Oil Gas 270111

OIL & GAS
November 2010
OIL & GAS
November 2010
Contents
Advantage India
Market overview
Industry Infrastructure Investments Policy and regulatory framework Opportunities Industry associations
2
ADVANTAGE INDIA Oil & Gas November 2010
Advantage India
Investment worth US$ 563 billion is expected across the oil and gas value chain under the Eleventh Plan (20072012).
100 per cent foreign direct investment (FDI) is allowed in upstream and private sector refining projects. The FDI limit for public sector refining projects has been raised to 49 per cent.
Huge capital investment plans Liberal FDI regime High demand potential
India is the third-highest consumer of coal (7.5 per cent share of global coal consumption).
Over the period 20002009, oil and gas consumption grew at a 5 per cent CAGR to reach 184 million metric tonnes (MMT). This is projected to reach 368 MMT by 2025.
About 130,000 people were employed in the petroleum industry in 2009-10. The University of Petroleum and Energy Studies in Dehradun, Uttarakhand, is Asias first and only energy university.
Advantage India
Skilled workforce Enabling regulation and policy Substantial capacity additions
The Government of India (GoI) has enacted various policies (such as new exploration licensing policy [NELP] and coal bed methane [CBM]) policy to encourage investments across the industrys value chain.
Domestic gas supplies are projected to increase from 163 million metric standard cubic meters per day (MMSCMD) in 200910 to 285.4 MMSCMD by 2012. Refining capacity is projected to increase from 184.4 million metric tonnes per annum (MMTPA) in 200910 to 241 MMTPA by 2012.
Source: Basic statistics on Indian petroleum & natural gas 200910, and Report of the Working Group on Petroleum & Natural Gas Sector for the XI Plan (2007-2012), Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010.
OIL & GAS
November 2010
Contents
Advantage India
Market overview
4
MARKET OVERVIEW Oil & Gas November 2010
Market overview
Petroleum products and natural gas together contributed 2.8 per cent (US$ 30.8 billion) to the countrys total GDP (US$ 1089.3 billion) in 200809.
Key segments upstream, midstream and downstream

The upstream segment comprises exploration and production (E&P) activities. The midstream segment is involved in storage and transportation of crude oil and natural gas. The downstream segment is engaged in refining and production of petroleum products, and processing, storage, marketing and transportation of commodities such as crude oil and natural gas.
Source: Basic statistics on Indian petroleum & natural gas 200910, Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010.
Upstream segment exploratory and development drilling
The total number of exploratory and development wells and metreage drilled in India was 428 and 1019 thousand metres, respectively, in 200910. The national oil companies executed the bulk of the drilling.
Area Exploratory Onshore Offshore Development
200910 Wells 110 34 Metreage 298 128
Onshore
Offshore
236
48
470
123
Source: Hydrocarbon Exploration and Production Activities India 20092010, Directorate General of Hydrocarbons website, http://dghindia.org/Publication.aspx, accessed 6 December 2010.
Upstream segment annual crude oil production (1/2)
Total production of crude oil stood at 33.7 MMT in 200910, 0.6 per cent higher than the production in 2008-09 (33.5 MMT). In 200910, total domestic oil consumption stood at 160 MMT, a decrease of 0.5 per cent over the previous year. The Oil & Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) accounted for 73.8 per cent and 10.6 per cent, respectively, of total domestic crude oil production in 200910.The remaining share is held by private/joint venture (JV) fields.
Annual crude oil production (MMT) company-wise details

2009-10 2008-09 2007-08 2006-07 24.9 25.4 3.6 5.3
3.5 4.7
25.9
26.1 24.4
3.1 5.1
3.1 4.8 3.2 4.6
2005-06
0.0
10.0 ONGC OIL
20.0 Private/JV
30.0
40.0
ONGC: Oil & Natural Gas Corporation; OIL: Oil India Ltd Sources: Relevant company annual reports 200809 and 200910; Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010.
Upstream segment annual crude oil production (2/2)
Offshore production accounted for 64.9 per cent of domestic annual crude oil production for 200910.The remaining share was contributed by onshore production. During the Eleventh Five Year Plan period (2007 2012), production of crude oil is expected to increase by 24 per cent over oil production during the Tenth Five Year Plan period (200207).
Annual crude oil production (MMT) offshore/onshore

2009-10 11.8 11.3 11.2 11.3 11.4 0.0 5.0 10.0 Offshore 15.0 Onshore 20.0 21.9 22.2 22.9
2008-09
2007-08 2006-07 2005-06
22.7
20.8 25.0
Source: Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010.
Upstream segment annual natural gas production (1/2)
Total production of natural gas stood at 47.5 BCM in 2009-10 44.6 per cent more than the previous years production (32.9 BCM). The demand for domestic gas was estimated at 226 MMSCMD in 200910, whereas gas supply was 163 MMSCMD. ONGC accounted for 48.6 per cent (23.1 BCM) of total natural gas production during the year. Private/JV fields accounted for 46.3 per cent of total natural gas production This was mainly due to commencement of gas production at Reliances KG basin. Total production of natural gas is expected to reach 255.3 BCM by the end of the Eleventh Plan period.
Annual natural gas production (BCM) company-wise details

200910 200809 200708 200607 200506 23.1 22.5 22.3 22.4 2.4 2.3 8.1 2.3 7.7 2.3 7.0 22.0
22.6 0 10
ONGC
2.3 7.4 20
OIL
30
Private/JV
40
50
Upstream segment annual natural gas production (2/2)
In 200910, offshore gas production accounted for 81.7 per cent of total annual gas production in India.The remaining share was contributed by onshore production. Offshore production grew at the rate of 14.4 per cent CAGR over the period 200510.
Annual natural gas production (BCM) offshore/onshore

