Oil And Natural Gas

Exploration And
Production - India
SUBMITTED BY :
ASHISH SINGH
MBA – PM
500033217
History
 Colonial Rule : 1858 – 1947
 The first oil deposits in India were discovered in 1889 near the town of Digboi, Assam
 The first well was completed in 1890
 Assam Oil Company was established in 1899 to oversee production
 Independence : 1947 – 1991
 New government naturally wanted to move away from the colonial experience
which was regarded as exploitative
 focus on domestic industrial and agricultural production and consumption,
 large public sector, economic protectionism, and central economic planning
 Oil India Limited was still a joint venture involving the India Govt. and the British
owned Burmah Oil Limited (presently BP)
 1956 when the government adopted an industrial policy that placed oil as a
“schedule A industry”
 October 1959 an Act of Parliament was passed which gave the state owned Oil
and Natural Gas Commission (ONGC)
 Liberalisation : 1991 – present
 Process of economic liberalisation in India began in 1991
 ONGC reorganized into a public limited company (Oil and Natural Gas
Corporation)
 ONGC responsible for 77% of oil and 81% of gas production
 Indian Oil Corporation (IOC) owns most of the refineries
 NELP for exploration and production of Oil and Natural Gas were formulated
under Directorate General of Hydrocarbon (DGH), during 1997 - 98
Cont.
 Historically, India has relied on coal to power its electricity sector
 Liquid fuel as feed stock and oil for its transport sector
 But for environmental reasons we need to focus on cleaner fuels
 Gas is one of the cleanest fuel with less carbon dioxide per joule
delivered than either by Coal or Oil
 The development of Natural Gas industry in the country in 1960s with
discoveries of gas fields in Assam and Gujarat
 After discoveries of South Basin fields by ONGC in 1970s, Natural Gas
assumed importance
 The Exploration activities in India were earlier carried out only by the
Natural Oil Companies (ONGC & OIL)
Oil in India
 India had about 125 Million metric tonne of proven oil reserves as April 2010
 The second - largest amount in the Asia - Pacific region behind China
 Most of India's crude oil reserves are located in the western coast (Mumbai High)
and in the northeastern parts of the country
 considerable undeveloped reserves are also located in the offshore Bay of
Bengal and in the state of Rajasthan
 India’s oil sector is dominated by state-owned enterprises,
 The government has taken steps in past recent years to deregulate the
hydrocarbons industry and support greater foreign involvement
 India’s state-owned Oil and Natural Gas Corporation is the largest oil company
 ONGC accounting for roughly 75% of the country’s oil output during 2006, as per
Indian government estimates
Natural Gas In India
 As per the Ministry of petroleum, Government of India, India has
1,437 billion cubic meters of confirmed natural gas reserves as of April 2010
 A huge mass of India’s natural gas production comes from the western
offshore regions, particularly the Mumbai High complex
 The onshore fields in Assam, Andhra Pradesh, and Gujarat states are also
major producers of natural gas
 India imports small amounts of natural gas
 ONGC and Oil India Ltd. (OIL) are the leading companies with respect to
production volume
 Some foreign companies take part in upstream developments in joint-
ventures and production sharing contracts
 Reliance Industries, a privately owned Indian company, will also have a
bigger role in the natural gas sector
Crude Oil Production
 Crude Oil Production in 2013 – 14 was about 37.788 Million Metric Tonne (MMT)
by ONGC, OIL and private / JV Companies

Crude Oil Production Crude Oil Production : Offshore and Onshore

0.6

32% 24.3
48.2

13.4
68%

12.5

0.3 0.8
NOCs (ONGC & OIL) Private / JV Companies Offshore Andhra Pradesh Arunachal Pradesh
Assam Gujarat Rajasthan
Tamil Nadu
Source : Ministry of Petroleum & Natural Gas
 State - Wise Crude Oil Production Trends (Thousand Metric Tonne)

Source : Ministry of Petroleum & Natural Gas

Natural Gas Production
 Natural Gas Production in 2013 – 14 was about 35.406 Billion Cubic Meter (BCM)
or 97 MMSCMD by ONGC, OIL and Private / JV Companies

Natural Gas Production Natural Gas Production : Offshore and States

0.4
2.8 3.7 2.4
4.7

26.8, 27% 0.1 8.1

3.3

73% 74.5

Offshore Andhra Pradesh

NOCs (ONGC & OIL) Private / JV Companies Arunachal Pradesh Assam
Gujarat Rajasthan
Tamil Nadu Tripura

Source : Ministry of Petroleum & Natural Gas

 State – Wise Natural Gas Production Trends (MMSCMD)

