Oil and gas Sector Report - July 2018

India Brand Equity Foundation
India Brand Equity FoundationIndia Brand Equity Foundation
For updated information, please visit www.ibef.org July 2018
OIL & GAS
Table of Content
Executive Summary……………….….…….3
Advantage India…………………..….……...4
Market Overview and Trends………..……..6
Notable Trends and Strategies..…..……...22
Growth Drivers…...……………...……….…26
Opportunities...……………………..............33
Useful Information……….......…………..…36
For updated information, please visit www.ibef.orgOil & Gas3
EXECUTIVE SUMMARY
Second largest refiner
in Asia
 As of May 1, 2018, the oil refining capacity of India stood at 247.6 million tonnes, making it the second largest
refiner in Asia. Private companies own about 35.62 per cent of the total refining capacity.
Source: US Energy Information Administration (EIA), Ministry of Petroleum and Natural Gas, BP Statistical Review 2018
 India’s energy demand is expected to double to 1,516 Mtoe by 2035 from 753.7 Mtoe in 2017. Moreover, the
country’s share in global primary energy consumption is projected to increase by 2-folds by 2035
 India’s consumption of petroleum products grew 5.31 per cent to 204.992 MMT in 2017-18 from 194.597
MMT in FY17. Petroleum products’ consumption during Apr-Jun 2018 stood at 54.221 MMT.
 India retained its spot as the third largest consumer of oil in the world in 2017.
 LNG imports into the country accounted for about one-fourth of total gas demand, which is estimated to
further increase by two times, over next five years. To meet this rising demand the country plans to increase
its LNG import capacity to 50 million tonnes in the coming years.
 India increasingly relies on imported LNG; the country is the fourth largest LNG importer and accounted for
5.68 per cent of global imports.
 India imported 18.05 MMT of LNG during 2017-18, in comparison to 18.63 MMT in 2016-17. Imports during
Apr-May 2018 stood at 3.43 MMT.
Notes: MMT - Million Metric Tonnes, Mtoe – Million Tonnes of Oil Equivalent; mbpd – Million Barrels Per Day; Figures mentioned in this slide is as per latest data available
World’s third-largest
energy consumer
Third-largest consumer
of oil
Fourth-largest LNG
importer in 2017
Oil and Gas
ADVANTAGE INDIA
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ADVANTAGE INDIA
 India is the world’s third largest energy
consumer
 Demand for primary energy in India is
to increase 3-fold by 2035 to 1,516
million tonnes of oil
 The University of Petroleum and Energy
Studies in Dehradun, Uttarakhand, is
Asia’s 1st and only energy university
 Indian Oil is going to invest Rs 1.8 trillion
over the next five to seven years to
expand its refining capacity.
 The government allows 100 per cent
Foreign Direct Investment (FDI) in
upstream and private sector refining
projects
 The FDI limit for public sector refining
projects has been raised to 49 per cent
without any disinvestment or dilution of
domestic equity in the existing PSUs
 Government has enacted various
policies such as the Open Acreage
Licensing Policy (OALP) and Coal Bed
Methane (CBM) policy to encourage
investments
 In 2017, the government launched
National Data Repository (NDR) to
make E&P data available for
commercial exploitation and R&D.
ADVANTAGE
INDIA
Source: Business Monitor International (BMI), World Oil Outlook 2012, Ministry of Petroleum and Natural Gas, BP Statistical Review 2015
Oil and Gas
MARKET OVERVIEW
AND TRENDS
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STATE-OWNED COMPANIES DOMINATE OIL AND GAS IN
INDIA
Source: BP Statistical Review 2018, US Energy Information Administration, Petroleum Planning and Analysis Cell, Aranca Research
 India remained as the third largest energy consumer in 2017.
 India’s oil production reached 35.68 Mt in 2017-18 . As of 2017, the country had 600 million metric tonnes (MMT) of proven oil reserves
 India had 1.2 trillion cubic metres of proven gas reserves at the end of 2017 and produced 31.83 bcm of gas in FY18 which is expected to rise and
reach 36 bcm^ by 2021.
 State-owned ONGC dominate the upstream segment.
 It is the largest upstream company in Exploration and Production (E&P) segment, accounting
for approximately 58.26 per cent of the country’s total oil output (FY18).
 IOCL operates a 13,391 km network of crude, gas and product pipelines, with a capacity of
1.896 mbpd of oil and 9.5 mmscmd of gas
 This is around 30 per cent of the nation’s total pipeline network
 IOCL is the largest company, controls 10 out of 22 Indian refineries, with a combined capacity
of 1.31 mbpd
 Reliance launched India’s 1st privately owned refinery in 1999 and has gained considerable
market share (30 per cent)
 Essar’s Vadinar refinery has a capacity of 20 mmtpa, currently accounting for around 10 per
cent of total refining capacity
Indian Oil and
Gas sector
Upstream segment
- exploration and
production
Midstream
segment – storage
and transportation
Downstream
segment – refining,
processing and
marketing
Notes: bcm – Billion Cubic Metres, mbpd – Million Barrels Per Day, mmscmd - Million Metric Standard Cubic Metre Per Day, mmtpa -- million metric tons per annum, ^As per IEA
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OIL SUPPLY AND DEMAND IN INDIA (1/2)
Source: Ministry of Petroleum and Natural Gas, BP Statistical Review 2018, Aranca Research
Note: CAGR – Compound Annual Growth Rate, mbpd – Million Barrels Per Day, P - Provisional, FY19* - up to May 2018, ^As per OPEC
2.94
3.08
3.24
3.32
3.49
3.69
3.73
3.85
4.16
4.56
4.69
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Oil consumption in India (2008-17) (mbpd)
 Oil consumption has expanded at a CAGR of 4.78 per cent during 2007–17 to reach 4.69 mbpd by 2017.
 Due to the expected strong growth in demand, India’s dependency on oil imports is likely to increase further
 Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation
 India’s crude oil demand is expected to increase over 150 per cent to 10.1 million tonnes per day by 2040.^
 In FY18, total crude oil imports were valued at US$ 87.37 billion as compared to US$ 70.71 billion in FY17. In FY18, crude oil imports increased to
4.41 mbpd from 4.27 mbpd in FY17. Crude oil imports during Apr-May 2018 stood at 0.74 mbpd.
3.18
3.27
3.43
3.69
3.78
3.79
4.05
4.27
4.41
0.74
0.67 0.75 0.76
0.76 0.76 0.75
0.74
0.72 0.64
0.12
0.00
1.00
2.00
3.00
4.00
5.00
6.00
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19*
Oil Imports (mbpd) Oil Production (mbpd)
Imports and domestic oil production in India (mbpd)
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GAS SUPPLY AND DEMAND IN INDIA (1/2)
38.81
39.99
48.34
59.49
61.32
56.66
49.81
49.64
46.41
50.83
54.20
1,015.44
1,049.12
1,073.44
1,105.50
1,230.13
1,280.36
1,303.96
1,373.63
1,204.94
1,181.37
1,241.44
0
200
400
600
800
1000
1200
1400
1600
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Gas Consumption Proven Gas Reserves
Source: PPAC, BP Statistical Review 2018, Aranca Research;
Note: F – Forecast, bcm – Billion Cubic Metres, CAGR – Compound Annual Growth Rate Figures are as per latest data available, FY19* - up to April 2018
 India’s gas consumption has increased at a CAGR of 3.40 per cent between 2007 and 2017.
 Demand is not likely to simmer down anytime soon, given strong economic growth and rising urbanisation.
 Gas consumption is projected to reach 143.08 bcm by 2040.
 India’s natural gas imports increased at a CAGR of 10.64 per cent during FY10–FY18.
 Auto LPG consumption advanced 0.2 per cent during Apr-May 2018.
Proven reserves and total gas consumption in the country (bcm)
47.49
52.22
46.48
39.78
34.64
32.79
31.24
30.92
31.83
5.26
11.72
12.78
17.44
17.19
17.05
18.39
21.21
21.6
22.7
4.54
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19*
Gas production Gas Imports
Domestic gas production and imports (bcm)
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UPSTREAM SEGMENT: CRUDE OIL AND GAS
PRODUCTION (1/2)
22.50
21.80
20.50
19.20
20.80
21.10
20.90
20.80
1.60
3.60 3.80
3.70
3.50
3.40 3.20 3.30 3.40
0.30
9.50
10.30
11.50
12.00
11.70
11.20
10.40
9.90
0.80
0
5
10
15
20
25
30
35
40
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19*
ONGC OIL Pvt/JV
Source: Ministry of Petroleum and Natural Gas, Aranca Research
Notes: mmt – Million Metric Tonne, JV – Joint Venture, P – Provisional, FY19* - up to April 2018
Crude Oil Production (in MMT)
16.43
18.03
19.44
19.59
18.54
17.85
17.59
17.54
21.28
20.06
18.42
18.20
18.92
19.09
18.42
18.14
-
5
10
15
20
25
30
35
40
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Onshore Offshore
Annual crude oil production (in MMT)
 In 2017-18, crude oil production stood at 35.68 million tonnes. Crude oil production without inclusion of condensates reached nearly 34 million
tonnes.
 ONGC accounted for around 58.26 per cent of total crude oil production in India.
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UPSTREAM SEGMENT: CRUDE OIL AND GAS
PRODUCTION (2/2)
23095
23316
23549
23284
22023
21177
22088
23429
26054
21609
14491
9497
8912
8235
6872
6338
2350
2633
2639
2626
2722
2838 2937 2881
0
10000
20000
30000
40000
50000
60000
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
ONGC Pvt/JV OIL
Source: Ministry of Petroleum and Natural Gas; Aranca Research
Note: JV – Joint Venture
Annual gas production (million metric standard cubic meter)
8,577.00
9,083.80
8,876.92
9,011.68
8,795.63
9,237.48
9,858.48
10,638.68
43,645.10
38,474.84
31,802.35
26,395.20
24,860.64
23,011.74
22,038.23
22,010.62
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Onshore Offshore
Annual gas production (million metric standard cubic meter)
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UPSTREAM SEGMENT: EXPLORATION AND
DEVELOPMENT ACTIVITIES
40
102
119
227
0
50
100
150
200
250
300
350
Offshore Onshore
Wells Meterage ('000 metres)
Source: Ministry of Petroleum and Natural Gas, Aranca Research, BMI
Notes: FY17(1) – Provisional, *OALP – Open Acreage Licensing Policy
Exploration activities (FY17(1))
86
312222
628
0
100
200
300
400
500
600
700
800
900
1000
Offshore Onshore
Wells Meterage ('000 metres)
Development drilling activities (FY17(1))
 During FY17(1), 1,245,000 metres of wells were explored and developed and 540 wells were drilled in the country.
