Click to edit Master title styleIndian Oil and Gas Industry
Contents
Market Overview
Government regulations & policy
Business opportunities and Advantage India
Indian Oil and Gas Industry - Prime mover of the Indian economy
Oil and Gas Industry Size is estimated at USD 110 bn (about
15% of Indian GDP) Contributes to about 64% of gross revenues of Government
(both Central and State together) through Taxes and Duties Total Contribution to Government exchequer in 2004-05 = USD
27 bn Contributes to about 45% of India’s primary energy
consumption Constitutes 30.87% of India’s imports in 2005-06 Accounts for 11.21% of India’s exports in 2005-06 India is the Sixth largest crude consumer in the world India is the Ninth largest crude importer in the world India’s has the sixth largest refining capacity - 2.56 million
barrels per day representing 2.99% of world capacity
India is the Fifth largest
energy consumer in the
world Primary Energy
Consumption (2005) – 387.3
MMTOE Oil and gas accounts for
44% of India’s primary
energy consumption Compounded Annual Growth
rate of Energy Consumption
(1996-2005) – 3.62% Energy-GDP Elasticity = 0.58
Source: Integrated Energy Policy; BP Statistical Review 2006, Ministry of Commerce,
MoP&NG, Stg Comm Report, FICCI Report, ABN AMRO , IMaCS Analysis
India’s GDP would fall by 1.5% for every USD 10 increase in the price of oil per barrel
Crude Oil (MMT)
107 135172
368
32 35 34 610
100
200
300
400
2001-02 2006-07 2011-12 2024-25
Year
Oil Demand Production
Supply has failed to keep pace with demand
Natural Gas (MMSCMD)
151231
313391
81 95158 170
0100200300400500
2001-02 2006-07 2011-12 2024-25
Year
Demand Supply
Source: DGH Presentation
Yawning Demand-Supply Gap : Need to
Intensify exploration efforts to convert the remaining prognosticated hydrocarbon reserves to established reserves
Increase recovery factor of producing fields
Tie up crude oil and gas imports – setting up of LNG Regasification terminals/ laying of transnational pipelines
Scout for equity oil and gas from abroad
Explore new technologies like coal gasification, coal to oil conversion, gas hydrates exploration, coal bed methane extraction etc.
Intensive Exploration & Production a must ….
Sedimentary Area – 3.14 million sq km
Only 19% of the area extensively explored
Domestic Hydrocarbon Scenario (as on 1.04.2006):
Prognosticated Resources (Oil + Oil
Equivalent Gas)
28-32 BMT
Established Geological reserves (O + OEG) 8.2 BMT
O + OEG already produced 1.42 BMT
Balance Recoverable Reserves (O + OEG) 1.85 BMT
Current Oil Production 32.19 MMT
Current Gas Production 88.22 MMSCMD
Source: DGH / MoP&NG
Exploratory measures initiated by Government….
New Exploration Licensing Policy Coal Bed Methane Policy
110 Production Sharing
contracts in 5 New Exploration
Licensing Policy (NELP) rounds
30 discoveries with hydrocarbon
in-place reserves of over 600
MMT in last 3-4 years
Investment commitment of about
USD 5 bn in exploration phases
under NELP
Perception of prospectivity of
Indian sedimentary basins
reflected in NELP VI response
Exploratory
Measures
16 Blocks already awarded with production potential of 25 MMSCMD under Coal Bed Methane (CBM) I & II rounds
Significant commercial finds in blocks held by RIL and ONGC
First commercial production of CBM by 2007-08
54 Bids received for 10 CBM blocks offered in the third round
Award of blocks in near future
GSPC RIL
OILHOEC
ONGC
Cairn
British Gas
Government’s exploratory measures bearing fruits..
