ENERGY COUNTRY REVIEW India

keyfactsenergy.com Country Review India

India had an ancient civilisation which was gradually absorbed into the administration of the British East India Company from the early 18th Century. It was then run by

NE the UK from the mid 19th Century. The country gained Delhi PAL Jaipur independence in 1947 following partition from Pakistan.

INDIA India began producing oil from the Assam-Arakan Basin Bangladesh in the NE in 1891. In the 1960s production began to grow when output commenced from the Cambay Basin in Mumbai Gujarat on the west and then offshore in 1976 from the Mumbai High area. In 1993 the Ravva field was developed Chennai off the SE coast along with other small on and offshore fields in the Krishna-Godavari Basin. Oil production has also increased as a series of fields first drilled in Rajasthan in 2004 have been developed.

Considerable gas volumes have been produced, mostly from the Mumbai High area, and many deep water fields India year end proved oil exist off the east coast which have stepped up capacity. reserves Billion barrels However, output has been slower to build up than originally planned. There are also proven and potential CBM and 5.7 5.7 5.7 5.7 shale gas resources available to exploit.

The oil and gas sector is among the eight core industries

4.8 in India and plays a major role in influencing decision 4.7 making for all the other important sections of the economy.

In 1997–98, the New Exploration Licensing Policy (NELP) was envisaged to fill the ever-increasing gap between India’s gas demand and supply. India’s economic growth is closely related to energy demand; therefore the need for oil and gas is projected to grow more, thereby making the sector quite conducive for investment. The Government of India has adopted several policies to fulfil the increasing demand. The government has allowed 100 per cent Foreign Direct Investment (FDI) in many segments of the sector, including natural gas, petroleum products, and refineries, among others. Today, it attracts both domestic and foreign investment, as attested by the presence of Ltd (RIL) and . 11 12 13 14 15 16

Source: BP Statistical Review Market Size India is expected to be one of the largest contributors to non-OECD petroleum consumption growth globally. Domestic refiners’ import of crude oil increased 9.1 per cent year-on-year to around 18.81 million metric tons during August 2016. Country Review India

India Oil Production Total fuel consumption is expected to grow around 5-6 per Thousand barrels per day cent in FY 2016-17 and thereafter, while consumption of gasoline is expected to grow around 9-10 per cent over the medium term, supported by robust passenger vehicle sales 903 894 894 887 amid low crude oil prices. 873 876 856 India is the fourth-largest Liquefied Natural Gas (LNG) importer after Japan, South Korea and China, and accounts for 5.8 per cent of the total global trade.3Domestic LNG demand is expected to grow at a CAGR of 16.89 per cent to 306.54 MMSCMD by 2021 from 64 MMSCMD in 2015.

The country's gas production is expected to touch 90 Billion Cubic Metres (BCM) in 2040 from 35 BCM in 2013. Gas pipeline infrastructure in the country stood at 15,808 km in December 2015.

State-owned Oil and Natural Gas Corporation (ONGC) dominates the upstream segmen, producing around 22.37 MT of crude oil, which is approximately 60.5 per cent of the country’s 36.95 MT oil output, as of March 2016.

Outlook India’s oil demand is expected to grow at a CAGR of 3.6 per cent to 458 Million Tonnes of Oil Equivalent (MTOE) by 2040, 10 11 12 13 14 15 16 while demand for energy will more than double by 2040 as economy will grow to more than five times its current size, as Source: BP Statistical Review stated by Mr Dharmendra Pradhan, Minister of State for Petroleum and Natural Gas.

Gas production will likely touch 90 Billion Cubic Metres (BCM) by 2040, subject to adjustment to the current formula that determines the price paid to domestic producers, while demand for natural gas will grow at a CAGR of 4.6 per cent to touch 149 MTOE.

The Ministry of Oil of India expects US$20bn to US$30bn to be invested in the Krishna Godavari (KG) Basin in eastern India over the next ten years. Investments would come from both the public and private sectors and would help raise domestic gas production in the KG Basin from around 80-90 mcm/d to 120 mcm/d by 2020-2021.

India also plans to raise its refining capacity from around 230 Mt/year to 380 Mt/year over the next 7-8 years. Around 1/3 of the 150 Mt/year capacity increase would come from brownfield expansion (50-60 Mt/year).

Source: India Brand Equity Foundation Country Review India

India Gas Reserves Key Facts Trillion cubic meters • The oil and gas industry ranks amongst India's eight core industries. 1.4 • India was the third largest consumer of oil in the world in

1.3 2015, after the United States & China. • Oil imports constitute about 81% of India's total domestic 1.2 1.2 oil consumption in 2015-16. • Oil and gas contributes about 34.4% to primary energy consumption in India. • During 2015, natural gas constituted about 6.5% of the

0.9 total energy mix • India had 54 Trillion cubic feet of proven natural gas reserves at the beginning of 2015. Approximately 34% of

0.7 total reserves are located onshore, while 66% are offshore. • India has 230.066 MMTPA of refining capacity with a surplus refining capacity of about 15%, making it the second largest refiner in Asia after China. Private & joint venture companies own about 41% of total capacity. • India is the fourth-largest LNG (Liquified Natural Gas) importer in 2015 and accounted for 6.4% of global imports. • India held nearly 635 MMT of proven oil reserves at the beginning of 2015, mostly in the western part of the country. About 49% of reserves are onshore resources, 84 04 13 14 15 16 while 51% are offshore

Source: BP Statistical Review

Shale Gas India has several Shale formations which seem to hold Shale Gas and oil. The Shale Gas formations are spread over several sedimentary basins such as Cambay, Gondwana, Krishna-Godavari and Cauvery onland.