 State-owned oil companies undertake most of the upstream drilling and exploration work.
 In January 2018, after a gap of eight years, the Central Government auctioned 55 exploration blocks which offered a record area for prospecting
of oil and gas. This was the first auction under OALP* that allows companies to carve out blocks of their choice with a view to bringing about 2.8
million square kilometres of unexplored area in the country under exploration.
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PIPELINES: CRUDE PIPELINE NETWORK
41.43%
34.42%
5.95%
18.20%
ONGC
IOC
OIL
Others
51.33%
11.55%
11.53%
25.58%
IOCL
OIL
ONGC
Others
Source: Ministry of Petroleum and Natural Gas, Aranca Research
Note: km – Kilometre, mmtpa – Million Metric Tonnes Per Annum, (1)Approximate
Shares in crude pipeline network by length (out of 10,327 km)
(May 1, 2018)1
Shares in crude pipeline network by capacity (out of 141.2
MMTPA) (May 1, 2018)1
 As of May 1, 2018, India had a network of 10,327 km of crude pipeline having a capacity of 141.2 mmtpa(1).
 In terms of length, IOCL accounts for 51.33 per cent (5,301 km) of India’s crude pipeline network.
 In terms of actual capacities, ONGC leads the pack with a share of 41.43 per cent, followed by IOCL at 34.42 per cent.
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Pipelines: Existing Pipelines in India
IOCL BPCL(1) HPCL(2) OIL ONGC Cairn HMEL Others (GAIL and Petronet India.) Total industry
Length (Kms)
Product
Pipeline
7,950 1,948 3,371 654 - - - 2,688 16,611
Crude oil
Pipeline
5,301 937 - 1,193 1,191 688 1,017 - 10,327
Total 13,251 2,885 3,371 1,847 1,191 688 1,017 2,688 26,938
Capacity of Crude Oil Pipelines (MMTPA)
Product
Pipeline
46.2 16.2 38.1 1.7 - - - 9.3 111.4
Crude oil
Pipeline
48.6 6.0 - 8.4 58.5 10.7 9.0 - 141.2
Total 94.8 22.2 38.1 10.1 58.5 10.7 9.0 9.3 252.6
Source: Ministry of Petroleum and Natural Gas, Aranca Research
Note: kms – Kilometres, mmtpa – Million Metric Tonnes Per Annum, (1)Includes Petronet Cochin-Coimbatore-Karur Product pipeline, (2)Includes Petronet Mangalore-Hassan-Bangalore
Product Pipeline
Company-wise length and capacity of products pipeline and crude oil pipeline (as of May 1, 2018)
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PIPELINES: REFINED PRODUCTS AND LPG PIPELINE
NETWORK
67.94%
10.62%
15.59%
4.87%
0.83%
GAIL
Reliance
GSPL
ARN
Others
47.86%
20.29%
11.73%
3.94%
16.18%
IOC
HPCL
BPCL
OIL
Others
Source: Ministry of Petroleum and Natural Gas, Aranca Research
Shares in products pipeline network under operation by length
(out of 16,611 km, FY182)
Shares in Natural Gas pipeline network by length (out of 16,793
km) (FY183)
 With 16,611 km of refined products pipeline network (capacity of 111.4 mmtpa) in India, Indian Oil Corporation (IOC) leads the segment with 47.86
per cent of the total length of product pipeline network, as of May 1, 2018.
 Top 3 companies IOC, HPCL and BPCL contribute 79.88 per cent of the total length of product pipeline network in the country.
 As of April 1, 2018, Gas Authority of India Ltd. (GAIL) has largest share (67.94 per cent or 11,410 km) of the country’s natural gas pipeline network
(16,793 km)
Note: km - Kilometre, mmtpa – Million Metric Tonnes Per Annum, LPG - Liquefied Petroleum Gas, IOC - Indian Oil Corporation, HPCL - Hindustan Petroleum Corporation Ltd, BPCL -
Bharat Petroleum Corporation Ltd, OIL - Oil India Limited, (1)Others include GAIL and Petronet India, (2)As of May 1, 2018, (3)As of April 1, 2018, (4)Others includes IOCL and ONGC
1
4
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DOWNSTREAM SEGMENT: REFINERY CRUDE
THROUGHPUT… (1/2)
108.03
112.51
112.17
112.13
115.11
122.58
130.57
134.22
134.73
144.20
154.3
160.77
27.62
33.43
38.29
48.54
74.44
81.38
81.18
88.27
88.23
88.53
88.66
91.09
91.16
14.47
0
50
100
150
200
250
300
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19*
Public sector Private sector
Source: Ministry of Petroleum and Natural Gas, Aranca Research
Note: mmt – Million Metric Tonne, Public Sector includes IOCL ,BPCL ,HPCL, CPCL and ONGC, Private sector includes RIL and Essar, FY19* - up to May 2018
 State-controlled entities dominate the downstream segment as well
 India has 19 refineries in the public sector and 3 in the private sector
 Private companies such as Reliance Industries Ltd. and Essar Oil
have become major refiners
 Crude oil throughput of public sector refineries has grown at a CAGR
of 3.68 per cent from 108.03 mmt in FY07 to 160.77 mmt in FY18.
During the same time, crude oil throughput of private sector
refineries has grown at a CAGR of 9.55 per cent from 33.43 mmt to
91.16 mmt.
 The share of private sector refineries’ throughput in total crude
throughput has grown from 29.99 per cent in FY07 to 36.18 per cent
in FY18.
 Refiner crude throughput of public sector and private sector stood at
27.62 mmt and 14.47 mmt, respectively, during Apr-May 2018.
Visakhapatnam port traffic (million tonnes)Refinery crude throughput (mmt)
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DOWNSTREAM SEGMENT: REFINERY CRUDE
THROUGHPUT… (2/2)
Shares in India's total refining capacity (May 1, 2018)
116.89
120.07
120.07
120.07
120.07
135.07
139.00
142.10
142.10
76.50
93.00
95.00
95.00
95.00
95.00
95.00
105.50
105.50
0.00
50.00
100.00
150.00
200.00
250.00
300.00
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19*
Public sector Private sector (incl JV)
Source: Ministry of Petroleum and Natural Gas, PPAC, Aranca Research
Total installed refinery capacity (mmt)
Note: mmt – Million Metric Tonne; HPCL - Hindustan Petroleum Corporation Ltd, BPCL - Bharat Petroleum Corporation Ltd, OIL - Oil India Limited, ONGC - Oil and Natural Gas
Corporation, IOCL - Indian Oil Corporation Ltd, CPCL - Chennai Petroleum Corporation Limited, FY 19* - As of May 1, 2018
 As of May 1, 2018, the sector’s total installed provisional refinery capacity was 247.6 mmt. IOC emerged as the largest domestic refiner with a
capacity of 69.2 mmt
 Top three companies - RIL, IOC and BPCL contribute around 70.23 per cent of India's total refining capacity
27.95%
27.54%
14.74%
10.95%
8.08%
6.10%
4.64% IOC
RIL
BPCL
HPCL
Essar
ONGC
CPCL
247.6 MMT
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DOWNSTREAM SEGMENT: PETROLEUM PRODUCTS
 Consumption of petroleum products in India increased to 204.92 mmt
in FY18(P) from 194.60 mmt in FY17.
 Petroleum products derived from crude oil include light distillates
such as LPG, naphtha; middle distillates such as kerosene; and
heavy ends such as furnace, lube oils, bitumen, petroleum coke and
paraffin wax
 Light distillates with the highest growth rate grew at CAGR of 4.78
per cent, while middle distillates and heavy end segment witnessed a
CAGR of 3.93 per cent and 5.89 per cent respectively, during the
year FY08-17.
 Production of petroleum products increased from 3,996 tmt in FY 07
to 4,608 tmt in FY 18.
 Production of petroleum products by fractionators grew to 769.07 tmt
during Apr-May 2018.
Consumption of Petroleum Products (mmt)
38.4 39.7 39.0 41.4 43.9 46.3 47.6 50.9 54.7 58.5
62.8
66.4
71.1
75.0
79.4
82.7
81.8
82.8
81.9
88.9
27.7 27.5 27.7 24.6 24.9 28.1 29.0 31.4 31.6
46.4
0.0
50.0
100.0
150.0
200.0
250.0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Light Distillates Middle Distillates Heavy Ends
Source: Ministry of Petroleum and Natural Gas, Aranca Research
3,996.00
4,084.00
4,191.40
4,363.00
4,168.60
4,175.20
4,089.43
3,871.57
3,657.15
3,377.16
3,457.75
4,608.00
769.07
0.00
1000.00
2000.00
3000.00
4000.00
5000.00
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19*
Production of Petroleum Products by Fractionators (tmt)
Note: mmt – Million Metric Tonne, tmt – thousand metric tonne, P – Provisional, FY19* - As of May 2018
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DOWNSTREAM SEGMENT: DISTRIBUTION AND
MARKETING
85.10 89.57 97.70 104.50 110.50
109.72 97.36
97.36 96.61
107.58
0.0
50.0
100.0
150.0
200.0
250.0
FY14 FY15 FY16 FY17 FY18
Product pipeline Natural Gas Pipeline
Source: Ministry of Petroleum and Natural Gas, Aranca Research
Downstream distribution statistics (MMT)
Pipeline
Capacity (mmtpa)
As of May 1, 2018
Length (km)
As of May 1, 2018
Crude Pipeline 141.2 10,327
Product Pipeline 111.4 16,661
Natural Gas Pipeline2 104.08 16,793
Note: MMT – Million Metric Tonne, mmtpa – Million Metric Tonnes Per Annum, OMC – Oil Marketing Companies, 1As of 1st May 2018, 2As of April 1, 2018
 The total number of OMC retail outlets increased to 62,670 at the
start of May 20181 from 59,595 at the end of FY17.
