OPPORTUNITIES IN THE INDIAN OIL AND GAS SECTOR · OPPORTUNITIES IN THE INDIAN OIL AND GAS SECTOR...
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OPPORTUNITIES IN THE INDIAN OIL AND GAS SECTOR BUSINESS SWEDEN India June 2015 BUSINESS SWEDEN 1
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OPPORTUNITIES IN THE
INDIAN OIL AND GAS
SECTOR
BUSINESS SWEDEN
India
June 2015
BUSINESS SWEDEN 1
BUSINESS SWEDEN 2
SUMMARY OF ANALYSIS
India is the fourth-largest consumer of oil and petroleum products in the world after the US, China, and Japan
The country is heavily reliant on the import of crude oil, growing at 7.7% CAGR over the past 7 years. 80% of crude oil
demand is met through imports and rest from local production.
During the last 7 years, natural gas imports has witnessed a growth of 8.5% CAGR, where as the local production of
natural gas has been volatile in the range of 32 to 52 BCM per year.
Production is well balanced between onshore and offshore for crude oil. In contrast, 75% of natural gas is produced
offshore.
India has 762 MMT (0.3% of the world’s) recoverable reserve of crude oil, and 1,427 BCM (0.7% of the world’s)
recoverable reserve of natural gas. These reserves should be sufficient to meet 20 years of crude oil production and
30 years of natural gas production with the current production capacity.
Indian private companies play a prominent role during the exploration, well-development and refining stages of the oil
and gas value chain.
Crude oil and natural gas pipeline infrastructure is dominated by public sector companies, and private firms own 10%
length of this infrastructure.
Despite allowing 100% Foreign Direct Investment in exploration, refining, pipeline, and marketing of oil & gas, there
are limited number of foreign companies operating in India, where the British (including Scottish) and Dutch
companies are predominant international players.
Vast opportunities exist for Swedish companies to tap-in across the oil and gas value chain from setting up of refinery
infrastructure, pipeline transportation, providing professional services, to Shale gas exploration, and technology
partnership in upstream.
BUSINESS SWEDEN 3
ABBREVIATIONS
Public sector companies
AGC: Assam Gas Company Limited
BPCL: Bharat Petroleum Corporation Limited
CPCL: Chennai Petroleum Corporation Limited
GAIL: Gas Authority of India Limited
GSPL: Gujarat State Petronet Limited
HPCL: Hindustan Petroleum Corporation Limited
IOCL: Indian Oil Corporation Limited
MRPL: Mangalore Refinery and Petrochemicals Limited
OIL: Oil India Limited
ONGC: Oil and Natural Gas Corporation
Private sector companies
EOL: Essar Oil Limited
RPL: Reliance Petroleum Limited
Joint venture companies (non-exhaustive)
BORL: Bharat Oman Refineries Limited
HMEL: HPCL-Mittal Energy Limited
Industry terminologies
LNG: Liquefied Natural Gas
O&G: Oil and Gas
PSU: Public Sector Undertaking
Measurement units
BCM: Billion Cubic Metres of natural gas
MMT: Million Metric Tons of oil equivalent
MMSCMD: Million Metric Standard Cubic Metre
Per Day
BUSINESS SWEDEN 4
KEY PLAYERS IN THE INDIAN OIL AND GAS VALUE
CHAIN
Ministry of Petroleum and
Natural Gas
ONGC Private/ JVs OIL
ONGC BPCL IOCL Private/ JVs GAIL
Petroleum
Planning and
Analysis Cell
Center for
High
Technology
Petroleum
Conservation
Research
Institute
Petro Fed
Oil Industry
Safety
Directorate
Petroleum
India
International
Upstream
