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Introduction to Indian Upstream Oil & Gas Sector
Tejas Sharma, Market AdvisorInnovation Norway, New DelhiSeptember 2010
Index
Part I - Overview of Indian Oil & Gas
Part II - Indian Hydrocarbon Resources
Part III - Sedimentary Basins of India
Part IV - Significant Discoveries & prominent basins
Part V - Drilling Rigs Scenario in India
Part VI - Well Information & Challenges
Part VII - Offshore Vessel Scenario in India
Part VIII - Opportunities – EPC Contracts
Part IX - Case Study Indo-Norway successful co-operation
Part X - INBDP’s
Part XI - CBM Scenario in India
Part XII - Conclusion
Part I:Overview of Indian Oil & Gas
The Indian Oil and Gas Industry- Prime mover of the Indian economy
• India is the fifth largest energy consumer in the world
• India is the sixth largest crude consumer in the world
• India is the ninth largest crude importer in the world
• Oil and Gas Industry size is estimated at about USD 110 billion.
• Contributes to about 64% of gross revenues of Government (both Central and State together) through taxes and duties
• Contributes to about 45% of India’s primary energy consumption
• Constitutes about 32% of India’s imports.
• Accounts for about 12% of India’s exports.
• India has the world’s sixth largest refining capacity - 2.56 million barrels per day, representing approx. 3% of world capacity
Source: Ministry of Commerce, MoP&NG,
Yawning Demand Supply Gap
Crude Oil (MMT)
107 135 172
368
32 35 34 610
100200
300400
2001-02 2006-07 2011-12 2024-25
Year
Oil Demand Production
Natural Gas (MMSCMD)
151231
313391
81 95158 170
0100200300400500
2001-02 2006-07 2011-12 2024-25
Year
Demand Supply
Source: DGH Presentation
Exploratory measures initiated by Government
New Exploration Licensing Policy
• 280 blocks awarded in Pre-NELP and New Exploration Licensing Policy (NELP) rounds
• 40+ discoveries with hydrocarbon in-place reserves of over 600 MMT in last five years
• Investment commitment of about USD 5 bn in exploration phases under NELP
• Perception of prospectivity of Indian sedimentary basins broadens with every NELP auction round
ExploratoryMeasures
Coal Bed Methane Policy
• 33 Blocks already awarded with production potential of about 35 MMSCMD under four auction rounds of Coal Bed Methane (CBM) policy
• Significant commercial finds in blocks held by RIL and ONGC
• Present commercial gas production of 0.15 MM SCMD
• 54 Bids received for 10 CBM blocks offered in the fourth round.7 blocks awarded.
• Fifth auction round on cards before end of calender year 2010
Source: DGH / Mo-PNG
Major Offshore E&P operators in India
Oil & Natural Gas Corporation (ONGC) Reliance Industries Ltd (RIL) Cairn Energy British Gas Gujarat State Petroleum Corporation (GSPC) Hindustan Oil Exploration Corporation (HOEC) Jubilant Energy limited BHP Billiton Oil India Limited (OIL) Hardy Exploration
Part II:Indian Hydrocarbon Resources
India Hydrocarbon Resource Base
Total Hydrocarbon resource base – 32 billion tons
Established Inplace hydrocarbon – 9,50 billion tons
Established Oil in place : 6,1 billion tons
Established gas in place: 3,4 billion tons
Established Ultimate recoverable reserves – 3,5 billion tons
Established Ultimate Oil reserves : 1,8 billion tons
Established Ultimate Gas reserves : 1,7 billion tons
Balance recoverable reserves – 1,8 billion tons
Balance Oil reserves : 0,7 billion tons
Balance Gas reserves : 1,1 billion tons
Hydrocarbon ResourcesTotal Offshore Hydrocarbon Resources~ 18815 MMT
Total Onland Hydrocarbon Resources~ 9270 MMT
Note* - The hydrocarbon resources
in Deepwater Off East Coast is
likely to increase further by about
4000 MMT as per the
interpretation results of surveys
carried out by Directorate General
of Hydrocarbons, the govt.
