Opportunities in the Asian Region and regional synergy

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1 Opportunities in the Asian Region and regional synergy Harnessing the location specific advantages of Hambantota for regional LPG opportunities W K H Wegapitiya Chairman LAUGFS Gas PLC Sri Lanka & Bangladesh

2 Shift in the Economic Center of Gravity World economy is shifting from the West to East Easternisation (Rachman: 2016) will act as the pivotal point in the global economic axis. Source; IMF world economic outlook, 2015

3 What s Fueling the Economic Shift to the East?

4 Economic opportunities in the IOR The Blue & Red economic opportunities in Asia Blue Economy - Oceanic based economic opportunities fisheries, sea-minerals including oil & gas, developing ports & shipping activities, marine tourism, marine biotechnology, deep-sea mining, and transport & logistics (Mohanty, 2015) Red Economy - energy based economic opportunities Upstream and downstream energy developments, oil & gas based power generations, energy transportation & logistics terminalling & pipe borne logistics, entrypot activities (Parat et al, 2014)

5 IOR The epicenter of the Global Economic shift No other place has the combine advantages of Blue & Red economic opportunities other than the Indian Ocean Rim Countries

6 Purple Economy in the IOR More than 50 percent of the world's maritime oil trade is in the IOR 32.2 millions of barrels of crude oil and petroleum products are transported Nearly 40% of the world's offshore petroleum is produced in the Indian Ocean countries India imports nearly 80% of its energy from the Middle East, and is due to overtake Japan as the world's third largest energy consumer (behind China and the United States) 84% of China s imported energy resources passed through IOR 78% of world LPG is pass through IOR Over 100,000 ships transit through IOR and 25% carry energy

7 Drivers of the Purple Economy in the IOR Growth spillover Indo-China economic spill China - One Belt, One Road - India Make in India India China Geopolitical struggle India assisted 12 ports, China assisted 17 ports India 9 Oil & Gas infrastructure, China 11 Oil & Gas infrastructure Kra Isthmus and changing maritime dynamics in Asia IOR country's LPG demand will increase by 3 fold in 10 years (WLPGA) Maritime logistics and support services need to grow by 65%

8 Sri Lankan competitiveness in the Purple Economy Ideal location for Blue and Red Economic activities Nutracentral location & underutilized capacities Maritime & logistic hub for energy, terminalling & break bulking, Entrepot activities, shipbuilding and repairing, supplies and services bunkering, chandelling and crew services Oil refining, petrochemical, processing and value adding of energy, safe stocks, trading, arbitrage and product swaps Immediate Spill over benefits and Sharkunning strategy

9 The Sri Lankan advantage Development Epicenter Location specific advantages Economic Spillover effects Strong Regional trade ties with Asian economies Conducive trade and economic policies

10 Competitiveness of Hambantota Port Average of 45,000 ships passing southern tip of Sri Lanka annually and 25% of them are reported to carry energy including LPG All weather Port no impact from the monsoon effect Deep Port - 19 meter draft which can accommodate VLGC s Brand new berthing facilities with pier based unloading and loading arms Dedicated berth for energy (LPG) handling Free Port status with many concessions Especial investment concessions under BOI Hub status 25 year tax holiday which can be extended further period depending on the size investment Most cost competitive location for a hub operation

11 Logistic competitiveness of Hambantota for LPG 1 day 5 days 1. Tuticorin 1. Singapore 1.5 days 4 days 2. Kochi 2. Port Kelang 2 days 3. New Mangalore 4 days 3. Penang 3 days 4. Mumbai 3 days 4. Thilawa 3.5 days 5. Rathnagiri 3 days 5. Yangon 6. Pipavav 4 days 4 days 6. Chittagong 7. Port Qasim 5 days 4 days 7. Dhaka 8. Karchi 5 days 4 days 8. Mongla 9. Maldives 2 days 10. Mauritius 9 days 3 days 9. Haldia 11. Madagascar 9 days 3 days 10. Paradip 12. Reunion 7 days 2 days 11. Vishakapatnam 13. Mombasa 7 days 1 day 12. Krishnapatnam 9 days 14. Dar Es Salam 1 day 11 days 13. Madras 15. Rechard Bay 15 days 16. Durban

12 LAUGFS LPG Import & Export Terminal at Hambantota Port Project Investments Largest LPG import, storage and re-export terminal in the IOR Total estimated investment USD. 85 million Project promoter/ Investor LAUGFS Terminals Limited Project Capacity & Capabilities Project Timelines Started: August 2016 Completion: April 2018 Capacity 45,000 m/tons of pressurized LPG storage Product handling capacity 1,800,000 m/tons of LPG annually Ability to store Propane and Butane separately, facilitating the export of mix LPG

13 Project Contributions - to the National Economy Total Sri Lankan export earnings is US$ 11.3 Bn in year 2015 Projected to grow to US$ 20 Bn by 2020 Total value of reexports of LPG by this project in 2020 is expected to be US$ 1.3 Bn This project will contribute 6% of total exports earning projected by 2020 Sri Lanka will become a leading energy reexporter and an energy hub in Asia Sri Lanka will become and energy trading and maritime hub in the Indian Ocean

14 Capitalizing IOR Purple Economy - LAUGFS Strategy Cylinder manufacturing Technical services Regional energy trading Supply chain Management Maritime and logistic support Laugfs Gas Bangladesh 160 m population Less than 5% market Own shipping fleet 20 ships by 2020 Maritime center in Asia Blue Economy in IOR Largest LPG infrastructure in the IOR USD 85 million investment First Hub stated project in Hambantota 45,000 m/ton storage 1.8 million m/tons of LPG PA 6% of total export earning by 2020 Creating the Energy hub- Purple Economy Laugfs Gas Sri Lanka Growing Domestic market Energy efficiency Local value creation Laugfs Gas Myanmar Regional presence Multinational company Integrated energy solution IOR Blue economy

15 LAUGFS, is committed in harnessing rising Blue & Red Economic opportunities in the IOR and support the regional synergies by collaborating with all stakeholders. We invite you to join with us.. THANK YOU