Petroleum Federation of India
April 13, 2006
India Oil & Gas Overview & Opportunities
Deepak Mahurkar
Oil & Gas Industry Practice
Page 2PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Agenda
Macroeconomic & Energy Indicators
Overview of India’s Petroleum Sector
Destination India
Opportunities in Upstream Sector
Opportunities in Downstream Sector
Opportunities in Natural Gas Sector
Opportunities in Services Sector
Destination Philippines
PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Page 3
India is a unique economy. Energy challenge is of fundamental importance to India’s economic growth imperatives.
Population : 1.1 bn to 1.47 bn in 2031
Energy consumption : 304 to 1,112 kgoe/capita in 2031
Two Wheelers : 0.6 mn to 41.5 mn over 30 years
Cars : 0.54 mn to 5.71 mn over 30 years ending 2002
CAGR 1.1%
CAGR 5.1%
CAGR 15.3%
CAGR 8.2%
Electricity : absent in 84 mn households in 2000 44.2% of total
Macroeconomic and Energy Indicators
Renewables in use. GHG emissions low. ~ 3% of Globe
Page 4PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
India has an ambition of high Economic Growth Rate.
Macroeconomic and Energy Indicators
Page 5PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Energy intensity and elasticity are on downtrend already. Future growth would need relatively more energy.
0
0.5
1
1.5
2
2.5
'68-74 '74-79 '84-89 '89-94 '94-99 '99-04(Q)Energy Oil
GDP Intensity
0.00
0.05
0.10
0.15
0.20
0.25
0.30
'68-69 '75-76 '82-83 '89-90 '96-97 '03-04
Inte
nsi
ty (
MM
TO
E/R
s. '0
00
Cr.
)
Energy Oil Gas
GDP Elasticity
Source : MoPNG, CSO, PwC Analysis
Macroeconomic and Energy Indicators
PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Page 6
Despite fuel prices being high on PPP basis, import dependent R&M companies seek to raise consumer prices to recover costs and remain financially strong. Domestic production is therefore a thrust area.
0 50 100 150
Iraq
Iran
Yemen
Syria
Indonesia
Brunei
Malaysia
Oman
Uzbekistan
Bangladesh
Thailand
New Zealand
Sri Lanka
Kyrgyz Republic
Russia
Myanmar
Singapore
USA
Tajikistan
Korea, North
Lao PDR
Mongolia
West Bank & Gaza
Japan
Hong Kong
Netherlands
Germany
UK
0 50 100 150
Turkmenistan
Venezuela
Yemen
Saudi Arabia
Indonesia
Oman
Uzbekistan
Azerbaijan
China
Vietnam
Philippines
Thailand
Russia
Jordan
Pakistan
Armenia
Lao PDR
Myanmar
Sri Lanka
New Zealand
Cambodia
India
Israel
Japan
France
Germany
UK
Netherlands
Source : GTC, International Fuel Prices 2005
Diesel Price Nov 2004
in US Cent per Litre
Gasoline Price Nov 2004
in US Cent per Litre
Macroeconomic and Energy Indicators
Page 7PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Agenda
Macroeconomic & Energy Indicators
Overview of India’s Petroleum Sector
Destination India
Opportunities in Upstream Sector
Opportunities in Downstream Sector
Opportunities in Natural Gas Sector
Opportunities in Services Sector
Destination Philippines
Page 8PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Coal was the primary source of commercial energy and diesel was the highest consumed refined fuel in 2004-05
39%
8%
46%
3% 4%
PoL (Incl RBF) Natural Gas Coal
Lignite Others
Overview of Petroleum Sector
28%
7%
6%
6%9%
2%
9%
2%
6%
7%
18%
HSD & LDO
LPG
Kerosene
Petrol
Naphtha
ATF
LSHS &FO
Bitumen
Others
RBF
NG
Commercial Energy (333 MMTOE) POL and Gas (158 MMTOE)
Source : MoPNG, PwC Analysis
Page 9PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Robust hydrocarbon demand imparts element of necessity of sector development for sustained economic growth and the GoI recognizes latter would be compromised if supply challenges are not met.
Overview of Petroleum Sector
6.9%
4.5% 4.7%
1.8%
6.3%
5.1%
4.0%
6.0%
9.1%
6.0% 6.2%
1.8%
8.3%
6.9%
5.6%
8.0%
0%
2%
4%
6%
8%
10%
NG + NGequivalent of
Naphtha
POL excl.Naphtha
HSD, LDOEquivalent
LPG and LPGEquivalent of
SKO
PetrolEquivalent
LSHS andHFO
ATF Bitumen
CAGR of Products and NG upto 2030 under BAU & HOG Scenario, per cent CAGR(%)
Multiple in 27 years
4 2.9
4.5 3.3
5 3.7
5.5 4.2
6 4.8
6.5 5.5
7 6.2
7.5 7.0
8 8.0
8.5 9.0
9 10.0
Source : PetroFed projections by PwC-IRADe
Page 10PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Oil & gas sector is crucial to Indian economy. Apart from fuelling it, the fiscal contributions by sector are significant.
