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For updated information, please visit www.ibef.org October 2019

OIL & GAS

Table of Content

Executive Summary……………….….…….3

Advantage India…………………..….……...4

Market Overview and Trends………..……..6

Notable Trends and Strategies..…..……...23

Growth Drivers…...……………...……….…28

Opportunities...……………………..............35

Useful Information……….......…………..…38

For updated information, please visit www.ibef.orgOil & Gas3

EXECUTIVE SUMMARY

As of May 1, 2019, the oil refining capacity of India stood at 249.4 million tonnes, making it the second largest

refiner in Asia. Private companies own about 35.36 per cent of the total refining capacity.

Source: US Energy Information Administration (EIA), Ministry of Petroleum and Natural Gas, BP Statistical Review 2018, News sources

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.

Petroleum product consumption registered a contraction by 0.2 per cent year-on-year for the quarter and 1.7

per cent in June alone..

India’s consumption of petroleum products grew 2.66 per cent to 211.64 MMT in FY19 from 206.17 MMT in

FY18.

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’s LNG imports rise 9.1 per cent to 2.738 billion cubic meters (bcm) in July 2019

Notes: MMT - Million Metric Tonnes, Mtoe – Million Tonnes of Oil Equivalent; mbpd – Million Barrels Per Day, LNG – Liquified Natural Gas; Figures mentioned in this slide is as per latest

data available. ^Updated data is expected in June 2019 from BP statistical review 2019

World’s third-largest

energy consumer

Third-largest consumer

of oil

Fourth-largest LNG

importer in 2017

Second largest refiner

in Asia

Oil and Gas

ADVANTAGE INDIA


ADVANTAGE INDIA

India is the world’s third largest energy consumer globally

Demand for primary energy in India is to expected increase

threefold by 2035 to 1,516 million tonnes of oil

Diesel demand in India is expected to double to 163 million

tonnes (MT) by 2029-30.

The oil and gas industry is growing

robustly, and players are undertaking

investments to cater to the burgeoning

demand.

The industry is expected to attract US$ 25

billion investments in exploration and

production by 2022.^

Refining capacity in the country is

expected to increase to 667 MTPA by

2040.*

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 OALP and CBM

policy to encourage investments

In September 2018, Government of

India approved fiscal incentives to

attract investments and technology to

improve recovery from oil fields which

is expected to lead to hydrocarbon

production worth Rs 50 lakh crore

(US$ 745.82 billion) in the next twenty

years.

ADVANTAGE

INDIA

Source: Business Monitor International (BMI), World Oil Outlook 2012, Ministry of Petroleum and Natural Gas, BP Statistical Review 2015, Make in India.

Note: OALP – Open Acreage Licensing Policy, CBM – Coal Bed Methane, MTPA – Million Tonnes Per Annum, ^As per Directorate General of Hydrocarbons, *As per Working Group on

Enhancing Refining Capacity by 2040

GAIL India offering two US Liquefied

Natural Gas (LNG) cargos and seeking

one for delivery to India.

ExxonMobil and ONGC signed an Memorandum of

Understanding (MoU) for offshore blocks.

Oil and Gas

MARKET OVERVIEW

AND TRENDS


STATE-OWNED COMPANIES DOMINATE OIL AND GAS IN

INDIA

Source: BP Statistical Review 2018, US Energy Information Administration, Petroleum Planning and Analysis Cell, TechSci Research

India remained as the third largest energy consumer in 2017*.

India’s domestic crude oil production in July 2019 stood at 2,769 thousand metric tonnes (TMT). As of 2017, the country had 600 million metric

tonnes (MMT) of proven oil reserves.

India had 4.5 thousand million barrels of proven oil reserves at the end of 2018 and produced 39.5 million tones in 2018.

Oil production 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)

Nayara Energy Limited’s (NEL’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, *Updated

data is expected in June 2019 from bp statistical review 2019


OIL SUPPLY AND DEMAND IN INDIA

Source: Ministry of Petroleum and Natural Gas, BP Statistical Review 2018, TechSci Research

Note: CAGR – Compound Annual Growth Rate, mbpd – Million Barrels Per Day, P - Provisional, ^As per OPEC, Based on 50 MMT = 1 MBPD, *Updated data is expected in June 2019

from BP statistical review 2019

2.9

4

3.0

8

3.2

4

3.3

2

3.4

9

3.6

9

3.7

3

3.8

5 4.1

6 4.5

6

4.6

9 5.1

6

0.00

1.00

2.00

3.00

4.00

5.00

6.00

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Oil consumption in India (2008-18) (mbpd)

Oil consumption has expanded at a CAGR of 5.24 per cent during 2007–18 to reach 5.16 mbpd by 2019.

