Global and Economic Viewpoint of the Oil &

Gas sector
The global demand for petroleum products grew strongly over
the year reflecting a growth of 1.5%, though there was
marginal decrease in demand for the OECD (Organisation for
Economic Co-operation and Development) nations due to
sluggish economic activity, higher oil prices and mild weather
conditions. A substantial part of the growth in the Oil and Gas
sector is credited to developing countries like China and India
who are witnessing strong economic upliftment. The shift in the
demand in European Union as well as Asian countries, for
cleaner and environmentally less harmful transportation fuel
has also increased substantially. The crude oil prices have
continued to increase and reached new high of US$
110.40/barrel in March, 2008, which was effectively an increase
of about 27%. The reasons behind the abrupt price rise were
attributed to geopolitical events and unplanned outages of
some oil production fields. The price forecast by analysts for
crude oil is within 70-96 US$ /barrel range.
In contrast with the strong demand growth, global refining
capacity increased marginally from 85.1 million Barrels/day to
85.3 million Barrels/day. This has a pressure effect on the
already stretched global refining system working at an
operating rate of 85.3%. The IEC(International Energy Agency)
estimates additional crude distillation requirement of 9.7million
Barrels/Day to meet the demand in 2012. Though several large
projects for refining has been announced the progress has been
slow due to the constraint of rising cost and resource shortage.
The global demand for Liquefied Natural Gas is increasing at an
average of 7.4% annually and is set to reach 330mtpa by 2015.
Demand is all set to overshoot supply and the two primary
reasons has been ascertained as:
(a)Location of gas reserves close to traditional markets has
been depleted.
(b)Increasing share of gas in the future energy mix.
Hence the successful exploitation of newer or more remote
sources and its transmission through pipelines is becoming
imperative. Spot market availability of LNG has also been very
tight due to the sudden increase in demand from Japan, whose
nuclear dependency has taken a beating after an earthquake.
Though Russia’s initiative to construct major pipelines for
supplying Natural Gas will ease the pressure in the Asian
market and prices are expected to soften in the medium and
long term range.

Industry and National Viewpoint of the Oil &

Gas sector
Oil and Gas sector contributes to 16% of GDP in India and over
the last 5 years crude oil import has increased at the rate of 7%
/year. 45% of the energy consumption of India comes from this
sector and India’s oil demand expected to grow at 8-8.5% in
the recent future. The steep price of crude oil in the
international market is a concern for the industry.
Unprecedented sustained high demand, geopolitical
uncertainties, production decline in ageing fields, supply
concerns, speculative trading and weakening of US Dollar are
the probable reasons for the raise in prices. In order to lessen
the impact, the Government of India regulated the retail prices
of products which led to severe under recoveries in the sales of
these products to OMCs (Oil Marketing Companies).
Appreciation of rupee against Dollar, moderate hike in price of
petroleum products, abolition of Custom Duty on crude oil,
sharing of subsidy by upstream companies by giving discounts
in crude oil prices and issue of oil bonds minimized the damage
to a certain extent. The refining capacity of the crude is also set
to increase to 238 MMTPA by the end of 2012, which will
provide the country with sufficient energy resources.
The natural gas demand in India is at an inflection point and
there are chances that the demand may rise dramatically. The
demand is estimated to reach 313 MMSCMD in 2012, whereas
we only have a supply of 86 MMSCMD in the present scenario.
The present sources of Natural Gas are already projected to
deplete in coming years, so companies have been bound to
aggressively pursue domestic as well as international sources
by ways of pipeline & LNG routes. Natural Gas is becoming a
popular energy source in India for use in industries,
transportations, power generations, fertilizer industries as well
as domestic sectors. The pollution free characteristic of the gas
and also that it is cheaper than imported oil adds to the appeal
of using Natural gas. The demand of the gas is forecasted to
grow at 8.5% CAGR & in long term the extent to which LNG
capacities can be absorbed will depend on domestic finds.
However, the demand of gas in the country would remains
buoyant and price affordability would keep on improving with
the overall economic growth of the country.

COMPANY OVERVIEW of the Oil & Gas sector

CAIRN INDIA LTD

✔ Consolidated revenue for the company is US$ 245 million
✔ Consolidated profit for the company is US$ 31 million
✔ Hydro-carbon reserves in tune of 175,000 barrels of
oil/day
✔ Gross investment in the Rajasthan project in tune of US$
1.8 billion
Business opportunity:
• Expected date for first commercial oil production from
Rajasthan is H2 2009
• The pipeline project for production in Mangala is also
scheduled to be completed by H2 2009
• The upstream projects being carried out in Bhagyam and
Aishwariya to be commissioned by 2010
 • Potential to account for 20% of India’s oil production by
2010

GAS AUTHORITY OF INDIA LIMITED (GAIL)

✔ Annual turnover of Rs. 18,008 croresin 2008 against Rs.
16,047 crores in 2007
✔ Cost of sales increased 7% to Rs. 14,379 crores
✔ Increased productivity, 82.10 MMSCMD Natural Gas and
2684 MT of Oil being produced, compared to 77.27
MMSCMD of Natural Gas and no production of Oil last year.
✔ The annual profit of Rs. 2601 crores was registered due to
higher productivity of polymer products, LPG transmission,
better product price of LPG and lowering of subsidies
Business Opportunity:
• Marketing rights of PMT gas awarded as Govt of India
nominee
• 576 km of Dahej-Dabhol pipeline commissioned
• GAIL-RLTIL signed transmission agreement for KG Basin
• Commercial Production of oil from Cambay basin block in
partnership with GSPC
• Expansion of petrochemical plant in Pata
• Joint venture company formed with China Gas Global
Energy Holdings limited, the company has been registered
in Bermuda
• GAIL and Indian Oil linked MoU for Joint Venture in City Gas
Distribution in West Bengal