upstream regulator
Basin wise Hydrocarbon Resources
760210550Kutch
380380-Rajasthan
700430270Cauvery
1130575555Krishna-
Godavari
18601860-Upper Assam
20502050-Cambay
31803180-Assam Arakan
9190-9190Mumbai Offshore
Total (MMT )OnlandOffshoreBasin
Basin wise Hydrocarbon Resources
7000-7000Deepwater*
14545100Mahanadi
150150-Himalayan Foreland
19016030Bengal
230230-Ganga Valley
280-280Saurashtra
660-660Kerala-Konkan
180-180Andaman-Nicobar
Total (MMT )OnlandOffshoreBasin
Part III:Indian Sedimentary Basins
Sedimentary Basins
Indian Sedimentary basins - Facts
• 26 Sedimentary Basins identified
• 7 basins have commercial production
• Total Sedimentary Area - 3.14 MM square KM including deepwater
areas (~4% of world sedimentary area)
• Approx. 22% area explored excluding deepwater area
• Sedimentary area distribution:
• Onshore (1.39 MM Sq KM)
• Shallow water up to 200 mts water depth (0.40 MM Sq KM)
• Deepwater (1.35 MM Sq KM)
• Almost 1/3 of the sedimentary area remains unexplored/poorly
explored.
• NELP launch have been significant in exploring hydrocarbon potential of
the sedimentary basins in India
Categorisation Of Sedimentary Basins (up to 200 Meters Isobath)Category I – Basins with established Commercial Production
60000-60000Assam Arakan
126000-126000Rajasthan
550003000025000Cauvery
520002400028000KG
116000116000-Mumbai Off
56000-56000Assam Shelf
53500250051000Cambay
Total (Sq Km)OffshoreOnlandBasin
Categorisation of Sedimentary Basins
Category II – Known accumalation of Hydrocarbons but no
commercial production as yet
47000410006000Andaman
Nicobar
690001400055000Mahanadi -NEC
480001300035000Kutch
Total (Sq Km)OffshoreOnlandBasin
Categorisation of Sedimentary Basins
Category III – Indicated Hydrocarbon – considered geologically
prospective
890003200057000Bengal
9400094000-Kerala Konkan
52000-52000Saurashtra
162000-162000Vindhyan
186000-186000Ganga
30000-30000Himalayan Foreland
Total (Sq Km)OffshoreOnlandBasin
Categorisation of Sedimentary BasinsCategory IV – Uncertain potential which may be prospective by analogy
with similar basins in the world
32000-32000Chattisgarh
5000-5000Bastar
15000-15000Pranhita-Godavari
39000-39000Cuddapah
8500-8500Bhima Kaladgi
273000-273000Decan Syneclise
17000-17000Narmada
46000-46000Satpura
22000-22000Spiti-Zanskar
3700-3700Karewa
Total (Sq Km)OffshoreOnlandBasin
Part IV:Significant Discoveries and prominent basins
Significant discoveries from 2000-2009
Offshore Field Location & Water Depths
1000m
4000m
2000m
3000m100m
500m
4000m
Eastern Offshore •Small continental shelf•Steep slopes•Two monsoons, Operating window Jan - May•Cyclone & Tsunami affected
KG Basin3000m
2000m
1000m100mWestern
Offshore •Shallow – Large Continental Shelf
•Monsoon – July to October
Offshore Basins – West Coast
Kutch - Saurashtra Basin
Mumbai Offshore Basin
Kerala - KonkanBasin
Prominent sedimentary basins on western coast of India are:
Kutch - Saurashtra BasinCategory II basin
Mumbai Offshore BasinCategory I basin
Kerala - Konkan BasinCategory III basin
Mumbai offshore has been the in production for more than 30 years
Deep water prospectivity on West coast is under study
Offshore Basins – East Coast
Prominent sedimentary basins on eastern coast of India are:
Mahanadi - NEC BasinCategory II basin
Krishna Godavari BasinCategory I basin
Cauvery BasinCategory I basin
Krishna Godavari is believed to be the GoM for India with gas reserves of ~ 25 tcf
Some Deepwater blocks have started producing since last year
Part V:Drilling Rig Scenario in India
Offshore rigs operating in Indian watersSr No. Operator Rig Type Number
Cantilever Jack Up 17Cantilever HPHT Jack UP 2Slot Jack Up 1Mat Supported Jack Up 2Mat Supported HPHT Jack Up 1Semi-submersibles 2Drillships 4Drilling Barge 1
