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Upstream Opportunities in India
&
Foray for equity Oil & Gas abroad
B.Basu , ONGC, New Delhi
11th Energy Summit, ASSOCHAMNew Delhi, 17 October, 2008
The Presentation
India: Energy Scenario
India: Opportunities in Upstream Sector
Foray for equity oil & gas abroad
3
16% of global population 0.5% of global Petroleum reserve 6.7% of world’s Coal reserve 8- 9% GDP growth rate target 4.5% CAGR in energy demand
the Challenges are apparent……
India: The Energy contextIndia: The Energy context
India's energy sector requires investment to the tune of $120-150 billion over the next 5 years to build increased capabilities and upgrade technology, says an industry report.
4
2361
1863
692
517404
311 322255 234 216
USA China Russia Japan India Germany Canada France South Korea UK
India: Energy scenarioIndia: Energy scenario
• India: the 5th largest energy consumer– CAGR (1996-2006): 4.5% (global CAGR: 2.1%)– Per Capita energy consumption projected to rise from 375 Kgoe in 2007 to about 1200 Kgoe in
2030
Source: BP Statistical Review 2008
Primary Energy Consumption (MMToe)
3.6% of total
5
Nuclear6%
Hydel6%
Gas24%
Oil35%
Coal29%
India: Energy ScenarioIndia: Energy Scenario
Source: BP Statistical Review 2008
World India
• Gas consumption in India increasing at a CAGR of >6.1% (Global: 2.6%)– next only to China in Asia Pacific(13%) in last decade
Nuclear1%
Hydel7%
Gas9%
Oil32%
Coal51%
6Source: BP Statistical Review 2008
India: Energy ScenarioIndia: Energy Scenario
943
368
229128 126 112 108 102
USA China J apan India Russia Germany S.Korea Canada
• India: 4th largest consumer of Oil (3.3% of total)– Oil consumption increased at CAGR of 4% (1997-2007)
against the world CAGR of 1.4%.
Growing Primary Energy demand … India
Growing Primary Energy demand … India
0
500
1000
1500
2007* 2011 2016 2021 2026 2031
Coal Oil Natural Gas Hydro Nuclear
*Source: BP Statistical Review 2007 figure Source: Integrated Energy Policy
• With development of East Coast, new & marginal fields of West coast, CBM, UCG, and likely trans-national gas trunk lines- the gas demand seems to be achievable
• For oil, though importer for over 25 years, considering the dramatic rise in volume demand, the balance of trade for oil is a critical issue
404MTOE
1633MTOE
CAGR= 6%
Gas CAGR= 7.9%
Oil CAGR= 5.2%
India: Oil ScenarioIndia: Oil Scenario
• Import dependence increased from 69.5% in 2002-03 to 74.9% in 2007-08
• Import dependence may rise to 80-90% around 2030
0
20
40
60
80
100
120
140
1975 1980 1985 1990 1995 2000 2005 2006 2007
Production Import Consumption
Growing Import
Demand –Supply gap in Oil to existDemand –Supply gap in Oil to exist
MMT
Growing Dependence on Imports
• Over dependence on oil & gas leading to import dependence from 70-85%
• 92% Import dependent on geo-politically sensitive Middle East and Africa
» 37% of total M-East crude comes from Iraq & Iran
» About 45% of total African crude comes from volatile Nigeria
• Over dependence on oil & gas leading to import dependence from 70-85%
• 92% Import dependent on geo-politically sensitive Middle East and Africa
» 37% of total M-East crude comes from Iraq & Iran
» About 45% of total African crude comes from volatile Nigeria
Region w ise India's oil import
73%
19%2%4%2%
M-East Africa FSU Asia Pac Latin Am
Source: PPAC
Source: BP Statistical Review 2008
India: Gas ScenarioIndia: Gas Scenario• Gas constitutes ~9% in Primary energy basket; likely to
increase, thanks to Gas strikes at East coast• Situation to improve by 2012. • Demand-supply gap to exist
0
5
10
15
20
25
30
35
40
1975 1980 1985 1990 1995 2000 2005 2006 2007
Production Import Consumption
MTOE
11
Opportunity in supply… GasOpportunity in supply… Gas
Sector wise Gas Consumption projection (mmscmd)
SECTOR 2008-09 2009-10 2010-11 2011-12
Power 91 103 114 127
Fertilizer 43 52 80 79
City Gas 13 14 15 16
Industrial 16 17 18 20
Petrochemicals/ Refineries/ Int. Con.
27 29 31 33
Sponge Iron/ Steel 6 7 7 8
Total 196 222 265 283
• Only about 110 mmscmd available (80 Prodn. + 30 Import) against demand of 196 mmscmd
• Energy demand growth ~5%, gas demand growth~7%• Power sector poised for more gas based generation• Other industries, using liquid fuels, to shift to gas
Upstream OpportunitiesUpstream Opportunities
Indian Oil & Gas BusinessIndian Oil & Gas Business
Opportunity in E&P
• India has 4% sedimentary basins of the world (3.14 million
sq. km)» About 80% area yet to be explored extensively
» Out of 26 basins, exploration yet to be Initiated in 11.
» Favorable open NELP regime
» Abundant opportunities- New bidding, Farm-in
• India has 4% sedimentary basins of the world (3.14 million
sq. km)» About 80% area yet to be explored extensively
» Out of 26 basins, exploration yet to be Initiated in 11.
