Role of PNGRB in oil and gas industry (including PNGRB act)

Rudraksh Saxena R600209091rudrakshsaxena@rediffmail.comMBA (Logistics and Supply Chain Management) IIUniversity Of Petroleum and Energy Studies, Dehradun

Content Glossary Oil and natural gas industry in India - an introduction Consumption of Oil and Natural Gas in India Major Players – Upstream and Downstream Major Oil and Natural Gas reserves in India Mode of transportation used

Research methodology

Role of PNGRB in Oil and Gas Industry Objectives of PNGRB Functions and Powers of the PNGRB

References

Glossary

Oil and Natural Gas Industry in India

Consumption of Crude Oil

Year Oil Consumption

(Barrels/day)

Percentage Change %

2005 2,130,000 0

2006 2,320,000 8.92

2007 2,450,000 5.60

2008 2,722,000 11.10

2009 2,722,000 0

Source: CIA World Factbook (till September 17, 2009)

0

50

100

150

200

250

300

113 222 283

2008 2010 2012

D E M A N D

Natural Gas Consumption

(In MMSCMD, Million Metric Standard Cubic Meter Per Day)

Source: Report of the Working Group on Petroleum & Natural Gas Sector for the XI Plan (2007-2012)

Major Players

Upstream: Exploration and production

• ONGC (Oil and Natural Gas Corporation)• OIL (Oil India Limited)• RIL (Reliance India Limited)• GSPC (Gujarat State Petroleum Corporation)• Cairn India• Essar Oil

Major Players

Downstream: Refining, processing, storage, transportation, distribution, marketing and sale.

• BPCL (Bharat Petroleum Corporation Limited)• GGCL (Gujarat Gas Company Limited)• HPCL (Hindustan Petroleum Corporation)• IGL (Indra Prastha Gas Limited) • MGL (Mahanagar Gas Limited) • RNRL (Reliance Natural Resources Limited)• IOCL (Indian Oil Corporation of India)• Essar Oil• GAIL (Gas Authority of India Limited)

Major Oil and Natural Gas reserves

India currently has an estimated quantity of 5.4 billion barrels of oil reserves out of which it produces around 0.8 million barrels per day.

The major oil reserves of the country are situated at

• Mumbai high (Mumbai) • Upper Assam (Assam)• Cambay (Gujarat)• Krishna-Godavari basin (Andhara Pradesh) • Cauvery basin (Tamil Nadu)• Nagaland • Arunachal Pradesh • Rajasthan

Mode of Transportation:

• Earlier since most the refineries were located at the costal line therefore costal transportation was more used and for the secondary transportation Road/Rail was used. After 1960 as refineries started installing in the land-locked areas and due to this the need of pipeline transportation was felt.

•Thus during 1960-63, Oil India Limited laid the first trunk crude oil pipeline, 1156 km long from Naharkatiyaand Moran oil fields to the Refineries at Guwahatiand Barauni.

• At present India has 20000 Km pipeline for the shipment of oil.

Research Methodology

Research Objectives: The objective of the research is to:

• Identify the working of Indian Oil and Gas Industry post exploration and extraction, and;

• Role played by PNGRB i.e. Petroleum and Natural Gas Resources Board in the Oil and Gas Industry in India.

Research Design

The research conducted here is a pure and exploratory research aiming to clarify the role of PNGRB in oil and gas industry.

Type of DataThe data collected, used and presented is secondary data, collected from websites of boards and the regulatory bodies of Indian Oil and Natural sector plus recent news updates.

Data Analysis Procedure

• Study of Indian Oil and Natural Gas Industry.• Study of Petroleum and Natural Gas Regulatory

Board Act, 2006• Finding of the functions, objectives and

obligations of the Board.

Petroleum and Natural Gas Regulatory Board

Objectives

Regulation of:

• Refining• Processing• Transportation • Distribution• Marketing• Sales of petroleum products and natural gas

• Protect the interest of the consumers• Ensure uninterrupted and adequate supply • Promote competitive markets

Functions and Powers of PNGRB

1. Authorization

2. Registration of entities

3. Declaring, laying, building of common carrier or contract carrier and city or local natural gas distribution network

4. Right of first use

5. Transportation tariff

6. Other important functions

Authorization

Entities have to take prior authorization to lay, build, operate or expand any pipeline as a common carrier or contract carrier by the board.

Registration of entities

Entities interested in:

•Marketing of any notified petroleum or petroleum products or natural gas

• Establishing or operating a liquefied natural gas terminal

• Establishing storage facilities for petroleum, petroleum products or natural .

Shall make the application to the Board in form as may be prescribed by the board and with fee.

- The Board will issue the Certificate of Registration

Declaring, laying, building of common carrier or contract carrier and city or local natural gas distribution network

• The board if finds necessary to declare an existing pipeline or natural gas distribution network as common or contract carrier can do so after receiving the suggestions from the entities effected by such decision and deciding on the terms and conditions for the same.

• Authorise an entity to lay, build, operate or expand a pipeline as a common carrier or contract carrier; or

•Allow access to common carrier or contract carrier or city or local natural gas distribution network; or

•Authorise an entity to lay, build, operate or expand a city or local natural gas distribution network.

Right of first use

The entity who has laid, built and operating the pipeline for the petroleum, petroleum product or natural gas or has distribution network for the natural gas, will have first right to use their establishment for their own purpose.

Board if finds necessary for the proper distribution of the petroleum products throughout the city can allow the unutilized capacity of the establishment of the owner entity to be used by any other entity.

The entity other than the operating entity shall pay the transportation cost to the operating entity for using its establishment.

Transportation tariff

The Board shall lay down, by regulations, the transportation tariffs for common carriers or contract carriers or city or local natural gas distribution network and the manner of determining such tariffs.

The Board shall take into consideration following aspects:

- Factors encouraging competition, efficiency, economic use of the  resources, good performance.- Protect interest of customers

Other Functions

(a)  Ensure adequate availability;

(b) Ensure display of information about the maximum retail prices fixed by the entity for consumers at retail outlets;

(c) Monitor prices and take corrective measures to prevent restrictive trade practice by the entities;

(d) Secure equitable distribution for petroleum and petroleum products;

The importance of Board: Conclusion

PNGRB is found to be acting as the regulatory body of the entities engaged in the refining, processing, transportation and storage of the petroleum, petroleum products and natural gas in the country.

The purpose of the establishment of the board is to ensure adequate and secure supply of the petroleum products throughout the country at the competitive and regulated prices.

It also works as an infrastructure enabling Board by providing regulatory support for the development of the pipeline network.

References

http://petroleum.nic.in/psbody.htm

http://www.pngrb.gov.in/

http://oilandgasindia.blogspot.com

http://www.business-standard.com

Thanks