1. Upstream Opportunities in India & Foray for equity Oil & Gas abroad B.Basu, ONGC, New Delhi 11 th Energy Summit, ASSOCHAM New Delhi, 17 October, 2008

2. The Presentation  India: Energy Scenario  India: Opportunities in Upstream Sector  Foray for equity oil & gas abroad

3. 3  16% of global population  0.5% of global Petroleum reserve  6.7% of world’s Coal reserve  8- 9% GDP growth rate target  4.5% CAGR in energy demand the Challenges are apparent…… India: The Energy context India's energy sector requires investment to the tune of $120-150 billion over the next 5 years to build increased capabilities and upgrade technology, says an industry report.

4. 4 India: Energy scenario India: the 5 th largest energy consumer –CAGR (1996-2006): 4.5% (global CAGR: 2.1%) –Per Capita energy consumption projected to rise from 375 Kgoe in 2007 to about 1200 Kgoe in 2030 Source: BP Statistical Review 2008 Primary Energy Consumption (MMToe) 3.6% of total

5. 5 India: Energy Scenario Source: BP Statistical Review 2008 WorldIndia Gas consumption in India increasing at a CAGR of >6.1% (Global: 2.6%) –next only to China in Asia Pacific(13%) in last decade

6. 6 Source: BP Statistical Review 2008 India: Energy Scenario India: 4 th largest consumer of Oil (3.3% of total) –Oil consumption increased at CAGR of 4% (1997-2007) against the world CAGR of 1.4%.

7. Growing Primary Energy demand … India *Source: BP Statistical Review 2007figure Source: Integrated Energy Policy With development of East Coast, new & marginal fields of West coast, CBM, UCG, and likely trans-national gas trunk lines- the gas demand seems to be achievable For oil, though importer for over 25 years, considering the dramatic rise in volume demand, the balance of trade for oil is a critical issue 404 MTOE 1633 MTOE CAGR= 6% Gas CAGR= 7.9% Oil CAGR= 5.2%

8. India: Oil Scenario Import dependence increased from 69.5% in 2002-03 to 74.9% in 2007-08 Import dependence may rise to 80-90% around 2030 Growing Import Demand –Supply gap in Oil to exist MMT

9. Growing Dependence on Imports Over dependence on oil & gas leading to import dependence from 70-85% 92% Import dependent on geo-politically sensitive Middle East and Africa »37% of total M-East crude comes from Iraq & Iran »About 45% of total African crude comes from volatile Nigeria Source: PPAC

10. Source: BP Statistical Review 2008 India: Gas Scenario Gas constitutes ~9% in Primary energy basket; likely to increase, thanks to Gas strikes at East coast Situation to improve by 2012. Demand-supply gap to exist MTOE

11. 11 Opportunity in supply… Gas Sector wise Gas Consumption projection (mmscmd) SECTOR2008-092009-102010-112011-12 Power91103114127 Fertilizer43528079 City Gas13141516 Industrial16171820 Petrochemicals/ Refineries/ Int. Con. 27293133 Sponge Iron/ Steel6778 Total196222265283 Only about 110 mmscmd available (80 Prodn. + 30 Import) against demand of 196 mmscmd Energy demand growth ~5%, gas demand growth~7% Power sector poised for more gas based generation Other industries, using liquid fuels, to shift to gas

12. Upstream Opportunities Indian Oil & Gas Business

13. Opportunity in E&P India has 4% sedimentary basins of the world (3.14 million sq. km) »About 80% area yet to be explored extensively »Out of 26 basins, exploration yet to be Initiated in 11. »Favorable open NELP regime »Abundant opportunities- New bidding, Farm-in

14. 14 NELP: The success story Opportunity in E&P Total Blocks offered: 256, Awarded: 207

15. 15 Discovery to Development … NELP  Total Discoveries : 66 Discoveries under evaluation/appraisal : 42 Commerciality under evaluation : 6 Commerciality established : 18  Development Plan to be submitted : 7  Development Plan approved : 5  Development Plan under evaluation : 6  IOGIP ( commercial discoveries) : 5.86 Bbbls As on : September, 2008. Source: DGH Opportunity in E&P

16. 16 NELP: Attracting Investment USD 3.9 Billion invested in NELP till March, 07 –30% by NOCs, 61% by Domestic Pvt & 9% by Foreign Investors USD 3.33 billion committed for NELP-VI Committed Investments in NELP (US$ million) RoundPhase-IPhase-IIPhase-IIITotal NELP-I244.14413.83493.661150.53 NELP-II287.85241.2246.5775.5 NELP-III414.5335.1388.91038.5 NELP-IV466.15367.2301.71135.1 NELP-V412238268917 NELP-VI20871230-3317 TOTAL3911.642825.331698.768333.63 Opportunity in E&P

17. 17 The future: Open Acreage Licensing Policy(OALP) Possible broad framework Opportunity in E&P  User defined blocks with certain constraints – 1 st party envisaging interest in the area any time  Two types of bid  Reconnaissance – short term, exit with no cost recovery  Exploration – parallels NELP  Exploration bid wins over a Reconnaissance bid every time  If reconnaissance company loses subsequent exploration bid, it shall have some options to participate/recover cost as a prior right

18. India has a potential of becoming E&P technology & services hub. With significant increase in E&P activities there is need for high quality & cost effective technology, goods and other related services in the full value chain of E&P sector. Opportunity in E&P

19. 19 Investment Environment Stable Political Environment and Growing Business Opportunities Competitive and transparent Fiscal regime with equal opportunity for NOCs and Global Investors  Attractive Income Tax Regime (Sec 44BB including)  VAT with credits, Goods & Services Tax with cross credits  Reduction in Customs Duty, Very attractive SEZ Act 2005  Cost competitive work force Liberal policy for FDI in E&P Open to partnerships in India as well as for overseas opportunities Excellent Tax incentives in NELP projects Special Deep-water concessions High demand-driven market/ Freedom of marketing Skilled/ cost effective Manpower etc. (400 PG in Geosciences and Petroleum Engineering, 350,000 Engineers/Annum) Opportunity in E&P

20. MARKET SECTORS UPSTREAM Exploration MIDSTREAMDOWNSTREAM ProductionDevelopmentPower / LNG Chemicals, Metals etc. Engineering & Construction FabricationDrilling, Wells & Rigs Subsurface Services Consulting and Professional Services Operations Support & ProductionLogistics (marine, water, land, air) Opportunity in E&P The value chain : Opportunities

21. Opportunity in E&P Opportunities: Technology, Goods and Services  Exploration Technology : Geo-scientific survey, data processing, G&G – Conventional, state of the art  Drilling Services: onland, offshore( shallow and Deep), High Technology wells  Field development and Reservoir management : Engineering and processes, IOR/EOR  Information Technology : various Software applications  Goods and Services: Drilling & oil field chemicals, consumables, array of hardware  Management Services : financial, legal consulting and Project management

22. Opportunity in E&P  ONGC to spend Rs 82670 Crore ( $ 17.2 Billion) in the XI Plan period ( 2007- 08 to 2011-12)  $ 40 Billion investment expected up to 2012 by all players

23. Foray for Equity oil and Gas abroad

24. 24 OVL: Activities 38* Projects in 18 Countries 24 Exploration6 Development 7 Producing

25. Reserve Base : 280 MMToe

26. India invites Partner in Progress for development & sustainability…

27. 27 Thank You