Oil

1
Overview of Petroleum Natural Gas Sector
Regulatory Perspective in India
2
Top Primary Energy Consuming Countries 2005
Total World Energy Consumption 10537 mtoe

• 5th largest energy consumer (Share 3.7 of global
  energy)
• Per capita energy consumption - about one third
  of world average
• Energy consumption projection(2031-32)
• to grow at 5 CAGR (8 GDP growth) as per
  Integrated Energy Policy
• 3.4 CAGR upto 2025 (GDP 5)
• Energy import dependence is 30 (26 on account
  of oil 4 for Coal Power) and is likely to
  climb to 40-45 by 2025
• Oil import dependence is around 72 currently.
  Likely to go upto 90 level

Fig. in MTOE
Per-capita Energy Consumption
Source Energy Information Administration (EIA)
3
Primary Commercial Energy Mix
World
World
2003
2030
10517 mtoe
18040 mtoe CAGR 2

• Oil Gas continue to play major role

India
India
2003-04
2031-32
327 mtoe
1651 mtoe CAGR 6.2
Coal Oil continue to play major role Gas is
emerging
Source World EIA-2006 India IEP 2006
4
Crude Oil Demand, Production Import Trends
MMT
5
POL - Imports Exports
Crude Oil Import
US Billion

• Gross crude and petroleum products
• Crude/product Imports 28 of total imports
• Product Exports 8 of total
  exports

Product Export
Product Import
India - A Net Exporter of Products
6
Refineries Product Pipelines
Refining
Refining Capacity 178 MMT
Product Pipelines
Product Pipelines Length 12017 KM Capacity
68.17 MMT Capacity Utilisation 77
7
Refineries in India(1.4.08)
Bhatinda (9.0)
Existing Ongoing/Planned
Panipat (6.0), (9.0)
Digboi (0.7)
Bongaigaon (2.4)
Mathura (8.0)
Numaligarh (3.0)
Guwahati (1.0)
Barauni (6.0)
BINA (6.0)
Baroda (13.7)
Haldia (6.0), (1.5)
Jamnagar (33.0, 29.0, 10.5
Paradip (15.0)
Mumbai
(5.5) (2.4)
Visakh (7.5, 7.5)
(12)
Nos MMTPA IndianOil
10 60.2 BPC 3 22.5 HPC
2 13.0 ONGC / MRPL 2
9.8 Reliance (Pvt.) 2
62.0 Essar(Pvt.) 1 10.5 Total
20 178.0
Tatipaka (0.1, 0.1)
Mangalore (9.7, 5.3)
Chennai (9.5, 1.7)
Cochin (7.5, 2.0)
Narimanam (1.0)
Expected Refining Capacity by 2011-12 200-235
MMTPA
8
Indias product demand refining capacity
Gap between Refining Capacity Demand
142
68
21
Surplus refining capacity is expected to increase
further by 2030
Source XI Plan Demand
India will continue to be product surplus
Import/Export requirement for crude/products to
be quite substantial
9
Petroleum Products Pipelines in India
Jalandhar
Ambala
Bhatinda
Roorkee
Sangrur
Najibabad
Panipat
Meerut
Tinsukia
Nahorkatiya
Delhi
Rewari
Loni
Shahjahanpur
Sanganer
Mathura
Bongaigaon
Siliguri
Digboi
Ajmer
Jodhpur
Tundla
Chaksu
Numaligarh
Lucknow
Kanpur
Guwahati
Jagdishpur
Kot
Chittaurgarh
Barauni
Sidhpur
Ahmedabad
Rajbandh
Kandla
Ratlam
Navagam
BudgeBudge
Mundra
Jamnagar
Maurigram
Koyali
Indore
Vadinar
Ankleshwar
Dahej
Haldia
Hazira
Manmad
Mumbai High
Paradip
Mumbai
Vizag
Pune
Secunderabad
Existing
Uran
Product Crude Oil
Pakni
Hazarwadi
Vijayawada
Products 9893 KM 64 MMTPA LPG 2124 KM 4.5
MMTPA Capacity Utilization Prods. - 78 LPG - 62
Mangalore
Bangalore
On-going
Chennai
Product Crude Oil
Sankari
Asanur
Karur
Existing
Coimbatore
Trichy
Kochi
LPG
Madurai
10
Distribution Marketing Infrastructure
Marketing Infrastructure
Terminals/Depots No. 383
LPG Bottling Plants No. 170
Aviation Fuel Stations No. 126
Retail Outlets No. 37953
LPG Distributors No. 9366
SKO/LDO Dealers No. 6614
11
Long Term Demand Supply - Gas
12