30Drillships 6Semi-Submersibles 1
73 British Gas Cantilever Jack Up 1
14 Gujarat State Pet.Corp Semi-Submersibles 1
139
1 Oil & Natural Gas Corporation
2 Reliance Industries Ltd
Subtotal
Subtotal
Subtotal
Subtotal Total
Upcoming requirement of Offshore Drilling rigs in India
Sr No. Operator Rig Nos. Rig Type Duration Timeline
6 Nos. Cantilever Jack Up - substitute rigs against de-hiring 3 years Q3 20113 Nos. Cantilever Jack UP 3 years Q2 20112 Nos. Floater 3 years Q2 20111 No. HPHT Mat Type 3 years Q3 2011
2 Cairn Energy 1 No. Cantilever Jack Up 2 years Q4 2012/Q1 2013
3 OIL India 1 No. Cantilever Jack Up 1 year Q1 2013
1 BHP Billiton 1 No Floater 2 years Q1 2015
2 Oil & Natural Gas Corp. Ltd 1 No. Floater 3 years Q4 2011/ Q1 2012
Shallow Water Drilling
Deepwater Drilling
Oil & Natural Gas Corporation Limited
1
Part VI:Well Information & Challenges
Well Statistics:
252258201242223Meterage
Drilled
( x 1000 mts)
8188667469Number of
Wells
2008-092007-082006-072005-062004-05Financial Year
The above stats are for the following offshore basinal areas
Mumbai OffshoreKrishna GodavariMahanadi
Challenges faced by operators in India
Hole Plugging• With ageing fields and depleting reservoirs on the western
coast horizontal/multilateral well drillings is common in practice to maximize production
• Remedial engineering incase of thin layer reservoirs is difficult
• Plugging of holes is a problem incase any of the branches start producing water.
Drilling Fluid Loss• Operators in India need assistance of experts in the field
of reservoir characterization• To predict pressure sink areas which accounts for great
amount of drilling fluid loss is difficult• Tools and softwares for encountering low pressures zones
are in demand
Challenges faced by operators in India
Slot Utilization• Lack of technology for drilling multiple wells from a single slot
reduces drilling efficiency
Casing Wear• The wells in Mumbai High field on the western coast are approx.
40 years old and so are the casing pipes
• Frequent requirement of patching the casing pipes in the areas
of thining or rupture
Challenges faced by operators in India
Part VII:Offshore Vessel Scenario in India
Supply Scenario Indian Flagged Vesssels• 195 Indian flag vessels are dedicated for
offshore sector• 158 Offshore Vessels• 37 Specialized Offshore Vessels
• Indian Fleet dominated by AHTS• Gradual acquisition and hiring of PSV, which
started in early 2000• Trend likely to continue
• Indian flagged PSV have young fleet• Fleet acquisition dominated in AHTS, PSV and
MSV segment• AHT has a small and old fleet, and has not been
ordered by Indian companies in last decade• These ships are hired on spot charter for short duration – gap mainly filled by boats from Singapore
• Ships in Crewboat, Utility boat are owned by smaller companies, mostly older fleet
Fleet breakup - Indian FlagAHT6%
AHTS54%PSV
10%
OSV9%
CrewBoat5%
Utility5%
Others11%
Fleet breakup - Indian FlagAHT6%
AHTS54%PSV
10%
OSV9%
CrewBoat5%
Utility5%
Others11%
Note: AHTS – Anchor Handling Tug and SupplyPSV – Platform Supply VesselMSV – Multi Service Vehicle
Source: Mantrana Maritime Advisory
Supply Scenario- Foreign Flagged Vessels449 Foreign Flagged Offshore Vessels Licensed in 2008-09
AHT, 44
AHTSV, 18
MSV, 6
OSV, 68
Survey, 34
Other, 45
Offshore Vessels by Number
Source: Compiled by Mantrana215 Vessels 449 Vessels
• Offshore vessels dominate list of foreign flagged ships in Indian coastal waters• Anchor Handlers & OSV dominate the offshore ships deployed in India• Young fleet is chartered for deployment in environmentally harsh conditions• Older fleet have less charter rates, they are preferred in the fair weather season• The period of charter ranged from 1 week to several months
36
