Oil and Gas

Growth Drivers

  • As part of International Energy Outlook 2013, EIA projects in India and China will account for about half of global energy demand growth through 2040, with India’s energy demand growing at 3% per year.
  • India held nearly 800 MMT of proven oil reserves at the beginning of 2014, mostly in the western part of the country.
  • About 44% of reserves are onshore resources, while 56% are offshore. The country’s natural gas pipeline network amounted to over 15,340 kms in 2013 and a proposed expansion of 30,000 kms is envisaged by 2018-19.
  • Gas Initial is in place for CDM established at 10 TCF with the possibility of an upside.
  • The government has decided to set up strategic storage of 5.03 MMT of crude oil at three locations – Visakhapatnam, Mangalore and Padur.
  • The government unveiled plans to add another 91 Million barrels to its crude oil capacity to protect India from supply disruptions by 2017.
  • India projects an increase of the country’s refining capacity to 307.366 MMTPA by 2017 based on its current Five Year Plan (2012-17) to meet rising domestic demands and export markets.
  • The government is in the process of determining the structure of petroleum contracts between the government and companies. The current system includes a production-sharing mechanism, allowing producers to recover exploration costs during production before sharing profits with the government.
  • In recent years, major discoveries in the Barmer basin in Rajasthan and the offshore Krishna-Godavari basin by smaller companies such as the Gujarat State Petroleum Corporation and Andhra Pradesh Gas Infrastructure Corporation hold some potential to diversify the country’s production.

Reasons to Invest

  • Growing economy and population growth are the main drivers for oil & gas demand, increasing every year.
  • Import content in oil & gas sector is in the range of 15% for refinery to 70% for upstream.
  • Government has approved natural gas pricing Formula. International prices for majority of petroleum products
  • Surplus refining capacity and present refining capacity of about 4.3 million barrels per day.
  • Gas Pipeline network of 15,000 kilometre exists and construction of another 15,000 Kilometre of gas pipeline network is in progress. Several industries are increasing consumption of natural gas in operations.
  • Several domestic companies such as the Oil and Natural Gas Corporation, Reliance Industries Limited and Gujarat State Petroleum have found natural gas in deep waters.
  • Several private companies have emerged as important players in the past decade. Cairn India, a subsidiary of British company Cairn Energy, produces more than 20% of India’s crude oil production through its operation of major stakes in the Rajasthan and Gujarat regions and Krishna-Godavari basin.
  • It is a transparent and level playing field for Indian private/foreign investors and national oil companies – both enjoy the same fiscal and contract terms.
  • 61% of the prognosticated reserves of 28,000 MMT are yet to be harnessed.
  • Supportive Government Regime – ease of doing business
  • Proposed Uniform Licensing Policy - Rights to explore all type of hydrocarbons – conventional and non-conventional. Other fiscal incentives for ultra deepwater blocks.
  • Prospectively - every fifth block is hydrocarbon discovery block under NELP where E&P inputs were provided for.
  • Private companies such as Reliance Industries Limited and Essar Oil have become major refiners.
  • Despite being a net importer of crude oil, India has become a net exporter of petroleum products by investing in refineries designed for export, particularly in Gujarat.
  • RLNG regasification facility is likely increase to 32.5 MMTPA by 2017-18 from a current level of 22 MMTPA.
  • Investment opportunities are in Upstream, gas pipeline, CGD network, LNG Terminal, Petrochemical and Refinery.
Oil and Gas

Foreign investors

BP
CAIRN
SHELL
BG GROUP
NIKO RESOURCES LTD