Oil And Gas 2006

24
Click to edit Master title style Indian Oil and Gas Industry October 2006

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Indian oil & gas Industry - the prime mover of indian Economy

Transcript of Oil And Gas 2006

Page 1: Oil And Gas 2006

Click to edit Master title styleIndian Oil and Gas Industry

October 2006

Page 2: Oil And Gas 2006

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Contents

Market Overview

Government regulations & policy

Business opportunities and Advantage India

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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

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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.

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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

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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

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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

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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

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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

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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)

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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

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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

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Contents

Market Overview

Government regulations & policy

Business opportunities and Advantage India

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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

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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

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Contents

Market Overview

Government regulations & policy

Business opportunities and Advantage India

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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

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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

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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)

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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

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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)

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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

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The India Brand Equity Foundation is a public-private partnership between the Ministry of

Commerce & Industry, Government of India and the Confederation of Indian Industry. The

Foundation’s primary objective is to build positive economic perceptions of India globally

India Brand Equity Foundation

c/o Confederation of Indian Industry

249-F Sector 18, Udyog Vihar Phase IV

Gurgaon 122015, Haryana, INDIA

Tel +91 124 401 4087, 4060 - 67

Fax +91 124 401 3873

Email [email protected]

Web www.ibef.org

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ICRA Management Consulting Services Limited

Disclaimer

This presentation has been prepared jointly by the India Brand Equity Foundation (“IBEF”) and

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