 IOC, as of May 01, 2018, owned the maximum number of retail
outlets in the country (27,712 or 43.26 per cent of total), followed by
HPCL (15,077 or 24.06 per cent), BPCL (14,453 or 23.06 per cent)
and MRPL (6 or 0.01 per cent); the remaining being owned by
private firms.
 As of May 20181, there were 20,221 LPG distributors (of PSUs) in
India.
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STATE-WISE CRUDE RESERVE, CAPACITY AND
THROUGHPUT
Source: Ministry of Petroleum and Natural Gas, Aranca Research
State
Balance recoverable reserves
of crude oil, April 1, 2017 (MMT)
Assam 159.96
Gujarat 118.61
Rajasthan 24.55
Tamil Nadu 9.00
Andhra Pradesh 8.15
Nagaland 2.38
Arunachal Pradesh 1.52
Tripura 0.07
Total Onshore 324.24
Western Offshore 239.20
Eastern Offshore 40.67
Total Offshore 279.87
State
Installed capacity,
as of April 2017 (mt)
Crude throughput for
FY 2017 (mmt)
Gujarat 93.7 105.01
Maharashtra 19.5 22.05
Haryana 15.0 15.64
Karnataka 15.0 15.97
Tamil Nadu 1.5 0.53
Kerala 12.4 11.82
Andhra Pradesh 8.396 9.42
Uttar Pradesh 8.0 9.23
West Bengal 7.5 7.69
Assam 7.0 6.57
Bihar 6.0 6.53
Punjab 9.0 10.52
Madhya Pradesh 6.0 6.36
Odisha 15 8.23
Himachal Pradesh 10.5 9.76
Total 234.496 245.33
Note: Mmt – Million Metric Tonne, mt – Million Tonne
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KEY DOMESTIC OIL AND GAS COMPANIES
Source: Bloomberg, Aranca Research
Company
Ownership
(per cent) as on FY17-18
FY18 Total Income
from Operations
(US$ billion)
Indian Oil Corporation Limited
56.98%
state-owned
65.79
Reliance Industries Public Listed 60.77
Bharat Petroleum Corporation
Limited
54.31%
state-owned
31.13*
Hindustan Petroleum
Corporation Limited
51.11%
state-owned (through
ONGC)
34.06
ONGC
68.07%
state-owned
11.99*
GAIL India Limited
53.59%
state-owned
8.46
Oil India Limited
66.13%
state-owned
1.69*
Note: : FY – Indian Financial Year from April–March , *for FY17
Oil and Gas
NOTABLE TRENDS
AND STRATEGIES
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NOTABLE TRENDS IN THE OIL AND GAS SECTOR
 Government approved the CBM policy in 1997 to boost the development of clean and renewable energy
resources
 The CBM policy was designed to be liberal and investor friendly; the 1st commercial production of CBM was
initiated in July 2007 at about 72,000 cubic metres per day. Production in 2017-18 stood at 2.01 million cubic
metres per day.
Coal Bed Methane
(CBM)
 The technology was first widely used in the US in the 1800s and in India (Kolkata and Mumbai) in the early
1900s
 UCG is currently the only feasible technology available to harness energy from deep unmineable coal seams
economically in an eco-friendly manner and it reduces capital outlay, operating costs and output gas
expenses by 25–50 per cent vis-à-vis surface gasification
Underground Coal
Gasification (UCG)
 The government initiated the National Gas Hydrate Programme (NGHP), a consortium of national E and P
companies and research institutions, to map gas hydrates for use as an alternate source of energy
 Bio-fuels (bio-ethanol and bio-diesel) are alternate sources of energy from domestic renewable resources;
these have lower emissions compared to petroleum or diesel
Gas hydrates and bio-
fuels
 The Open Acreage Licensing Policy (OALP), which allows an explorer to study the data available and bid for
blocks of his choice has been initiated to increase foreign participation by global E & P companies like Shell,
BP, Conoco Phillips etc
Open Acreage
Licensing Policy
For updated information, please visit www.ibef.orgOil & Gas24
STRATEGIES ADOPTED … (1/2)
Expansions
Source: Aranca Research
Diversification
Open Acreage Licensing Policy
 Oil and Natural Gas Corporation (ONGC) is going to invest Rs 17,615 crore (US$ 2.73 billion) on drilling oil and gas wells
in 2018-19.
 Essar Oil and Gas will undertake investments to the tune of Rs 900 crore (US$ 130.64 million) for drilling more wells in its
Raniganj CBM block to increase gas output to 2.3 MMSCMD by 2021.
 H-Energy is planning to invest Rs 3,500 crore (US$ 540.62 million) to build Liquified Natural Gas (LNG) terminals and lay
down a 60 km pipeline.
 State run energy firms Bharat Petroleum, Hindustan Petroleum and Indian Oil Corp plan to spend US$ 20 billion on refinery
expansions to add units, by 2022
 The country’s state owned oil companies aim to sustain spending at a 3 year high due to increasing demand and declining
oil services costs. Indian Oil plans to expand its refining capacity and build new businesses, for which it will be spending
US$ 27.94 billion over the next 5-7 years.
 Indian Oil Corp plans to make an investment of US$22.91 billion, including US$7.64 billion for expanding its existing
brownfield refineries, in the next 5 to 7 years. Moreover, the company plans to lay the nation's longest LPG pipeline of
1987 km, from Gujarat coast to Gorakhpur in eastern Uttar Pradesh, to cater to growing demand for cooking gas in the
country. In FY18, the company is planning to invest US$ 3.5 billion to expand and enhance its refinery capability and
marketing infrastructure.
 India targets US$ 100 billion worth investments in gas infrastructure by 2022, including an addition of another 228 cities to
city gas distribution (CGD) network. This would include setting up of RLNG terminals, pipeline projects, completion of the
gas grid and setting up of CGD network in more cities.
 Oil companies are focusing on vertical integration for next stage of growth. For instance, oil producer Oil India Ltd is
planning to build and operate refineries, while Indian Oil is planning to enter oil and gas exploration
 As of March 2017, Bharat Petroleum Corp. Ltd. (BPCL), an Indian state-controlled oil and gas company, plans to enter the
country’s travel business with the launch of its startup named as “Happy Roads”. The application, which is available on
Android Play Store, documents itineraries and assists the users in planning a fun-filled trip
For updated information, please visit www.ibef.orgOil & Gas25
STRATEGIES ADOPTED … (2/2)
Source: India Banking Association, Reserve Bank of India, Aranca Research
Notes: ATM - Automated Teller Machine, FIP – Financial Inclusion Plan, RBI – Reserve Bank of India
Move to non-
conventional energy
resources
 Companies are looking forward to developing JVs and technical partnership with foreign companies to improve capabilities
to develop shale reserves
Investments to enhance
production
 Indian companies are enhancing production through redevelopment plans to increase recovery rates of hydrocarbon from
oil wells; ONGC in Mumbai High achieved success in implementing this.
 Indian Oil Company (IOC) is planning to invest Rs 1.43 lakh crore (US$ 22.19 billion) to nearly double its oil refining
capacity to 150 million tonnes by 2030.
More focus upon small
companies
 Private sector units like Adani, Sun Petrochemicals and few new entrants have bagged 1/3rd of small oil and gas fields.
 In February 2017, Genesis, London, bagged a contract from RIL’s (Reliance Industries) to design deep water field front
end engineering at KG Basin in West India.
Pilot project Initiated for
Shale Gas Production in
India
 Oil and Natural Gas Corp (ONGC) has started Shale Gas exploration by spudding the first Shale Gas well RNSG-1 in
Burdwan District of West Bengal.
Piped Cooking Gas
 ONGC has started supply of Piped Natural Gas in Bhubaneswar from October 2017 and is currently laying down natural
gas pipeline in Varanasi.
 In May 2018, India launched its biggest auction of City Gas Distribution (CGD) networks. The successful companies will be
permitted to sell Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in 86 geographical areas. The auctions
are expected to lead to investments worth Rs 70,000 crore (US$ 10.86 billion).
Oil and Gas
GROWTH DRIVERS
For updated information, please visit www.ibef.orgOil & Gas27
GROWTH DRIVERS
Source: Ministry of Petroleum and Natural Gas, US Energy Information Administration, BP Statistical Review of World 2015 Energy, June 2012; BMI, Aranca Research
Notes: TCM - Trillion Cubic Metres, EandP - Exploration and Production
Growing Demand
Robust growth in domestic
market
Increasing demand for natural
gas
Favourable Business Conditions
Abundant raw material
Skilled labour
Government Support
100% FDI investments
allowed
Favourable Policies
For updated information, please visit www.ibef.orgOil & Gas28
RISING DEMAND
 Energy demand of India is anticipated to grow faster than energy demand of all major economies, on the back of continuous robust economic
growth.
 Consequently, India’s energy demand as a percentage of global energy demand is expected to rise to 11 per cent in 2040 from 5.58 per cent in
2017.
 Crude oil consumption is expected to grow at a CAGR of 3.60 per cent to 500 million tonnes by 2040 from 221.76 million tonnes in 2017.
 Natural Gas consumption is forecasted to increase at a CAGR of 4.31 per cent to 143.08 million tonnes by 2040 from 54.20 million tonnes in 2017.