GUJARAT GAS COMPANY LIMITED (GGCL)

✔ Total revenue improved to Rs. 1262.12 crores from
1214.69 crores in 2007
 ✔ Net profit increased to Rs. 391.16 crores
Business Opportunity:
• The large scale industrialization in Gujarat, together with
awareness about advantages of using natural gas, has led
to very strong demand for gas. The shortage of gas is
expected in this year too, so the company has to look for
additional sources of gas to meet the growth in long term
phase.

INDRAPRASTHA GAS LIMITED

✔ The company had an increase in sales in the order of 51
million units in case of CNG and 6 million units in case of
PNG
✔ The total revenue in this year also increased to Rs.
7294.16 million from Rs. 6343 million
✔ The total profit of the company increased to Rs. 4465.05
million, increasing by around 25%
Business Opportunity:
• The company has been supplying Re-gassified Liquid
Natural Gas to 16 industrial consumers and further
exploration in the market is being done
• Consolidation the presence in the NCT of Delhi by
investing around Rs. 1288 million in the fiscal year
• Expansion in the NCR towns of Noida, Greater Noida and
Ghaziabad with an investment of Rs. 781 million

MANGALORE REFINERY AND PETROCHEMICALS

LIMITED (MRPL)
✔ Highest ever turnover, audited at Rs. 1272 crores
 ✔ Highest capacity utilization ever at the rate of 130%
Business opportunity:
• Joint venture with SHELL to form SHELL-MRPL Aviation Fuel
& services to promote Aviation Turbine Fuel
• Rajasthan refinery negotiations on with state government
• Implementing Phase III refinery project, investment of Rs.
7943 crores
• Acquisition of nitrogen facilities from M/S Essel Mining
Industries Limited
• Joint Venture in Aromatics complex and Kakinada refinery
SEZ

PETRONET LNG LIMITED

✔ The total revenue increased from Rs. 5545.54 crores to Rs.
6608.89 crores
✔ The cost of import of LNG also increased to 5566.42 crores
with 323.76 TBTU LNG being purchased
✔ The net profit after tax also increased to 474.65 crores
from 313.25 crores
Business Opportunity:
• The company’s main thrust is on catalyzing the growth of
Indian Gas sector through extending the gas supply to
consumers.
• Company has India’s first and largest LNG terminal at
Dahej and is now exploring options to further leverage the
potential of imported LNG in Indian market

RELIANCE PETRO LIMITED

✔ Complex refinery at SEZ Jamnagar financed at Rs. 15,750
crores
✔ Alliance with Chevron Corporation, USA
 ✔ RPL setup at a capital cost of less than US $ 10,000 per
barrel per day, which comparably much lower than the
average cost of such setup
Business opportunity:
• The company sees an exciting opportunity in global
refining on the back of continuing strong growth in
demand, slow growth in capacities and upgrades as well
as tightening product specifications because these would
support higher margins for the company. The likely
completion of its refinery project ahead of schedule at
significantly lower capital costs provides RPL to enhance
its value. RPL will leverage the learning and experience of
RIL and ensure the same.

POWER GRID CORPORATION OF INDIA

✔ The annual turnover for the company was Rs. 4700 crores
with respect to Rs. 4082 crores in the previous year
✔ The annual profit also increased to Rs. 1420 crores from
Rs. 1229 crores.
✔ The company’s capital also increased from Rs. 29,015
crores to Rs. 35000 crores
Business Opportunity:
• Commissioning of transmission projects worth Rs. 6000
crores, thereby adding transmission network of 7350
Circuit kms, 9 EHV AC substations and transformation
capacity of more than 13,700 MVA
Comparison amongst upstream, midstream
and downstream companies based on 1st
quarterly report, 2008
Upstream Companies:
ABAN OFFSHORE LIMITED
CAIRN INDIA LIMITED
ONGC
Company Total Net Profit(Rs)
revenue(Rs)
Aban Offshore 18,640.3 million 2,517.2 million
Ltd
CAIRN India Ltd 23,894 lakhs 13,858 lakhs
ONGC 21,102,22 crores 6592.92crores

Midstream Companies:
PETRONET LNG LIMITED
GUJARAT GAS COMPANY LIMITED
Company Total Net
revenue(Rs) Profit(Rs)
Petronet LNG Ltd 166,250.44 lakhs 10,564.67 lakhs
GGCL 32892.67 lakhs 4,405.66 lakhs

Downstream Companies:
MANGALORE REFINERY AND PETROCHEMICALS LIMITED
(MRPL)
INDRAPRASTHA GAS LIMITED
BHARAT PETROLEUM CORPORATION LIMITED
Company Total Net Profit(Rs)
revenue(Rs)
MRPL 10,747 crores 845.40 crores
IGL 21,551.19 lakhs 4368.19 lakhs
BPCL 392,977 lakhs -10667 lakhs