INVEST INDIA : Opportunities in the World's Largest Democracy

Oil & Gas Exploration

OVERVIEW

SIZE

Oil & Gas provide 45% of India’s primary energy requirements
- It is a critical input for downstream industries like petrochemicals, fertilizers and energy
Crude oil demand is currently about 146 MMT while the domestic production of crude is only 34 MMT
- India’s crude oil import dependency is likely to increase to 90% by 2025 from the current level of 72%
Natural gas demand is currently about 179 MMSCMD while the domestic supply is only 80 MMSCMD
- The demand-supply gap is likely to reduce in the near future on account of the several major gas finds, especially those in the Krishna Godavari (KG) basin

STRUCTURE

Oil and Natural Gas Commission (ONGC) and Oil India Limited (OIL), both public sector companies, are the largest with about 82% share of the total domestic oil and gas production
The Exploration and Production (E&P) sector is witnessing increasing private sector participation, both domestic and foreign
- In the last 2 years, private sector/JV companies have made 17 significant hydrocarbon discoveries
- The world’s largest gas discovery in 2002 (about 10 trillion cubic feet) was made by Reliance Industries Ltd.
International E&P companies like Hardy Oil & Gas, Santo, Geoglobal, Newbury, Petronas, Niko Resources and Cairn Energy are already present in India

POLICY

100% FDI is allowed in the exploration of Crude Oil and Natural Gas through the automatic route
The New Exploration Licensing Policy (NELP) is in place (since 1998) to facilitate private sector participation in Oil and Gas exploration
- Over 164 oil blocks have been awarded since 1999 via 6 rounds of global competitive bidding under the NELP programme
- 57 blocks are expected to be awarded in 2008 under NELP VII
A Coal Bed Methane (CBM) Policy has been formulated which provides for attractive fiscal and contract terms for the exploration of CBM blocks
- Over 26 blocks have been awarded under 3 rounds of global competitive bidding
Petroleum and Natural Gas Regulatory Board Bill enacted, Regulatory Board constituted

Source: Directorate General of Hydrocarbons, Ministry of Petroleum and Natural Gas, BP Statistical Review of World Energy

Sedimentary Basins in India

TOP

OPPORTUNITY

Several major gas finds have taken place in India
in the last few years

OUTLOOK

Crude oil demand is likely to increase to about 235 MMT by 2012
- Rising global crude oil prices have triggered increased E&P focus to expand domestic production
Gas demand is expected to reach 279 MMSCMD by 2012
- A CAGR of 12% for the next 5 years
- Increased use of gas for power generation, petrochemicals, fertilisers and city gas distribution will drive demand growth

POTENTIAL

Growing demand-supply mismatch provides ample opportunities for investment
Exploration and production of crude oil, gas and CBM
The government is actively promoting the creation of strategic oil and gas reserves through partnerships with the private sector
22% of the Indian sedimentary area is unexplored – discovery of oil fields by investors such as Cairn Energy and “giant” gas fields by Reliance, ONGC, etc. indicate a large potential for profitable investment in exploration
An investment need of US$40 billion is expected in exploration and production by 2012
Reliance alone plans to spend over US$10 billion in oil & gas exploration and production over the next 3 years.

For additional information: Ministry of Petroleum and Natural Gas (http://petroleum.nic.in)