Crude oil consumption and forecast (MT)
221.76
500.00
0
100
200
300
400
500
600
2017 2040F
Natural gas consumption and forecast (BCM)
54.20
143.08
0
20
40
60
80
100
120
140
160
2017 2040F
Source: BP Statistical Review of World Energy 2018, BP Energy Outlook 2018
Notes: F-Forecast, MT – Million Tonnes, BCM – Billion Cubic Metres
CAGR 3.60% CAGR 4.31%
For updated information, please visit www.ibef.orgOil & Gas29
REGULATORY OVERVIEW OF THE INDUSTRY… (1/2)
Pricing of CNG and PNG
by CGD Entities (2014)
Source: Ministry of Petroleum and Natural Gas, Aranca Research
 In 2014, the pricing for CNG (transport) and PNG (domestic) were examined by the Ministry of Petroleum and Natural Gas
while the disclosure of prices of the CNG and PNG commodities were made compulsory
The Policy on Shale Gas
and Oil, 2013
 Allows companies to apply for shale gas and oil rights in their petroleum exploration licenses and petroleum mining leases
Open Acreage Licensing
 Launched in June 2017, it allows companies to carve out area for petroleum exploration and production. The policy,
launched under Hydrocarbon Exploration and Licensing Policy (HELP), has replaced New Exploration and Licensing Policy
under which bidders did not have the freedom of carving out areas for E&P
The National Biofuel
Policy, 2009
 Promotes bio-fuel usage, the Government of India has provided a 12.36 per cent concession on excise duty on bio-ethanol
and exempted bio-diesel from excise duty
Integrated Energy Policy
(IEP), 2006
 Outlines goals to deal with challenges faced by India’s energy sector
For updated information, please visit www.ibef.orgOil & Gas30
REGULATORY OVERVIEW OF THE INDUSTRY… (2/2)
Source: Ministry of Petroleum and Natural Gas, Aranca Research
Petroleum and Natural
Gas Regulatory Board
(PNGRB) Act, 2006
 Regulate refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products
and natural gas
Auto Fuel Policy, 2003
 Provide a roadmap to comply with various vehicular emission norms and corresponding fuel quality upgrading
requirements over a period of time
Freight Subsidy (for far-
flung areas) Scheme,
2002
 Compensate public sector Oil Marketing Companies (OMCs) for the freight incurred to distribute subsidised products in far-
flung areas
Domestic Natural Gas
Pricing Formula, 2014
 New domestic natural gas pricing formula has been formed, which will be revised on an half yearly basis.
Marginal Field Policy
 Monetise discovered small oil and gas fields to augment domestic production
 Improved fiscal terms viz. no oil cess applicable on crude oil production, no upfront signature bonus, pricing and marketing
freedom for oil and gas and no carried interest by NOCs
Note: NOCs - National Oil Companies
For updated information, please visit www.ibef.orgOil & Gas31
FDI INVESTMENTS IN PETROLEUM AND GAS IN INDIA
Source: : Department of Industrial Policy and Promotion, Aranca Research
 FDI inflows in India’s petroleum and natural gas sector stood at US$ 6,880.35 million during April 2000–March 2018.
0.50
0.10
2.10
0.10 1.10
0.07 0.18 0.03
3.20 3.30
5.40 5.50
6.60 6.67
6.85 6.88
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
FDI inflows into petroleum and natural gas (US$ billion)
Cumulative from April 2000
For updated information, please visit www.ibef.orgOil & Gas32
M&A ACTIVITIES IN THE INDIAN OIL AND GAS
SECTOR
Source: Thomson Banker, News Articles
Date announced Acquirer name Target name Value of deal (US$ million)
Feb 2018 ONGC HPCL (51.11 per cent stake) 57,020.39
Feb 2018 ONGC Videsh
Abu Dhabi National Oil Co (10 per cent stake
in offshore oilfield)
600
Aug 2017 Rosneft Essar Oil (49 per cent stake) 1,290
Dec 2016 Oil and Natural Gas Corp's Gujarat State Petroleum Co's 1200
Dec 2015 ONGC Videsh Ltd (OVL) Vankor oil field 1260
Jan 2015 Bharat Forge Mecanique Generale Langroise 12.82
Jun 2014 Gulf Petrochem Ltd Sah Petroleums Limited 7.13
Mar 2014 IOCL Progress Energy Canada Ltd Not disclosed
Oct 2013 ONGC Videsh Ltd Parque das Conchas, Brazilian Oilfield 529
Jun 2013
ONGC Videsh Ltd (in partnership
with Oil India Ltd)
Rovuma Area 1 Offshore Block 2640
Oil and Gas
OPPORTUNITIES
For updated information, please visit www.ibef.orgOil & Gas34
OPPORTUNITIES
 Locating new fields for exploration: 78 per cent of the country’s sedimentary area is yet to be explored
 Development of unconventional resources: CBM fields in the deep sea
 Opportunities for secondary/tertiary oil producing techniques
 Higher demand for skilled labour and oilfield services and equipment
 Expansion in the transmission network of gas pipelines
 LNG imports have increased significantly; this provides an opportunity to boost production capacity
 In light of mounting LNG production, huge opportunity lies for LNG terminal operation, engineering,
procurement and construction services
Midstream segment
 India is already a refining hub with 21 refineries and expansions planned for tapping foreign investment in
export-oriented infrastructure, including product pipelines and export terminals
 Development of City Gas Distribution (CGD) networks, which are similar to Delhi and Mumbai’s CGDs
 Expansion of the country’s petroleum product distribution network
Downstream segment
Upstream segment
For updated information, please visit www.ibef.orgOil & Gas35
SHALE GAS PROSPECTS OF INDIA
Source: EandY; Ministry of Petroleum and Natural Gas, Aranca Research
 India has technically recoverable shale gas resources of nearly 96 tcf.
 The Cambay, Krishna Godavari, Cauvery and the Damodar Valley are the most prospective sedimentary basins for carrying out shale gas
activities in the country
 Around 20 tcf of gas has been classified as technically recoverable reserves in the Cambay basin in Gujarat (the largest basin in the country)
spread across 20,000 gross square miles with a prospective area of 1,940 square miles
 It is estimated that the Krishna Godavari (KG) basin encloses a series of organically rich shales, containing around 27 tcf of technically
recoverable gas. KG basin, located in Eastern India, holds the country’s largest shale gas reserves, extending over 7,800 gross square miles with
a prospective area of around 4,340 square miles
 In April 2013, the Directorate General of Hydrocarbons (DGH) submitted its policy on exploitation of shale gas to the Ministry of Petroleum and
Natural Gas
 India launched its policy on shale gas exploration to tap the non-conventional energy resource in order to boost output.
Notes: tcf – Trillion Cubic Feet
Oil and Gas
USEFUL
INFORMATION
For updated information, please visit www.ibef.orgOil & Gas37
CONTACT INFORMATION
Name Address Contact person Telephone E-mail
Oil Industry
Development Board
(OIDB)
3rd Floor, Tower C, Plot No. 2, Sector
– 73, Noida, Uttar Pradesh - 201301
Mr Ajay Srivastava, Financial
Adviser and Chief Accounts
Officer
0120-2594630
0120-2594603
facao.oidb@nic.in
Petroleum Conservation
Research Association
(PCRA)
Sanrakshan Bhavan, 10 Bhikaji Cama
Place, New Delhi – 110066
Mr Alok Tripathi, ED
91-11- 26198799
Ext.301
pcra@pcra.org
Bureau of Energy
Efficiency (BEE)
Ministry of Power, 4th floor, SEWA
Bhawan, RK Puram,
New Delhi – 110066
Mr Abhay Bakre, Director
General
91-11- 26178316,
91-11- 26179699
dg-bee@nic.in,
Oil Industry Safety
Directorate
Ministry of Petroleum & Natural Gas,
8th Floor, OIDB Bhawan, Plot No 2,
Sector-73, Noida, Uttar Pradesh-
201301
Mr Varanasi Janardhana Rao,
ED
0120-2593800 rao.vj@gov.in
Petroleum Planning and
Analysis Cell (PPAC)
Ministry of Petroleum and Natural
Gas, 2nd floor, Core-8, SCOPE
Complex, 7 Institutional Area, Lodhi
Road, New Delhi – 110003
Mr Vinod Kumar, Deputy
Director – Information
Technology
011-24306153 webadm@ppac.gov.in
Directorate General of
Hydrocarbons
Ministry of Petroleum and Natural
Gas, OIDB Bhawan, Plot No 2, Sector
73, Noida
Mr Atanu Chakraborty,
Director General
0120 - 2472001 dg@dghindia.org
For updated information, please visit www.ibef.orgOil & Gas38
GLOSSARY
 B/D (or bpd): Barrels Per Day
 MBPD (or mbpd): Million Barrels Per Day
 BCM (or bcm): Billion Cubic Metres
 CBM: Coal Bed Methane
 CGD: City Gas Distribution
 EandP: Exploration and Production
 FDI: Foreign Direct Investment
 FY: Indian Financial Year (April to March)
• FY17 implies April 2016 to March 2017
 GoI: Government of India
 INR: Indian Rupee
 LNG: Liquefied Natural Gas
 MMT (or mmt): Million Metric Tonne
 MMTPA (or mmtpa): Million Metric Tonnes Per Annum
 EBITDA: Earning Before Interest Taxes Depreciation Amortisation
 NRL: Numaligarh Refinery Limited
 CPCL: Chennai Petroleum Corporation Limited
 HPCL: Hindustan Petroleum Corporation Limited
 BPCL: Bharat Petroleum Corporation Limited
For updated information, please visit www.ibef.orgOil & Gas39
GLOSSARY
 IOC: Indian Oil Corporation Ltd
 EOL: Essar Oil Ltd
 RPL: Reliance Petroleum Limited
 MRPL: Mangalore Refinery and Petrochemicals Limited
 PCCK: Petronet Cochin-Coimbatore-Karur
 PMHB: Petronet Mangalore-Hassan-Bangalore
 OALP: Open Acreage Licensing Policy
 TOE (or toe): Tonnes of Oil Equivalent
 US$ : US Dollar
 ONGC: Oil and Natural Gas Corporation of India
 IOCL: Indian Oil Corporation Limited
 mn bbl: Million Barrels
 CAGR: Compound Annual Growth Rate
 JV: Joint Venture
 UCG: Underground Coal Gasification
 NGL: Natural Gas Liquids
 OMCs: Oil Marketing Companies
 NHGP: National Gas Hydrate Programme
 Wherever applicable, numbers have been rounded off to the nearest whole number
For updated information, please visit www.ibef.orgOil & Gas40
EXCHANGE RATES
Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)
Year INR INR Equivalent of one US$
2004–05 44.95
2005–06 44.28
2006–07 45.29
2007–08 40.24
2008–09 45.91
2009–10 47.42
2010–11 45.58
2011–12 47.95
2012–13 54.45
2013–14 60.50
2014-15 61.15
2015-16 65.46
2016-17 67.09
2017-18 64.45
Q1 2018-19 67.04
Year INR Equivalent of one US$
2005 44.11
2006 45.33
2007 41.29
2008 43.42
2009 48.35
2010 45.74
2011 46.67
2012 53.49
2013 58.63
2014 61.03
2015 64.15
2016 67.21
2017 65.12
Source: Reserve Bank of India, Average for the year
For updated information, please visit www.ibef.orgOil & Gas41
DISCLAIMER
India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation
with IBEF.