200910 200809 200708 38.8 8.7 24.1 8.8 23.3 9.1 22.5 9.3 22.6 9.6 0.0 10.0 20.0 Offshore 30.0 Onshore 40.0 50.0
200607
200506
Sources: Basic statistics on Indian petroleum & natural gas 200910, and Report of the Working Group on Petroleum & Natural Gas Sector for the XI Plan (20072012), Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010.
10
Midstream segment crude pipeline capacity
As on 1 April 2010, the total length and capacity of the crude oil pipelines stood at 6,235 kms and 92.6 MMTPA respectively. ONGC holds 47.3 per cent of the crude pipeline capacity in India with a 673 kms long pipeline network. IOCL holds 43.6 per cent of the crude pipeline capacity in India with its 4,366 kms long network of crude pipelines. Remaining share of the crude pipeline capacity is held by OIL which owns the 1,193 km long Duliajan-Digboi-BongaigaonBarauni pipeline having a capacity of 8.4 MMTPA.
Existing crude pipelines in India (as on 1 April 2010) Name of the pipeline OIL - Duliajan-Digboi-Bongaigaon-Barauni IOCL - Salaya-Mathura-Panipat Pipeline Capacity (MMTPA) 8.4 21 Length (km) 1,193 1,870
IOCL - Haldia-Barauni/Paradip Barauni

IOCL - Mundra-panipat ONGC-Mumbai High-Uran ONGC-Heera-Uran ONGC-Kalol-Nawagam-Koyali ONGC-MHN-NGM ONGC-CTF , Ank to Koyali (AKCL) ONGC-Lakwa-Moran ONGC-Geleki-Jorhat ONGC-NRM to CPCL ONGC-KSP-WGGS to TPK refinery ONGC-GMAA EPT to S. Yanam unloading terminal Total
11
8.4 15.63 11.5 8.54 2.26 2 1.5 1.5 0.74 0.08 0.09 92.64
1,302
1,194 204 81 129.31 77 94.8 18 48.47 6 13.5 4 6,235
Sources: Basic statistics on Indian petroleum & natural gas 200809, Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010.
11
Downstream segment refining (1/2)
India has 20 refineries 17 in the public sector and three in the private sector. The countrys refining capacity increased to 184.4 MMTPA in April 2010 from 178 MMTPA in the previous year. Its total refinery crude throughput in 200910 was 160 MMT, 0.5 per cent lower than the volume in 200809 (160.8 MMT).
Annual refinery crude throughput

Year 20092010 200809 Refinery crude throughput (MMT) 160.03 160.77
200708
200607 200506 200405
156.10
146.55 130.10 127.41
12
Downstream segment refining (2/2)
The GoI has opened the refining industry to private sector investment to increase domestic refining capacity. Reliance Industries has emerged as the largest domestic refiner and has overtaken Indian oil Corporation (IOCL) after the commissioning of the formers Reliance Petroleum Ltd (SEZ) (RPL [SEZ]) refinery in 2008, which has increased the companys total refining capacity to 62 MMT.
Refining capacity details (as on 1 April 2010)
Public sector
Indian Oil Corporation Limited (IOCL) Hindustan Petroleum Corporation Limited (HPCL) Chennai Petroleum Corporation Limited (CPCL) Numaligarh Refinery Limited (NRL) ONGC Mangalore Refinery and Petrochemicals Limited (MRPL) Private sector RIL Essar
Installed capacity (MMT) 48.85 13.8 10.5 3 0.066
Pro-rata capacity utilisation (per cent) 102.0 121.2 96.2 87.3 70.5
11.82
Installed capacity (MMTPA) 62 10.5
129
Pro-rata capacity utilisation (per cent) 104.3* 128.6
*does not contain the RPL (SEZ) capacity utilisation
13
Downstream segment production of petroleum products
The production of petroleum products was 151.9 MMT (including 2.2 MMT of LPG production from natural gas) in 200910, a decrease of 0.5 per cent over last years production (152.7 MMT) Petroleum products derived from crude oil include: Light distillates LPG, mogas, naphtha, natural gas liquids (NGL) Middle distillates kerosene Heavy ends furnace and lube oils, bitumen, petroleum coke, paraffin wax Production of petroleum products is expected to reach 904.8 MMT by the end of the Eleventh Plan period.
Production of petroleum products (MMT)