» Favorable open NELP regime
» Abundant opportunities- New bidding, Farm-in
Unexplored15%
well explored20%
Poorly Explored
21%
Exploration initiated
44%
14
NELP: The success storyNELP: The success story
Opportunity in E&P
Total Blocks offered: 256, Awarded: 207
15
Discovery to Development … NELPDiscovery to Development … NELP
Total Discoveries : 66
Discoveries under evaluation/appraisal : 42 Commerciality under evaluation : 6 Commerciality established : 18
Development Plan to be submitted : 7 Development Plan approved : 5 Development Plan under evaluation : 6
IOGIP ( commercial discoveries) : 5.86 Bbbls
As on : September, 2008. Source: DGH
Opportunity in E&P
16
NELP: Attracting InvestmentNELP: Attracting Investment
• USD 3.9 Billion invested in NELP till March, 07– 30% by NOCs, 61% by Domestic Pvt & 9% by Foreign
Investors
• USD 3.33 billion committed for NELP-VI
Committed Investments in NELP (US$ million)
Round Phase-I Phase-II Phase-III Total
NELP-I 244.14 413.83 493.66 1150.53
NELP-II 287.85 241.2 246.5 775.5
NELP-III 414.5 335.1 388.9 1038.5
NELP-IV 466.15 367.2 301.7 1135.1
NELP-V 412 238 268 917
NELP-VI 2087 1230 - 3317
TOTAL 3911.64 2825.33 1698.76 8333.63
Opportunity in E&P
17
The future: Open Acreage Licensing Policy(OALP)
Possible broad framework
The future: Open Acreage Licensing Policy(OALP)
Possible broad framework
Opportunity in E&P
User defined blocks with certain constraints – 1st party envisaging interest in the area any time
Two types of bid
Reconnaissance – short term, exit with no cost recovery Exploration – parallels NELP
Exploration bid wins over a Reconnaissance bid every time
If reconnaissance company loses subsequent exploration bid, it shall have some options to participate/recover cost as a prior right
India has a potential of becoming E&P
technology & services hub. With significant
increase in E&P activities there is need for
high quality & cost effective technology,
goods and other related services in the full
value chain of E&P sector.
India has a potential of becoming E&P
technology & services hub. With significant
increase in E&P activities there is need for
high quality & cost effective technology,
goods and other related services in the full
value chain of E&P sector.
Opportunity in E&P
19
Investment EnvironmentInvestment Environment• Stable Political Environment and Growing Business Opportunities
• Competitive and transparent Fiscal regime with equal opportunity for NOCs and Global Investors
Attractive Income Tax Regime (Sec 44BB including) VAT with credits, Goods & Services Tax with cross credits Reduction in Customs Duty, Very attractive SEZ Act 2005 Cost competitive work force
• Liberal policy for FDI in E&P
• Open to partnerships in India as well as for overseas opportunities
• Excellent Tax incentives in NELP projects
• Special Deep-water concessions
• High demand-driven market/ Freedom of marketing
• Skilled/ cost effective Manpower etc. (400 PG in Geosciences and Petroleum Engineering, 350,000 Engineers/Annum)
Opportunity in E&P
MA
RK
ET
SE
CT
OR
S
UPSTREAM
Exploration
MIDSTREAM DOWNSTREAM
ProductionDevelopment Power / LNGChemicals, Metals etc.
Engineering & Construction
Fabrication
Drilling, Wells & Rigs
Subsurface Services
Consulting and Professional Services
Operations Support & Production
Logistics (marine, water, land, air)
Opportunity in E&P
The value chain : Opportunities
Opportunity in E&P
Opportunities: Technology, Goods and Services
Exploration Technology : Geo-scientific survey, data processing, G&G – Conventional , state of the art Drilling Services: onland, offshore( shallow and Deep) , High Technology wells
Field development and Reservoir management : Engineering and processes, IOR/EOR
Information Technology : various Software applications
Goods and Services: Drilling & oil field chemicals, consumables, array of hardware
Management Services : financial , legal consulting and Project management
Opportunity in E&P
ONGC to spend Rs 82670 Crore ( $ 17.2 Billion) in the XI Plan period ( 2007- 08 to 2011-12)
$ 40 Billion investment expected up to 2012 by all players
Foray for Equity oil and Gas abroadForay for Equity oil and Gas abroad
24
OVL: ActivitiesOVL: Activities
38* Projects in 18 Countries
24 Exploration
6 Developmen
t
7 Producing
* 38th project is Sudan’s 741 km long completed Pipeline
Venezuela 1
Cuba 2
Colombia 3 1
Brazil 2 1
Libya 3
Nigeria 2
Nigeria J DZ 1
Congo Br 1
Sudan 1 2
Egypt 2
1 Russia
2 Myanmar3
1 Vietnam2
Turkmenistan1
Iran1
1 Qatar
Iraq1
1 Syria1
* 38th project is Sudan’s 741 km long completed Pipeline
Venezuela 1
Cuba 2
Colombia 3 1
Brazil 2 1
Libya 3
Nigeria 2
Nigeria J DZ 1
Congo Br 1
Sudan 1 2
Egypt 2
1 Russia
2 Myanmar3
1 Vietnam2
Turkmenistan1
Iran1
1 Qatar
Iraq1
1 Syria1
Reserve Base : 280 MMToe
IndiaIndia invites Partner in Progress invites Partner in Progress
for for
development & sustainability…development & sustainability…
27
Thank You
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