All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced,
wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or
incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval
of IBEF.
This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the
information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a
substitute for professional advice.
Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do
they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation.
Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any
reliance placed or guidance taken from any portion of this presentation.
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Oil and gas Sector Report - July 2018

  • 1. For updated information, please visit www.ibef.org July 2018 OIL & GAS
  • 2. Table of Content Executive Summary……………….….…….3 Advantage India…………………..….……...4 Market Overview and Trends………..……..6 Notable Trends and Strategies..…..……...22 Growth Drivers…...……………...……….…26 Opportunities...……………………..............33 Useful Information……….......…………..…36
  • 3. For updated information, please visit www.ibef.orgOil & Gas3 EXECUTIVE SUMMARY Second largest refiner in Asia  As of May 1, 2018, the oil refining capacity of India stood at 247.6 million tonnes, making it the second largest refiner in Asia. Private companies own about 35.62 per cent of the total refining capacity. Source: US Energy Information Administration (EIA), Ministry of Petroleum and Natural Gas, BP Statistical Review 2018  India’s energy demand is expected to double to 1,516 Mtoe by 2035 from 753.7 Mtoe in 2017. Moreover, the country’s share in global primary energy consumption is projected to increase by 2-folds by 2035  India’s consumption of petroleum products grew 5.31 per cent to 204.992 MMT in 2017-18 from 194.597 MMT in FY17. Petroleum products’ consumption during Apr-Jun 2018 stood at 54.221 MMT.  India retained its spot as the third largest consumer of oil in the world in 2017.  LNG imports into the country accounted for about one-fourth of total gas demand, which is estimated to further increase by two times, over next five years. To meet this rising demand the country plans to increase its LNG import capacity to 50 million tonnes in the coming years.  India increasingly relies on imported LNG; the country is the fourth largest LNG importer and accounted for 5.68 per cent of global imports.  India imported 18.05 MMT of LNG during 2017-18, in comparison to 18.63 MMT in 2016-17. Imports during Apr-May 2018 stood at 3.43 MMT. Notes: MMT - Million Metric Tonnes, Mtoe – Million Tonnes of Oil Equivalent; mbpd – Million Barrels Per Day; Figures mentioned in this slide is as per latest data available World’s third-largest energy consumer Third-largest consumer of oil Fourth-largest LNG importer in 2017
  • 5. For updated information, please visit www.ibef.orgOil & Gas5 ADVANTAGE INDIA  India is the world’s third largest energy consumer  Demand for primary energy in India is to increase 3-fold by 2035 to 1,516 million tonnes of oil  The University of Petroleum and Energy Studies in Dehradun, Uttarakhand, is Asia’s 1st and only energy university  Indian Oil is going to invest Rs 1.8 trillion over the next five to seven years to expand its refining capacity.  The government allows 100 per cent Foreign Direct Investment (FDI) in upstream and private sector refining projects  The FDI limit for public sector refining projects has been raised to 49 per cent without any disinvestment or dilution of domestic equity in the existing PSUs  Government has enacted various policies such as the Open Acreage Licensing Policy (OALP) and Coal Bed Methane (CBM) policy to encourage investments  In 2017, the government launched National Data Repository (NDR) to make E&P data available for commercial exploitation and R&D. ADVANTAGE INDIA Source: Business Monitor International (BMI), World Oil Outlook 2012, Ministry of Petroleum and Natural Gas, BP Statistical Review 2015
  • 6. Oil and Gas MARKET OVERVIEW AND TRENDS
  • 7. For updated information, please visit www.ibef.orgOil & Gas7 STATE-OWNED COMPANIES DOMINATE OIL AND GAS IN INDIA Source: BP Statistical Review 2018, US Energy Information Administration, Petroleum Planning and Analysis Cell, Aranca Research  India remained as the third largest energy consumer in 2017.  India’s oil production reached 35.68 Mt in 2017-18 . As of 2017, the country had 600 million metric tonnes (MMT) of proven oil reserves  India had 1.2 trillion cubic metres of proven gas reserves at the end of 2017 and produced 31.83 bcm of gas in FY18 which is expected to rise and reach 36 bcm^ by 2021.  State-owned ONGC dominate the upstream segment.  It is the largest upstream company in Exploration and Production (E&P) segment, accounting for approximately 58.26 per cent of the country’s total oil output (FY18).  IOCL operates a 13,391 km network of crude, gas and product pipelines, with a capacity of 1.896 mbpd of oil and 9.5 mmscmd of gas  This is around 30 per cent of the nation’s total pipeline network  IOCL is the largest company, controls 10 out of 22 Indian refineries, with a combined capacity of 1.31 mbpd  Reliance launched India’s 1st privately owned refinery in 1999 and has gained considerable market share (30 per cent)  Essar’s Vadinar refinery has a capacity of 20 mmtpa, currently accounting for around 10 per cent of total refining capacity Indian Oil and Gas sector Upstream segment - exploration and production Midstream segment – storage and transportation Downstream segment – refining, processing and marketing Notes: bcm – Billion Cubic Metres, mbpd – Million Barrels Per Day, mmscmd - Million Metric Standard Cubic Metre Per Day, mmtpa -- million metric tons per annum, ^As per IEA
  • 8. For updated information, please visit www.ibef.orgOil & Gas8 OIL SUPPLY AND DEMAND IN INDIA (1/2) Source: Ministry of Petroleum and Natural Gas, BP Statistical Review 2018, Aranca Research Note: CAGR – Compound Annual Growth Rate, mbpd – Million Barrels Per Day, P - Provisional, FY19* - up to May 2018, ^As per OPEC 2.94 3.08 3.24 3.32 3.49 3.69 3.73 3.85 4.16 4.56 4.69 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Oil consumption in India (2008-17) (mbpd)  Oil consumption has expanded at a CAGR of 4.78 per cent during 2007–17 to reach 4.69 mbpd by 2017.  Due to the expected strong growth in demand, India’s dependency on oil imports is likely to increase further  Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation  India’s crude oil demand is expected to increase over 150 per cent to 10.1 million tonnes per day by 2040.^  In FY18, total crude oil imports were valued at US$ 87.37 billion as compared to US$ 70.71 billion in FY17. In FY18, crude oil imports increased to 4.41 mbpd from 4.27 mbpd in FY17. Crude oil imports during Apr-May 2018 stood at 0.74 mbpd. 3.18 3.27 3.43 3.69 3.78 3.79 4.05 4.27 4.41 0.74 0.67 0.75 0.76 0.76 0.76 0.75 0.74 0.72 0.64 0.12 0.00 1.00 2.00 3.00 4.00 5.00 6.00 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19* Oil Imports (mbpd) Oil Production (mbpd) Imports and domestic oil production in India (mbpd)
  • 9. For updated information, please visit www.ibef.orgOil & Gas9 GAS SUPPLY AND DEMAND IN INDIA (1/2) 38.81 39.99 48.34 59.49 61.32 56.66 49.81 49.64 46.41 50.83 54.20 1,015.44 1,049.12 1,073.44 1,105.50 1,230.13 1,280.36 1,303.96 1,373.63 1,204.94 1,181.37 1,241.44 0 200 400 600 800 1000 1200 1400 1600 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Gas Consumption Proven Gas Reserves Source: PPAC, BP Statistical Review 2018, Aranca Research; Note: F – Forecast, bcm – Billion Cubic Metres, CAGR – Compound Annual Growth Rate Figures are as per latest data available, FY19* - up to April 2018  India’s gas consumption has increased at a CAGR of 3.40 per cent between 2007 and 2017.  Demand is not likely to simmer down anytime soon, given strong economic growth and rising urbanisation.  Gas consumption is projected to reach 143.08 bcm by 2040.  India’s natural gas imports increased at a CAGR of 10.64 per cent during FY10–FY18.  Auto LPG consumption advanced 0.2 per cent during Apr-May 2018. Proven reserves and total gas consumption in the country (bcm) 47.49 52.22 46.48 39.78 34.64 32.79 31.24 30.92 31.83 5.26 11.72 12.78 17.44 17.19 17.05 18.39 21.21 21.6 22.7 4.54 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19* Gas production Gas Imports Domestic gas production and imports (bcm)
  • 10. For updated information, please visit www.ibef.orgOil & Gas10 UPSTREAM SEGMENT: CRUDE OIL AND GAS PRODUCTION (1/2) 22.50 21.80 20.50 19.20 20.80 21.10 20.90 20.80 1.60 3.60 3.80 3.70 3.50 3.40 3.20 3.30 3.40 0.30 9.50 10.30 11.50 12.00 11.70 11.20 10.40 9.90 0.80 0 5 10 15 20 25 30 35 40 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19* ONGC OIL Pvt/JV Source: Ministry of Petroleum and Natural Gas, Aranca Research Notes: mmt – Million Metric Tonne, JV – Joint Venture, P – Provisional, FY19* - up to April 2018 Crude Oil Production (in MMT) 16.43 18.03 19.44 19.59 18.54 17.85 17.59 17.54 21.28 20.06 18.42 18.20 18.92 19.09 18.42 18.14 - 5 10 15 20 25 30 35 40 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Onshore Offshore Annual crude oil production (in MMT)  In 2017-18, crude oil production stood at 35.68 million tonnes. Crude oil production without inclusion of condensates reached nearly 34 million tonnes.  ONGC accounted for around 58.26 per cent of total crude oil production in India.