Offshore Vessels – Delivery Schedule
Garware Offshore 1 MSV ordered at Havyard
Greatship (India) limited has committed a Capital investment of US$ 365 M for ongoing fleet expansion
• New company with young fleet, subsidiary of India’s largest shipping company in private
sector
Tag Offshore is developing its fleet focusing opportunities in India
ONGC ships are managed by Shipping Corporation, would be deployed in India for ONGC project
Shipping Corporation would deploy all its ships in India, may be on ONGC projects
Calendar Years 2010 2011 2012 Total
Garware Offshore MSV 2 2Great Offshore MSV 1 1GreatShip (India) AHTS 2 2
MSV 3 1 4PSV 2 1 3
ONGC AHTS 4 8 12Samson Maritime PSV 1 2 3TAG Offshore AHTS 1 1Shipping Corporation AHTS 1 4 1 6Total 11 14 9 34
Delivery Schedule of Offshore Vessels as on March, 2010
37
DP Systems installed on Indian Ships (Major Owners)
• Out of 28 offshore vessels (supply) owned by Great Offshore about 8 have DP
• All the ships belonging to Great Ship has DP 2 (except 1)
• All 7 offshore vessels owned by Tag offshore has DP
• Shipping Corporation owned
Owned DP installed
Under Construction
DP on under construction Vessel
Remarks
Great Offshore 28 8 1 1 Confirmed
Greatship 10 10 7 7 Confirmed
Shipping Corporation 10 10 6 6 Confirmed
ONGC 31 12 Not Available
Tag Offshore 7 7 Confirmed
Varun Shipping 4 4 Estimates
Samson Maritime 10 4 3 3 Estimates
Garware Offshore 11 4 2 2 Estimates
Total 111 47 29 17
• Great Offshore has DP-1 installed on their ships
• All the ships of Greatship (except 1) have DP-2 installed on their ship
• Shipping Corporation did not have DP onboard their ships, However company has got it retrofitted
• ONGC has placed orders for 12 offshore vessels to Pipavav shipyard at close to US$ 120 mn, at this
price it would not be possible to supply offshore vessels with DP systems.
• All Ships of Tag Offshore has DP 1 installed on them
Note: DP System – Dynamic Positioning System
Source: Mantrana Maritime Advisory
Part VIII:Opportunities - EPC Contracts
Offshore Facilities
Western Offshore:Process Platforms : 36Well Platforms : 161 Clamp On : 76 Submarine Pipeline (Kms) : 5000+
Eastern Offshore:Well Platforms : 4 Submarine Pipeline (Kms) : 50+
Opportunities for Norwegian companies in India
The Indian Oil & Gas sector looks upon Norwegian companies as their preferred technology partner in the fields of,
• Exploration in Western & Eastern Offshore
• New & Marginal Fields
• Deep waters in India
• Early exploration & development of NELP (New Exploration Licensing
Policy) Blocks
• Mature fields reservoir complexities
• Drilling Challenges in mature fields
• Completion problems
• Process/Production Challenges
• Offshore Logistics Challenges
Areas of Cooperation for Norwegian companies
Domain Activities Remarks
Drilling &
Completion
Well Design/ Drilling/
Completion at Western
Offshore
Well Bore stability in highly
heterogeneous carbonate reservoirs at
plateau stage
Deepwater Training/ Skill development
in Deepwater/ Subsea
Best Practices
Field
Development
EOR/ IOR Activities Consultants for EOR/ IOR activities for
both Offshore & Onshore fields
Process Floating LNG Knowledge & Technology
Reservoir Mgmt. Fracture Delineation Highly heterogeneous multi layer
reservoir with various pressure zones &
unstable shale
Areas of Cooperation for Norwegian companies
Domain Activities Remarks
Marine Survey Geo-Hazards at Offshore For deepwater east coast
Logistics Construction of MSVs/ ISVs Competence enhancement in
Mari-time & Offshore
operations
Hiring/ acquisition of SAR
Helicopters
Environment Platform de-commissioning /
Debris removal at Offshore
Talk with M/s Proserv carried
out. To be expedited
Security Offshore Security Technology & Mechanism
Renewable/
Alternates
