mmBtu 244.30 46824 5186

Spot Price: Rs. 238.90 per mmBtuSpot Price: Rs. 238.90 per mmBtu

NATURAL GASFutures, NYMEX

NATURAL GAS

MCX - 28Dec2009 Futures Contract Price Movement

NATURAL GASFuture Outlook

At MCX, the futures of the further months are trading at a premium compared to the earlier month’s futures (FUTOCT<FUTNOV<FUTDEC)

Storage Congestions predicted to see a fall in the price in the Global market

Oil prices predicted to be bullish and expected to touch the $100 per barrel mark, with more bearish outlook for the Natural Gas

Industrial demand is expected to pick up. Still in the global space, supply is more than the demand

In India, the KG basin reserve find is expected to be much more than estimated and hence reducing the price, alongwith the import bill on Natural Gas.

Demand for LNG is high in the LNG importing countries like India, China.

NATURAL GASFuture Outlook

Titan……..Moon of Saturn has seas made of Pure LNG !