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India Energy Conference 2008 Session 2 – Taking Upstream to the Next Level

India Energy Conference 2008 Session 2 – Taking Upstream to the Next Level . Sanjiv Kumar ONGC 3-4 October 2008. Presentation overview. E&P global scenario Indian E&P Industry To the NEXT level. The Scenario. Challenge to sustain supply of Oil & Gas. 3. Stagnant production.

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India Energy Conference 2008 Session 2 – Taking Upstream to the Next Level

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  1. India Energy Conference 2008 Session 2 – Taking Upstream to the Next Level Sanjiv Kumar ONGC 3-4 October 2008

  2. Presentation overview • E&P global scenario • Indian E&P Industry • To the NEXT level

  3. The Scenario Challenge to sustain supply of Oil & Gas 3

  4. Stagnant production Production Production hovering around Oil: 34 MMT; Gas: 32 BCM Balance Reserves India’s total reserve (~1812 MTOE) 0.56% of World Reserve Source: MoP&NG, GOI

  5. Level of exploration Exploration initiated: 44% Unexplored: 15% Moderate/ well explored: 20% Poorly Explored: 21% 80% of Sedimentary basins not well explored Source: Petroleum Exploration & Production Activities, India, 2006-07, DGH

  6. Increasing interest NELP Bidders • NELP-VI: 55 Blocks • 165 Bids • 65 Companies • Foreign: 35 • Indian: 31 • NELP-VII: 57 Blocks • 181 Bids • 96 Companies • Foreign: 21 • Indian: 75

  7. Limited presence of oil majors Initial interest limited low oil price regime Increasing oil price increasing interest Limited presence of Oil Majors Perception of low prospectively

  8. The Challenges • Lack of resources • Non availability of Rigs and technology • shortage of manpower • Little or poor seismic data available • Delay in NELP award due to still complex process • Delay in required approvals from other departments • Regulatory procedures still unclear • Lack of clarity on tax structure

  9. To the next level Free market dynamics Fiscal Incentives Resources To the NEXT level Strengthening ongoing efforts Enabling regulations Technology & skills

  10. To the next level:Making NELP regime more attractive • NELP process • Time-period ‘Announcement’ to ‘Award’ • Any sudden change in policies … confusion among prospective bidders • Open acreage system • Availability of blocks year-round • Natural gas pricing • Gas from challenging frontiers require huge investment • Industry expects market determined gas price as per PSC terms • However, Govt. having final say on pricing • Linking NELP gas price with pre - determined fuel basket

  11. To the next level:Making NELP regime more attractive • Government take of profit Petroleum in ‘KIND’ • Govt. able to address the needs of critical sectors • Difficult for producer to enter in to long-term supply agreements • Subsidized allocation to priority sector - a deterring factor for free market dynamics • Integration of regulations • PSC terms under NELP require clarity even if read with other regulations • Ambiguities need to be addressed and resolved • Regulations to be integrated & complimentary

  12. To conclude To take Upstream to the next level • Increased and more intensive exploration • Move to Open Acreage • R&D collaboration & greater infusion of technology • Resource sharing • Clarity on policy issues • Natural gas pricing • Govt. take of profit share – cash or kind • Enabling regulations & policies • Public-Private Partnership • Simpler processes

  13. Thank You

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