30 CEDIGAZ INSIGHTS

1 #30 CEDIGAZ . NOVEMBER. 2018 INSIGHTS . THE FUTURE OF NATURAL GAS IN CHINA AND INDIA. CRITICAL DRIVERS and challenges . ARMELLE LECARPENTIER. CEDIG. GAZ DATA. ABASES. S. DRAW YOUR OWN ANALYSES. FROM COMPREHENSIVE RAW DATA. Designed for gas professionals with little time on hands, CEDIGAZ databases allow to dig into detailed and accurate data. Advanced browsing and reporting features help focus on what is important for business research. Data visualization with graphs and charts, standard or customized reports contribute to a better understanding of the market situation. And it can be easily shared with teams thanks to Excel exports. Ranging from global overviews, to data dedicated to LNG and underground storage facilities, CEDIGAZ databases take market analyses a step ahead.

2 Annual Gas Indicators Contracts by Country Long-term LNG supply contracts Include reserves, gross and marketed Long term pipeline gas supply contracts . production, reinjection, aring, Europe consumption, imports and exports and infrastructure Covering 120+ countries from 1950 to now Evolution of EU gas supplies Simply the reference database for gas experts 600. 500. Trade Statistics on Bilateral Gas Flows 400. Annual pipeline gas ows 300. Annual LNG ows 200. Monthly LNG ows and prices 100. Planned and Existing Infrastructure 0. 2010 2011 2012 2013 2014 2015 2016 2017e LNG liquefaction plants LNG regasi cation plants LNG (net imports) Norway (pipeline). Libya (pipeline) Russia Underground gas storage facilities Algeria (pipeline) Indigenous production The Future of Natural Gas in China and India TABLE OF CONTENTS EXECUTIVE SUMMARY.

3 5 1. CHINA MEDIUM AND LONG TERM NATURAL GAS OUTLOOK .. 7 Recent trends in the national energy mix .. 7 Prospects for China's energy mix .. 8 Prospects for China's natural gas demand .. 11 Prospects for China's gas supply .. 14 2. INDIA MEDIUM AND LONG TERM NATURAL GAS OUTLOOK .. 16 Recent gas market developments .. 16 Prospects for India's energy mix and the role of natural gas .. 19 Prospects for India's natural gas demand .. 22 Prospects for India's natural gas supply .. 29 The expansion of infrastructure is a key enabler for natural gas expansion .. 31 CEDIGAZ , November 2018 3 The Future of Natural Gas in China and India LIST OF TABLES TABLE 1: CEDIGAZ CHINA MEDIUM AND LONG TERM OUTLOOK MAIN ASSUMPTIONS.

4 9 TABLE 2: PROSPECTS FOR CHINA'S GAS DEMAND BY SECTOR (BCM) .. 13 TABLE 3: CEDIGAZ INDIA MEDIUM AND LONG TERM OUTLOOK MAIN ASSUMPTIONS .. 20 TABLE 4: PROSPECTS FOR INDIAN GAS DEMAND BY SECTOR (1) .. 28 TABLE 5: PROSPECTS FOR INDIAN GAS DEMAND BY SECTOR (2) .. 28 TABLE 6: PROSPECTS FOR GAS SUPPLY IN INDIA .. 30 TABLE 7: PROSPECTS FOR LNG INFRASTRUCTURE DEVELOPMENTS IN INDIA .. 30 LIST OF FIGURES FIGURE 1: RECENT TRENDS IN CHINA'S ENERGY MIX .. 7 FIGURE 2: RECENT TRENDS IN CHINA'S GAS SUPPLY .. 8 FIGURE 3: CHINA LONG TERM OUTLOOK MAIN TRENDS .. 9 FIGURE 4: CHINA'S ENERGY MIX IN 2016 .. 10 FIGURE 5: CHINA'S ENERGY MIX IN 2040 .. 10 FIGURE 6: EVOLUTION OF CHINA'S GAS DEMAND, 2010 2018 .. 11 FIGURE 7: VARIATIONS IN GAS DEMAND (2016 2040), TOP 10 COUNTRIES.