Major Upstream Players Major Discoveries
Year Discovery Operator
2000 Gas – Gulf of Cambay Cairn
2001 Oil & Gas Krishna Godavari
Deep waters
Cairn
2002 Gas KG Basin Deep waters
(World’s biggest discovery for
the year)
RIL
2003 Oil in Barmer-Sanchor basin
(Rajasthan)
Cairn
2004 Gas in Mahanadi basin shallow
waters
RIL
2005 Gas in KG Basin shallow waters GSPC
2005 Oil in KG Basin shallow waters RIL
Source: DGH
Oil Refining Capacity … from shortage to surplus
Refinery Capacity in MMT
Refineries No June 06 2006-07 2011-12
IOC Group 10 60.2 60.2 72.2
BPC Group 3 22.5 22.5 30.5
HPC 2 13.0 16.2 25.2
ONGC/
MRPL
2 9.8 9.8 9.8
RIL 1 33.0 33.0 60.0
Essar 12.0 12.0
18 138.5 153.7 210.0
Refinery Throughput 127 MMT (2005)
Imported Crude – 78%
Domestic Crude – 22%
Source: MoP&NG, BP Statistical Review 2006
Refining Capacity more than doubled
between 1998 and 2006
Refining Capacity (MMT)
863
328270 226
129 127 116 114
0
200
400
600
800
1000
MM
T
Petroleum product exports - a major Foreign Exchange earner
Consumption 2005-06 (MMT) Exports
Product MMT %
Diesel 40.2 35.9%
Petrol 8.6 7.7%
LPG 10.3 9.2%
Kerosene 9.4 8.4%
FO/LSHS 12.7 11.4%
Naphtha 12.2 10.9%
Bitumen, ATF,
Lubes, Solvents
18.5 16.5%
111.9 100%
Sector with vast export potential
Exports increased by about 65% from
2004-05 to 2005-06
Source: MoP&NG, Ministry of Commerce & Industry
6.99
11.5
0
2
4
6
8
10
12
14
2004-05 2005-06
US
D b
n
Inland Petroleum transportation – gradual shift from railways to pipelines
Source: MoP&NG, Infraline, IMaCS analysis
Mode of Transportation
India
43%
42%
11%4%
Rail Pipeline Coastal Road
USA
58%
34%
5% 3%
Rail Pipeline Coastal Road
Share of pipeline transportation in India much lower as compared to USA, inspite of its
advantages
Total POL pipeline length currently under operation in India – 12,204 kms
POL pipelines under implementation – 5,561 kms (Investment of USD 1.5 bn)
Presence of both State and Private players in the Indian oil market…
Marketing Infrastructure – Oil Marketing Companies
Source: MoP&NG
Company Retail
Outlets
LPG
Distributors
SKO
Dealers
IOC 11,739 4,856 3,564
HPCL 7,313 2,202 1,648
BPCL 7,318 2,123 1,014
IBP 3,468 89 381
29,838 9,270 6,607
Marketing Infrastructure Others
Company Retail
Outlets
ONGC 1
NRL 58
RIL 1,218
Shell 12
Essar 516
Controlled PricingMarket Determined
PricingAdministered Pricing
Massive Investments planned in gas pipelines…
Total Investment required
in the proposed projects
is about USD 15-20 bn
Transnational Gas pipelines planned
Iran-Pakistan-India pipeline
Myanmar-India Pipeline
Turkmenistan-Afghanistan-
Pakistan-India pipeline
Source: MoP&NG, Infraline, IMaCS Research
Contents
Market Overview
Government regulations & policy
Business opportunities and Advantage India
Government regulations have evolved over time in tune with domestic compulsions and international hydrocarbon scenario….
1947-1962 1962-1970 1970-1990 1990-2000 Post 2000
Upstream
Downstream
Setting up of
Public Sector
Upstream Oil
Companies –
ONGC (1956)
and OIL (1959)
Free Investment
Multinationals like Shell, Caltex, and Esso conducting operations
Dismantling of APM (2002)
Passing of Petroleum and Natural Gas Regulatory Board Act, 2006
Nationalization of foreign Companies (1970)
Strict Government controls
Increasing Government participation
Formation of national oil refining companies
Coexistence of Public and Private Sectors
Liberalised FDI regime
Delicensing of Refinery sector (MRPL – 1996)
Open marketing of many products
Selective private participation
Government, the only player
Offer of exploration blocks to international oil companies (1979 onwards)
Setting up of regulator – DGH (1993)
Introduction of NELP
Implementation and award of NELP blocks
CBM policy
Policy initiatives to attract Foreign Direct Investment…
Upto 100% FDI through automatic route
Through incorporated/ unincorporated Joint Ventures or directly
Upto 100% FDI if set up as a private Indian company
Upto 26% in case of state owned companies
Upto 100% FDI through automatic route
Upto 100% FDI through automatic route
Upto 100% FDI allowed
Approval required from Foreign Investment Promotion Board.