Source : Ministry of Petroleum & Natural Gas

Allocation and Supply of Natural Gas
 Natural gas available in India can broadly be classified into two categories
 Domestic Natural Gas
 Imported Re – Gasified Liquefied Natural Gas (R - LNG)
 Domestic Gas is allocated to various sectors based on the Policy Guidelines
issued by Govt.
 In case of Imported Gas, the marketers are free to import LNG and sell the
RLNG to customers
 A statement showing sector – wise supplies of natural gas in given in below
(Figures are in MMSCMD)
Sector Domestic R – LNG Domestic + R - LNG
Fertilizers 30.30 12.64567 42.95
Gas Based LPG plants for LPG 1.83 1.09 2.92
extraction
Power 27.26 2.170355 29.43
CGD 7.25 8.2337 15.48
TTZ 0.98 0.07 1.05
Small consumers having allocation 2.45 2.2575 5.03
less than 50,000 SCMD
Steel 1.32 1.8244 3.14
Petrochemicals 3.82 0.88 4.70
Refineries 1.89 10.454 12.35
Others 2.92 1.16906 4.09
Total 80.02 41.11 121.13
Basin – Wise Hydrocarbon Discoveries
 So far 810 hydrocarbon discoveries comprising of 260 – natural gas and 550 – crude
oil have been made
 610 discoveries by NOCs and 200 discoveries by private/ Joint Venture Companies

Hydrocarbon Discoveries Discoveries By Companies

260, 32% 200, 25%

550, 68% 610, 75%

Natural Gas Crude Oil NOCs (ONGC & OIL) Private / JV Companies

Source : Ministry of Petroleum & Natural Gas

 Hydrocarbon Discoveries as on 01.01.2014 since inception

Source : Ministry of Petroleum & Natural Gas

Exploration and Production of
Hydrocarbons in India
 Petroleum Exploration and Production were initially carried out in India by
two companies
 Oil and Natural Gas Corporation (ONGC)
 Oil India Limited (OIL)
 With liberalization of economy in 1991 – 92, Indian sedimentary basin were
opened to private sector companies also
 Private companies were allowed to enter into exploration through JV with
NOCs under pre – NELP regime
 282 blocks for exploration were awarded under the liberalized policy till 2012
Exploration & Production
 The Energy demand is on rise with social and economic development in country
 Keeping in view the growing requirement of energy, Govt. of India has adopted
multi – pronged strategy for giving momentum to exploration and production
 The major steps taken in this regard are :
 offering of exploration blocks through NELP
 acquisition of oil gas assets abroad
 development of alternate sources of hydrocarbon such as
 Coal Bed Methane
 Shale Gas
 Research and development for new sources such as Gas Hydrate
 to carry out E&P operation in safe and environment friendly manner
New Exploration And Licensing Policy
 As a net importer of all oil, the Indian Government has introduced policies
aimed at growing domestic oil production and oil exploration activities
 As part of the effort, the Ministry of Petroleum and Natural Gas crafted the
New Exploration License Policy (NELP)
 The NELP for exploration and production of Oil and Natural Gas (but
excluding Coal Bed Methane) and Coal Bed Methane (CBM) policy were
formulated by Govt. of India
 The policy were formulated with Directorate General of Hydrocarbon (DGH),
during 1997 – 98
 These two policies were formulated to provide a level playing field to both
public and private sector companies in E&P of hydrocarbons
 This policy has opened up E&P sector for private sector and foreign
investments with 100 % FDI
Cont.
 NELP became effective in Feb 1999
 acreages were offered to the participating companies through the
process of open International Competitive Bidding
 First round of offer of blocks was launched in 1999
 And Most of the ninth round awards were concluded in 2012
 Under NELP, 360 exploration blocks have been offered so far and

Blocks 88

254
166

Awarded Blocks Active Blocks Relinquised

Source : Ministry of Petroleum & Natural Gas

Hydrocarbon Discoveries in NELP Blocks
 Total of 130 hydrocarbon discoveries under the NELP regime in 42 blocks

Hydrocarbon Discoveries under Discoveries Made By

NELP Companies

47, 36%
64, 49%
66, 51%
83, 64%

Crude Oil Natural Gas NOCs (ONGC and OIL) State PSU (GSPCL)

Source : Ministry of Petroleum & Natural Gas

 The details of Company – Wise discoveries made are as under

Hydrocarbon Discoveries in NELP Blocks

140 130

120

100
83
80

60 51
47
39 37
40 29
24
20 15 14
10 9 6 4 1 5
1 0 1 2 4 0 1 1 0 2 2 1 0 1
0
ONGC Oil India GSPCL Reliance Jubiliant Focus Cairn Niko Naftogaz Total
Ltd. Industries Oil and Energy India Ltd. Resource
Ltd. Gas Pvt Ltd. Ltd.
Ltd.

