Professional Documents
Culture Documents
Sector Analysis
An NSC2 Initiative
Introduction
Energy India Scenario
Value Chain
Oil
Gas
Oil &
Gas
Oil &
Competition Scenario
Gas
Oil &
Policy Framework Oil &GasGas
Oil &
Challenges Coal
Gas
Major Players
Future Outlook
Coal
Coal
Coal
Coal
Coal
Introduction
Production
Processing
Trading
Distribution
Sale
Unit
Equivalent
Unit
Equivalent
1 bbl
42 US gallons or 120
litres
mmcf
Bcf
1 mbbl
1000 bbl
Tcf
1 mmbbl
1 million bbl
1 Bbbl
1 billion bbl
Btu(British Thermal
Unit)
E&P companies often describe their gas production in units of barrels or tonnes of oil
equivalent
Indias growing dependence on foreign energy sources has serious policy implications for its energy
security
Coal-centred energy mix and rising carbon emissions will create serious challenges for Indias
sustainable development
India has substantially low per-capita energy consumption and per-capita carbon emissions in
comparison with other countries
Exploration
Production
Transport
Bulk
Carriers,
Pipelines
Crude
Oil
Upstream
Intermediate
Storage
Downstream
Consumers
Retail,
Commerci
al,
Industrial
Marketing Co
Refining
Intermediate
Storage
Petrol
Diesel
Lubes
Chemicals,
etc.
Oil
Production
Production World 91.25 million
barrel / day
Production India - 0.89 million barrel /
day
Top three oil producing nations
Russia
Saudi Arabia
USA
Indias Rank 23
Demand
Exploration
Production
Natural Gas
Upstream
Processing
Liquefied
Gas
Transport
Downstream
Consumer
Marketing
Household,
Commercial
Industrial
Botteling,
Pipe supply
Pipe lines,
Gas Tankers
Storage
KG-D6
KG-D6 production was expected to compensate for
maturing fields
Production started according to plan in 2009, it has
since dropped significantly due to technical problems
In July 2013, production was at 14 mcm/d, instead of
the projected 80 mcm/d, which would have equalled
Exploration
Mining
Washeries
Upstream
Bulk
Consumers
Transport
Downstream
Consumers
Transport
Marketing
Production
Production World 7695 million
tonne
Production India 588.5 million
tonne
Top three Producing nations
China
USA
India
India ranks 5th in world for global
reserves with 66.8 billion tonnes
Jharkhand,
and Orissa account for
reserves in Chhattisgarh,
2010
approximately 70 percent of the country's coal
reserves
Other significant coal producing states include
West Bengal, Andhra Pradesh, Madhya Pradesh,
and Maharashtra
Coal production has more than doubled between
1990 and 2011.
Almost all of the country's coal mines are
opencast (less than 1,000 feet deep
Cairn India - major reserves in Rajasthan, it produced 149103 barrels per day (b/d) or
about 20% of Indias domestic crude in FY 2010/11, sold a controlling stake to UK-based
Vedanta in December 2011
Reliance Industries (RIL), has emerged as a prominent player in both upstream and the
refining sector since the discovery of considerable gas reserves in the Krishna-Godavari (KG)
basin in 2002 and the completion of its Jamnagar refinery in Gujarat in 2008. RIL also owns
Reliance Gas Transportation Infrastructure (RGTIL), which operates the 1396 km-long
East-West Gas Pipeline from Andhra Pradesh to Gujarat
Essar Oil is another key player in both upstream and downstream, and is the second largest
private refiner; it recently completed the expansion of Vadinar refinery in Gujarat
Mittal Energy Limited through a JV with HPCL, called HMEL, starting operation of the
Bathinda refinery in Punjab in 2012
British Petroleum (BP) acquired 30% of RIL's share in the KGD6 gas field for USD 7.2
billion in 2011
Royal Dutch Shell has been active in the LNG business in India, owning the Hariza LNG
terminal that was commissioned in 2005
Petronet LNG Limited (PLL) - import LNG and build re-gasification plants. A JV by oil
PSUs, namely GAIL, ONGC, IOCL and BPCL, each of them owning 12.5% of share, the
remaining 50% share is held by private shareholders, including a GDF Suez subsidiary
(10%)
Source: IEA: Understanding Ene
and the Asian Development Bank (5.2%)
Challenges in India 2013
Center
Ministry of Coal
Policy
Coal
Controller
Private
State Governments
CMPDIL
Ministry of Coal
Production
States
State Governments
Singareni Collieries
Company Ltd
Singareni Collieries
Company Limited
Mahanadi Coalfields
Power
Cement
Iron & Steel
Others