Wind Mills at Offshore for power To reduce carbon foot print
Gas Hydrates Huge potential in India
Offshore projects under tendering
Revamp of existing
facility
Marginal Field
Development
Marginal Field
Development
Marginal Field
Development
Purpose
Q2 2011
Q2 2011
Q2 2011
Q1 2011
Estimated Timeline
of tender award
WIN Revamp
Project
4
B-46 Series
Pipelines
3
B-46 Series Well
Platform
2
B-193 Pipeline
Project
1
Name of ProjectSr.No
Total Investment envisaged with projects under tendering – US$ 780 MMTotal Investment envisaged with projects under tendering – US$ 780 MM
Upcoming Offshore projects
Hydrocarbon
exploitation
For O&G
processing
facility of
marginal fields
Hydrocarbon
exploitation
Purpose
Q2 2012
Q3 2011
Q4 2011
Estimated
Timeline
Well platforms
Conversion of
Jack Up rig to
mobile product
unit
Well Platform
Facilities /
Scope of Work
Cluster-7
Development
3
Conversion of
Sagar Samrat
from MODU to
MOPU
2
WO-161
Name of
Project
Sr. No
Total Investment envisaged with upcoming projects – US$ 1866 MMTotal Investment envisaged with upcoming projects – US$ 1866 MM
Upcoming Offshore projects
Hydrocarbon
exploitation
on east coast
Hydrocarbon
exploitation
on east coast
Purpose
Q4
2011/Q1
2012
Q4
2011/Q1
2012
Timeline
Subsea manifold
installation, laying
of umbilical,hook-
up testing and pre-
commissioning
Installation of
risers,hook-
ups,pipelines
testing,modification
at GS-15-4
Facilities / Scope of
Work
DW works of G-
1/GS-15 field
development
5
SW work of G-
1/GS-15 field
development
4
Name of ProjectSr.No
Upcoming Offshore Revamp projects
Revamp of
existing
platforms
Revamp of
existing
platforms
Revamp of
existing
platforms
Purpose
Q3 2011
Q4 2011
Q3 2011/ Q4
2011
Estimated
Timeline
Revamp of 13
well platform in
Mumbai Offshore
Revamp of 13 well
platforms in Neelam
field
7
Revamp of
Platform
Water Injection
South Revamp
Project
8
Revamp of well
platforms in
Mumbai offshore
Facilities / Scope
of Work
Revamp of 39 well
platforms in Mumbai
High and Heera field
6
Name of ProjectSr.No
Upcoming Offshore Deepwater Project
FEED awarded to
Pegasus-L&T in
July 2010
Q4 2011S1 Vashistha
field
development
Tender is on for
consultant hiring
until Sept
26,2010
Q3 2012 Hiring FPSO for
Cluster 7
marginal field on
west coast
DPS,UK has been
hired as
consultant
Q2 2012Hiring FPSO for
D1 marginal filed
on west coast
Oil & Natural Gas
Corporation
RemarkEstimated
Timeline
Project DetailOperator
Upcoming Offshore Deepwater projects
Re-tenderingQ3 2011Process Platform
for Deendayal
development
Gujarat State
Petroleum
Corporation
Mustang-Bechtel
awarded the FEED
in August 2010
Q4 2011KG-D6 Phase II
development
Reliance
Industries Limited
RemarkEstimated
Timeline
Project DetailOperator
Total Investment envisaged with upcoming deepwater projects – US$ 2 billion ++ Total Investment envisaged with upcoming deepwater projects – US$ 2 billion ++
Part IX:Case Study – Indo Norway Successful Co-operation
Successful cooperation India-Norway
Project: Development of Dhirubhai-6 offshore deepwater field in the
Krishna- Godavari basin on the Eastern coast of India
Field Operator: Reliance Industries Limited, India
Subsea Contractor: Aker Solutions, Norway
Project Highlites:
• An upstream project with record discovery to development time of 7
years as against the world average of 9 - 10 years.
• First of its kind deepwater development project in India.
• The output from D6 field has doubled the national gas production levels
from 80mmscmd to 160mmscmd, drastically changing the natural gas
market in India.
Successful cooperation India-Norway
• The KG-D6 project is one of the world’s largest subsea engineering contract
valued at USD 400M
• The D6 field’s oil and gas producing ship Dhirubhai-1 is India’s first FPSO.