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 FY19, total crude oil imports were valued at US$ 111.96 billion as compared to US$ 87.70 billion in FY18. In FY19, crude oil imports increased

to 4.53 mbpd from 4.41 mbpd in FY18.

3.1

9

3.2

7

3.4

3

3.7

0

3.7

8

3.7

9

4.0

6

4.2

8

4.4

1

4.5

30.67 0.750.76

0.76 0.76 0.750.74

0.72 0.64 0.68

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 Oil Production

Imports and domestic oil production in India (mbpd)


GAS SUPPLY AND DEMAND IN INDIA

38

.81

39

.99

48

.34

59

.49

61

.32

56

.66

49

.81

49

.64

46

.41

50

.83

54

.20

58

.10

1,0

15

.44

1,0

49

.12

1,0

73

.44

1,1

05

.50

1,2

30

.13

1,2

80

.36

1,3

03

.96

1,3

73

.63

1,2

04

.94

1,1

81

.37

1,2

41

.44

0

200

400

600

800

1000

1200

1400

1600

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Gas Consumption Proven Gas Reserves

Source: PPAC, BP Statistical Review 2018, TechSci Research

Note: F – Forecast, bcm – Billion Cubic Metres, CAGR – Compound Annual Growth Rate Figures are as per latest data available, ^Updated data is expected in June 2019 from BP

statistical review 2019

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. The government is planning to invest US$ 2.86 billion in the upstream oil and gas

production to double the natural gas production to 60 bcm and drill more than 120 exploration wells by 2022 .

India’s natural gas imports increased at a CAGR of 9.62 per cent during FY10–FY19.

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

.80

32

.06

13

.44

11

.82

12

.89

17

.58

17

.33

17

.20

18

.55

21

.39

21

.6

22

.7

27

.02

10

.65

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20(t

ill A

ugu

st)

Gas production Gas Imports

Domestic gas production and imports (bcm)


EXPORTS OF PETROLEUM PRODUCTS FROM INDIA

51

.15 59

.08

60

.84

63

.41

67

.86

63

.93

60

.54

65

.51

66

.76

61

.10

24

.91

0

10

20

30

40

50

60

70

80

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18P

FY

19

FY

20

Exports of Petroleum Products from India (MMT) (up to

August’19)

Source: PPAC, BP Statistical Review 2018

Note: MMT – Million Metric Tonnes, P – Provisional, HSD – High speed Diesel, MS – Motor Spirit, ATF – Aviation Turbine Fuel, LPG – Liquefied Petroleum Gas, LDO – Light Diesel Oil,

SKO – Superior Kerosene Oil, LOBS – Lubricating Oil Base Stocks, ^Others includes Hexane, Benzene, MTO (Mineral Turpentine Oil), Sulphur, etc

53

31

26

89

31

94

60

4

44

2

17

6

0 13

9 3

93

3

0600

1,2001,8002,4003,0003,6004,2004,8005,4006,0006,6007,2007,8008,4009,000

HS

D

MS

AT

F

Nap

hth

a

Fu

el O

il

Pe

tco

ke

/CB

FS

LP

G

LD

O

Bitum

en

SK

O

LO

BS

/ L

ub

e O

il

Oth

ers

^

Product-wise export of Petroleum Products from India in FY20 (up to

August’19) (TMT)

India is one of the largest exporters of refinery products due to the presence of various refineries. The country had the fourth largest oil refining

capacity and fourth largest refinery throughput globally in 2017.

Exports of petroleum products from India increased from 51.15 MMT in FY10 to 24.91 MMT in FY20 (Till August.

The total value of petroleum products exported from the country increased to US$ 38.24 billion in FY19 from US$ 34.89 billion in FY18.

HSD was the major export item among petroleum products, followed by MS, ATF and Naptha.


