Energy is what drives Ashok Kumar Balyan. The 63-year-old has spent a lifetime dealing with oil and gas. The CEO of Petronet LNG (PLL), the country's biggest gas importer, has luck on his side, too. His tenure, which started in 2010, has coincided with the country moving towards greener fuel, and the global gas prices calming down.
"There is demand for more gas. And I see it only growing in the days to come," says Balyan. India imported 49 mmcmd (million metric cubic metre per day) gas in 2013/14. The country's demand for gas was 242.66 mmcmd in 2012/13, and is projected to grow to 378.06 mmcmd by 2016/17, according to petroleum ministry documents. The domestic gas supply remained stagnant at around 110 mmcmd in the last four years, especially after the fall in production at Krishna-Godavari D6 basin. Given this scenario, the pie of imported gas is only expected to grow. Various gas trade tracking agencies expect India's import of gas to touch 143 mmcmd by the end of 2016/17.The LNG prices have been dropping consistently. The spot LNG for December delivery to Asia (Japan-Korea Marker) has plunged by 29.4 per cent, according to energy tracker Platts. Indian imports are approximately $3 to $4 per unit cheaper than this marker. The average price quoted on this marker for December delivery is $12.5 per mmBtu.
"At current prices, the gas imported from any corner of the world is competitive in Indian market," says Balyan. "GAIL has committed imports from the US, Petronet imports from Australia. All we need is good import facility and pipeline network," he adds. The imported gas accounts for 25 per cent in the gas pool account, and PLL's market share in this is more than 66 per cent. The import capacity of the country is 22.5 million tonnes per annum (mtpa), out of which PLL has 15 mtpa.
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On his recent visit Down Under, Prime Minister Narendra Modi stressed that he foresees India as a gas-based economy. So at a time when the country's gas production is increasing at a snail's pace, the role of Balyan becomes vital.
And he has stiff competition. Most of PLL's principal promoters, ONGC, BPCL, IOCL and GAIL, have plans in LNG business. ONGC, along with BPCL, has already got clearances for setting up a 3 mtpa import capacity at Mangalore and IOCL has plans to set up a 2.5 mtpa unit near Chennai. Shell, GSPC and Adani Group are also keen on this business. "The cake is increasing, so will our pie. But we don't know how serious these players are," says Balyan. He understands that most of his PSU counterparts would require PLL expertise in setting up their facilities. In the past, PLL assisted GAIL to commission the latter's port and facility at Dabhol.
Meanwhile, the NDA government at the centre is working out a policy to pool the imported and cheaper domestic gas. The policy may allow consumers to pay a levellised price of gas. Balyan, who is part of the initial consultations, says the policy will ensure increasing demand in the market. Right now, he is busy strengthening Petronet's reach and tackling glitches. For instance, the Gangavaram project in Andhra Pradesh, which faced delay in clearances because of political uncertainty, is now clear of all road blocks.
Meanwhile, Petronet is facing delivery challenges at the newly commissioned Kochi LNG terminal, where it could utilise only two per cent of its 5 mtpa capacity. Reason: GAIL, which has a mandate to lay pipelines there, is facing challenges from farmers who cite their first right of use. Undeterred, Balyan came up with an innovative business model.
Petronet LNG leased out the storage capacity in Kochi to UK's BG Group. "They will just have to pay for the storage," says Balyan. "Kochi port is in SEZ area, and gives leverage on taxes. Which makes this business lucrative for us and the partners."
"The gas is available in the international market. There is huge demand for this greener fuel in the country. This means that we just have to figure out good business models to leverage the current scenario. In the last few years we are focusing on this," says Balyan. PLL's unit in Dahej allows its customers to use the facility to import and process the gas, other than using only the conventional method of sourcing from PLL.So the fortunes of Petronet are inextricably linked to Balyan's skills. He joined as CEO of Petronet LNG after working in ONGC for over 34 years, where he grew to be director of HR division and served on the boards of several subsidiaries. ONGC relied on Balyan, when it chose to diversify into the utilisation of alternative energy. "He was very active, an excellent manager and had a special knack of understanding commercial aspects," says his former boss R.S. Sharma, who was part of the panel that roped in Balyan in PLL. Narendra Taneja, national convener of BJP's Energy Cell, describes Balyan as an innovative business leader. "He has taken Petronet LNG to new heights."
Never one to rest on laurels, Balyan is busy expanding the company's capacity. Petronet LNG has a 10 mtpa import and storage unit at Dahej in Gujarat and another 5 mtpa capacity at Kochi. Balyan got the go ahead to expand Dahej's capacity to 17.5 mtpa by 2019. "Dahej has four storage tanks and two more are being built as part of the expansion," explains Balyan. Dahej, with an incremental project cost of Rs 1,000 crore, will be Asia's largest import facility. Given his track record, Balyan may well deliver on this promise, too.