(exploration and production)
Downstream
(refining , transportation and
marketing)
Industry bodies / Others
Globally, India is the fourth-largest consumer
of oil and petroleum products after the US,
China, and Japan
Oil and gas constitutes over one-third of
India’s energy usage
Industry dynamics
Highly regulated industry, where fuel prices
for consumers is regulated
Fuel subsidies are shouldered by the
government and state-owned upstream
companies
An inconsistent energy sector reform
BUSINESS SWEDEN 5
OIL AND GAS COMBINED, IS THE SECOND LARGEST
SOURCE OF ENERGY CONSUMPTION IN INDIA
SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION
44%
23%
22%
7% 4% Coal
Solid biomass & waste
Petroleum
Natural gas
Nuclear & otherrenewables
Total energy consumption in India
2013
BUSINESS SWEDEN 6
INDIA IS HEAVILY DEPENDENT ON IMPORTS, WHERE
80% OF ITS CRUDE OIL DEMAND IS IMPORTED…
SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA
34 33 33 37 38 37 37
121 132
159 163 171
184 189
200
7-0
8
200
8-0
9
200
9-1
0
201
0-1
1
201
1-1
2
201
2-1
3
201
3-1
4
Production Import
Crude oil production and imports in India
in MMT*, FY 2008-14
* MMT: MILLION METRIC TONS
CAGR
1.4%
CAGR
7.7%
60%
10%
30%
ONGC
OIL
Private/
JVs
51% 49%
Onshore
Offshore
32 32
47 52
47
40 35
11 11 13 14 18 18 18
Production Import
BUSINESS SWEDEN 7
…AND IMPORT OF NATURAL GAS HAS SHOT UP BY 65%
OVER THE PAST FIVE YEARS
SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA * BCM: BILLION CUBIC METRES
Natural gas production and imports in India
in BCM*, FY 2008-14
CAGR
1.5%
CAGR
8.5%
20
08
-09
20
09
-10
20
10
-11
20
11-1
2
20
12
-13
20
13
-14
20
07
-08
65%
7%
28%
ONGC
25%
75%
Onshore
Offshore
OIL
Private/
JVs
BUSINESS SWEDEN 8
THE LIMITED O&G RESERVE IS SUFFICIENT TO MEET
30 YEARS OF PRODUCTION WITH CURRENT CAPACITY
SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA
Natural gas recoverable reserve
2014
50%
23%
18%
6% 3%
Offshore
Assam
Gujarat
Rajasthan
Others
Crude oil recoverable reserve
2014
68%
10%
5%
3%
14%
Offshore
Assam
Gujarat
Andhra
Others*
* OTHER STATES WITH MAJOR RESERVES OF NATURAL GAS ARE TRIPURA, TAMIL NADU, MADHYA
PRADESH, WEST BENGAL, JHARKHAND AND RAJASTHAN
99.7% 0.3% 99.3% 0.7%
India
1,427 BCM
India
762 MMT
World
238,000 MMT World
183,618 BCM
13 620
2 111
7 019
730
2 306
4 044
Oil Gas Dry Undertest
Injector Others
BUSINESS SWEDEN 9
ONGC AND PRIVATE FIRMS ARE PUSHING FORWARD
EXPLORATION AND WELL DEVELOPMENT
SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA
Status of wells in India
in number of wells, FY 2013-14
194
207
2007-08 2013-14
Total wells: 29,830
Exploratory & development drilling by companies
in number of wells, FY 2013-14
Total wells: 682
389 34 259
ONGC Private/ JVs OIL
Exploratory
303
475
2007-08 2013-14
Development
57% 7%
56% 37% 7%
BUSINESS SWEDEN 10
RELIANCE, INDIA’S BIGGEST PRIVATE COMPANY HAS
THE LARGEST PETROLEUM REFINING CAPACITY
SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA
Petroleum refining capacity in India
Total: 215 MMTPA, 2014
Public sector firms: 120 (in MMTPA)
IOCL: 54
BPCL: 21
HPCL: 14
CPCL: 11
MRPL: 15
Private sector firms: 80 (in MMTPA)
Reliance Industries: 60
Essar Oil: 20
JV firms: 15 (in MMTPA)
BPCL, BORL: 6
HMEL: 9
Public sector Private sector JVs
WITH 215 MMTPA REFINING CAPACITY, INDIA IS THE SECOND LARGEST REFINER IN ASIA AFTER CHINA
BUSINESS SWEDEN 11
STATE OWNED FIRMS DOMINATE THE PIPELINE
INFRASTRUCTURE IN INDIA...