UPSTREAM SEGMENT: CRUDE OIL AND GAS

PRODUCTION (1/2)

24

.45

23

.72

22

.56

22

.25

22

.26

22

.36

22

.22

20

.80

19

.60

8.5

8

3.58 3.853.66 3.47 3.40 3.41 3.30

3.40 3.30

1.34

9.6

8

10

.53

11

.64

12

.08

11

.79

11

.36

10

.53

9.9

0

9.6

0

3.7

8

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

ONGC OIL Pvt/JV

Source: Ministry of Petroleum and Natural Gas, TechSci Research

Notes: MMT – Million Metric Tonne, JV – Joint Venture, *Provisional

Crude Oil Production (in MMT)

16

.43

18

.03

19

.44

19

.59

18

.54

17

.85

17

.59

17

.54

13

.17

7.0

0

21

.28

20

.06

18

.42

18

.20

18

.92

19

.09

18

.42

18

.14

12

.78

6.7

2

-

5

10

15

20

25

30

35

40

FY11 FY13 FY15 FY17 FY19 (uptoDec 2018)

Onshore Offshore

Annual crude oil production (in MMT)

In 2018-19, crude oil production in India stood at 34.20 million metric tonnes (MMT).

Onshore production accounted for 50.68 per cent of total production, while offshore contributed the remaining 49.32 per cent.

ONGC accounted for around 61.25 per cent of total crude oil production in India in FY19*.


UPSTREAM SEGMENT: CRUDE OIL AND GAS

PRODUCTION (2/2)

23

,09

5

23

,31

6

23

,54

9

23

,28

4

22

,02

3

21

,17

7

22

,08

8

23

,42

9

24

,67

5

10

15

8.2

9

26

,05

4

21

,60

9

14

,49

1

9,4

97

8,9

12

8,2

35

6,8

72

6,3

38

5,4

77

21

26

.05

2,350

2,633

2,639

2,626 2,722

2,838 2,937 2,881 2,722

1152.66

-

10,000

20,000

30,000

40,000

50,000

60,000

FY11 FY13 FY15 FY17 FY19*

ONGC Pvt/JV OIL

Source: Ministry of Petroleum and Natural Gas; TechSci Research

Note: JV – Joint Venture, ^Including CBM production, **Revised, *Provisional

Annual gas production (million metric standard cubic meter)

8,5

77

.00

9,0

83

.80

8,8

76

.92

9,0

11

.68

8,7

95

.63

9,2

37

.48

9,8

58

.48

10

,63

8.6

8

10

,75

6.2

6

4,1

96

.47

43

,64

5.1

0

38

,47

4.8

4

31

,80

2.3

5

26

,39

5.2

0

24

,86

0.6

4

23

,01

1.7

4

22

,03

8.2

3

22

,01

0.6

2

22

,11

7.1

0

8,9

66

.44

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

FY11 FY13 FY15 FY17 FY19*

Onshore^ Offshore

Annual gas production (million metric standard cubic meter)


UPSTREAM SEGMENT: EXPLORATION AND

DEVELOPMENT ACTIVITIES

59

85

149

266

0

50

100

150

200

250

300

350

400

Offshore Onshore

Wells Meterage ('000 metres)

Source: Ministry of Petroleum and Natural Gas, TechSci Research , BMI

Notes: P– Provisional, *OALP – Open Acreage Licensing Policy, Updated data is expected in October - November 2019 from Ministry of Petroleum PNG statistics 2018-19

Exploration activities (FY18P)

63

338

165

649

0

200

400

600

800

1000

1200

Offshore Onshore

Wells Meterage ('000 metres)

Development drilling activities (FY18P)

During FY18 (P), 1,228,000 metres of wells were explored and developed and 545 wells were drilled in the country.

State-owned oil companies undertake most of the upstream drilling and exploration work.

In September 2018, investments worth Rs 5,900 crore (US$ 840.70 million) were committed in 55 oil and gas exploration areas awarded under

Open Acreage Licensing Policy – 1. The Government of India will soon undertake auction of 14 more blocks in the second round.

The government is planning to invest US$ 2.86 billion in the upstream oil and gas production to double the natural gas production to 60 bcm and

drill more than 120 exploration wells by 2022.