100.0 80.3 80.0 60.0 40.2 40.4 30.0 29.9 40.0 20.0 0.0 2008-09 Light distillates Middle distillates 2009-10 Heavy ends 79.4
14
Downstream segment marketing, retail and distribution
Total sales of petroleum products by companies was 138.2 MMT in 200910, which was 3.6 per cent higher than in the previous year (133.4 MMT). IOC had the maximum retail outlets in the country at 51.1 per cent, followed by HPCL at 25 per cent and BPCL at 23.8 per cent. The remaining outlets were owned by private players. The total number of retail outlets of public sector oil marketing companies (OMCs) increased to 36,462 in April 2010 from 34,948 in 2009. The number of LPG distributors in India totaled 9,686 as on 1 April 2010.
Existing pipeline network in India (as on 1 April 2010) Capacity (MMTPA) (as on 1 April 2010) 65.90 3.90 92.64 162.44 Length (km) (as on 1 April 2010) 10,615.8 2,252 6,235.08 19,103 Throughput (MMT) (200910) 52.1 3.5 72.64 128.24
Pipeline
Product LPG Crude Total
15
Consumption pattern energy consumption mix
India is largely dependent on coal and oil for its energy needs, and this dependency has been increasing over the years. The countrys consumption of coal increased to 245.82 million tonnes of oil equivalent (MTOE) in 2009, an increase of 6.5 per cent over the previous year (230.9 MTOE), underscoring the importance of coal as a primary source of energy.
Projected energy consumption mix in India (2030)
Energy consumption mix in India (2009) Energy source Coal Oil Natural gas Hydroelectricity Nuclear energy Unit MTOE MMT MTOE MTOE MTOE Consumption 245.8 148.5 46.7 24 3.8
Source: BP Statistical Review of World Energy June 2010, BP.
Product Oil Gas Coal
Unit MTOE MTOE MTOE
World 5775 4125 3597
India 435 224 816
Source: Draft report of the expert committee on Integrated Energy Policy, Planning Commission 2005.
16
EXIM scenario
The total value of gross crude and petroleum imports was estimated at US$ 87.2 billion (INR 4,184.8 billion) in 200910. The following are the volumes of imports in 200910: Crude oil 159.3 MMT LNG 8.8 MMT Petroleum products 14.7 MMT Indias primary exports in this sector include petroleum products. The total value of its export of petroleum products was estimated at US$ 30 billion (INR 1,440.4 billion) in 200910.
Import trend in oil and gas sector

7.0 2009-10 2008-09 78.2 13.4 72.6 12.7 2007-08 2006-07 2005-06 56.8 8.6 45.6 5.8 35.8 0.7 1.2 1.5 2.0 1.9
Import value (US$ billion)
0.0
20.0
Crude Oil
40.0
60.0
80.0
LNG
100.0
Petroleum products
17
Key players Indian (1/2)

Company Sector Turnover in 200910 US$ billion (INR billion) Operations Exploration and production (E&P), refining, distribution and marketing through pipelines, downstream petroleum, natural gas marketing, bio-fuels and wind power projects E&P and downstream business (through its subsidiary Mangalore Refinery and Petrochemicals [MRPL]) Refining, aviation fuelling and marketing of petroleum products Refining, aviation fuelling and marketing of petroleum products
Remarks IOC accounts for a market share of nearly 46 per cent in domestic petroleum products, 34 per cent of the national refining capacity and 54 per cent of downstream sector product pipeline capacity. ONGC has the largest share of hydrocarbon acreage in India. The company operates 15 major fields that contribute about 60 per cent of Indias oil production. It also has the maximum number of exploration licenses. HPCL has a strong presence in lubricants in India, and owns brands such as HP Cruise, HP Lal Ghoda and HP Racer 4. BPCL was the first public sector oil company to implement enterprise resource planning (ERP) solutions in the country. The company has set up one of the biggest centres of excellence in Asia to provide online support to end users. OIL is primarily engaged in the development of small and medium-sized fields.
IOC
Public
54 (2593.6)
ONGC
Public
22.1 (1,061.7)
HPCL
Public
23.6 (1,131.6)
BPCL
Public
27.9 (1,337.5)
OIL
Public
1.6 (79)
E&P
18
Key players Indian (2/2)

Company Sector Turnover in 200910 US$ billion (INR billion) Operations
Remarks GAIL has pioneered the development of India's gas transmission infrastructure and currently owns about 7,850 km of natural gas pipelines. It has transmission capacity of over 150 mmscmd. The company owns north Indias only gas-based integrated petrochemicals complex. RIL is credited with the first discovery of gas in the Krishna-Godavari (KG) basin in 2008, and is capable of producing 40 per cent of Indias current oil and gas output. The company made its second discovery in May 2008 and third one in December 2009. Production of natural gas at the KG basin commenced in June 2009. RIL currently has 13 blocks in its international E&P portfolio. The company has the largest grassroots refinery in the Asia-Pacific region at Jamnagar in Gujarat. Essar has the largest CBM acreage in India (2,700 sq kms). Adani has set up a gas distribution network at Ahmedabad and Vadodara in Gujarat and Faridabad in Haryana Petronet has set up Indias first LNG re-gasification terminal at Dahej in Gujarat, which currently has a capacity of 10 MMTPA.
GAIL (India) Limited
Public
5.6 (270.4)
E&P, gas processing, transmission, distribution, marketing and petrochemicals
RIL
Private
44.1 (2,117.3)
E&P, petroleum refining and marketing and petrochemicals
Essar Oil Limited Adani Gas * Petronet LNG
Private Private Private
8.8 (424) 5.4 (258.9) 2.2 (106)
E&P, refining and marketing Natural gas distribution LNG re-gasification terminal
*Revenue figures pertain to parent company revenues Source: Basic statistics on Indian petroleum & natural gas 2009-10. Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010.; relevant company annual reports.
19
Key players international