• Dhirubhai-1 has been constructed by Aker Floating Production and is one of
the most advanced FPSO’s operating in any of the world’s oil and gas fields
today
• Aker Borgestad Operations has been awarded the operation and maintenance
contract for Dhirubhai-1 FPSO for 10 years
• According to Aker Solutions, a so complex deepwater project has never
before been delivered quicker from a supplier standpoint.
Cooperation between IN New Delhi and INTSOK
• INTSOK has entered into an agreement with IN New Delhi to hire
regional assistance for its partner companies in India free of cost for
five days annually
• The scope of the agreement in addition to the local assistance to
INTSOK partner companies includes updates on the upcoming
opportunities as regards projects and tenders in the Indian market
• INTSOK and IN New Delhi are in process of hosting a Business
delegation to India in end October 2010 to facilitate a platform
wherein Norwegian companies can promote their niche technologies
to the Indian clients thereby establishing business relations
• The Business delegation will include the O&G sector
Part X:INBDP
Info on INBDP’s:
2 Nos. INBDP projects under process.The reporst shall be submitted by
end December 2010.
1. EOR activities in Indian upstream sector: (Report by Dec 2010)
2. Pipeline Projects: (Report by Dec 2010)
1 No. INBDP project proposed for next year.The report shall be
submitted by end Deember 2011
1. Overview of LNG market in India
Part XI:Coal Bed Methane Scenario in India
Coal Bed Methane Scenario in India
India’s proven coal resources - 495 billion tons
Prognosticated CBM resources - 50 trillion cubic feet
Established resources – 8.4 trillion cubic feet
33 Blocks awarded in 4 auction rounds
26.000 Sq Kms - Total Sedimentary area for CBM exploration
17.327 Sq Kms of area awarded
300 CBM Wells drilled so far (Core Hole/Test Well/Pilot Well)
3 Producing blocks namely Raniganj (S), WB & Sohagpur (E) ,
Sohagpur (W) in MP
Present gas production from above 3 blocks is 0,15 MMSCMD
Expected gas production by 2013 is 7,5 MMSCMD
Approved gas sale price is 6,79 $/MMBTU
Major Operators in CBM space
Oil & Natural Gas Corporation Limited Great Eastern Energy Corporation Limited Arrow Energy Reliance Industries Limited Essar Oil Limited Tata Power Company Limited Gas Authority of India Limited Indian Oil Corporation Gujarat State Petroleum Corporation limited Reliance Natural Resources Limited
Investments expected in CBM space
Essar Oil, Arrow Energy and Great Eastern have committed investments worth US$ 158 MM for development of 7 CBM blocks awarded in latest auction round from MoPNG – (August 2010)
Essar Oil has declared investment of US$ 800MM to develop its 3 CBM blocks awarded in first 3 CBM rounds having recoverable gas reserves of 7 tcf. - (June 2010)
Great Eastern Energy to invest US$ 500MM for development of its CBM assets in Eastern India during next 3 yrs – (September 2009)
Part XII:Conclusion
To Conclude..• Immense possibilities are available for the Norwegian oil and gas companies in the Indian oil
and gas sector
• Field Development - 23 Exploratory wells in 2011 by ONGC
11 Developmental wells in 2011 by GSPC
• Rig Hire – 16 Nos. (14 Shallow & 2 Nos Deepwater )
• Rig Purchase – 3 to 4 Offshore rigs ( Capex US$ 850 MM)
• US$ 780 MM worth projects under tendering
• US$ 1866 MM worth shallow water projects in near future
• US$ 2 billion ++ worth deepwater projects in coming 3-4 years
• With deepwater development projects taking place especially on the Eastern coast of India,
Norwegian companies, being the technology master, can play a key role. Remember Aker
Solutions.
• Bureaucracy, Corruption, Voluminous documentation requirements, etc. may pose as obstacles
to Norwegian companies desiring to make their mark in India
• Innovation Norway, New Delhi is just a mail/call away for answer to your queries to prosper in
this growing oil and gas market.
Thank you for your attention
Name: Tejas Sharma, Market Adviser
Address: Innovation Norway; New Delhi
Royal Norwegian Embassy
50-C Shantipath, Chanakyapuri,
New Delhi – 110021
Contacts: +91-11-41779254
E-mail: [email protected]
Web: www.innovasjonnorge.no