Exploration
& Production
Refining
Marketing
Product
Pipelines
Natural Gas/
LNG pipelines
Contents
Market Overview
Government regulations & policy
Business opportunities and Advantage India
India offers significant advantages for the domestic and global oil and gas majors…
Strategic location
Nearness to the premier crude oil and gas supply market (Middle East)
Geographical Proximity to the major petroleum product importers – China and Japan
Well Developed Maritime infrastructure
Government policies conducive to the growth of the sector – tax holidays, Special Economic Zones for
Petroleum products
Availability of experienced manpower at lesser costs –Cost advantage
5912 162
21
0
100
200
Market Size (in billion US$)
Gas 12 21
Oil 59 162
2006-07 2024-25
Existence of hi-tech indigenous EPC Companies – lower
construction periods
Large domestic market
Anchor customer of the various petroleum products
Possibility of achieving economies of scale
Source: IMaCS Research
71
183
Significant Business Opportunities exist for foreign players…
NELP rounds and Open acreage system (Opportunities for providers of
services – platforms, rigs, Offshore vessels etc.) Redevelopment of existing fields to improve recovery factor Offer of CBM blocks through Competitive bidding route. Natural gas hydrate programme Underground coal gasification Coal to oil conversion
Refining – Expansion of existing capacities, setting up of new refineries,
acquiring stakes in these refineries Ethanol and Biodiesel production – cultivation of Sugarcane and Jatropha Petroleum marketing – setting up of retail outlets, new product pipelines. LNG imports
Setting up of LNG Regasification terminals. Offshore Transshipment (Single Buoy Mooring)
Laying of cross country gas grid and transnational gas pipelines City Gas Distribution including laying of CGD and CNG networks
Upstream
Midstream/
Downstream
Key Players in the Indian Oil and Gas Sector
Company Fortune
500 Rank
Profile
153
India’s largest company by sales (Turnover of USD 37 bn)
India’s flagship Downstream company - Along with subsidiaries accounts for
47% of Petroleum market share among Public Sector Oil Companies, 41% of
National refining capacity and 51% downstream pipeline capacity
Operates the largest and widest network of petrol and diesel stations in the
country
342 India’s largest private sector company on all major financial parameters
Presence in Upstream, midstream and downstream segment
368
PSU engaged in refining and marketing of petroleum products
Has two subsidiary companies – Kochi Refineries Ltd. And Numaligarh Refineries Limited
Refining Capacity – 22.5 MT (16.25% of India’s refining capacity)
Key Players in the Indian Oil and Gas Sector
Company Fortune
500 Rank
Profile
378
Another mega Public sector company with focus on refining and marketing
Turnover of about US$ 17 Billion
Accounts for about 10% of India’s total refining capacity
402
India’s Flagship E & P Company
Accounts for 77% of crude oil and 81% of natural gas produced in India
Venturing into downstream refining and marketing
All the five Indian companies in the Fortune 500 list are from the oil and gas industryAll the five Indian companies in the Fortune 500 list are from the oil and gas industry
Global majors present in India
71% stakeholder in Castrol, India’s major lubricant company
Plans to develop a 2.5 MTPA LNG Terminal at Kakinada
Participated in the CBM III and NELP VI bidding rounds – expected to win
some blocks
One of the bidders for strategic sale of HPCL
Presence in both upstream and downstream
Stakeholders in Tapti gas fields and Panna/Mukta oil and gas fields,
Cambay basin block
Interests in city gas distribution through participation in Gujarat Gas Limited
and Mahanagar Gas Limited
Leverages its distribution assets to operate Broadband service, Iqara
Among the top FDI investors in India (Hazira port and LNG terminal project
– milestone for FDI in the sector)
Interests in both upstream and downstream (LNG, Lubricants, LPG,
Bitumen, retail fuels and even solar energy)
Global majors present in India
Owns 10% stakeholder in Petronet LNG Limited, a JV promoted by Indian
public sector companies to set up LNG terminals to import LNG
5% stakeholder in Reliance Petroleum Limited’s proposed new refinery at
Jamnagar
Possibility of increasing the stake to 29%
Wholly owned subsidiary TotalFinaElf, a major player in lubricants market
Another 100% subsidiary ElfGas India Ltd owns and operates LPG Import
Terminal at Mangalore
50% stakeholder in LPG Import terminal at Visakhapatnam