  • 11. For updated information, please visit www.ibef.orgOil & Gas11 UPSTREAM SEGMENT: CRUDE OIL AND GAS PRODUCTION (2/2) 23095 23316 23549 23284 22023 21177 22088 23429 26054 21609 14491 9497 8912 8235 6872 6338 2350 2633 2639 2626 2722 2838 2937 2881 0 10000 20000 30000 40000 50000 60000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 ONGC Pvt/JV OIL Source: Ministry of Petroleum and Natural Gas; Aranca Research Note: JV – Joint Venture Annual gas production (million metric standard cubic meter) 8,577.00 9,083.80 8,876.92 9,011.68 8,795.63 9,237.48 9,858.48 10,638.68 43,645.10 38,474.84 31,802.35 26,395.20 24,860.64 23,011.74 22,038.23 22,010.62 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Onshore Offshore Annual gas production (million metric standard cubic meter)
  • 12. For updated information, please visit www.ibef.orgOil & Gas12 UPSTREAM SEGMENT: EXPLORATION AND DEVELOPMENT ACTIVITIES 40 102 119 227 0 50 100 150 200 250 300 350 Offshore Onshore Wells Meterage ('000 metres) Source: Ministry of Petroleum and Natural Gas, Aranca Research, BMI Notes: FY17(1) – Provisional, *OALP – Open Acreage Licensing Policy Exploration activities (FY17(1)) 86 312222 628 0 100 200 300 400 500 600 700 800 900 1000 Offshore Onshore Wells Meterage ('000 metres) Development drilling activities (FY17(1))  During FY17(1), 1,245,000 metres of wells were explored and developed and 540 wells were drilled in the country.  State-owned oil companies undertake most of the upstream drilling and exploration work.  In January 2018, after a gap of eight years, the Central Government auctioned 55 exploration blocks which offered a record area for prospecting of oil and gas. This was the first auction under OALP* that allows companies to carve out blocks of their choice with a view to bringing about 2.8 million square kilometres of unexplored area in the country under exploration.
  • 13. For updated information, please visit www.ibef.orgOil & Gas13 PIPELINES: CRUDE PIPELINE NETWORK 41.43% 34.42% 5.95% 18.20% ONGC IOC OIL Others 51.33% 11.55% 11.53% 25.58% IOCL OIL ONGC Others Source: Ministry of Petroleum and Natural Gas, Aranca Research Note: km – Kilometre, mmtpa – Million Metric Tonnes Per Annum, (1)Approximate Shares in crude pipeline network by length (out of 10,327 km) (May 1, 2018)1 Shares in crude pipeline network by capacity (out of 141.2 MMTPA) (May 1, 2018)1  As of May 1, 2018, India had a network of 10,327 km of crude pipeline having a capacity of 141.2 mmtpa(1).  In terms of length, IOCL accounts for 51.33 per cent (5,301 km) of India’s crude pipeline network.  In terms of actual capacities, ONGC leads the pack with a share of 41.43 per cent, followed by IOCL at 34.42 per cent.
  • 14. For updated information, please visit www.ibef.orgOil & Gas14 Pipelines: Existing Pipelines in India IOCL BPCL(1) HPCL(2) OIL ONGC Cairn HMEL Others (GAIL and Petronet India.) Total industry Length (Kms) Product Pipeline 7,950 1,948 3,371 654 - - - 2,688 16,611 Crude oil Pipeline 5,301 937 - 1,193 1,191 688 1,017 - 10,327 Total 13,251 2,885 3,371 1,847 1,191 688 1,017 2,688 26,938 Capacity of Crude Oil Pipelines (MMTPA) Product Pipeline 46.2 16.2 38.1 1.7 - - - 9.3 111.4 Crude oil Pipeline 48.6 6.0 - 8.4 58.5 10.7 9.0 - 141.2 Total 94.8 22.2 38.1 10.1 58.5 10.7 9.0 9.3 252.6 Source: Ministry of Petroleum and Natural Gas, Aranca Research Note: kms – Kilometres, mmtpa – Million Metric Tonnes Per Annum, (1)Includes Petronet Cochin-Coimbatore-Karur Product pipeline, (2)Includes Petronet Mangalore-Hassan-Bangalore Product Pipeline Company-wise length and capacity of products pipeline and crude oil pipeline (as of May 1, 2018)
  • 15. For updated information, please visit www.ibef.orgOil & Gas15 PIPELINES: REFINED PRODUCTS AND LPG PIPELINE NETWORK 67.94% 10.62% 15.59% 4.87% 0.83% GAIL Reliance GSPL ARN Others 47.86% 20.29% 11.73% 3.94% 16.18% IOC HPCL BPCL OIL Others Source: Ministry of Petroleum and Natural Gas, Aranca Research Shares in products pipeline network under operation by length (out of 16,611 km, FY182) Shares in Natural Gas pipeline network by length (out of 16,793 km) (FY183)  With 16,611 km of refined products pipeline network (capacity of 111.4 mmtpa) in India, Indian Oil Corporation (IOC) leads the segment with 47.86 per cent of the total length of product pipeline network, as of May 1, 2018.  Top 3 companies IOC, HPCL and BPCL contribute 79.88 per cent of the total length of product pipeline network in the country.  As of April 1, 2018, Gas Authority of India Ltd. (GAIL) has largest share (67.94 per cent or 11,410 km) of the country’s natural gas pipeline network (16,793 km) Note: km - Kilometre, mmtpa – Million Metric Tonnes Per Annum, LPG - Liquefied Petroleum Gas, IOC - Indian Oil Corporation, HPCL - Hindustan Petroleum Corporation Ltd, BPCL - Bharat Petroleum Corporation Ltd, OIL - Oil India Limited, (1)Others include GAIL and Petronet India, (2)As of May 1, 2018, (3)As of April 1, 2018, (4)Others includes IOCL and ONGC 1 4
  • 16. For updated information, please visit www.ibef.orgOil & Gas16 DOWNSTREAM SEGMENT: REFINERY CRUDE THROUGHPUT… (1/2) 108.03 112.51 112.17 112.13 115.11 122.58 130.57 134.22 134.73 144.20 154.3 160.77 27.62 33.43 38.29 48.54 74.44 81.38 81.18 88.27 88.23 88.53 88.66 91.09 91.16 14.47 0 50 100 150 200 250 300 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19* Public sector Private sector Source: Ministry of Petroleum and Natural Gas, Aranca Research Note: mmt – Million Metric Tonne, Public Sector includes IOCL ,BPCL ,HPCL, CPCL and ONGC, Private sector includes RIL and Essar, FY19* - up to May 2018  State-controlled entities dominate the downstream segment as well  India has 19 refineries in the public sector and 3 in the private sector  Private companies such as Reliance Industries Ltd. and Essar Oil have become major refiners  Crude oil throughput of public sector refineries has grown at a CAGR of 3.68 per cent from 108.03 mmt in FY07 to 160.77 mmt in FY18. During the same time, crude oil throughput of private sector refineries has grown at a CAGR of 9.55 per cent from 33.43 mmt to 91.16 mmt.  The share of private sector refineries’ throughput in total crude throughput has grown from 29.99 per cent in FY07 to 36.18 per cent in FY18.  Refiner crude throughput of public sector and private sector stood at 27.62 mmt and 14.47 mmt, respectively, during Apr-May 2018. Visakhapatnam port traffic (million tonnes)Refinery crude throughput (mmt)
  • 17. For updated information, please visit www.ibef.orgOil & Gas17 DOWNSTREAM SEGMENT: REFINERY CRUDE THROUGHPUT… (2/2) Shares in India's total refining capacity (May 1, 2018) 116.89 120.07 120.07 120.07 120.07 135.07 139.00 142.10 142.10 76.50 93.00 95.00 95.00 95.00 95.00 95.00 105.50 105.50 0.00 50.00 100.00 150.00 200.00 250.00 300.00 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19* Public sector Private sector (incl JV) Source: Ministry of Petroleum and Natural Gas, PPAC, Aranca Research Total installed refinery capacity (mmt) Note: mmt – Million Metric Tonne; HPCL - Hindustan Petroleum Corporation Ltd, BPCL - Bharat Petroleum Corporation Ltd, OIL - Oil India Limited, ONGC - Oil and Natural Gas Corporation, IOCL - Indian Oil Corporation Ltd, CPCL - Chennai Petroleum Corporation Limited, FY 19* - As of May 1, 2018  As of May 1, 2018, the sector’s total installed provisional refinery capacity was 247.6 mmt. IOC emerged as the largest domestic refiner with a capacity of 69.2 mmt  Top three companies - RIL, IOC and BPCL contribute around 70.23 per cent of India's total refining capacity 27.95% 27.54% 14.74% 10.95% 8.08% 6.10% 4.64% IOC RIL BPCL HPCL Essar ONGC CPCL 247.6 MMT
  • 18. For updated information, please visit www.ibef.orgOil & Gas18 DOWNSTREAM SEGMENT: PETROLEUM PRODUCTS  Consumption of petroleum products in India increased to 204.92 mmt in FY18(P) from 194.60 mmt in FY17.  Petroleum products derived from crude oil include light distillates such as LPG, naphtha; middle distillates such as kerosene; and heavy ends such as furnace, lube oils, bitumen, petroleum coke and paraffin wax  Light distillates with the highest growth rate grew at CAGR of 4.78 per cent, while middle distillates and heavy end segment witnessed a CAGR of 3.93 per cent and 5.89 per cent respectively, during the year FY08-17.  Production of petroleum products increased from 3,996 tmt in FY 07 to 4,608 tmt in FY 18.  Production of petroleum products by fractionators grew to 769.07 tmt during Apr-May 2018. Consumption of Petroleum Products (mmt) 38.4 39.7 39.0 41.4 43.9 46.3 47.6 50.9 54.7 58.5 62.8 66.4 71.1 75.0 79.4 82.7 81.8 82.8 81.9 88.9 27.7 27.5 27.7 24.6 24.9 28.1 29.0 31.4 31.6 46.4 0.0 50.0 100.0 150.0 200.0 250.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Light Distillates Middle Distillates Heavy Ends Source: Ministry of Petroleum and Natural Gas, Aranca Research 3,996.00 4,084.00 4,191.40 4,363.00 4,168.60 4,175.20 4,089.43 3,871.57 3,657.15 3,377.16 3,457.75 4,608.00 769.07 0.00 1000.00 2000.00 3000.00 4000.00 5000.00 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19* Production of Petroleum Products by Fractionators (tmt) Note: mmt – Million Metric Tonne, tmt – thousand metric tonne, P – Provisional, FY19* - As of May 2018
  • 19. For updated information, please visit www.ibef.orgOil & Gas19 DOWNSTREAM SEGMENT: DISTRIBUTION AND MARKETING 85.10 89.57 97.70 104.50 110.50 109.72 97.36 97.36 96.61 107.58 0.0 50.0 100.0 150.0 200.0 250.0 FY14 FY15 FY16 FY17 FY18 Product pipeline Natural Gas Pipeline Source: Ministry of Petroleum and Natural Gas, Aranca Research Downstream distribution statistics (MMT) Pipeline Capacity (mmtpa) As of May 1, 2018 Length (km) As of May 1, 2018 Crude Pipeline 141.2 10,327 Product Pipeline 111.4 16,661 Natural Gas Pipeline2 104.08 16,793 Note: MMT – Million Metric Tonne, mmtpa – Million Metric Tonnes Per Annum, OMC – Oil Marketing Companies, 1As of 1st May 2018, 2As of April 1, 2018  The total number of OMC retail outlets increased to 62,670 at the start of May 20181 from 59,595 at the end of FY17.  IOC, as of May 01, 2018, owned the maximum number of retail outlets in the country (27,712 or 43.26 per cent of total), followed by HPCL (15,077 or 24.06 per cent), BPCL (14,453 or 23.06 per cent) and MRPL (6 or 0.01 per cent); the remaining being owned by private firms.  As of May 20181, there were 20,221 LPG distributors (of PSUs) in India.