Company Sector
Turnover (200910) US$ billion
Operations
Remarks Cairn operates the largest producing oil field in the Indian private sector. The company has drilled about 81 wells (including six horizontal and tested wells in 2009 , achieving a production rate of more than 11,500 barrels of oil per day (bopd). Shell has an LNG re-gasification terminal at Hazira in Gujarat, which has a capacity of 3.7 MMTPA. The company has established Shell Technology India in Bangalore, for technical support services for Shells operations in India and worldwide. The BG Group has a 65.12 per cent stake in Gujarat Gas Company Limited, Indias largest private sector natural gas distribution company, in terms of its sales volume. Castrol India, a part of the BP Group, is the secondlargest player in the Indian lubricant industry and the market leader in the retail automotive lubricant segment.
Cairn Energy India Pty Ltd
Private
0.34
Exploration, production and crude pipeline Fuel retailing; supply of crude, petroleum products and chemicals; technology support to oil and gas companies; lubricant and LNG production E&P, transmission and distribution
Shell#
Private
278.2 (year ending February 2010)
BG Group#
Private
16.1 (year ending December 2009) 239.3 (year ending December 2009)
BP#
Private
Automotive lubricants, E&P and solar power
#Revenue
figures pertain to group revenues
Sources: Relevant company annual reports.
20
Key trends alternative fuels (1/3)

Coal bed methane (CBM)
CBM is an eco-friendly natural gas (methane), which is adsorbed in coal and lignite seams. Coal is the main source of CBM production, which is conducted by simple depressurisation and dewatering processes. Exploration and production of CBM activities furthers the quest to reduce the greenhouse effect and earn carbon credits. The GoI approved the CBM Policy in July 1997. The first commercial production of CBM was initiated in July 2007 at about 72,000 cubic metres per day. Four rounds of bidding have been completed till date:

CBM i (2001) 7 blocks offered CBM ii (2003) 9 blocks offered CBM iii (2006) 10 blocks offered CBM iv (2009) 10 blocks offered
India is the fourth-largest coal producer in the world with the third-largest proven coal reserves. With about 4.6 TCM of CBM resources, the country has significant prospects for commercial recovery of CBM.
Source: Directofourth- General of Hydrocarbons website, www.dghindia.org/, accessed 09 November 2010.
21

Underground coal gasification (UCG)
The technique of underground coal gasification converts unminable underground coal or lignite into combustible gases by gasifying the coal in situ. The technology was first widely used in the US in the 1800s and in India, in Kolkata and Mumbai, in the early 1900s. UCG is currently the only feasible technology available to harness energy from deep unminable coal seams, both economically and in an environmentally clean manner. This process reduces capital investment and operating costs as well as the cost of output gases by 25 to 50 per cent compared to surface gasification.
22

Gas hydrates
The GoI has initiated the National Gas Hydrate Programme (NGHP) to map gas hydrates for use as an alternate source of energy by extracting methane from solids below the seabed in the deep ocean and the permafrost regions of the world. NGHP is a consortium of national E&P companies and research institutions.
Biofuels

Biofuels (bioethanol and biodiesel) are fuels that are produced as an alternate source of energy from domestic renewable resources. Biofuels have lower emissions compared to petroleum or diesel. In India, biodiesel is produced from plants (renewable resources) such as jatropha and has the potential to reduce the countrys dependence on oil imports. Bioethanol is mainly produced from sugar or starch containing materials such as sugarcane and cellulosic material. The GoI has signed an agreement with the US to develop a joint clean energy research and development centre with second generation biofuels as one of its priority areas.
Sources: Directorate General of Hydrocarbons 200708 annual report, website, www.dghindia.org/CBMRounds.aspx?tab=0, accessed 6 December 2010, Status report on underground coal gasification, August 2007, Government of India; National Policy on Biofuels, Ministry of New and Renewable Energy website, www.mnre.gov.in/policy/biofuel-policy.pdf, accessed 17 November 2010.
23
Growth drivers (1/2)

Abundant raw material
Million cubic metres
Industry-wise utilisation of natural gas in India

35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2007-08 Energy purposes 2008-09 2009-10 22,191 18,978 15,135 11,892 10,541 32,111
India has large reserves of coal, crude oil and natural gas.
Growing demand for natural gas
Utilisation of natural gas in different industries has increased over the years.
Non-energy purposes
Source: Basic statistics on Indian petroleum & natural gas 2009 10, http://petroleum.nic.in/, accessed 6 December 2010.
24
Growth drivers (2/2)
Natural gas is an important input in various industries for the following:
Energy:

Power generation Industrial and domestic fuel Tea plantations Captive use or LPG shrinkage
Non-energy:

Fertiliser industry Petrochemicals CNG
25
OIL & GAS
November 2010
Contents
Advantage India
Market overview
26
INDUSTRY INFRASTRUCTURE Oil & Gas November 2010
Industry infrastructure
Name of SEZ and status State Area (hectares) Sector Developer/ Promoter
Details Dedicated pipeline-cum-road corridor (proposed) Water and power available Non-processing zone to have housing, offices, educational and health facilities Proposed units OMPL, ISPRL, MRPL refinery Target companies from upstream and downstream businesses Proposed residential accommodation, educational, healthcare and recreational facilities Establishment of a 6 MMTPA petroleum refinery at an estimated cost of about US$ 1 billion Project expected to be commissioned by mid-2011
Mangalore SEZ Ltd (Notified)
Karnataka
588
1.Petrochemicals and petroleum 2. Multi-product (proposed)
ONGC, KIADB, IL&FS, KCCI
Gujarat Hydrocarbons and Power SEZ Ltd (Formal approval)
Gujarat
140
Oil and gas
Gujarat Hydrocarbons and Power SEZ Ltd Nagarjuna Oil Corporation Ltd, Nagarjuna Fertilisers & Chemicals Ltd
Nagarjuna Oil Corporation Ltd (Formal approval)
Tamil Nadu
104.01
Petrochemicals and petroleum
Sources: Relevant SEZ official websites Karnataka Industrial Development Board (KIADB), Karnataka Chamber of Commerce and Industry (KCCI), ONGC Mangalore Petrochemicals Ltd (OMPL), Indian Strategic Petroleum Reserves Limited (ISPRL)
27
OIL & GAS
November 2010
Contents
Advantage India
Market overview
28
INVESTMENTS Oil & Gas November 2010
Investments FDI
Indias petroleum and natural gas sectors attracted FDI equity worth US$ 525 million between April 2010 and September 2010. Cumulative FDI in the petroleum and natural gas sectors has been estimated at US$ 3.2 billion between April 2000 and September 2010.
Country-wise FDI (April 2000September 2010)
Country Singapore Mauritius UK Cyprus US Cumulative FDI Period: April 2000 to September 2010 Sector Oil refinery and transportation Oil refinery and fuel Oil refinery, oil exploration and fuel Oil refinery, oil exploration and fuel Oil refinery and fuel Petroleum and natural gas Amount of FDI (US$ million) 3,191
FDI (total value) (US$ million)

