Presentation on theme: "Top Primary Energy Consuming Countries 2005"— Presentation transcript:
1 Overview of Petroleum & Natural Gas Sector & Regulatory Perspective in India
2 Top Primary Energy Consuming Countries 2005 Total World Energy Consumption: mtoe5th largest energy consumer (Share 3.7% of global energy)Per capita energy consumption - about one third of world averageEnergy consumption projection( )to grow at 5 % CAGR (8% GDP growth) as per Integrated Energy Policy3.4% 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 2025Oil import dependence is around 72% currently. Likely to go upto 90% levelFig. in MTOEPer-capita Energy ConsumptionIndia has been one of the world’s most consistent growth stories, and India’s GDP growth rate has accelerated from about 5% in the 1980’s and 1990’s to about 6% over the past 5 years. Today, Indian policy makers and planners accept that 6-7% annual growth is more likely.Source – Energy Information Administration (EIA)
3 Primary Commercial Energy Mix WorldWorld2003203010517 mtoe18040 mtoeCAGR: 2%Oil & Gas continue to play major roleIndiaIndia327 mtoe1651 mtoeCAGR: 6.2%Coal & Oil continue to play major role; Gas is emergingSource – World: EIA-2006; India: IEP 2006
4 Crude Oil Demand, Production & Import Trends MMT
5 India - A Net Exporter of Products POL - Imports & ExportsCrude OilImportUS$ BillionGross crude and petroleum productsCrude/product Imports : ~ 28% of total importsProduct Exports : ~ 8% of total exportsProductExportProductImportIndia - A Net Exporter of Products
6 Refineries & Product Pipelines RefiningRefining Capacity: 178 MMTProduct PipelinesProduct Pipelines Length: KMCapacity: MMTCapacity Utilisation: %IndianOil, through strategic mergers and acquisitions, has strengthened its leadership position in the downstream oil sector in India. The IndianOil group accounts for 41% of national refining capacity, 51% of product pipeline capacity, and 47% of market share.
7 Expected Refining Capacity by 2011-12: 200-235 MMTPA Refineries in India (1.4.08)Bhatinda(9.0)ExistingOngoing/PlannedPanipat(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)Jamnagar(33.0, 29.0, 10.5Haldia(6.0), (1.5)Paradip(15.0)Mumbai(5.5)(2.4)(12)Visakh(7.5, 7.5)Nos MMTPAIndianOilBPCHPCONGC / MRPLReliance (Pvt.)Essar(Pvt.)TotalTatipaka(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 : MMTPA
8 India’s product demand & refining capacity Gap between Refining Capacity & Demand1426821Surplus refining capacity is expected to increase further by 2030Source: XI Plan DemandIndia will continue to be product surplusImport/Export requirement for crude/products to be quite substantial
9 Petroleum Products Pipelines in India JalandharBhatindaAmbalaRoorkeeSangrurNajibabadPanipatMeerutNahorkatiyaTinsukiaRewariDelhiLoniSanganerShahjahanpurMathuraAjmerSiliguriBongaigaonDigboiJodhpurChaksuTundlaNumaligarhLucknowKanpurJagdishpurGuwahatiKotChittaurgarhSidhpurBarauniAhmedabadRajbandhKandlaRatlamMundraNavagamBudge BudgeJamnagarKoyaliMaurigramIndoreVadinarDahejAnkleshwarHaldiaHaziraManmadMumbaiHighMumbaiParadipPuneSecunderabadVizagExistingUranProductCrude OilRRIndia, already has a network of oil pipelines for supplying crude oil to the inland refineries viz. Guwahati, Mathura, Panipat, Barauni, Koyali etc., and for transportation of the petroleum products from the refineries and port terminals to inland depots and bulk consumers.Most of these pipelines are located in Eastern, western and northern parts of the country.At present the country has about 11,500 km of cross-country pipelines for transportation of crude oil and petroleum products. These pipelines are owned and operated by various oil and gas companies viz. Indian Oil Corporation Limited (IOCL), Gas Authority of India Limited (GAIL), Oil India Limited (OIL), Oil & Natural Gas Corporation Limited (ONGCL), Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and Petronet VK Limited (PVKL). Except PVKL, all other companies are state owned.70% of countries pipeline owns & operated by IOC. Total Pipeline capacity is MMTPAPakniHazarwadiVijayawadaProducts9893 KM; 64 MMTPALPG2124 KM; 4.5 MMTPACapacity UtilizationProds. - 78%; LPG - 62%MangaloreBangaloreChennaiOn-goingProductCrude OilSankariAsanurKarurExistingCoimbatoreTrichyKochiLPGMadurai9
10 Distribution & Marketing Infrastructure Terminals/DepotsNo.383LPG Bottling Plants170Aviation Fuel Stations126Retail Outlets37953LPG Distributors9366SKO/LDO Dealers6614IndianOil, through strategic mergers and acquisitions, has strengthened its leadership position in the downstream oil sector in India. The IndianOil group accounts for 41% of national refining capacity, 51% of product pipeline capacity, and 47% of market share.