• Length- 11000 kms
• Gas Consumption- 39 bcm
• LNG Import - 8-9 MMT, 1 mmtpa spot)
• Players- GAIL, GSPCL,
• GGCL, RGTIL
• Pipeline length is likely to double in next 4-5
  years

Gas Pipelines in India
Total infrastructure inadequate to meet the
countrys requirements
13
Government of India Policies

• Administered Pricing Mechanism (APM) dismantling
  effective 1.4.2002
• Gas Pricing
• NELP
• Policy on Refining
• Auto Fuel Policy
• Policy on Marketing of Petroleum Products
• Gas Pipeline Policy
• Petroleum Product Pipeline Policy
• FDI Policy

14
APM Dismantling Key decisions
Key Decisions Taken on APM dismantling

• Crude oil producers/Refineries to be paid on
  import parity basis from Apr02
• Market determined prices for all products except
  LPG Kerosene from Apr02
• Subsidies for LPG/Kerosene from fiscal budget on
  flat rate basis since Apr02. Free float
  thereafter

15
Gas Pricing July 2005 Govt. order
Key Decisions Taken on APM dismantling

• Consumer price of APM gas increased from Rs.
  2,050/mscm to Rs. 3,200/mscm linked to calorific
  value of 10,000 kcal/scm pending Tariff Comm.
  recommendations
• All APM gas to be supplied to only power
  fertiliser sector consumers against existing
  allocation as well as for specific end consumers
  under court orders/small consumers having
  allocation upto 0.05 mmscmd
• Rest of consumers to be supplied at market
  related price
• APM gas price for other than power fertiliser
  sectors further increased from Rs 3,200/mscm to
  Rs 3,840/mscm wef June 2006
• As against APM gas price of around 1.8/mmbtu,
  free market gas price varies e.g., RLNG _at_
  3.86/mmbtu, PMT gas _at_ 4.75/mmbtu, spot LNG
  purchases _at_ 7-8/mmbtu, etc.

16
New Exploration Licensing Policy (NELP)

• NELP introduced in 1999 so far VIII rounds held
• Internationally competitive fiscal regime
• Transparent Process, International competitive
  bidding
• Contractual Fiscal Stability
• Excellent Tax Incentives
• Special deepwater concessions
• Freedom to market production domestically

17
Policy on Refining

• Administered Pricing Mechanism (APM) dismantled
  for refineries in April 1998
• Setting up of refineries de-licensed in June 1998
• Refineries may be set up subject to meeting
  statutory requirements
• Private refineries by RIL and Essar set up in
  India
• Others JV refineries are under implementation

18
Auto Fuel Policy - Road map for Fuel Quality
improvement in India
Passenger Cars, LCV Heavy Duty diesel vehicles Passenger Cars, LCV Heavy Duty diesel vehicles Passenger Cars, LCV Heavy Duty diesel vehicles 2/3 wheelers 2/3 wheelers
BS-II BS-III Euro III Eq BS IV Euro IV Eq BS-II BS-III
11 Major cities (Delhi/NCR, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur Agra) Done by 1-Apr-03 Done by 1-Apr-05 Target 1-Apr-10 Done by 1-Apr-03 Done by 1-Apr-05
Entire Country Done by 1-Apr-05 Target 1-Apr-10 Done By 1-Apr-05 Preferably from 1.4.2008 but not later than 1.4.2010
Sulphur content in ppm (max)
Fuel BS-II BS-III/Euro-III BS-IV/Euro-IV Petrol 50
0 150 50 Diesel 500 350
50
Source Auto Fuel Policy, GoI
19
Policy on Marketing of Petroleum Products

• Marketing of petroleum products except subsidized
  products allowed to private companies
• Marketing of Transportation Fuels authorised
• Subject to entities making investment or
  proposing to invest Rs. 20 billion in
  exploration / refining / pipelines / terminals
  /infrastructure etc.