11,329 51,089 6,212 4,314 9,002
Focus area(s)
Source: Factsheet on FDI, Department of Industrial Policy and Promotion (DIPP) website, www.dipp.nic.in, accessed 6 December, 2010.
Source: Basic statistics on Indian petroleum & natural gas 200910. Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010.
29
Investments M&A (1/2)
Inbound deals:
ONGC signed a Memorandum of Understanding (MoU) with Arrow Energy (Australia) for cooperation in CBM production in 2009. Vedanta Resources signed an agreement to buy 51 to 60 per cent of Cairn Indias oil and gas assets for US$ 9.6 billion.Vedanta seeks to acquire a 31 to 40 per cent stake directly and the remaining 20 per cent through its subsidiary, Sesa Goa.
M&A scenario details Period : January 2009 to August 2010 Deal type Inbound No of deals 7 4 8 Deal value (US$ million) 27 3,065 3826
Outbound Domestic
Sources: Bloomberg, Thomson One Banker; company websites
Domestic deals:
2009: IOCL has bought a 5 per cent stake in OIL for US$ 232.9 million. 2010: Reliance Power Ltd has acquired Reliance Natural Resources Ltd for US$ 1,529 million.
30
Investments M&A (2/2)
Outbound deals:
Reliance Eagleford Upstream LP, a subsidiary of Reliance India Ltd (RIL), has entered a JV with Pioneer Natural Resources Company. It will acquire a 45 per cent stake in Pioneers Eagle Ford Shale acreage for a consideration of US$ 1.3 billion.
Reliance Marcellus LLC, a subsidiary of Reliance India Ltd (RIL), has formed a JV with Atlas Energy, Inc The former has acquired a 40 per cent interest in Atlas Marcellus Shale acreage for US$ 1.7 billion. An international consortium, comprising Indian national oil companies, has acquired a 40 per cent stake in Empresa Mixta in Venezuela. The members and their stakes include ONGC Videsh Limited (OVL) 11.0 per cent, IOCL 3.5 per cent, OIL 3.5 per cent, Repsol YPF 11 per cent and PETRONAS 11 per cent. The total project cost is US$ 19 billion. Through its subsidiary, Reliance Marcellus II, LLC, Reliance Industries has formed a 60:40 JV with Carrizo Oil & Gas, Inc of the US. Reliance plans to acquire a 20 per cent interest in Carrizos 52,600 net acres in Pennsylvanias shale acreages for US$ 65 million through the agreement. The company will also acquire a 100 per cent stake in these acreages from an affiliate of Avista Capital Partners for US$ 327 million.
31
Increasing demand
Value (MMT)
Between 2005 and 2010, Indias consumption and import of crude oil increased steadily, while production remained largely stagnant due to the countrys low oil discovery rate.
Imports are currently meeting the high demand for crude oil as a source of energy. They accounted for 82.5 per cent of total crude oil supply in 200910.
*Demand projections
*Crude oil demand-supply trend

200.0 150.0 100.0 50.0 0.0 2005-06 2006-07 2007-08 2008-09 2009-10 120.4 119.6 111.5 99.4 132.9 121.7 159.3 143.6 148.5 132.8
32.2
34.0
34.1
33.5
33.7
Production
Consumption
Imports
Product Petroleum products Natural gas
Unit
201415
201920
202425
MMT
MMSCMD
226
329
288
358
368
391
*Sources: Basic statistics on Indian petroleum & natural gas 2009-10," Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010; BP Statistical Review of World Energy, June 2010, BP; India Hydrocarbon Vision 2025, Government of India
32
OIL & GAS
November 2010
Contents
Advantage India
Market overview
33
POLICY AND REGULATORY FRAMEWORK Oil & Gas November 2010
Policy and regulatory framework (1/4)

FDI policy
Sector/Activity FDI Cap/Equity Entry route Other conditions
E&P
100%
Automatic
Subject to the sectoral regulations of the Ministry of Petroleum & Natural Gas
Refining
49% for public sector undertakings (PSUs) without involving any divestment or dilution of domestic equity in existing PSUs; 100% for private companies
Foreign Investment Promotion Board (FIPB) for PSUs and automatic route for private companies
Subject to sectoral policy
Source: Petroleum and natural gas sector FDI, Ministry of Petroleum & Natural Gas website, http://petroleum.nic.in/, accessed 6 December 2010.
34
Oil Field (Regulation and Development) Act, 1948
Oil and Natural Gas Commission Act, 1959