12 Gas Pipelinesin IndiaLength- ~ kmsGas Consumption- 39 bcmLNG Import MMT, 1 mmtpa spot)Players- GAIL, GSPCL,GGCL, RGTILPipeline length is likely to double in next 4-5 yearsTotal infrastructure inadequate to meet the country’s requirements
13 Government of India Policies Administered Pricing Mechanism (APM) dismantling effectiveGas PricingNELPPolicy on RefiningAuto Fuel PolicyPolicy on Marketing of Petroleum ProductsGas Pipeline PolicyPetroleum Product Pipeline PolicyFDI Policy
14 APM Dismantling – Key decisions Key Decisions Taken on APM dismantlingAPM Dismantling – Key decisionsCrude oil producers/Refineries to be paid on import parity basis from Apr’02Market determined prices for all products except LPG & Kerosene from Apr’02Subsidies for LPG/Kerosene from fiscal budget on flat rate basis since Apr’02. Free float thereafter
15 Gas Pricing – July 2005 Govt. order Key Decisions Taken on APM dismantlingGas Pricing – July 2005 Govt. orderConsumer 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. recommendationsAll 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 mmscmdRest of consumers to be supplied at market related priceAPM gas price for other than power & fertiliser sectors further increased from Rs 3,200/mscm to Rs 3,840/mscm wef June 2006As against APM gas price of around $ 1.8/mmbtu, free market gas price varies e.g., $ 3.86/mmbtu, PMT $ 4.75/mmbtu, spot LNG $ 7-8/mmbtu, etc.
16 New Exploration & Licensing Policy (NELP) NELP introduced in 1999; so far VIII rounds heldInternationally competitive fiscal regimeTransparent Process, International competitive biddingContractual Fiscal StabilityExcellent Tax IncentivesSpecial deepwater concessionsFreedom to market production domestically
17 Policy on RefiningAdministered Pricing Mechanism (APM) dismantled for refineries in April 1998Setting up of refineries de-licensed in June 1998Refineries may be set up subject to meeting statutory requirementsPrivate refineries by RIL and Essar set up in IndiaOthers JV refineries are under implementation
18 Auto Fuel Policy - Road map for Fuel Quality improvement in India Passenger Cars, LCV & Heavy Duty diesel vehicles2/3 wheelersBS-IIBS-IIIEuro III EqBS IVEuro IV Eq11 Major cities(Delhi/NCR, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur & Agra)Doneby1-Apr-031-Apr-05Target1-Apr-10Entire Countryby 1-Apr-05ByPreferably from but not later thanSulphur content in ppm (max)Fuel BS-II BS-III/Euro-III BS-IV/Euro-IVPetrolDieselSource: Auto Fuel Policy, GoI
19 Policy on Marketing of Petroleum Products Marketing of petroleum products except subsidized products allowed to private companiesMarketing 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 Refining Marketing Petroleum Pipelines Up to 100% FDI: Automatic route through Competitive biddingRefiningUp to 100% FDIUp to 49% FDI: if project taken up along with Public Sector UndertakingsMarketingUp to 100% FDI permitted in petroleum products marketingPetroleum PipelinesUp to 100% FDI: Under automatic routeNatural Gas Pipelines20
22 Need for Reform Need for reform on account of - Provision of level playing fieldcapital intensive activities requiring heavy investmentspromoting competitioninviting foreign capitalattuning oil & gas sector in line with international practicesprotection of consumer interest
23 PNGRB Act, 2006 Enacted by Parliament in March’06 All provisions (except Section 16) of the Act notified w.e.fPNGRB formally established w.e.fOne Chairperson and four full time MembersBasic Objectives –To protect the interest of consumers and entitiesTo ensure uninterrupted and adequate supply in all parts of the countryTo provide level playing fieldTo promote competitive markets