  • 20. For updated information, please visit www.ibef.orgOil & Gas20 STATE-WISE CRUDE RESERVE, CAPACITY AND THROUGHPUT Source: Ministry of Petroleum and Natural Gas, Aranca Research State Balance recoverable reserves of crude oil, April 1, 2017 (MMT) Assam 159.96 Gujarat 118.61 Rajasthan 24.55 Tamil Nadu 9.00 Andhra Pradesh 8.15 Nagaland 2.38 Arunachal Pradesh 1.52 Tripura 0.07 Total Onshore 324.24 Western Offshore 239.20 Eastern Offshore 40.67 Total Offshore 279.87 State Installed capacity, as of April 2017 (mt) Crude throughput for FY 2017 (mmt) Gujarat 93.7 105.01 Maharashtra 19.5 22.05 Haryana 15.0 15.64 Karnataka 15.0 15.97 Tamil Nadu 1.5 0.53 Kerala 12.4 11.82 Andhra Pradesh 8.396 9.42 Uttar Pradesh 8.0 9.23 West Bengal 7.5 7.69 Assam 7.0 6.57 Bihar 6.0 6.53 Punjab 9.0 10.52 Madhya Pradesh 6.0 6.36 Odisha 15 8.23 Himachal Pradesh 10.5 9.76 Total 234.496 245.33 Note: Mmt – Million Metric Tonne, mt – Million Tonne
  • 21. For updated information, please visit www.ibef.orgOil & Gas21 KEY DOMESTIC OIL AND GAS COMPANIES Source: Bloomberg, Aranca Research Company Ownership (per cent) as on FY17-18 FY18 Total Income from Operations (US$ billion) Indian Oil Corporation Limited 56.98% state-owned 65.79 Reliance Industries Public Listed 60.77 Bharat Petroleum Corporation Limited 54.31% state-owned 31.13* Hindustan Petroleum Corporation Limited 51.11% state-owned (through ONGC) 34.06 ONGC 68.07% state-owned 11.99* GAIL India Limited 53.59% state-owned 8.46 Oil India Limited 66.13% state-owned 1.69* Note: : FY – Indian Financial Year from April–March , *for FY17
  • 22. Oil and Gas NOTABLE TRENDS AND STRATEGIES
  • 23. For updated information, please visit www.ibef.orgOil & Gas23 NOTABLE TRENDS IN THE OIL AND GAS SECTOR  Government approved the CBM policy in 1997 to boost the development of clean and renewable energy resources  The CBM policy was designed to be liberal and investor friendly; the 1st commercial production of CBM was initiated in July 2007 at about 72,000 cubic metres per day. Production in 2017-18 stood at 2.01 million cubic metres per day. Coal Bed Methane (CBM)  The technology was first widely used in the US in the 1800s and in India (Kolkata and Mumbai) in the early 1900s  UCG is currently the only feasible technology available to harness energy from deep unmineable coal seams economically in an eco-friendly manner and it reduces capital outlay, operating costs and output gas expenses by 25–50 per cent vis-à-vis surface gasification Underground Coal Gasification (UCG)  The government initiated the National Gas Hydrate Programme (NGHP), a consortium of national E and P companies and research institutions, to map gas hydrates for use as an alternate source of energy  Bio-fuels (bio-ethanol and bio-diesel) are alternate sources of energy from domestic renewable resources; these have lower emissions compared to petroleum or diesel Gas hydrates and bio- fuels  The Open Acreage Licensing Policy (OALP), which allows an explorer to study the data available and bid for blocks of his choice has been initiated to increase foreign participation by global E & P companies like Shell, BP, Conoco Phillips etc Open Acreage Licensing Policy
  • 24. For updated information, please visit www.ibef.orgOil & Gas24 STRATEGIES ADOPTED … (1/2) Expansions Source: Aranca Research Diversification Open Acreage Licensing Policy  Oil and Natural Gas Corporation (ONGC) is going to invest Rs 17,615 crore (US$ 2.73 billion) on drilling oil and gas wells in 2018-19.  Essar Oil and Gas will undertake investments to the tune of Rs 900 crore (US$ 130.64 million) for drilling more wells in its Raniganj CBM block to increase gas output to 2.3 MMSCMD by 2021.  H-Energy is planning to invest Rs 3,500 crore (US$ 540.62 million) to build Liquified Natural Gas (LNG) terminals and lay down a 60 km pipeline.  State run energy firms Bharat Petroleum, Hindustan Petroleum and Indian Oil Corp plan to spend US$ 20 billion on refinery expansions to add units, by 2022  The country’s state owned oil companies aim to sustain spending at a 3 year high due to increasing demand and declining oil services costs. Indian Oil plans to expand its refining capacity and build new businesses, for which it will be spending US$ 27.94 billion over the next 5-7 years.  Indian Oil Corp plans to make an investment of US$22.91 billion, including US$7.64 billion for expanding its existing brownfield refineries, in the next 5 to 7 years. Moreover, the company plans to lay the nation's longest LPG pipeline of 1987 km, from Gujarat coast to Gorakhpur in eastern Uttar Pradesh, to cater to growing demand for cooking gas in the country. In FY18, the company is planning to invest US$ 3.5 billion to expand and enhance its refinery capability and marketing infrastructure.  India targets US$ 100 billion worth investments in gas infrastructure by 2022, including an addition of another 228 cities to city gas distribution (CGD) network. This would include setting up of RLNG terminals, pipeline projects, completion of the gas grid and setting up of CGD network in more cities.  Oil companies are focusing on vertical integration for next stage of growth. For instance, oil producer Oil India Ltd is planning to build and operate refineries, while Indian Oil is planning to enter oil and gas exploration  As of March 2017, Bharat Petroleum Corp. Ltd. (BPCL), an Indian state-controlled oil and gas company, plans to enter the country’s travel business with the launch of its startup named as “Happy Roads”. The application, which is available on Android Play Store, documents itineraries and assists the users in planning a fun-filled trip
  • 25. For updated information, please visit www.ibef.orgOil & Gas25 STRATEGIES ADOPTED … (2/2) Source: India Banking Association, Reserve Bank of India, Aranca Research Notes: ATM - Automated Teller Machine, FIP – Financial Inclusion Plan, RBI – Reserve Bank of India Move to non- conventional energy resources  Companies are looking forward to developing JVs and technical partnership with foreign companies to improve capabilities to develop shale reserves Investments to enhance production  Indian companies are enhancing production through redevelopment plans to increase recovery rates of hydrocarbon from oil wells; ONGC in Mumbai High achieved success in implementing this.  Indian Oil Company (IOC) is planning to invest Rs 1.43 lakh crore (US$ 22.19 billion) to nearly double its oil refining capacity to 150 million tonnes by 2030. More focus upon small companies  Private sector units like Adani, Sun Petrochemicals and few new entrants have bagged 1/3rd of small oil and gas fields.  In February 2017, Genesis, London, bagged a contract from RIL’s (Reliance Industries) to design deep water field front end engineering at KG Basin in West India. Pilot project Initiated for Shale Gas Production in India  Oil and Natural Gas Corp (ONGC) has started Shale Gas exploration by spudding the first Shale Gas well RNSG-1 in Burdwan District of West Bengal. Piped Cooking Gas  ONGC has started supply of Piped Natural Gas in Bhubaneswar from October 2017 and is currently laying down natural gas pipeline in Varanasi.  In May 2018, India launched its biggest auction of City Gas Distribution (CGD) networks. The successful companies will be permitted to sell Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in 86 geographical areas. The auctions are expected to lead to investments worth Rs 70,000 crore (US$ 10.86 billion).