PIPELINES: CRUDE PIPELINE NETWORK

41.45%

33.24%

6.16%

19.15%

ONGC

IOC

OIL

Others*

50.88%

11.45%

12.31%

25.36%

IOCL

OIL

ONGC

Others*


Note: km – Kilometre, mmtpa – Million Metric Tonnes Per Annum, (1)Approximate, *Others includes HMEL, BPCL and Cairn

Shares in crude pipeline network by length

(out of 10,419 km, as on September 01, 2019)1Shares in crude pipeline network by capacity

(out of 145.6 MMTPA, September 01, 2019)1

As of Apr 01, 2019, India had a network of 10,419 km of crude pipeline having a capacity of 145.6 mmtpa(1).

In terms of length, IOCL accounts for 50.88 per cent (5,301 km) of India’s crude pipeline network.

In terms of actual capacities, ONGC leads the pack with a share of 41.62 per cent, followed by IOCL at 33.38 per cent.


PIPELINES: EXISTING PIPELINES IN INDIA

IOCL BPCL(1) HPCL(2) OIL ONGC Cairn HMEL Others (GAIL and Petronet India.) Total industry

Length (Kms)

Product

Pipeline9,098 2,241 3,371 654 - - - 2,395 17759

Crude oil

Pipeline5,301 937 - 1,193 1,283 688 1,017 - 10,419

Total 14,399 3,178 3,371 1,847 1,283 688 1,017 2,395 28,178

Capacity of Crude Oil Pipelines (MMTPA)

Product

Pipeline46.0 19.5 29.4 1.7 - - - 9.4 106

Crude oil

Pipeline48.6 7.8 - 9.0 60.6 10.7 11.3 - 148

Total 94.6 27.3 29.4 10.7 60.6 10.7 11.3 9.4 254


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 on September 01, 2019)

Government of India is planning to invest Rs 70,000 crore (US$ 9.97 billion) to expand the gas pipeline network across the country.


PIPELINES: REFINED PRODUCTS AND LPG PIPELINE

NETWORK

69.90%

10.93%

16.49%

1.82% 0.86%

GAIL

Reliance

GSPL

ARN

IOCL

51.23%

18.98%

12.62%

3.68%

13.49%

IOC

HPCL

BPCL

OIL

Others


Shares in products pipeline network under operation by length

(out of 17,430 km, as on September 1, 2019 )

Shares in Natural Gas pipeline network by length

(out of 16,226 km, September 1, 2019)

With 8,748 km of refined products pipeline in India, Indian Oil Corporation (IOC) leads the segment with 51.23 per cent of the total length of

product pipeline network, as on September 01, 2019.

Top three companies IOCL, HPCL and BPCL contribute 82.83 per cent of the total length of product pipeline network in the country.

As on September 01, 2019, Gas Authority of India Ltd. (GAIL) has largest share (69.90 per cent or 11,411 km) of the country’s natural gas pipeline

network (16,324 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


DOWNSTREAM SEGMENT: REFINERY CRUDE

THROUGHPUT… (1/2)

10

8.0

3

11

2.5

1

11

2.1

7

11

2.1

3

11

5.1

1

12

2.5

8

13

0.5

7

13

4.2

2

13

4.7

3

14

4.2

0

15

4.3

16

0.7

7

16

9.1

7

33

.43

38

.29

48

.54

74

.44

81

.38

81

.18

88

.27

88

.23

88

.53

88

.66

91

.09

91

.16

88

.20

0

50

100

150

200

250

300

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19*

Public sector Private sector


Note: MMT – Million Metric Tonne, Public Sector includes IOCL ,BPCL ,HPCL, CPCL and ONGC, Private sector includes RIL and NEL, *Provisional

India has 23 refineries, out of which 18 are in the public sector, two

in the joint sector and three in the private sector.

Crude oil throughput of public sector refineries has grown at a CAGR

of 3.81 per cent from 108.03 MMT in FY07 to 169.16 MMT in FY19*.

During the same time, crude oil throughput of private sector

refineries has grown at a CAGR of 8.40 per cent from 33.43 MMT to

88.04 MMT.

The share of private sector refineries’ throughput in total crude

throughput has grown from 29.99 per cent in FY07 to 34.24 per cent

in FY19*.