Crude oil pipeline infrastructure
2014
SOURCE: ENERGY INFORMATION ADMINISTRATION, INDIAN PETROLEUM AND NATURAL GAS STATISTICS
2013-14, GOVERNMENT OF INDIA
Refinery
Crude oil pipeline
Pipeline length: 9,573 km
93%
7%
Onshore
Offshore
47%
12%
12%
11%
10%
8%
IOCL
ONGC
OIL
HMEL
Private/ JVs
Ownership
by pipeline
length
BORL
BUSINESS SWEDEN 12
...AND PRIVATE FIRMS OWN ONE-TENTH OF O&G
PIPELINE INFRASTRUCTURE
SOURCE: ENERGY INFORMATION ADMINISTRATION, INDIAN PETROLEUM AND NATURAL GAS STATISTICS
2013-14, GOVERNMENT OF INDIA
Regasification plant
Natural gas pipeline
Natural gas pipeline infrastructure
2014
Pipeline length: 18,020 km
60%
12%
6% 6%
16%
GAIL
Ownership
by pipeline
length
GSPL
ONGC
AGC
Private/ JVs
92%
8%
Onshore
Offshore
BUSINESS SWEDEN 13
OVERVIEW OF CURRENT REGULATORY SCENARIO
IN THE INDIAN O&G SECTOR
Petroleum refining by PSUs
Sub-category Entry Route FDI Limit
Automatic
FDI limit varies with type of business activity in India
* PSU: PUBLIC SECTOR UNDERTAKING SOURCE: MINISTRY OF PETROLEUM AND NATURAL GAS
Marketing and related infrastructure of
petroleum products & natural gas 100% Automatic
LNG re-gasification Automatic
Market study and formulation, and
petroleum refining in private sector Automatic
Up to 49%
100%
100%
100%
Exploration activities of oil and natural
gas fields 100% Automatic
Petroleum product pipeline, natural
gas/pipelines Automatic
100% FDI IS ALLOWED IN EXPLORATION, REFINING, PIPELINES AND MARKETING OF OIL & GAS
BUSINESS SWEDEN 14
BRITISH AND DUTCH COMPANIES ARE PREDOMINANT
INTERNATIONAL PLAYERS IN INDIAN O&G SECTOR
Only a handful of foreign companies have presence in the Indian oil and gas sector
British Petroleum is the largest international oil
company in India. It has a gas value chain alliance
with Reliance Industries Ltd. covering exploration,
production, gas marketing, and sells Castrol
lubricants
Cairn India is one of the largest independent oil and gas
exploration and production companies in India, having a
portfolio of 9 blocks (onshore/offshore)
BG Group of Scotland has presence in the upstream
exploration and production, and in the downstream
through LNG shipping and marketing
Shell is so far the only international company to enter the Indian
fuel retail market. It operates LNG storage, re-gasification
terminal, and has a presence in lubricants and bitumen
business
SOURCE: COMPANY WEBSITES
BUSINESS SWEDEN 15
VAST OPPORTUNITIES EXIST FOR SWEDISH
COMPANIES IN INDIA ACROSS THE O&G VALUE CHAIN
SOURCE: FICCI, MAKE IN INDIA
Refinery infrastructure
Swedish companies can invest in
export-oriented infrastructure for
refinery, including export terminals
Equipment companies
Professional services
Swedish professional service firms
can provide advisory and financial
services across the oil and gas
value chain
48% of India’s sedimentary area is
yet to be explored, along with the
setting-up of the city gas
distribution network. This offers
untapped opportunities for
Swedish equipment companies
Pipeline transportation
Shale exploration
Technology partnership in
upstream
Swedish firms can invest in
pipelines, as only 35% of
petroleum product movement
happens by pipeline in India, in
contrast to 60% in the US and
other developed markets
Opportunities exist for Swedish
companies with technical expertise,
in exploration of deep & ultra-deep
water oil & gas resources
India has recoverable shale gas
resources of nearly 96 Trillion cubic
feet, which essentially provides
major opportunities for Swedish
exploration firms
INVESTMENTS WORTH USD 600 BILLION IS EXPECTED DURING 2012-30 ACROSS THE O&G VALUE CHAIN
NEW DELHI
Business Sweden
Embassy of Sweden, Nyaya Marg,
Chanakya Puri, New Delhi-110021,
INDIA
T +91 11 46067100
www.business-sweden.se/indien
CONTACT US
BUSINESS SWEDEN IN INDIA
BANGALORE
Business Sweden
Kheny Chambers, 4/2
Cunningham Road, Bangalore
560052
T: +91 80 415 29100
www.business-
sweden.se/indien
We are located in India since
1995 and have offices in
Bangalore and New Delhi.
From our offices in India, we also
cover Afghanistan, Bangladesh,
Bhutan, Maldives, Nepal,
Pakistan and Sri Lanka
