Reliance Industries Limited

Reliance Industries Limited Global Opportunities for Energy Security July 27, 2006

Forward Looking Statements This presentation contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning. All statements that address expectations or projections about the future, including, but not limited to, statements about the strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The companies referred to in this presentation cannot guarantee that these assumptions and expectations are accurate or will be realised. The actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements. These companies assume no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events, or otherwise.

Global Opportunities for Energy Security • Energy Issues of India • Global Scenario • Global Opportunities for India

Energy Issues of India 2005 Industry faced an average of 17 power shutdowns a month

Energy Issues of India 2012 – look ahead Resource crunch • Energy demand estimated to grow by 40% • India – the fourth largest energy consumer • Electricity generation requirement : 90 GW – equal to wiring up the entire United Kingdom • Widening demand-supply gap • Funding of US$ 225 billion; Government ?? Any takers ? It is not just energy ……. It is “affordable energy”

Energy Issues of India Energy Resources Gap* Deficit Supply *Source: McKinsey

Energy Issues of India Coal • Supply – Demand gap expected to be 85 million tonnes in 2012 • Govt monopoly in coal production – short of targets • Needs US$ 10-15 billion for upgradation / new mines • Opex is 50% higher – needs newer technologies • Sale price much lower than international price • 15% drop in commitment shaves off 1% in growth rate • Major investments for infrastructure – US$ 45 - 50 billion • Coal Sector reforms needed ??

Energy Issues of India Crude Oil • Demand supply gap for Oil may rise from current ~70% to well over 80% levels, in next 20 years Source: ORF Energy Monitor, 23-29 Nov, 05

Energy Issues of India The demand-supply gap will likely be filled by further domestic discoveries and imported gas (either LNG or trans-national pipeline)

Energy Issues of India STRATEGY MANAGING DEMAND-SUPPLY GAP

Strategy to manage the Demand-Supply Gap • Accelerate Domestic E&P • Build Refining capacity • Invest in LNG sourcing and non-conventional energy sources • Expand overseas acquisition

Strategy to manage the Demand-Supply Gap • Accelerate Domestic E&P • Reforms in Petroleum Sector • NELP rounds • 110 blocks awarded in previous 5 rounds covering approx. 1 million square kms. • 55 blocks under offer in NELP-VI • Excellent results • 48 discoveries in previous NELP rounds • Discoveries by Reliance, Cairn, GSPC etc.

Strategy to manage the Demand-Supply Gap • Build Refining capacity • Some of the new refineries are coming up in • Jamnagar – 27.0 mmtpa (Reliance) • Vadinar – 10.5 mmtpa (Essar) • Bina – 6.0 mmtpa (BPCL) • Bhatinda – 9.0 mmtpa (HPCL) • Paradip – 15.0 mmtpa (IOC)

Strategy to manage the Demand-Supply Gap • Invest in following: • LNG sourcing and related infrastructure • Stress on gas-based energy resource • Cross-country pipelines • Options include Iran, Turkmenistan, Myanmar

GAS IMPORT OPTIONS Turkmenistan Delhi Iran Qatar, Oman Dahej Myanmar Malaysia, Indonesia Australia Yemen Cochin LNG imports would supplement gas pipeline imports and help in development of pipeline grid Gas Pipeline Import LNG Import Strategy to manage the Demand-Supply Gap

Strategy to manage the Demand-Supply Gap • Invest in following: • LNG sourcing and related infrastructure • Stress on gas-based energy resource • Cross-country pipelines • Non-conventional energy sources • Tar sands, heavy oils, oil shales etc.

Strategy to manage the Demand-Supply Gap • Expand overseas acquisition • Additional empowerment • Acquisition of Sakhalin, Sudan, Myanmar assets • Current scenario necessitates different strategy

Global Scenario • World Population 7.9 0.8 6.3 Asia – 50% 0.8 Asia – 50% 6.3 2002 2025 Source: McKinsey

Global Scenario • World Economy 113 34 32 Asia – 48% 47 47 Source: McKinsey India is one of the key players of Emerging Asia

Global Scenario • World Energy needs 16125 3145 10300 2680 Asia – 46% 10300 Source: McKinsey Oil & Gas responsible for 64% of increased consumption

“Easy Oil” over Exploration Outlays as a Percentage of Worldwide E&D Spending (Independents) • Rising f&d costs; last ten year average $7.44/boe as against $11.37/boe in 2005 • Reduction in discoveries in the last few years, the average size of new discoveries around the world has declined three-fold to about 22 mmboe • Exploration outlays on decline, E&P spending directed towards existing producing wells rather than exploration thru drilling new wells Worldwide Fully-Loaded F&D costs (55 Independents) ($/BOE) 10-Yr Avg = $7.44 Low hanging fruits already plucked, new reserves are in difficult logistics, unconventional plays, adverse fiscal regimes, politically unstable geographies

Oil & gas producing and delivery systems are stretched • Global Refining Capacity is stretched • Little surplus capacity in major oil producing nations • Geopolitics, accidents and weather related incidents resulting in supply disruptions • Futures markets indicate higher prices Supply Side measures key to solve the energy related issues

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Reserve & Production Growth CAGR Oil 1.29% Negligible growth in reserves Increased difficulty in finding new reserves CAGR Gas 0.8% Billion bbls or TCF 0 2001 2002 2003 2004 2005 Oil Reserves Gas Reserves R/P ratio: Oil 42 years Gas 70 years Production growth exceeded growth in oil & gas reserves accretion R/P ratio: Oil 42 years Gas 70 years Source: BP Statistical Review 2006

Skewed Distribution of oil reserves Distribution of proved oil reserves Percentage 70 60 50 40 30 20 10 0 Middle East Europe and Africa S & Cent. North America Asia Pacific Eurasia America 1985 1995 2005 Source: BP Statistical Review of World Energy 2006

50 40 30 20 10 0 Skewed Distribution of gas reserves Distribution of proved gas reserves Percentage Middle Europe Africa S & Cent. North Asia Pacific East and America America Eurasia 1985 1995 2005 Source: BP Statistical Review of World Energy 2006

Summary • Demand would continue to grow • Supplies would be stretched • Fierce competition • Oil prices would remain high • Fewer and smaller discoveries • Low-hanging fruits gone • Geo-political issues - skewed reserve distribution • Meeting demand is a challenge

Issues for India in International Business Issues impacting International Business scenario • Branding • Political muscle • Technology • Company culture

Issues for India in International Business Using our strength to our advantage • Emerging India as a part of BRIC countries • Leverage help to enter Indian market • Large pool of skilled human resources which can be leveraged to • Bag projects • collaborative research in universities; helping train human resources • technical BPOs contributing to on the job training Convert Threat to Opportunity

Issues for India in International Business Using our strength to our advantage • Target countries with good diplomatic relations or where other major countries refuse to engage themselves • Collaborative effort with other companies • strategic fit Convert Threat to Opportunity

Global Opportunities for India • Focus on exploration; not on discovered properties • Focus on non-conventional energy sources • Heavy oil, Tar sands, Coal-bed-methane, Gas hydrates, Bio-diesel • Biofuels can be a part of CSR • Use of cutting edge technologies/ processes

Ground Realities • Do not spread resources too thin • Image of the company on long term basis – speed of working/ decision making • Understand international power play • Corporate Social Responsibility • Deal to be commercially driven – diplomacy only a sweetener

Growth is Life Thank You

Reliance Industries Limited