24 Salient Functions of the PNGRB Fostering fair trade & competition amongst entitiesRegister entities for-marketing petroleum, petroleum products & natural gasestablishing & operating LNG terminalsestablishing storage facilitiesAuthorize entities for-Laying, building, operating or expanding a common carrier or contract carrier for transportation of natural gas or petroleum productsLaying, building, operating or expanding city or local natural gas distribution network
25 Functions of the PNGRB (contd.) Declaring pipelines as common carrier or contract carrier & specify access code for allowing access to such pipelinesIn respect of notified petroleum, petroleum products & natural gas -Ensure adequate availabilityMonitor prices & take corrective measures to prevent restrictive trade practicesEnforce retail service obligations & marketing service obligationsLay down technical standards & specifications including safety standards in activities relating to petroleum, petroleum products & natural gas
26 PROCESS OF FRAMING & FINALISING REGULATIONS Internal Deliberations in PNGRBDraft Regulations approved by BoardDraft Regulations posted in public domainOpen House with StakeholdersComments from stakeholders consideredOpen House on Final DraftRegulations finalized & approved by BoardLegal VettingNotification in Official Gazette26
27 Regulations for CGD & NG Pipelines notified so far Date NotifiedAuthorizing entities to lay, build, operate or expand CGD NetworksExclusivity for CGD NetworksDetermination of Network Tariff for CGD Networks and Compression Charge for CNGAuthorizing entities to lay, build, operate or expand natural gas pipelinesTechnical Standards & Specifications including Safety Standards for CGD NetworksAffiliate Code of Conduct for entities in Transporting and Distributing Natural Gas
28 Regulations for CGD & NG Pipelines notified so far Date NotifiedAccess Code for common carrier or contract carrier natural gas pipelinesDetermination of pipeline tariff for natural gas pipelinesGuiding Principles for Declaring or Authorising Natural Gas Pipeline as Common Carrier or Contract CarrierProcedure for Development of Technical Standards and Specifications including Safety Standards
29 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 yearsMarketing exclusivity of 5 years after which 3rd party access to the network for marketing of natural gas would be available on payment of network tariffNetwork 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 < 300 KM)- Least percentage increase for determining incremental tariff for 2nd tariff zone - (20%; nil for pipelines < 300 KM & 30% for pipelines > 300 KM < 600 KM)- Least percentage increase for determining incremental tariff for 3rd and subsequent tariff zones - (10% & nil for pipelines < 600 KM)- Highest PV of natural gas volumes - (30%)
32 Process for Grant of Authorization Suo-motu by BoardEOIReject the ProposalOpen Advt. in paper for “Public Consultation process”Firm-up “Authorized Area”Invite BidsBid evaluationNo entity gets selected. Board may go for re-bidGrant of AuthorizationGas Tie-upFinancial ClosurePost authorization monitoring of activities /meeting the service obligations/Quality of Standard normsConsequence of Default & Termination of Authorization15 days15 days30 days60 days (extendable by 30 days)30 days90 days30 days
33 City Gas and CNG Present Scenario Total Number of CNG vehicles - 7 lakhNumber of entities - 19Number of GAsFuture Scenario (next three years)Total Number of GAs - 86Expected CNG vehicles - 25 lakhFuture Scenario (next five years)Number of GAs - 125Expected CNG vehicles - 33 lakhFuture Scenario (next ten years)Number of GAs - 250Expected CNG vehicles - 58 lakh
34 PNGRB - Major Tasks on Hand Notification of RegulationsDeclaring/Authorizing petroleum products & natural gas pipelines and city gas distribution networks on common carrier basisSpecifying market service and retail service obligations to protect consumers’ interestsFostering Fair Trade and CompetitionLaying down Standards and Safety Norms