Under the Industrial Policy Resolution in 1956, the Oil and Natural Gas Commission and Indian Oil
Corporation were created for the upstream and downstream sectors respectively
The Indian government nationalised the hydrocarbon sector during the 1970s, reaching completion in 1981
Upstream blocks for exploration were then allocated to oil PSUs on a nomination basis and private companies
could later participate too, but only through a joint venture with PSUs
Due to slow exploration and development of hydrocarbon reserves led to a re-liberalisation of the sector in
the 1990s
Earlier allocation of upstream projects to PSUs was controlled through administrative orders from the Indian
government
The NELP, effectuated in 1999, is a cornerstone of Indias upstream policy
Aim was to accelerate exploration and development of hydrocarbon resources in India against the backdrop
of increasing domestic demand
The NELP awards exploration blocks through international competitive bidding and allows 100% foreign and
private participation
The PSUs had to begin competing on equal footing with private and foreign companies
Under the NELP, the Production Sharing Contract (PSC) are the managing instrument
A total of eight bidding rounds of NELP have been implemented since the first in 1999, with mixed outcomes
Through these eight rounds, a total of 326 blocks have been offered and, 236 awarded
A total of 107 discoveries were made, of which 31 were declared commercial and six have started production
Under the NELP, Indias unexplored sedimentary areas decreased from 50% in FY 1995/96 to 12% in FY
2010/11
9th round of bidding 33 exploration blocks were offered, ONGC bagged
10,Wikipedia,
OIL 10 and
RIL 6 were Energy
awarded
DGH MoPNG,
IEA: Understanding
Challenges
100% (automatic) in Upstream exploration & production, petroleum product marketing & pipeline
100% (non-automatic) Natural gas / LNG pipelines
100% (automatic) in privately owned refineries
26% in state owned refineries
Introduced in 2001, IHV 2025 laid out the long-term vision for the oil and gas sector
The objectives were enhancing energy security and promoting a free market and competition within the
sector
In the medium- and long-term strategies contained in the IHV 2025, some salient features are
notably increasing operational flexibility and autonomy of PSUs
developing the sector to a globally competitive level
better utilisation of domestic hydrocarbon resources
The overall availability of energy would need to be increased substantially to bridge the gap in energy
demand and supply
Development of energy markets will be promoted as part of this overall policy to help reduce demand and
supply gap; this will ultimately lead to greater competition and better prices for consumers
For meeting the requirements of the transport and other sectors, development of other domestic energy
sources will be taken up through further exploration of oil and gas with the help of international competitive
bidding
Exploration policies will be further refined to attract the major global oil players, international investors and
technologies
Indias private coal mining companies were nationalised under the Coal Mines (Nationalisation) Act 1973; CIL
was established in 1975
In 1976 iron/steel and the power industry were allowed to produce coal from designated mines captive
consumption
National Mineral Policy 1993 aimed to encourage foreign and private investment in Indias mineral sector
Eligibility
for captive
was expanded to cement producers and coal washing, later to coal
Colliery
Control
Orderproduction
2000
gasification
and liquefaction
2007for all coal qualities; distribution remained controlled by the Government
Coal
Linkage Policy
deregulatedin
prices
Introduced to facilitate supply of assured quantities of coal to consumers of core and non-core sectors at predetermined prices
Introduced Fuel Supply Agreement (FSA) replacing the linkage system
Under FSAs 100% of coal requirements for the power and fertilizer sectors will be met by coal companies and
75% of coal requirements for other large consumers
The NCDP resulted in huge burdens to CIL due to stagnating coal production
As a FSA is a legal obligation, failing to honour its supply commitments entails an expensive penalty
payment by CIL to consumers
