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Oil and Gas Sector
Harneet Kaur Bhusari(9402)Prajakta Joshi(9407)Apoorva Puranik(9413)
Disha Shah(9418)
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The Sector Overview
One of the largest and most important sectorsfor fuelling economy
India- 5th largest refining country accounting to
4% of worlds refining capacity Oil consumption, currently 40 % in India is
projected to increase by 4-5 per cent perannum by 2015, indicating a demand of 4.01million b/d by 2015.
India depends on imported crude to meet 75%of domestic demand.
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In India, oil and gas is dominated by state-
owned entities
5.8 billion barrels of proven oil reserves Average oil production, 815,000 B/D
The petroleum and natural gas sector whichincludes transportation, refining and
marketing of petroleum products and gasconstitutes over 15 per cent of the GDP.
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UpstreamSegment
Exploration and
production
Midstreamsegment
Storage and
transportation
Downstreamsegment
Refining, processing
and marketing
The upstream segment is dominated by thestate-owned ONGCIt is the largest upstream company in theexploration and production (E&P) segment,accounting for approximately 75 per cent ofthe countrys total oil output
IOCL operates a 10,329 km network of crudeand product pipelines with a capacity of 1.4million B/DThis is around 75 per cent of the nations total
domestic oil pipeline network
IOCL is the largest company, operating 10 outof 19 Indian refineriesReliance launched Indias first privately-owned refinery in 1999, and has gained aconsiderable market share (41 per cent 2Q
2011) 4Niche and Magazine Journalsim Assignment
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Growth Rate of the Sector
Crude Oil production was recorded at 22.44million metric tonnes (MMT) for April-October2011, as compared to the 21.54 MMT in April-
October 2010 Natural Gas production was 28,431.4 million
cubic metres (MCM) during April-October 2011
During April-October 2011, 96.95 MMT ofcrude oil was refined, compared to 93.58 MMTof oil refined during corresponding period in2010
(According to the provisional production data released by the Ministry of Petroleum and
Natural Gas in a press release) 5Niche and Magazine Journalsim Assignment
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Oil & Gas - Government Initiatives
The India Hydrocarbon Vision 2025 envisagesa demand of about 391 million standard cubicfeet per day (MMSCMD) of gas by the year2020-25
New Exploration Licensing Policy (NELP),implemented by Government of India, permits100 per cent FDI for small and medium sizedoil fields via competitive bidding
Public-private partnerships (PPP) as well asonly private investments can foray into therefining sector.
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FDI in Oil and Gas
FDI permitted upto 100% through competitivebidding. (petroleum, pipeline, natural gas, LNGetc) since 2003.
The FDI totalled USD574 million in the oil andnatural gas sector during Financial Year 2011
Total FDI inflows in Indian petroleum andnatural gas has been USD3,159 million from
April 2000 April 20118Niche and Magazine Journalsim Assignment
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Oil and Natural Gas giant
One of the biggest exporters in India One of the largest petrochemical and oil
refining complexes.
Sold a stake in its valuable GodavariBasin to BP for a whopping $7.5 billion.
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Ranks 3rd in Oil & Gas Exploration & Production(E&P) Industry globally.
Market cap of Rs. 235,000 Crores, produced 803Million Metric Tonnes of crude and 485 BillionCubic Meters of Natural Gas from 111 fields.
ONGC Videsh Ltd. (OVL) is the biggest Indianmultinational, with 40 Oil & Gas projects in 15countries.
Created a record of sorts by turning MangaloreRefinery and Petrochemicals Limited (MRPL) tothe BSE Top 30, within a year.
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It is the second largest Oil and Gas private
company listed on the Indian stock exchange. One of the biggest private exploration and
production companies currently operating. A subsidiary of the British company Cairn,its
growth has been nothing short of phenomenalafter winning a bid to explore oil blocs in
Rajasthan in the NELP. The company has set up a Processing terminal in
Barmer (Rajasthan) to process the crude fromfields. A pipeline has also been constructed totransport the crude from Barmer to Bhogat in
the Gujarat coast. 14Niche and Magazine Journalsim Assignment
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Major distributor of petroleum, cookinggas and diesel in the Indian market.
The company has a marketcapitalisation of Rs. 21,000 crores.
.Bharat Petroleum produces a diverse
range of products, from petrochemicalsand solvents to aircraft fuel.
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Major Developments and Issues Oil producers to take a Rs 60 billion hit on
cess increase Rs 2000 billion oil losses next year may play
havoc with govt plans Will take corrective steps to deal with oil
prices: FM GAIL third quarter PAT up by 13%,
Turnover (net of Excise) up by 35% GAIL nine months PAT up by 14%, Turnover
(net of Excise) up by 27%
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Government Policy
Government invites global oil & gascompanies to bid for license under NELP
NELP-IX
Fiscal incentives to attract morecompanies to invest in the Indian oil &gas sector.
Deregulation of petrol prices (2011)
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National Auto Fuel Policy
Policy aims to comprehensively andholistically address the issues ofvehicular emissions, vehicular
technologies, and auto fuel quality in acost-efficient manner while ensuring thesecurity of fuel supply
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Policy to Attract FDI
Permits FDI up to 100% under theautomatic route in exploration, petroleumproduct marketing and petroleum refiningin the private sector
FDI up to 26% is permitted with priorGovernment approval in petroleum refiningby the PSU.
Actual trading and marketing petroleum
products- fdi to 100% with condition that26% foreign equity would be divested infavor of Indian public
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It has been decided to
i) Delete the condition of compulsorydivestment of up to 26% equity within 5years for actual trading and marketing of
petroleum products; andii) Allow FDI up to 49%, with prior
approval of FIPB, in petroleum refiningby PSUs without involving anydivestment or dilution of domesticequity in the existing PSUs.
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Expectations and Provisions
The oil companies were expecting 100%compensation for the under-recoveries in linewith year 2008-09, BUT the governmentrestrained from any such moves in the budget
presented.
The companies were also calling for an
extension of the tax holiday for bothexploration and refining activities by 10 years,as in case of power sector BUT this pitch did notmaterialize as per the market expectations.
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Expectations and Provisions
All eyes were pinged on the potential decontrolmeasure on diesel, BUT government backed offfrom such shift, possibly citing the escalatinginflationary levels in the country.
Expected a decline in the import duty on risingcrude oil prices BUT, With only considerationto LPG and Kerosene, and no concern for therising Crude Oil prices.
Expected issue of Diesel Deregulation, BUT noproposal was provided to deregulate it
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Expectations and Provisions
Expected more freedom to revise petrol prices,abolition of excise duties and special dutiesprevailing on branded fuels BUT did not
materialize Expected flexibility to claim tax holiday in a
block of 10 years
The budget is NEGATIVE for the entire sectorincluding companies HPCL, BPCL and IOC.
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THANK YOU!
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