Largest contributor to exchequer in 2004-05
Sixth largest crude oil consumer in the world
Crude imports as total imports exports & imports
All 5 Indian companies in F500 operate in the Oil & Gas sector
USD 27 bn
119.3 MMT
33 & 31% resp.
Ranks 6th in world refining with 3% capacity. 3rd largest refinery.
Overview of Petroleum Sector
Page 11PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Attractive fiscal and contractual terms with recently demonstrated prospectivity is fast changing investor’s perception about India’s upstream sector
Overview of Petroleum Sector - Upstream
• 26 sedimentary basins: 3.14 mn sq kM (1.39 mn sq kM onland and 1.75 mn sq kM offshore
• Hydrocarbon resources: 28 BTOE (<25% established)
• 22% area unexplored with another 22% area poorly explored
• Directorate General of Hydrocarbons (DGH) invested with upstream regulatory functions
• Crude oil prodn – 29.36 MMT (April’05 – Feb’06)
• E&P interests in 13 countries of OVL and in more by other PSUs/ Pvt companies
Key Facts
Major Upstream Players - Production
Pvt/JV14%
OIL10%
ONGC76%
• RIL, BG, GSPC, HOEC,
Cairn Energy, Niko
Resources, Hardy,
Jubilant Enpro
• 110 PSCs signed in the last 5 rounds
• NELP VI – 55 O&G and 10 CBM blocks on offer
• Exploration coverage has trebled from 0.35 mn sq kM in 2000 to 1.04 mn sq kM in 2005
• World class O&G discoveries by RIL, Cairn and GSPC
• $US 5 bn committed under NELP I to V
NELP Success
Page 12PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
India is refining surplus and plans to be an export hub leveraging on capability to operate at high refining margins
Overview of Petroleum Sector - Downstream
• No. of refineries - 18
• Installed refining capacity – 127.37 MMT (’04-05)
• Total Crude Throughput – 124.30 MMT (’04-05)
• 99.8% capacity utilization in 2004-05
• Petroleum product consumption – 111.71 MMT
• Petroleum product consumption registered over 3.5% yoy growth for last 3 years
• Petroleum product exports – 8.7 MMT
• New entrants in the oil marketing business include RIL, Shell, EOL, MRPL and NRL
• Auto sales 14.2% CAGR (’04-05 over ’00-01)
• Over 31,500 retail outlets including private companies
Major Downstream Players Key Facts
ONGC8%
BPCL14%
RIL26%
IOC42%
HPCL10%
Pvt. , 15.2%
HPCL, 17.1%
BPCL, 18.5%
IOC, 43.0%
Other(PSUs), 6.2%
Refining capacity (MMTPA)
Market Share of Petroleum Products (in Vol)
Page 13PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Natural gas market is supply constrained and needs to be developed.
Overview of Petroleum Sector – Natural Gas
Production : ONGC, OIL, RIL, BG, NIKO, GSPC
Transmission : GAIL, GSPL, GSPL
City Gas : IGL, MGL, GGCL, AGCL, BGL
LNG : PLL, Shell
GAIL’s Proposed National Gas Grid
Major Market Players
Supply scenario
• In-place reserves up by 50% in last 2 ½ years
• Natural Gas prodn – 29.39 BCM (April’05 – Feb’06)
• New domestic discoveries – RIL, GSPC and
ONGC on the east coast
• 2 operational LNG terminals at Dahej (5 MMTPA)
& Hazira (2.5 MMTPA) on west coast
Page 14PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Agenda
Macroeconomic & Energy Indicators
Overview of India’s Petroleum Sector
Destination India
Opportunities in Upstream Sector
Opportunities in Downstream Sector
Opportunities in Natural Gas Sector
Opportunities in Services Sector
Destination Philippines
PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Page 15
The
Dem
and
Driv
ers
Gro
win
g ec
onom
y w
ith I
ndus
tria
l, S
ervi
ces
and
Agr
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ture
– a
ll th
ree
heav
ily d
epen
dent
on p
etro
leum
sec
tor.
Gro
win
g in
com
e le
vels
and
the
refo
re
disp
osab
le in
com
es
Ris
e in
ene
rgy
inte
nsity
Urb
aniz
atio
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ion
India is poised to grow in energy consumption. Share of hydrocarbons is expected to be constantly high. Combined with this, India has very attractive investment environment.
