e) Future Projects Impacting Coastal Shipping
New refineries are proposed at Bina, Bhatinda (Punjab) and Paradip (Orissa). Paradip
being coast-based refinery and having access to major port is likely to induce more
demand for coastal movement of POL in future.
There are proposals for setting up of new pipelines for POL products by Petronet and
other oil companies like Reliance etc. for distribution purpose, however none of the
pipelines can be truly considered as competing mode for coastal shipping as these lines
are aligned into hinterland from coast.
f) Magnitude of POL movement by Coastal Shipping
Assuming that the modal share of coastal shipping as 17 percent of overall POL products
movement, it is estimated that the quantity of POL (Coastal movement) to be moved at
major and minor ports together will be around 25 and 32.5 million tonnes by 2006-07 and
2011-12 respectively.
Considering observed loading and unloading pattern of POL and the location specific
plans of industries, future POL traffic in terms of loading and unloading at major and
minor ports is worked out. However most of the forecast figures are dependent on the
business decisions of coast based and hinterland industries to which these ports serve.
4.3 LIQUEFIED NATURAL GAS (LNG)
Natural gas is the world’s third largest source of primary energy following coal and oil.
Since early 1970s, known reserves of natural gas have been increasing steadily, at the rate
of five per cent per annum. Similarly, the number of countries with known reserves has
also increased from around 40 in 1960 to about 85 today. Natural gas is considered to be
the most environment friendly fuel and also expected to last longer than crude oil.
Because of these reasons natural gas (LNG) is now preferred over other traditional
feedstock such as coal or liquid fuel. More than four-fifths of world production is
consumed locally while the rest is traded internationally.
Transportation is an essential aspect of gas business, since reserves are often quite distant
from the main markets. Pipelines transport is most preferred mode of transport for gas
and there is a well-developed network in the former USSR, Europe, and North America.
LNG use in India shows that out of total consumption around 37 percent is used for
power generation followed by 36 percent in fertilisers sector in India. Other sectors like
steel and manufacturing industries, transport etc. also make use of LNG.
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a) Production
Exploration and Reserves
India's natural gas reserves are currently estimated at 22.9 trillion cubic feet (tcf). The
area northwest of Mumbai in the Arabian Sea, 110-200 kilometers off the coast, is India's
major natural gas producing region housing the Bombay High, Heera, Panna, South
Bassein, Neelam, Bombay L-II, and Bombay L-III fields. The region is also rich in crude
oil. There are additional gas off the East Coast, in the Bay of Bengal, which includes the
Krishna-Godavari and Kaveri Basins. The Krishna-Godavari Basin houses the Rawa
Field while the Kaveri Basin contains the PY-1, PY-3, and KH-3 fields. There was a
major increase in the production of natural gas in the late seventies with the development
of the Bombay High fields and again in the late eighties when the South Bassein field in
the Western Offshore started production. Most of production of gas comes from the
Western offshore fields. Assam, Andhra Pradesh and Gujarat are other major producers of
gas. Smaller quantities of gas are produced in Tripura, Tamil Nadu and Rajasthan. 60
percent of natural gas is produced along with crude oil as associated gas while the rest is
produced as free gas. The South Bassein and Tapti fields in the Western Offshore and the
gas fields in Tripura and Andhra Pradesh (Krishna-Godavari Basin) are main producers of
free gas. Oil & Natural Gas Corporation Limited (ONGC) and Oil India Limited (OIL)
are main producer companies of gas.
Figure 4.5: Production and Consumption of LNG in India
Figure 4.5 depicts the trend of production and consumption of natural gas over the last
decade in India.
b) Consumption
India's natural gas consumption is currently met entirely through domestic production.
However, demand for natural gas likely to outstrip production. India will have to begin
importing natural gas within a few years to supply new gas-fired power plants. India's
consumption of natural gas has increased faster than any other fuel in recent years and
now accounts for around 7 percent of the country's energy demand. The consumption of
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natural gas in India has nearly doubled during the last decade i.e. it reached nearly 2525
million standard cubic feet per day (MMSCFD) in 2002 from 1076 MMSCFD in 1992.
c) Existing Modal Share in Transport and Movement Pattern
Gas produced in the western offshore fields of Bombay High, is brought to Uran
(Maharashtra) and partly moved to Hazira (Gujarat). Gas brought to Uran is utilised in
and around Mumbai. Gas brought to Hazira is partly utilised at Hazira and rest is fed into
the Hazira-Bijaipur-Jagdhishpur (HBJ) pipeline, which passes through Gujarat, Madhya
Pradesh, Rajasthan, U.P., Delhi and Haryana. The gas produced in Gujarat, Assam, etc; is
utilised within the concerned states. While the proposals for import of gas through
pipeline from Oman and Iran have not moved forward for technical & geo-political
reasons, it was considered that importing Liquefied Natural Gas (LNG) for Southern
India as well as other coastal locations would be a viable alternative however.
d) Estimation of Production and Consumption
The production of natural gas in the country is expected to level off in near future. As per
Hydrocarbon Vision - 2025 India will require 231 million standard cubic metre per day
(MMSCMD) and 313 MMSCMD (185 and 260 MMSCMD as per ADB Study) by 2006-
07 and 2011-12 respectively, whereas domestic reserves are expected to supply only 85
MMSCMD in 2006-07.