Visakhapatnam port traffic (million tonnes)Refinery crude throughput (MMT)


DOWNSTREAM SEGMENT: REFINERY CRUDE

THROUGHPUT… (2/2)

Shares in India's total refining capacity (As of September 1,

2019)

11

6.8

9

12

0.0

7

12

0.0

7

12

0.0

7

12

0.0

7

13

5.0

7

13

9.0

0

14

2.1

0

14

2.0

7

14

2.0

776

.50

93

.00

95

.00

95

.00

95

.00

95

.00

95

.00

10

5.5

0

11

0.0

0

11

1.8

0

0.00

50.00

100.00

150.00

200.00

250.00

300.00

Public sector Private sector (incl JV)

Source: Ministry of Petroleum and Natural Gas, PPAC, TechSci 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* - Apr 1, 2019

As of September 01, 2019, the sector’s total installed provisional refinery capacity was 253.87 MMT. IOC emerged as the largest domestic refiner

with a capacity of 69.2MMT

Top three companies - RIL, IOC and BPCL contribute around 69.11 per cent of India's total refining capacity

29.00%

28.58%

11.53%

11.36%

8.38%

6.33%4.82% IOC

RIL

BPCL

HPCL

Essar

ONGC

CPCL

238.60 MMT


DOWNSTREAM SEGMENT: PETROLEUM PRODUCTS

Consumption of petroleum products in India increased to 204.92

MMT in FY18(P) from 194.60 MMT in FY17 and reached 89.6 MMT

in FY20 (till August).

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 5.46

per cent, while middle distillates and heavy end segment witnessed a

CAGR of 4.06 per cent and 5.21 per cent respectively, during the

year FY08-18.

Production of petroleum products by fractionators grew to 4,931.22

TMT in FY19 from 4,808.00 TMT in FY18 and reached 2021 TMT in

FY20 (till August).

In August 2019, overall petroleum consumption increased 2.78 per

cent to 17,044 TMT

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 65.3

62.8 66.4 71.1 75.0 79.4 82.7 81.8 82.8 81.988.9

93.527.7 27.5 27.7 24.6 24.9 28.1 29.0 31.4 31.6

46.446.1

0.0

50.0

100.0

150.0

200.0

250.0

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18(P)

Light Distillates Middle Distillates Heavy Ends


3,9

96

.00

4,0

84

.00

4,1

91

.40

4,3

63

.00

4,1

68

.60

4,1

75

.20

4,0

89

.43

3,8

71

.57

3,6

57

.15

3,3

77

.16

3,4

57

.75

4,6

08

.00

4,9

31

.22

2,0

21

.00

0.00

1000.00

2000.00

3000.00

4000.00

5000.00

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20

( till…

Production of Petroleum Products by Fractionators (tmt)

Note: MMT – Million Metric Tonne, tmt – thousand metric tonne, FY19* - As of January 2019, P – Provisional, Updated data is expected in October - November 2019 from Ministry of

Petroleum and Natural Gas PNG statistics 2018-19


DOWNSTREAM SEGMENT: DISTRIBUTION AND

MARKETING

85.10 89.57 97.70 104.50 110.50 114.30 106.00

109.72 97.36 97.36 96.61 107.58 102.36

88.89

0.0

50.0

100.0

150.0

200.0

250.0

Product pipeline Natural Gas Pipeline


Downstream distribution statistics (MMT)

Pipeline

Capacity (mmtpa)

As on September 01,

2019

Length (km)

As on September 01,

2019

Crude Pipeline 147.9 10,419

Product Pipeline 114.3 17,759

Natural Gas Pipeline 320 16,324

Note: MMT – Million Metric Tonne, mmtpa – Million Metric Tonnes Per Annum, OMC – Oil Marketing Companies, (P) – Provisional, PSU – Public Sector Unit

The total number of OMC retail outlets increased to 64,624 at the

start of April 2019 (P) from 59,595 at the end of FY17.

IOCL, as of Mar 1, 2019, owned the maximum number of retail

outlets in the country (27,702), followed by HPCL (15,440), BPCL

(14,802) and MRPL (7 or 0.01 per cent); the remaining being owned

by private firms.

As of Apr 1, 2019 (P), there were 23,737 LPG distributors (of PSUs)

in India.