20
FDI Policy

• Exploration
• Up to 100 FDI Automatic route through
  Competitive bidding
• Refining
• Up to 100 FDI
• Up to 49 FDI if project taken up along with
  Public Sector Undertakings
• Marketing
• Up to 100 FDI permitted in petroleum products
  marketing
• Petroleum Pipelines
• Up to 100 FDI Under automatic route
• Natural Gas Pipelines
• Up to 100 FDI Under automatic route

21
Petroleum and Natural Gas Regulatory Board
22
Need for Reform
23
PNGRB Act, 2006

• Enacted by Parliament in March06
• All provisions (except Section 16) of the Act
  notified w.e.f. 1.10.2007
• PNGRB formally established w.e.f. 1.10.2007
• One Chairperson and four full time Members
• Basic Objectives
• To protect the interest of consumers and entities
• To ensure uninterrupted and adequate supply in
  all parts of the country
• To provide level playing field
• To promote competitive markets

24
Salient Functions of the PNGRB
25
Functions of the PNGRB (contd.)
26
PROCESS OF FRAMING FINALISING REGULATIONS
26
27
Regulations for CGD NG Pipelines notified so far
Regulations for Date Notified
Authorizing entities to lay, build, operate or expand CGD Networks 19.03.08
Exclusivity for CGD Networks 19.03.08
Determination of Network Tariff for CGD Networks and Compression Charge for CNG 19.03.08
Authorizing entities to lay, build, operate or expand natural gas pipelines 06.05.08
Technical Standards Specifications including Safety Standards for CGD Networks 27.08.08
Affiliate Code of Conduct for entities in Transporting and Distributing Natural Gas 17.07.08
28
Regulations for CGD NG Pipelines notified so far
Regulations for Date Notified
Access Code for common carrier or contract carrier natural gas pipelines 17.07.08
Determination of pipeline tariff for natural gas pipelines 20.11.08
Guiding Principles for Declaring or Authorising Natural Gas Pipeline as Common Carrier or Contract Carrier 21.04.09
Procedure for Development of Technical Standards and Specifications including Safety Standards 14.05.09
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Authorisation for CGD Networks
Bidding Criteria - (weightage) -
Least PV of overall unit network tariff over
economic life of project - (40) - Least PV of
compression charge for CNG over economic life of
project - (10) - Highest PV of inch-kilometer
of steel pipeline during exclusivity period -
(20) - Highest PV of PNG domestic connections
during exclusivity period - (30)
30
Exclusivity Criteria for CGD Networks

• Two periods of exclusivity provided to promote
  flow of investments
• Exclusivity of infrastructure over its economic
  life of 25 years
• Marketing exclusivity of 5 years after which 3rd
  party access to the network for marketing of
  natural gas would be available on payment of
  network tariff
• Network Tariff to be generally decided on bid
  basis

31
Authorisation for Natural Gas Pipelines
Bidding Criteria - (weightage) -
Least PV of unit tariff for 1st tariff zone over
economic life of project - (40 70 for
pipelines lt 300 KM) - Least percentage increase
for determining incremental tariff for 2nd tariff
zone - (20 nil for pipelines lt 300 KM 30 for
pipelines gt 300 KM lt 600 KM) - Least percentage
increase for determining incremental tariff for
3rd and subsequent tariff zones - (10 nil for
pipelines lt 600 KM) - Highest PV of natural gas
volumes - (30)
32
Process for Grant of Authorization
15 days
15 days
30 days
60 days (extendable by 30 days)
30 days
90 days
30 days
33
City Gas and CNG

• Present Scenario
• Total Number of CNG vehicles - 7 lakh
• Number of entities - 19
• Number of GAs - 25
• Future Scenario (next three years)
• Total Number of GAs - 86
• Expected CNG vehicles - 25 lakh
• Future Scenario (next five years)
• Number of GAs - 125
• Expected CNG vehicles - 33 lakh
• Future Scenario (next ten years)
• Number of GAs - 250
• Expected CNG vehicles - 58 lakh

34
PNGRB - Major Tasks on Hand

• Notification of Regulations
• Declaring/Authorizing petroleum products
  natural gas pipelines and city gas distribution
  networks on common carrier basis
• Specifying market service and retail service
  obligations to protect consumers interests
• Fostering Fair Trade and Competition
• Laying down Standards and Safety Norms

35
Thank you