Recent Finds in India
Some of the recent finds in natural gas sector having potential for yield are listed below:
• On Eastcoast, Krishna - Godavari Basin by Reliance Petroleum Ltd. (reserves
- around 7 Tcf)
• ONGC has discovered rich gas reserves estimated to contain 30 to 50 billion
cubic metres in the Daman offshore field north of the prime Mumbai high
field. ONGC anticipates a yield of 3 to 4 million cubic metres of gas per day
when the field goes onstream.
• Cairns Energy reported finds in late 2002 offshore from Andhra Pradesh as
well as in Gujarat (reserves - around 2 Tcf)
Import of Natural Gas
Gas imports involves costs for liquefying the gas at the supplier's end and re-vaporising it
at the receiver’s end. India can import gas from Qatar and other Persian Gulf countries,
Indonesia and even from relatively distant places such as Nigeria and Australia in the
form of Liquefied Natural Gas (LNG). Further, it has to be delivered inland at various
points by Indian pipelines. India is currently considering several LNG projects, which are
heavily capital-intensive. The proposed LNG terminals are along the coastline of India
are shown in Figure 4.6.
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Figure 4.6 Locations of Proposed LNG Import Terminals in India
Source: GAIL
d) Future LNG Projects Impacting Coastal Shipping
LNG import terminals are planned at Jamnagar, Dahej, Hazira, Pipavav, Trombay,
Dabhol, Mangalore, Kochi, Ennore, Kakinada, Gopalpur, and Paradeep. However, after
The Indian government has decided not to extend sovereign payment guarantees to power
projects, it has resulted in several companies cancelling or delaying LNG projects.
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• The import terminal at Dahej (by Petronet) currently is under construction, and is
expected to start its operations in late 2003. The Dahej terminal has advantages over
some of the other proposed projects because of the existing HBJ pipeline network.
• The Cochin import terminal by Petronet is expected to commence by 2007. The
advantage of setting up the terminal here is that the NTPC could make available LNG
to other prospective buyers in and around Kochi such as FACT apart from providing
natural gas as feedstock to the Kayamkulum power station.
• Shell also has begun construction of its LNG import terminal at Hazira in Gujarat, and
has contracted for LNG supplies from Oman. The facility is scheduled to begin
operation in 2005. Like the Petronet Dahej terminal, it is to be linked into existing
natural gas pipelines.
• The Dabhol LNG terminal was nearly complete. The construction was halted in June
2001, and it is likely to be completed by another firm but no definite timeframe is
known.
• No definite timeframe for completion is available for the LNG import terminal
projects at Pipavav, Trombay, Ennore and Kakinada.
Along with LNG imports by sea, imports of natural gas by pipeline will also play an
important role eventually in meeting India's natural gas needs. One possibility would
supply India with natural gas from Iran's huge South Pars field via a pipeline, either
subsea or through Pakistan.
Another possible import route would link the natural gas reserves of Bangladesh into the
Indian gas grid. Current proven reserves of natural gas in Bangladesh are at least 14 Tcf.
The new natural gas reserves discovered off Andhra Pradesh in 2002 could compete with
imports from Bangladesh, thus increasing the pressure to reach a decision in the near
future.
e) Forecast of Coastal Shipping Share
The future movement of LNG will depend upon indigenous production and LNG imports.
As far as indigenous production is concerned, it is likely to get consumed within the
production zones as it is happening today and main mode of transport will be pipelines.
The Reliance Petroleum is also likely to rely on pipeline for inland transportation of
LNG.
The LNG imports will be received at proposed LNG terminals (most of them are along
the westcoast) which, afterwards, will be moved through pipelines to their final
destination. In case if this LNG is required to be moved by coastal shipping then
specialised tanker carriers and infrastructure facilities near the landing terminal will be
required.
4.4 COAL
Coal is the world’s most widely distributed fossil fuel and is the most important source of
energy for electricity generation in India. Electricity is one of the most vital infrastructure
inputs for growth and around two third of the coal in the country is consumed for
generation of electricity. Of the 1,04,918 MW of overall installed power generation
capacity in the country (as on 31 March 2002), about 59,386 MW is coal based and 2,745
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MW is lignite based, totalling to 62,131 MW or 59 per cent. This is expected to grow
upto 1,40,000 MW by 2009-10.
Other major industries like steel, cement, fertilizers, chemicals and paper products and
several medium and small-scale industries are also dependent on coal for processing and
their energy requirements.
a) Production
India is the third largest coal producer in the world, after the USA and China. Local coal
production of around 320 MTPA is growing at around 5 percent per annum.
Though there are several coal mines distributed across India as depicted in Figure 4.7 the
major coal-fields are located in North-Eastern States, West Bengal, Bihar, Jharkhand,
Madhya Pradesh, Chattisgarh, Uttar Pradesh, Maharashtra, Orissa, Andhra Pradesh,
Assam, Arunachal Pradesh, Meghalaya and Nagaland. The estimated coal reserves, as on
01-01-2002 in India are 2,34,114 million tonnes (Press Information Bureau, Govt. of
India).
There are lignite fields at Neyveli in Tamilnadu and Gujarat. A large quantity of the total
coal production in the country is produced by various subsidiaries of Coal India Ltd
(CIL), which is the largest supplier of coal in the country. The only other major producer
outside of Coal India Limited is Singareni Collieries Company (SCCL) located in Andhra
Pradesh.
Figure 4.7 Major Coalfields and Mining
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