STATE-WISE CRUDE RESERVE, CAPACITY AND

THROUGHPUT


StateBalance recoverable reserves

of crude oil, 2018 (MMT)

Assam 160.34

Gujarat 118.20

Rajasthan 17.99

Tamil Nadu 9.16

Andhra Pradesh 7.94

Nagaland 2.38

Arunachal Pradesh 1.74

Tripura 0.07

Total Onshore 317.82

Western Offshore 236.25

Eastern Offshore 40.42

Total Offshore 276.67

StateInstalled capacity,

as of April 2018 (mt)

Crude throughput for

FY 2018 (MMT)

Gujarat 101.9 104.97

Maharashtra 19.5 22.70

Haryana 15.0 15.65

Karnataka 15.0 16.13

Tamil Nadu 11.5 10.79

Kerala 15.5 14.10

Andhra Pradesh 8.36 9.64

Uttar Pradesh 8.0 9.24

West Bengal 7.5 7.66

Assam 7.0 6.90

Bihar 6.0 5.82

Punjab 11.3 8.83

Madhya Pradesh 6.0 6.71

Odisha 15.0 12.73

Total 247.56 251.94

Note: Mmt – Million Metric Tonne, mt – Million Tonne,


KEY DOMESTIC OIL AND GAS COMPANIES

Source: Bloomberg, TechSci Research

CompanyOwnership

(per cent) as of FY18

Total Income from

Operations in FY19

(US$ billion)

Indian Oil Corporation Limited56.98%

state-owned86.68

Reliance Industries Public Listed 81.70

Bharat Petroleum Corporation

Limited

54.31%

state-owned48.73

Hindustan Petroleum

Corporation Limited

51.11%

state-owned (through

ONGC)

42.75

ONGC68.07%

state-owned12.16

GAIL India Limited53.59%

state-owned10.74

Oil India Limited66.13%

state-owned1.52

Note: : FY – Indian Financial Year from April–March

Oil and Gas

NOTABLE TRENDS

AND STRATEGIES


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 2018-19* stood at 596.63 million

cubic metres.

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

As of January 2019, the Government of India has put 14 blocks up for auction in the second round of OALP

and investments worth Rs 40,000 crore (US$ 5.54 billion) are expected. As of February 2019, the

Government of India put up 23 blocks for bidding in the third round of OALP which would generate work

commitment of US$ 600-700 million.

Open Acreage

Licensing Policy

Note: * - As of January 2019

Source: Ministry of Petroleum


STRATEGIES ADOPTED … (1/3)

Source: TechSci Research , Bloomberg reports, News Articles

Open Acreage Licensing PolicyExpansions

In September 2018, the Government of Gujarat selected Energy Infrastructure Limited (EIL), a subsidiary of the

Netherlands-based Energy Infrastructure Butano (Asia) BV, to set up a Liquefied Petroleum Gas (LPG) terminal at Okha

with an investment of Rs 700 crore (US$ 104.42 million).

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.

As per Union Budget 2019-20, Indian Scheme ‘Kayakave Kailasa’, The Ministry of Petroleum & Natural Gas has

enabled SC/ST entrepreneurs in providing Bulk LPG Transportation. 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

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.

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.

Reliance Industries Ltd is planning to expand its Jamnagar oil refining capacity by about 50 per cent. After the

expansion, the plant will then be able to process about 30 million tonnes crude oil per year.

As of January 2019, H-Energy is going to invest Rs 3,700 crore (US$ 512 million) for construction of an LNG project in

West Bengal.

As on January 2019, The Cabinet Committee on Economic Affairs has approved the capacity expansion of Numaligarh

Refinery from 3 MMTPA to 9 MMTPA which will be completed within 48 months.

As of March 2019, Brookfield is going to acquire Reliance Gas Transportation Infrastructure, now known as East West

Pipeline (EWPL) for Rs 13,000 crore (US$ 1.80 billion).



Source: India Banking Association, Reserve Bank of India, TechSci Research , News sources

Notes: ATM - Automated Teller Machine, FIP – Financial Inclusion Plan, RBI – Reserve Bank of India, ^As per Moody’s Investor Service

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.

Reliance Industries is planning to enter into a Joint Venture with the world’s largest oil exporter Saudi Arabia in

petrochemicals and refinery projects.

To boost hydrocarbon production and to improve oil recovery from offshore fields, ONGC plans to invest more

than US$ 500 million in Mumbai High.

India’s rising oil demand is expected to underpin investments in refining capacity expansions and upstream

production.^

Diversification

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 start-up 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

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

The Government of India is planning to set up around 5,000 compressed biogas (CBG) plants by 2023.

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.