Petroleum and Minerals Pipelines Act, 1962 acquisition of users rights by the GoI on land demarcated for laying pipelines for the transport of petroleum and other minerals from one area to another Oil Industry (Development) Act, 1974 Coal Bed Methane Policy, 1997 to encourage exploration and production of CBM gas as a new eco-friendly source of energy
35
Freight Subsidy (for far-flung areas) Scheme, 2002 to compensate public sector OMCs on the freight incurred to distribute subsidized products in far-flung areas Auto Fuel Policy 2003 to provide a roadmap to comply with various vehicular emission norms and corresponding fuel quality upgrading requirements over a period of time National Biofuel Policy, 2002 to promote biofuel usage, the GoI has provided concessional excise duty of 16 per cent on bioethanol and exempted biodiesel from excise duty. Petroleum and Natural Gas Regulatory Board (PNGRB) Act, 2006 to regulate refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas New Exploration Licensing Policy (NELP), 1999 to provide a contract framework for E&P of hydrocarbons; licenses for exploration only awarded through a competitive bidding system; eight rounds of bidding completed so far
Source: Ministry of Petroleum & Natural Gas 200708 annual report.
36

Government of India initiatives
The Eleventh Plan outlay for the oil and gas sector has been fixed at US$ 47.7 billion (INR 2,290.7 billion), about 121 per cent more than the allocation for the Tenth Plan. Thrust areas for E&P in the plan: Increasing domestic production by attracting investments in the upstream sector Increasing production at ONGCs assets, including its maturing fields Providing exploration coverage of 80 per cent during the period Establishing a national knowledge hub during the period Improvement of gas availability: Intensifying domestic E&P activities Exploiting new sources of energy such as CBM Conducting underground coal gasification Implementing the National Gas Hydrate Programme (NGHP) to evaluate hydrate resources The GoI has formulated a regulatory framework for the safe usage of LPG and CNG as an automotive fuel.
Source: Ministry of Petroleum & Natural Gas 200708 annual report.
37
New Exploration Licensing Policy (NELP) (1/2)
The GoI formulated the NELP in 199798 to provide an equal platform to both public and private sector companies for exploration and production of hydrocarbons. The NELP was conceptualised to increase domestic production and to attract inward investments.
The introduction of this policy has had a catalytic effect on the liberalisation of the oil and gas sector by opening up the E&P segment for investments.
Under the NELP, acreages are offered to participating companies through open competitive bidding.
Chronology of events:
1998 48 exploration blocks offered in the first round

2000 second round of the NELP launched and 25 exploration blocks offered 2002 third round of the NELP launched and 27 exploration blocks offered 2003 fourth round of the NELP launched and 24 exploration blocks offered
38
New Exploration Licensing Policy (NELP) (2/2)

2005 fifth round of the NELP launched and 20 exploration blocks offered 2006 sixth round of the NELP launched and 55 exploration blocks offered 2007 seventh round of the NELP launched and 57 exploration blocks offered 2009 eighth round of the NELP launched and 70 exploration blocks offered 2010 ninth round of the NELP launched on 15 October 2010 bid closing date 18 March 2011
Sources: Chronology of E&P events in India, Directorate General of Hydrocarbons website, http://www.dghindia.org/EandPGovernanceInIndia.aspx, accessed 5 January 2010; Press note on launch of NELP VIII, 9 April, 2009, Ministry of Petroleum & Natural Gas website www.petrolrum.nic.in; NELP-IX website, http://www.indianelpix.com/, accessed 15 November 2010; India-US Agreement for Setting up Joint Clean Energy Research and Development Centre, 9 November 2010, Press Information Bureau, Government of India website, http://www.pib.nic.in/newsite/erelease.aspx?relid=0, accessed 16 November 2010.
39
Highlights of the CBM Policy

Blocks are awarded through an open international competitive bidding system. The GoI has no participating interest. No upfront payment is required. Exemption from payment of customs duty on imports is required for CBM operations. Companies have the freedom to sell gas in the domestic market. Companies are provided a seven-year tax holiday.
Source: Directorate General of Hydrocarbons 200708 annual report.
40
PNGRB key functions

For petroleum, petroleum products and natural gas:

Ensures the availability of resources at all times Monitors prices and transportation rates to check restrictive trade practices Ensures equitable distribution Enforces retail service obligations for retail outlets and marketing service obligations for entities Maintains information data bank of activities relating to petroleum, petroleum products and natural gas Lays down technical standards for related activities in this sector
Source: About PNGRB, PNGRB website, www.pngrb.gov.in, accessed 11 November 2010.
41
OIL & GAS
November 2010
Contents
Advantage India
Market overview
42
OPPORTUNITIES Oil & Gas November 2010
Opportunities in the upstream segment (1/2)
Exploration and development of new fields
India has significant potential to discover new oil and gas basins since 78 per cent of the countrys sedimentary area is yet to be explored. Recent large-scale oil and gas discoveries in the Krishna Godavari and Rajasthan basins have amply demonstrated this potential. The GoI has enacted favourable regulatory policies and provided several fiscal incentives to promote the development of the domestic upstream segment. As a result, the NELP has received an encouraging response so far. A total of 246 blocks were awarded under the eight bidding rounds (from 2001 to November 2010) and 68 oil and gas discoveries have been made so far in the NELP blocks. In India, drilling activities are moving towards the deep sea, as most areas nominated under the NELP are under the deep sea. In the eight rounds of NELP bidding, a total of 80 deep sea blocks were awarded. Consequently, this has opened up opportunities for global upstream companies to carry out deepwater exploration, either independently or in partnerships, with domestic players. The GoI has also opened up avenues for the exploration and development of CBM fields. Up till 2010, 31 CBM blocks have been awarded over four rounds of CBM bidding. Methane hydrates are expected to be an important source of energy in the future, especially after the discovery of methane hydrate reserves in the Krishna, Godavari and Andaman basins. India has recently set up the National Gas Hydrate Program (NGHP) to harness the potential of this source. Furthermore, the development of shale gas in the country is likely to gain importance with the technological advancements taking place. India has signed an MoU with the US for shale gas cooperation, including resource assessment and technical studies for shale gas exploration in the country, as well as for training Indian personnel in the shale gas domain.
Development of unconventional resources
Sources: Ministry of Petroleum & Natural Gas website, www.petroleum.nic.in; India-US MOU on Shale Gas, Ministry of Petroleum & Natural Gas, 8 November 2010, Press Information Bureau, Government of India website, http://www.pib.nic.in/newsite/erelease.aspx?relid=0, accessed 17 November 2010.
43
Opportunities in the upstream segment (2/2)