5 12 FIGURE 8: PROSPECTS FOR CHINA'S GAS DEMAND BY SECTOR (BCM) .. 13 FIGURE 9: PROSPECTS FOR CHINA'S GAS SUPPLY (BCM) .. 14 FIGURE 10: CHINA'S GAS NETWORK .. 15 FIGURE 11: RECENT EVOLUTION OF INDIA'S ENERGY DEMAND BY FUEL .. 17 FIGURE 12: INDIA'S SECTOR WISE NATURAL GAS CONSUMPTION DURING 2016 17 .. 17 FIGURE 13: HISTORIC EVOLUTION OF INDIA'S GAS SUPPLY (BCM) .. 18 FIGURE 14: INDIA LONG TERM OUTLOOK MAIN TRENDS .. 20 FIGURE 15: INDIA'S ENERGY MIX IN 2016 .. 21 FIGURE 16: INDIA'S ENERGY MIX IN 2040 .. 21 FIGURE 17: REGIONAL CGD GAS CONSUMPTION .. 27 FIGURE 18: 9TH BID ROUND GAS .. 27 FIGURE 19: PROSPECTS FOR INDIA'S GAS DEMAND BY SECTOR (BCM) .. 29 FIGURE 20: PROSPECTS FOR INDIA'S GAS SUPPLY (BCM).

6 29 FIGURE 21: INDIA'S NATURAL GAS FIELDS AND INFRASTRUCTURE .. 31 CEDIGAZ , November 2018 4 The Future of Natural Gas in China and India EXECUTIVE SUMMARY The Future of Natural Gas in China and India Critical Drivers and challenges Accelerated reforms and focused policies aimed at increasing the role of gas and renewables in the energy mix combine to improve the natural gas demand outlook of China and India. In this report, the International Association CEDIGAZ provides its revised medium and long term outlook for natural gas demand and supply in these two key markets and analyses the main drivers and challenges surrounding these prospects. Projections on global primary energy demand and the structure of the energy mix are based on assumptions on the evolution of the world economy, population, energy and environmental policies and technological improvements (energy efficiency, development of renewables ).

7 According to the latest prospects of CEDIGAZ , energy consumption is expected to grow by 26% up to 2040, as the extent of the economic growth is mitigated by significant improvements in energy efficiency. This scenario, which incorporates national energy plans1, highlights the growing role of natural gas as a key transition fuel towards an increasingly renewable based, efficient and sustainable energy system. The transition to a lower carbon mix accelerates under this scenario, with non fossil fuels accounting for more than half of the incremental energy demand over 2016 2040. Virtually all the growth in world energy demand comes from fast growing emerging economies. China and India will stand as the largest growth markets for energy.

8 More than two thirds of the global energy demand growth is explained by India (30%), China (21%) and other emerging Asian markets (16%). Gas stands as the fastest growing fossil fuel over 2016 2040 (+ ) and increases its relative share in the world primary energy supply from 22% in 2016 to 24% in 2040, overtaking coal (22%) by this horizon. India and China both start with coal intensive fuel balances but will experience total opposite trends in coal consumption over the outlook period. The consumption of coal declines strongly in China. However, it continues to grow at significant pace in the power sector in India, although coal's share in power generation falls to the profit of renewables, and to a lesser extent, natural gas.

9 As natural gas in China and India hardly competes with coal on a cost basis, the substitution from coal to gas requires a strong support of policies and a fast pace of reforms. Past natural gas developments since 2000 in these two markets show very different trends, which attest to the key role of policy measures to support gas demand and supply. In 2016, the penetration of gas in the energy mix of these two countries was among the lowest in the world, illustrating a strong potential for future gas expansion in every consuming sector. The main natural gas demand drivers in these two markets will be the economic expansion, the urbanization, as well as energy and environmental policies. Indeed, both of these countries face the same environmental challenges , namely to reduce air pollution, particularly in urban areas.

10 China and 1. Some National Energy Plans are viewed with caution by CEDIGAZ and key targets can be delayed when considered too challenging. CEDIGAZ , November 2018 5 The Future of Natural Gas in China and India India's signing of the Paris Agreement should support the role of natural gas in their countries' energy mix. Local policies also strongly support the development of natural gas in cities. In CEDIGAZ Scenario, substantial domestic production growth and the expansion of pipeline and LNG infrastructure will bolster growth in gas consumption across various sectors in India and China. CEDIGAZ prospects for gas demand in these countries are among the highest in the forecast ranges of the different institutions.