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


GROWTH DRIVERS

Source: Ministry of Petroleum and Natural Gas, US Energy Information Administration, BP Statistical Review of World 2015 Energy, June 2012; BMI, TechSci 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


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 4.18 per cent to 143.08 million tonnes by 2040 from 58.10 million tonnes in 2018.

Diesel demand in India is expected to double to 163 million tonnes (MT) by 2029-30.

In August 2019, Diesel demand fell 1.1 per cent year-on-year for the first time since Nov 2018 and stood at 6.11 MT.

Crude oil consumption and forecast (MT)

22

1.5

6

50

0.0

0

0

100

200

300

400

500

600

2017 2040F

Natural gas consumption and forecast (BCM)

58

.10

14

3.0

8

0

20

40

60

80

100

120

140

160

2018 2040F

Source: BP Statistical Review of World Energy 2018, BP Energy Outlook 2018

Notes: F-Forecast, MT – Million Tonnes, BCM – Billion Cubic Metres, Updated data is expected in June 2019 from BP statistical review 2019

CAGR 3.60% CAGR 4.18%


REGULATORY OVERVIEW OF THE INDUSTRY… (1/2)


Pricing of CNG and PNG

by CGD Entities (2014)

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

National Policy on

Biofuels, 2018

Proposes an indicative target of 20 per cent blending of ethanol in petrol and 5 per cent blending of biodiesel in diesel by

2030

Promotes advanced biofuels through a viability gap funding scheme of Rs 5,000 crore (US$ 745.82 million) in six years for

2G ethanol Bio refineries, along with additional tax incentives.

Integrated Energy Policy

(IEP), 2006 Outlines goals to deal with challenges faced by India’s energy sector


REGULATORY OVERVIEW OF THE INDUSTRY… (2/2)


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


FDI INVESTMENTS IN PETROLEUM AND GAS IN INDIA

Source: Department of Industrial Policy and Promotion, TechSci Research

FDI inflows in India’s petroleum and natural gas sector stood at US$ 7 billion during April 2000-March 2019..

2.70

7.02

0.10

2.10 0.10

1.10 0.070.18 0.03 0.14

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

FY01-FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY01-FY19

FDI Inflows in Petroleum and Natural Gas in April 2000-June 2019 (US$ billion)


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)

Mar 2019 Brookfield

East West Pipeline (EWPL) (Previously

known as Reliance Gas Transportation

Infrastructure)

US$ 1,800

Apr 2018 Indian Oil Corporation Ltd (IOCL) Shell Exploration & Production, Oman 329

Feb 2018 ONGC HPCL (51.11 per cent stake) 57,020.39

Feb 2018 ONGC VideshAbu 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 1,200

Dec 2015 ONGC Videsh Ltd (OVL) Vankor oil field 1,260

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



Oil and Gas

OPPORTUNITIES


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

In 2017-18, The two Upstream National Oil Companies (NOCs), Oil and Natural Gas Corporation Limited

(ONGC) and Oil India Limited (OIL) having a total share of about 71.5% in oil and 81% in gas production in the

country.

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


SHALE GAS PROSPECTS OF INDIA

Source: EandY; Ministry of Petroleum and Natural Gas, TechSci 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.

Great Eastern Energy Corp (GEECL) will invest US$ 2 billion over the next ten years in West Bengal to explore shale gas reserves.

Indian companies are invited to explore partnership opportunities in Vaca Muerta, Argentina which is known to be one of the largest deposits of

shale gas in the world.

Notes: tcf – Trillion Cubic Feet

Oil and Gas

USEFUL

INFORMATION


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

[email protected]

Petroleum Conservation

Research Association

(PCRA)

Sanrakshan Bhavan, 10 Bhikaji Cama

Place, New Delhi – 110066Mr Alok Tripathi, ED

91-11- 26198799

[email protected]

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- [email protected],

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,

ED0120-2593800 [email protected]

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 [email protected]

Directorate General of

Hydrocarbons

Ministry of Petroleum and Natural

Gas, OIDB Bhawan, Plot No 2, Sector

73, Noida

Mr Atanu Chakraborty,

Director General0120 - 2472001 [email protected]


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


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


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

2018-19 69.89

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

2018 68.36

Source: Reserve Bank of India, Average for the year


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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 TechSci Research and IBEF’s knowledge and belief, the content is not to be construed in any manner

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