Mature oilproducing basins
There are promising opportunities for companies specialising in the deployment of secondary and tertiary forms of enhanced oil recovery (EOR) techniques, since the majority of the countrys producing basins have matured or have begun to mature.
Increasing demand for skilled labour
The demand for skilled human resources is set to increase since the segment is witnessing substantial capacity augmentation across the value chain. This is a ready platform for global petroleum institutes to establish their presence in India.
Growing demand for oilfield services (OFS) and equipment
E&P spend in the country has doubled from about US$ 2.5 billion in 200405 to about US$ 5 billion in 200708. Overall E&P spend is expected to be in the range of US$ 90110 billion in the next 710 years.
This is will create a sustained demand for OFS, e.g., drilling rigs, offshore support vessels, tubular goods, and seismic services and equipment for constructing process platforms, pipelines and collecting stations, as well as other surface facilities for transportation of oil and gas from wells to delivery points.
Source: Ministry of Petroleum & Natural Gas; ONGC website, www.ongcindia.com, accessed 16 November 2010.
44
Opportunities in the midstream segment
The countrys gas pipeline coverage has increased substantially and has significant potential for further expansion. India currently has a trunk gas pipelines network of 9,900 km with a transmission capacity of 292 MMSCMD. Domestic gas supplies are expected to increase significantly from the new domestic gas fields and LNG capacity. To monetise the increased gas supplies, the GoI is aggressively promoting setting up of gas transmission infrastructure across the country by encouraging the participation of players from the private and public sectors. For example, GAIL (India) Ltd is planning to lay 6,663 km of gas pipelines by 201213 at an estimated costs of US$ 6.3 billion (INR 303 billion), which will provide ample opportunities for gas transmission, engineering, engineering procurement construction (EPC) and pipeline-manufacturing companies.
Expansion of gas transmission pipelines
Between 2004 and 2010, LNG imports share in the total domestic gas supply of the country has improved significantly from 1 per cent to 20 per cent due to brownfield and greenfield expansions. India is expected to witness significant expansion in its LNG re-gasification capacity in the near to medium term, which is expected to increase the share of LNG in its domestic gas supply to 32 per cent in 2015. This is expected to create opportunities for players specialising in operating LNG terminals, engineering and provision of EPC services.
Augmentation of LNG capacity
Source: Ministry of Petroleum & Natural Gas website, www.petroleum.nic.in, accessed 6 December 2010; Welspun Corp website, www.welspun.com, accessed 17 November 2010.
45
Opportunities in the downstream segment (1/2)
Emphasis on city gas distribution (CGD) networks
The successful development of CGD networks in Delhi and Mumbai, coupled with the support provided by the GoI, is likely to give a boost to this segment in the scenario of increasing gas availability. PNGRB projects may result in CGD coverage growing from 41 cities at present to 250 cities by 2020, which would entail an investment of about US$ 89 billion. Therefore, this segment offers promising opportunities to both global and domestic players in the field of CGD infrastructure development, including gas distribution pipelines, CNG stations and manufacturing of CNG kits. Domestic refiners are aggressively increasing their refining capacity by expanding their existing facilities and building new grassroot refineries. Indian refiners are expected to increase their capacity by 62 MMTPA by 20102012. With significant capacity additions planned, India is expected to become a global refining hub. Opportunities for players to construct new refineries, either independently or in collaboration, are due to the following reasons:

Augmentation of refining capacity
India offers low construction and operation costs to set up new refineries in the country. The countrys favourable location and vast coastline provides its refiners with a strategic freight advantage.
Developed countries are expected to increasingly rely on imported petroleum products as stringent environmental norms and high capital costs limit refining capacity, construction and/or expansion in these countries. This presents an opportunity for Indian refiners to increase their exports.
India has favourable regulatory policies, such as relaxation of FDI limits and tax rebates for new refineries, to promote capacity enhancement in this segment.
Source: Ministry of Petroleum & Natural Gas website, www.petroleum.nic.in, accessed 6 December 2010; PNGRB website, www.pngrb.gov.in, accessed 11 November 2010.
46
Opportunities in the downstream segment (2/2)
The demand for transportation and cooking fuel is expected to increase significantly in the future. This is expected to drive the demand for new transportation fuels and LPG marketing stations. The GoI has projected an investment of US$ 12.7 billion (INR 608 billion) for the development of marketing infrastructure for petroleum products for 20072012. Consequently, this creates opportunity for the following:

Expansion of petroleum product distribution networks
Enhanced role of private players in domestic distribution of petroleum products Manufacturing and distribution of LPG cylinders, kits, valves, regulators, etc., as well as manufacturing of new LPG pipelines, tankers and bottling facilities Collaboration between private and foreign players with domestic oil marketing companies in areas including the expansion of retail networks and logistics support International experience could be leveraged in building non fuel retailing business (convenience stores) and brand building activities such as quality assurance, loyalty cards, conducting surveys and soliciting customer feedbacks.
Source: Ministry of Petroleum & Natural Gas website, www.petroleum.nic.in, accessed 6 December 2010
47
OIL & GAS
November 2010
Contents
Advantage India
Market overview
48
INDUSTRY ASSOCIATIONS Oil & Gas November 2010
Industry associations
Name Oil Industry Development Board (OIDB) Petroleum Conservation Research Association (PCRA) Bureau of Energy Efficiency (BEE) Oil Industry Safety Directorate Address Contact person Mr T S Balasubramanian, Financial Adviser and Chief Accounts Officer Mr Arun Kumar, ED Dr Ajay Mathur, Director General Telephone 91-1123413298 91-1123414692 91-1126198799 Ext.301 91-1126178316, 9111- 26179699 91-1123316798 91-1124362501, 9111- 24361380 0120 4029401 E-mail
301, World Trade Centre, Babar Road, New Delhi 110001
oidb@hotmail.com
Sanrakshan Bhavan, 10 Bhikaji Cama Place, New Delhi 110066 Ministry of Power, 4th floor, SEWA Bhawan, RK Puram, New Delhi 110066 Ministry of Petroleum & Natural Gas, 7th floor, New Delhi House, 27 Barakhamba Road, New Delhi 110001 Ministry of Petroleum & Natural Gas, 2nd floor, Core-8, SCOPE Complex, 7 Institutional Area, Lodhi Road, New Delhi 110003 Ministry of Petroleum & Natural Gas, C-139, Sector 63, Noida 201301
pcra@pcra.org dg-bee@nic.in, amathur@beenet.in
Mr J B Verma, ED
verma.jb@gov.in
Petroleum Planning and Analysis Cell (PPAC) Directorate General of Hydrocarbons
Dr Basudev Mohanty, Director Mr S K Srivastava, Director General
dg@dghindia.org
49
NOTE Oil & Gas
November 2010
Note
Wherever applicable, numbers in the report have been rounded off to the nearest whole number. Exchange rate used: US$ 1= INR 48
50
OIL & GAS
November 2010
DISCLAIMER
India Brand Equity Foundation (IBEF) engaged Ernst & Young Pvt Ltd to prepare this presentation and the same has been prepared by Ernst & Young in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Ernst & Young and IBEFs knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Ernst & Young and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Ernst & Young nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.
51

Oil Gas 270111

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Oil Gas 270111

Hochgeladen von

Copyright:

Verfügbare Formate

OIL & GAS

OIL & GAS

ADVANTAGE INDIA Oil & Gas November 2010

OIL & GAS

MARKET OVERVIEW Oil & Gas November 2010

Key segments upstream, midstream and downstream

MARKET OVERVIEW Oil & Gas November 2010

Upstream segment exploratory and development drilling

Area Exploratory Onshore Offshore Development

200910 Wells 110 34 Metreage 298 128

MARKET OVERVIEW Oil & Gas November 2010

Upstream segment annual crude oil production (1/2)

Annual crude oil production (MMT) company-wise details

10.0 ONGC OIL

MARKET OVERVIEW Oil & Gas November 2010

Upstream segment annual crude oil production (2/2)

Annual crude oil production (MMT) offshore/onshore

MARKET OVERVIEW Oil & Gas November 2010

Upstream segment annual natural gas production (1/2)

Annual natural gas production (BCM) company-wise details

MARKET OVERVIEW Oil & Gas November 2010

Upstream segment annual natural gas production (2/2)

Annual natural gas production (BCM) offshore/onshore

MARKET OVERVIEW Oil & Gas November 2010

Midstream segment crude pipeline capacity

IOCL - Haldia-Barauni/Paradip Barauni

MARKET OVERVIEW Oil & Gas November 2010

Downstream segment refining (1/2)

Annual refinery crude throughput

MARKET OVERVIEW Oil & Gas November 2010

Downstream segment refining (2/2)

Refining capacity details (as on 1 April 2010)

Installed capacity (MMT) 48.85 13.8 10.5 3 0.066

*does not contain the RPL (SEZ) capacity utilisation

MARKET OVERVIEW Oil & Gas November 2010

Downstream segment production of petroleum products

Production of petroleum products (MMT)

MARKET OVERVIEW Oil & Gas November 2010

Downstream segment marketing, retail and distribution

Product LPG Crude Total

MARKET OVERVIEW Oil & Gas November 2010

Consumption pattern energy consumption mix

Source: BP Statistical Review of World Energy June 2010, BP.

Product Oil Gas Coal

Unit MTOE MTOE MTOE

World 5775 4125 3597

India 435 224 816

MARKET OVERVIEW Oil & Gas November 2010

Import trend in oil and gas sector

Import value (US$ billion)

MARKET OVERVIEW Oil & Gas November 2010

Key players Indian (1/2)

MARKET OVERVIEW Oil & Gas November 2010

Key players Indian (2/2)

GAIL (India) Limited

E&P, gas processing, transmission, distribution, marketing and petrochemicals

E&P, petroleum refining and marketing and petrochemicals

Essar Oil Limited Adani Gas * Petronet LNG

Private Private Private

8.8 (424) 5.4 (258.9) 2.2 (106)

MARKET OVERVIEW Oil & Gas November 2010

Key players international