  • 27. For updated information, please visit www.ibef.orgOil & Gas27 GROWTH DRIVERS Source: Ministry of Petroleum and Natural Gas, US Energy Information Administration, BP Statistical Review of World 2015 Energy, June 2012; BMI, Aranca Research Notes: TCM - Trillion Cubic Metres, EandP - Exploration and Production Growing Demand Robust growth in domestic market Increasing demand for natural gas Favourable Business Conditions Abundant raw material Skilled labour Government Support 100% FDI investments allowed Favourable Policies
  • 28. For updated information, please visit www.ibef.orgOil & Gas28 RISING DEMAND  Energy demand of India is anticipated to grow faster than energy demand of all major economies, on the back of continuous robust economic growth.  Consequently, India’s energy demand as a percentage of global energy demand is expected to rise to 11 per cent in 2040 from 5.58 per cent in 2017.  Crude oil consumption is expected to grow at a CAGR of 3.60 per cent to 500 million tonnes by 2040 from 221.76 million tonnes in 2017.  Natural Gas consumption is forecasted to increase at a CAGR of 4.31 per cent to 143.08 million tonnes by 2040 from 54.20 million tonnes in 2017. Crude oil consumption and forecast (MT) 221.76 500.00 0 100 200 300 400 500 600 2017 2040F Natural gas consumption and forecast (BCM) 54.20 143.08 0 20 40 60 80 100 120 140 160 2017 2040F Source: BP Statistical Review of World Energy 2018, BP Energy Outlook 2018 Notes: F-Forecast, MT – Million Tonnes, BCM – Billion Cubic Metres CAGR 3.60% CAGR 4.31%
  • 29. For updated information, please visit www.ibef.orgOil & Gas29 REGULATORY OVERVIEW OF THE INDUSTRY… (1/2) Pricing of CNG and PNG by CGD Entities (2014) Source: Ministry of Petroleum and Natural Gas, Aranca Research  In 2014, the pricing for CNG (transport) and PNG (domestic) were examined by the Ministry of Petroleum and Natural Gas while the disclosure of prices of the CNG and PNG commodities were made compulsory The Policy on Shale Gas and Oil, 2013  Allows companies to apply for shale gas and oil rights in their petroleum exploration licenses and petroleum mining leases Open Acreage Licensing  Launched in June 2017, it allows companies to carve out area for petroleum exploration and production. The policy, launched under Hydrocarbon Exploration and Licensing Policy (HELP), has replaced New Exploration and Licensing Policy under which bidders did not have the freedom of carving out areas for E&P The National Biofuel Policy, 2009  Promotes bio-fuel usage, the Government of India has provided a 12.36 per cent concession on excise duty on bio-ethanol and exempted bio-diesel from excise duty Integrated Energy Policy (IEP), 2006  Outlines goals to deal with challenges faced by India’s energy sector
  • 30. For updated information, please visit www.ibef.orgOil & Gas30 REGULATORY OVERVIEW OF THE INDUSTRY… (2/2) Source: Ministry of Petroleum and Natural Gas, Aranca Research Petroleum and Natural Gas Regulatory Board (PNGRB) Act, 2006  Regulate refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas Auto Fuel Policy, 2003  Provide a roadmap to comply with various vehicular emission norms and corresponding fuel quality upgrading requirements over a period of time Freight Subsidy (for far- flung areas) Scheme, 2002  Compensate public sector Oil Marketing Companies (OMCs) for the freight incurred to distribute subsidised products in far- flung areas Domestic Natural Gas Pricing Formula, 2014  New domestic natural gas pricing formula has been formed, which will be revised on an half yearly basis. Marginal Field Policy  Monetise discovered small oil and gas fields to augment domestic production  Improved fiscal terms viz. no oil cess applicable on crude oil production, no upfront signature bonus, pricing and marketing freedom for oil and gas and no carried interest by NOCs Note: NOCs - National Oil Companies
  • 31. For updated information, please visit www.ibef.orgOil & Gas31 FDI INVESTMENTS IN PETROLEUM AND GAS IN INDIA Source: : Department of Industrial Policy and Promotion, Aranca Research  FDI inflows in India’s petroleum and natural gas sector stood at US$ 6,880.35 million during April 2000–March 2018. 0.50 0.10 2.10 0.10 1.10 0.07 0.18 0.03 3.20 3.30 5.40 5.50 6.60 6.67 6.85 6.88 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FDI inflows into petroleum and natural gas (US$ billion) Cumulative from April 2000
  • 32. For updated information, please visit www.ibef.orgOil & Gas32 M&A ACTIVITIES IN THE INDIAN OIL AND GAS SECTOR Source: Thomson Banker, News Articles Date announced Acquirer name Target name Value of deal (US$ million) Feb 2018 ONGC HPCL (51.11 per cent stake) 57,020.39 Feb 2018 ONGC Videsh Abu Dhabi National Oil Co (10 per cent stake in offshore oilfield) 600 Aug 2017 Rosneft Essar Oil (49 per cent stake) 1,290 Dec 2016 Oil and Natural Gas Corp's Gujarat State Petroleum Co's 1200 Dec 2015 ONGC Videsh Ltd (OVL) Vankor oil field 1260 Jan 2015 Bharat Forge Mecanique Generale Langroise 12.82 Jun 2014 Gulf Petrochem Ltd Sah Petroleums Limited 7.13 Mar 2014 IOCL Progress Energy Canada Ltd Not disclosed Oct 2013 ONGC Videsh Ltd Parque das Conchas, Brazilian Oilfield 529 Jun 2013 ONGC Videsh Ltd (in partnership with Oil India Ltd) Rovuma Area 1 Offshore Block 2640
  • 34. For updated information, please visit www.ibef.orgOil & Gas34 OPPORTUNITIES  Locating new fields for exploration: 78 per cent of the country’s sedimentary area is yet to be explored  Development of unconventional resources: CBM fields in the deep sea  Opportunities for secondary/tertiary oil producing techniques  Higher demand for skilled labour and oilfield services and equipment  Expansion in the transmission network of gas pipelines  LNG imports have increased significantly; this provides an opportunity to boost production capacity  In light of mounting LNG production, huge opportunity lies for LNG terminal operation, engineering, procurement and construction services Midstream segment  India is already a refining hub with 21 refineries and expansions planned for tapping foreign investment in export-oriented infrastructure, including product pipelines and export terminals  Development of City Gas Distribution (CGD) networks, which are similar to Delhi and Mumbai’s CGDs  Expansion of the country’s petroleum product distribution network Downstream segment Upstream segment
  • 35. For updated information, please visit www.ibef.orgOil & Gas35 SHALE GAS PROSPECTS OF INDIA Source: EandY; Ministry of Petroleum and Natural Gas, Aranca Research  India has technically recoverable shale gas resources of nearly 96 tcf.  The Cambay, Krishna Godavari, Cauvery and the Damodar Valley are the most prospective sedimentary basins for carrying out shale gas activities in the country  Around 20 tcf of gas has been classified as technically recoverable reserves in the Cambay basin in Gujarat (the largest basin in the country) spread across 20,000 gross square miles with a prospective area of 1,940 square miles  It is estimated that the Krishna Godavari (KG) basin encloses a series of organically rich shales, containing around 27 tcf of technically recoverable gas. KG basin, located in Eastern India, holds the country’s largest shale gas reserves, extending over 7,800 gross square miles with a prospective area of around 4,340 square miles  In April 2013, the Directorate General of Hydrocarbons (DGH) submitted its policy on exploitation of shale gas to the Ministry of Petroleum and Natural Gas  India launched its policy on shale gas exploration to tap the non-conventional energy resource in order to boost output. Notes: tcf – Trillion Cubic Feet
  • 37. For updated information, please visit www.ibef.orgOil & Gas37 CONTACT INFORMATION Name Address Contact person Telephone E-mail Oil Industry Development Board (OIDB) 3rd Floor, Tower C, Plot No. 2, Sector – 73, Noida, Uttar Pradesh - 201301 Mr Ajay Srivastava, Financial Adviser and Chief Accounts Officer 0120-2594630 0120-2594603 facao.oidb@nic.in Petroleum Conservation Research Association (PCRA) Sanrakshan Bhavan, 10 Bhikaji Cama Place, New Delhi – 110066 Mr Alok Tripathi, ED 91-11- 26198799 Ext.301 pcra@pcra.org Bureau of Energy Efficiency (BEE) Ministry of Power, 4th floor, SEWA Bhawan, RK Puram, New Delhi – 110066 Mr Abhay Bakre, Director General 91-11- 26178316, 91-11- 26179699 dg-bee@nic.in, Oil Industry Safety Directorate Ministry of Petroleum & Natural Gas, 8th Floor, OIDB Bhawan, Plot No 2, Sector-73, Noida, Uttar Pradesh- 201301 Mr Varanasi Janardhana Rao, ED 0120-2593800 rao.vj@gov.in Petroleum Planning and Analysis Cell (PPAC) Ministry of Petroleum and Natural Gas, 2nd floor, Core-8, SCOPE Complex, 7 Institutional Area, Lodhi Road, New Delhi – 110003 Mr Vinod Kumar, Deputy Director – Information Technology 011-24306153 webadm@ppac.gov.in Directorate General of Hydrocarbons Ministry of Petroleum and Natural Gas, OIDB Bhawan, Plot No 2, Sector 73, Noida Mr Atanu Chakraborty, Director General 0120 - 2472001 dg@dghindia.org
  • 38. For updated information, please visit www.ibef.orgOil & Gas38 GLOSSARY  B/D (or bpd): Barrels Per Day  MBPD (or mbpd): Million Barrels Per Day  BCM (or bcm): Billion Cubic Metres  CBM: Coal Bed Methane  CGD: City Gas Distribution  EandP: Exploration and Production  FDI: Foreign Direct Investment  FY: Indian Financial Year (April to March) • FY17 implies April 2016 to March 2017  GoI: Government of India  INR: Indian Rupee  LNG: Liquefied Natural Gas  MMT (or mmt): Million Metric Tonne  MMTPA (or mmtpa): Million Metric Tonnes Per Annum  EBITDA: Earning Before Interest Taxes Depreciation Amortisation  NRL: Numaligarh Refinery Limited  CPCL: Chennai Petroleum Corporation Limited  HPCL: Hindustan Petroleum Corporation Limited  BPCL: Bharat Petroleum Corporation Limited
  • 39. For updated information, please visit www.ibef.orgOil & Gas39 GLOSSARY  IOC: Indian Oil Corporation Ltd  EOL: Essar Oil Ltd  RPL: Reliance Petroleum Limited  MRPL: Mangalore Refinery and Petrochemicals Limited  PCCK: Petronet Cochin-Coimbatore-Karur  PMHB: Petronet Mangalore-Hassan-Bangalore  OALP: Open Acreage Licensing Policy  TOE (or toe): Tonnes of Oil Equivalent  US$ : US Dollar  ONGC: Oil and Natural Gas Corporation of India  IOCL: Indian Oil Corporation Limited  mn bbl: Million Barrels  CAGR: Compound Annual Growth Rate  JV: Joint Venture  UCG: Underground Coal Gasification  NGL: Natural Gas Liquids  OMCs: Oil Marketing Companies  NHGP: National Gas Hydrate Programme  Wherever applicable, numbers have been rounded off to the nearest whole number
  • 40. For updated information, please visit www.ibef.orgOil & Gas40 EXCHANGE RATES Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year) Year INR INR Equivalent of one US$ 2004–05 44.95 2005–06 44.28 2006–07 45.29 2007–08 40.24 2008–09 45.91 2009–10 47.42 2010–11 45.58 2011–12 47.95 2012–13 54.45 2013–14 60.50 2014-15 61.15 2015-16 65.46 2016-17 67.09 2017-18 64.45 Q1 2018-19 67.04 Year INR Equivalent of one US$ 2005 44.11 2006 45.33 2007 41.29 2008 43.42 2009 48.35 2010 45.74 2011 46.67 2012 53.49 2013 58.63 2014 61.03 2015 64.15 2016 67.21 2017 65.12 Source: Reserve Bank of India, Average for the year
  • 41. For updated information, please visit www.ibef.orgOil & Gas41 DISCLAIMER India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.