Oil Discoveries Gas Discoveries Total Discoveries

Source : Ministry of Petroleum & Natural Gas
Blocks Awarded under NELP
Blocks Awarded NELP
70
70

60 57
55
52 52
48
50 45
41
40 36
34 33
32
28 27
30 25
24 23 23 24 23 24
21 20 20 20 20 19
20

10

0
NELP I NELP II NELP III NELP IV NELP V NELP VI NELP VII NELP VIII NELP IX

No of Blocks Awarded No of Blocks Bid for No of PSCs signed

Source : Ministry of Petroleum & Natural Gas

Details of NELP Bidding Round

Source : Ministry of Petroleum & Natural Gas

NELP Round Wise Area of Awarded Blocks
Round Area Awarded
(sq. kms) Area Awarded
NELP I 2,28,472 350000

NELP II 2,63,050 300000

NELP III 2,04,588 250000

NELP IV 1,92,810 200000

NELP V 1,13,687 150000

NELP VI 3,06,331 100000

NELP VII 1,12,988

50000

NELP VIII 52,603

0
NELP I NELP II NELP III NELP IV NELP V NELP VI NELP VII NELP VIII NELP IX
NELP IX 26,428
Area Awarded
Total 15,00,957 Source : Ministry of Petroleum & Natural Gas
Status of Awarded Blocks
NELP Blocks Awarded
Companies (Operators) Blocks Awarded
PSU 144
Indian Private Companies 70
Foreign Companies 40
Total 254

Blocks Status

Active Blocks Relinquished Blocks Total Awarded Blocks

148 106 254

Source : Ministry of Petroleum & Natural Gas

Salient Features of NELP
 100 % FDI is allowed under NELP
 No mandatory state participation through ONGC/OIL or any carried interest of the
Govt.
 Blocks to be awarded through open international competitive bidding
 ONGC and OIL to compete for obtaining the petroleum exploration licenses on a
competitive basis
 Freedom to the contracts for marketing of crude oil and gas in the domestic market
 Royalty at the rate of 12.5 % for the onland areas and 10 % for offshore areas
 Companies to be exempted from payments of import duty on goods imported for
petroleum operations
 A Model Production Sharing Contract (MPSC) which is reviewed for every NELP
round
 Contracts to be governed in accordance with applicable Indian Laws
Achievements under NELP
 An area of 1.50 Million Sq. Km awarded (48 % of total sedimentary area)
 A total of 254 blocks awarded in nine rounds
 A total of 3,46,676 LKM of 2D seismic and 2,74,178 SKM of 3D seismic data gathered
and 510 exploratory wells drilled
 A total of 128 hydrocarbon discoveries (46 oil and 82 gas) made in 42 blocks
 US $ 21.32 Billion invested (US $ 12.51 Billion on exploration and US $ 8.81 Billion on
development)
 Government has received US $ 657 Million as Royalty and Profit Petroleum till 2012 – 13
 India has joined the global deep-water players with first deep-water oil production in
September, 2008
India Sedimentary Basins

26 Sedimentary Basins

Total Area : 3.14 Miilion Sq. Km

1.35, 43% 1.39, 44%

0.4, 13%

Onland Shallow Water Deep Water

Source : Ministry of Petroleum & Natural Gas

Sedimentary Basins Cover
1. Gujarat – Kutch
2. Gujarat – Saurashtra
3. Mumbai
4. Kerala – Kankan
5. Cauvery
6. Krishna – Godavari
7. Mahanadi – NEC
8. Andaman
9. Bengal
10. Rajasthan
11. Cambay
12. Deccan Synclise
Blocks on Offer

Blocks Area No of Blocks

Total Area : 1,66,053 Sq. Km Total Blocks - 46

23,944, 14%
14, 30%
17, 37%
47,745, 29% 94,364, 57%

15, 33%

Deep Water Shallow Water Onland Deep Water Shallow Water Onland

Source : Ministry of Petroleum & Natural Gas

Petroleum Exploration License (PEL)
and Petroleum Mining Lease (PML)
 PEL is granted for a period of 7 years in onland/ shallow water areas
 And 8 years in deepwater and frontier areas for exploration activities as per PSC
provisions under NELP
 PML is normally awarded for 20 years for producing Hydrocarbons as per The
Oilfields Regulation and Development Act, 1948 P&NG Rules, 1959
 PEL / PML for offshore exploration and production is granted by the Union Govt.
 In case of onland blocks, PEL / PML is granted by the concerned State Govt. on
the basis of recommendation made by the Union Govt.
 Basin – Wise operative PEL and PML under Nomination Regime as on 01.04.2014

Source : Ministry of Petroleum & Natural Gas

 Basin Wise PEL & PML under nomination with private / JV as on 01.01.2014

Source : Ministry of Petroleum & Natural Gas

Why Invest in E&P Sector?
 Prospectivity
 Prospectivity of Indian Sedimentary is yet to be properly established
 large possible reserves trapped in Indian sedimentary basins
 Demand
 Growing economy and population growth are main drivers for oil and gas
demand, increasing every year
 Price
 International Crude Oil Price
 Infrastructure
 Surplus refining capacity and natural gas pipeline network
 100 % FDI is allowed in Exploration & Production
Thank You