Importing coal to fulfil its commitment turned out to be an enormous challenge, mainly due to the price
disparity
CIL has refused to sign a new FSA since March 2009, with 1184 standing FSAs for a total of 304.80 Mt for the
power sector
Challenges Coal
Stagnating domestic production
During the 11th Five-Year Plan, Indias coal demand increased at CAGR of 8.5%. However, CILs
domestic production has increased at a CAGR 4.6% during this period
Reasons sighted for stagnating coal production were majorly
rigid and time consuming procedures for land acquisition and environment clearance
frequent strikes and strong unions disrupting work and slowing down production
Import Dependence
Indias coal imports have more than doubled over the last five years
However importing coal is becoming problematic due to following reasons
Limited support infrastructure
Different characteristics of coal typically allow Indian power plants to blend imported coal
with domestic coal only up to 10% to 15%
Price disparity posit a considerable difficulty for both CIL & consumers
Infrastructure
India requires a well-integrated infrastructure for its coal supply chain, which includes railroads, importing
ports and washeries
Delayed construction of railways by Indian Railways to connect mines, dispatch centres and end-use
destinations, has already created a considerable bottleneck in coal supply in recent years
The limited supply capacity and poor quality of mining equipment of Indian suppliers can hinder mining
productivity
Latest Developments
Unconventional Hydrocarbons
Coal Bed Methane
It is a form of natural gas; extracted from coal beds
India began awarding coalbed methane (CBM) blocks for exploration in 2001
the U.S. Geological Survey (USGS) and ONGC to conducted a resource assessment and
estimates anywhere between 9 and 92 Tcf of CBM resources both onshore and offshore India
Great Eastern Energy Corporation (GEEC) has developed the Raniganj block in West Bengal, with
an estimated 1 TCF of gas potential
Essar Oil and RIL have also been developing blocks in Bengal, although there has not been any
significant commercial production
Unconventional Hydrocarbons
Shale Gas
Joshi Technologies made the first shale oil discovery in Cambay Basin in mid-2010
Companies are interested in exploring the Cambay basin in Gujarat, the Assam-Arakan basin in
northeast India, and the Gondwana basin in Central India for shale gas resources,
There has been no commercial production or publicly released reserve figures by Government
MoPNG announced to come up with a policy on Shale gas blocks exploration & production
Future Outlook
World Energy Demand
Future Demand
Population and income growth are the key drivers behind growing demand for energy. By 2030
world population is projected to reach 8.3 billion, which means an additional 1.3 billion people
will need energy; and world income in 2030 is expected to be roughly double the 2011 level in
real terms
World primary energy consumption is projected to grow by 1.6% p.a. from 2011 to 2030, adding
36% to global consumption by 2030. The growth rate declines, from 2.5% p.a. for 2000-10, to
2.1% p.a. for 2010-20, and 1.3% p.a. from 2020 to 2030
Demand Drivers
Low and medium income economies outside the OECD account for over 90% of population
growth to 2030. Due to their rapid industrialisation, urbanisation and motorisation, they also
contribute 70% of the global GDP growth and over 90% of the global energy demand growth
Energy used for power generation grows by 49% (2.1% p.a.) 2011-30, and accounts for 57% of
global primary energy growth. Primary energy used directly in industry grows by 31% (1.4%
p.a.), accounting for 25% of the growth of primary energy consumption
The fastest growing fuels are renewables (including biofuels) with growth averaging 7.6% p.a.
2011-30. Nuclear (2.6% p.a.) and hydro (2.0% p.a.) both grow faster than total energy. Among
fossil fuels, gas grows the fastest (2.0% p.a.), followed by coal (1.2% p.a.), and oil (0.8% p.a.)
Success of North Americas shale gas has sparked an interest in duplicating the results in other
countries. However countries have to overcome geographical and technical challenges to make it
commercially viable
BP World Energy Outlook 2030, Deloitte Oil & Gas Reality C