Coal Bed Methane (CBM) Commercial production of CBM in India commenced in July 2007 in Raniganj (South) block in West Bengal operated by Great Eastern Energy Corporation Limited (GEECL).

India’s production of CBM grew more than 44 percent in the financial year 2016-2017 to around 565 million standard cubic metres (MMSCM) as compared to 393 MMSCM in 2015-2016.

India houses the world’s fourth-largest coal reserves. The government has identified 26,000 square km of area for CBM operation with total estimated CBM Resources of 2,600 billion cubic meter (91.8 TCF). Of this, in-place reserves Country Review India

India Gas Production have been established at 9.9 TCF. The centre has so far Billion cubic meters awarded 33 blocks though four rounds of bidding between 2001 and 2008. However, CBM is currently produced from only four -- Jharia block in Jharkhand by ONGC, Raniganj

50.8 East in West Bengal by Essar Oil Ltd, Raniganj South in West Bengal by Great Eastern Energy Corporation and 46.1 Sohagpur West in Madhya Pradesh by RIL.

40.2 Hydrocarbons licensing, pricing

In March 2016, India approved a new policy for their 33.7 exploration, and defined the pricing norms for existing and 30.4 new discoveries made in difficult areas. Contracts for 28 29.2

27.6 old blocks were also extended.

Petroleum Minister Dharmendra Pradhan said the new oil and gas exploration policy will now be based on a revenue- sharing model, as opposed to cost-and-output-based norms earlier.

The difficult areas for which the new pricing norms have now been formulated are defined as those from deep- water, ultra deep-water and high-pressure, high- temperature areas. Such areas were not considered when prices were fixed for normal gas discoveries in October 10 11 12 13 14 15 16 2014. Source: BP Statistical Review The bulk of such fields are with Reliance Industries and state-run Oil and Natural Gas Corp.

What could impact the discovered oil fields of Reliance Industries is a clause that says if there are pending arbitration or litigation cases pertaining to such assets, the new policy shall only become applicable upon the conclusion or withdrawal of legal proceedings.

On difficult discoveries, an official statement later said the price will be calculated once in six months. The government feels this could potentially monetise 28 discoveries and also lead to some major investment. Reserves associated with such blocks are valued at $28.35 billion.

The oil minister said production contracts on some of the discovered fields could not be signed during last two decades due to a number of reasons, including arbitration proceedings, court cases, observations by the official auditor on “gold plating” of costs and alleged scandals. Country Review India

Government Geography

India, the world's most Indian continental crust was eventually thrust beneath populous democracy, is a Eurasia creating the Himalayas. South of the Himalayas a federal republic with a rapidly filling sedimentary basin became the Indo-Gangetic parliamentary system Plain. South of this plain the original Indian plate forms the defining the power peninsula. It extends north to the Satpura and Vindhya distribution between the mountain ranges running from the Arabian Sea coast in federal government and Gujarat in the west to the coal-rich Chota Nagpur Plateau in the 29 states and 7 union Jharkhand in the east. territories. The President is head of state, elected To the south, the Deccan Plateau, including the Deccan Trap indirectly by a national basalts, is flanked on the west and east by coastal ranges; electoral college for a 5- the Western and Eastern Ghats. India also includes the year term. The Prime Andaman, Nicobar, and Lakshadweep volcanic island chains Minister is head of within the Indian Ocean. government appointed by the president who leads Source: GlobalShift the Council of Ministers. The bicameral parliament Outlook comprises a 245-member upper house (Rajya India is expected to be one of the largest contributors to non- Sabha) and elected 545- OECD petroleum consumption growth globally. Oil imports member lower house (Lok rose sharply year-on-year by 27.89 per cent to US$ 9.29 Sabha). billion in October 2017. India’s oil consumption grew 8.3 per cent year-on-year to 212.7 million tonnes in 2016, as against The oil and gas industry is the global growth of 1.5 per cent, thereby making it the third- overseen by the federal largest oil consuming nation in the world. Ministry of Petroleum and Natural Gas. The India is the fourth-largest Liquefied Natural Gas (LNG) Directorate General of importer after Japan, South Korea and China, and accounts Hydrocarbons (DGH) is for 5.8 per cent of the total global trade. Domestic LNG the upstream advisory arm demand is expected to grow at a CAGR of 16.89 per cent to of the oil ministry. 306.54 MMSCMD by 2021 from 64 MMSCMD in 2015.

Source: GlobalShift The country's gas production is expected to touch 90 Billion Cubic Metres (BCM) in 2040 from 21.3 BCM in 2017-2018 (Apr-Nov). Gas pipeline infrastructure in the country stood at 16,470 km in September 2017. Country Review India

Proved oil reserves at 2016 year end (Thousand million barrels) Australia 4.0 Brunei 1.1 China 25.7 India 4.7 Indonesia 3.3 Malaysia 3.6 Thailand 0.4 Vietnam 4.4

2016 Oil production (Thousand barrels daily) Australia 359 Brunei 121 India 856 Indonesia 881 Malaysia 705 Thailand 479 Vietnam 333

Proved natural gas reserves at 2016 year end (Trillion cubic feet) Australia 122.6 Bangladesh 7.3 Brunei 9.7 China 189.5 India 43.3 Indonesia 101.2 Malaysia 41.3 Myanmar 42.0 Pakistan 16.0 Papua New Guinea 7.4 Thailand 7.3 Vietnam 21.8

2016 Natural gas production (Billion cubic metres) Australia 91.2 Bangladesh 27.5 Brunei 11.2 China 138.0 India 27.6 Indonesia 69.7 Malaysia 73.8 Myanmar 18.9 Pakistan 41.5 Thailand 38.6 Vietnam 10.7

Source: BP Statistical Review