Destination India
The FacilitatorsYoung Talent Pool (>50% population <50 yrs age)
Growing Business Opportunities
Stable Political Environment
Strong Govt. Owned and Private Oil Companies
Attractive Income Tax Regime (Sec 44BB including)
Progressive Indirect Tax Regime Fast Maturing
VAT with credits
Goods & Services Tax with cross credits
Reduction in Customs Duty
Very attractive SEZ Act 2005
Cost competitive work force
100% FDI allowed* in Petroleum Sector investments
Page 16PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Agenda
Macroeconomic & Energy Indicators
Overview of India’s Petroleum Sector
Destination India
Opportunities in Upstream Sector
Opportunities in Downstream Sector
Opportunities in Natural Gas Sector
Opportunities in Services Sector
Destination Philippines
Page 17PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Foreign Direct Investments are allowed in Indian petroleum sector. Upstream sector signifies complete liberalization achieved. Various avenues are available for investors.
• Acquisition of Blocks under periodic bidding rounds - NELP
• Farm-Ins
• Technology tie-ups with PI with Indian oil companies
• Service contracts for Marginal Fields
• IOR/EOR projects – ONGC
• Open Acreage Licensing – the future way
• Acquisition of CBM blocks in periodic rounds
Destination India – Opportunities in Upstream Sector
Page 18PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Agenda
Macroeconomic & Energy Indicators
Overview of India’s Petroleum Sector
Destination India
Opportunities in Upstream Sector
Opportunities in Downstream Sector
Opportunities in Natural Gas Sector
Opportunities in Services Sector
Destination Philippines
Page 19PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Refinery investments are being planned by India for exports and for petrochemical feed-stock purposes. Major oil companies can participate in the activity.
• Refinery expansions and upgradation
• Grass-root refineries
• Integrated complexes – petrochemical & VA products
• Tankages and strategic storage
• Pipelines – crude and products
IOCs interested in retail marketing segment use refining or LNG investment
opportunities to help cross the minimum investment condition for retail market entry
Destination India – Opportunities in Downstream Sector
Page 20PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Agenda
Macroeconomic & Energy Indicators
Overview of India’s Petroleum Sector
Destination India
Opportunities in Upstream Sector
Opportunities in Downstream Sector
Opportunities in Natural Gas Sector
Opportunities in Services Sector
Destination Philippines
Page 21PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
The allied infrastructure needs strengthening. Gas demand and supply imbalance would call for import infrastructure.
• Gas grid connecting producing and consuming locations
• LNG regasification terminals
• Gas Distribution networks
• Fractionators / Extractions
• Petrochemical and VA products
Destination India – Opportunities in Natural Gas Sector
Page 22PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Agenda
Macroeconomic & Energy Indicators
Overview of India’s Petroleum Sector
Destination India
Opportunities in Upstream Sector
Opportunities in Downstream Sector
Opportunities in Natural Gas Sector
Opportunities in Services Sector
Destination Philippines
Page 23PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
More than 800 wells are committed for blocks awarded upto NELP V. The number would go up with ensuing rounds and with discoveries. Service sector is to be in demand.
0
100
200
300
400500
600
700
800
900
2005 & 06 2007 & 08 2009 & 10 2011& 12 Total
ONGC RIL Others Total
Government of India has recognized need for quality, timely and cost optimal services for upstream sector and is ready to offer best investment environment
to companies.
Destination India – Opportunities in Services Sector
Page 24PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Agenda
Macroeconomic & Energy Indicators
Overview of India’s Petroleum Sector
Destination India
Opportunities in Upstream Sector
Opportunities in Downstream Sector
Opportunities in Natural Gas Sector
Opportunities in Services Sector
Destination Philippines
Page 25PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
In many ways the petroleum sector is well liberalized in Philippines offering opportunity to Indian companies. The delegation may guide the industry accordingly.
• PNOC stake sale in Malampaya. Opportunity?
• Refineries at 80% capacity. Opportunity for new refineries?
• Development of upstream resources. September rounds?
• Deregulation caused retail market rush. Space for new entrant?
• Market determined pricing. New Players’ Association active?
• LNG supply by BP yet to be binding. Scope of gas distributors?
• City gas & CNG transports. Opportunity for Indian companies?
Destination Philippines – Opportunities
Thank you
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Page 27PricewaterhouseCoopers
PetroFed: India Oil & Gas Overview & Opportunities
Upstream sector in India is a relatively unexplored market with reserves estimated in 15 of the 26 sedimentary basins.
Upstream
• Policy approved in Feb 1997
• International competitive bidding
• Single window ECS approval mechanism
• Up to 100% foreign participation
• Fiscal stability provision
• Level playing field – NOCs vs. Pvt companies
• Contract finalization based on MPSC
• Freedom to market O&G in domestic market
• No signature, discovery or production bonus
NELP