1. REGULATORY FRAMEWORK ON OIL & GAS SECTOR by B.S. NEGI Member Petroleum and Natural Gas Regulatory Board, India 1

2. Oil & Gas Sector Overview  Up stream  Infrastructure  Regulatory regime  Key Imperative and Suggestions  Mid stream and Down stream  Infrastructure  Regulatory regime  Issues Key Imperatives for India 2

3. India’s Sedimentary Basins- 26 Total Area- 3.14 million Square km.(msqkm) On land- 44% Shallow water- 14% Deep water- 42% 3

4. Area under License Yet to License Area (msk) (%) 2.15 (68%) 0.99 (32%) On land46%40% Shallow water14%10% Deep water40%50% 4

5. Gas Resources- 400 tcf ( in 15 basins) CBM resources- 50 tcf (in 26 blocks) Total Natural Gas Resources- 450 tcf Gas resources Established  From HC E&P- 114 tcf  From CBM- 6 tcf  Total Reserves- 120 tcf 5

6. 6

7. Process of AwardNos. of BlocksRemarks Pre NELP2811, relinquished Up to NELP-VI206Total awarded NELP-VII44Awarded, Dec’08 NELP-VIII100On bid, expected March, 2009 7

8. Accretion per Annum of Reserves 2014-152017-182020-212023-242026-27 1% *mmscmd 12*76145191214 2% 24152290382428 5% 583787289561072 8

9.  NELP - Fiscal benefits  NELP VII onwards no tax holiday for gas blocks, mineral oil definition limited to oil  Gas Hydrates – from limited participation of GAIL, OIL, ONGC, OIDB, NGRI – a more wider participation of interested parties with equity infusion as per the plan needs to be developed. Funds inflow could also be sought from international agencies  Open acreage for exploration as a part of NELP where parties spend money for searching the reserves. Allocation policy of such blocks to be decided by the regulator  Technical Standard – To follow the public consultation process

10. Refining capacity – 148 MMTPA Pipeline infrastructure  Natural Gas – 8000 km (including regional Network)  Petroleum Product pipelines – 10000 kms CGD networks – 21 cities having gas supply, 10 Cities in Project stage  0.85 million house hold connected  0.60 million vehicle on CNG Total infrastructure inadequate to meet the country’s requirements except oil 10

11. Regulatory Scenario Petroleum & Natural Gas Regulatory Board Act Policy for marketing of transport fuels Policy on NG Pipelines and CGD networks Product Pipeline Policy Policy on Refining

12. Enforce retail & marketting service obligation Monitor prices & prevent restrictive trade practices Register & Authorise entities Declare pipeline as common / contract carrier Perform other functions entrusted by Central Government Protect consumer interest by fostering fair trade & competition Regulate access & transportation rate on common / contract carrier / CGD network Ensure adequate availability, and equitable distribution Functions of the Board Lay down technical standards, specifications including safety standards Maintain databank of information 12

13. 13 S No.RegulationNotified on 1Levy of Fee and Other Charges26-11-2007 2Meetings of the Board26-11-2007 3Appointment of Consultants30-11-2007 4Conduct of Business, receiving and investigation of complaints 30-11-2007 5Authorizing entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution networks 19-03-2008 6Determination of Network Tariff for City or Local Natural Gas Distribution Network and Compression Charges for CNG 19-03-2008 7Exclusivity for City or Local Natural Gas Distribution Networks 19-03-2008

14. 14 S No.RegulationNotified on 8Authorizing entities to Lay, Build, Operate or Expand Natural Gas Pipelines 06-05-2008 9Affiliate Code of Conduct for Entities Engaged in Marketing of Natural Gas and Laying, Building, Operating or Expanding Natural Gas Pipeline 17-07-2008 10Access Code for Common Carrier or Contract Carrier Natural Gas Pipelines 17-07-2008 11Technical Standards and Specifications including Safety Standards for City or Local Natural Gas Distribution Network 27-08-2008 13Determination of Natural Gas Pipeline Tariff20-11-2008

15. 15 S No.RegulationNotified on 1Technical Standards and Specifications including Safety Standards for Natural Gas Pipelines Public Consultation completed. 2Emergency Response and Disaster Management Public Consultation completed. 3Declaring pipeline as Common Carrier or Contract Carrier Public Consultation completed. 4Procedure for Standards DevelopmentPublic Consultation completed. 5Authorizing entities to Lay, Build, Operate or Expand Petroleum Product Pipelines Web hosted for public comments

16. 16 S No.RegulationNotified on 6Methodology for determination of capacity for pipeline and CGD Networks Under preparation 7Access Code for Petroleum Product pipelines Under Preparation 8Quality of Service for CGD NetworksUnder Preparation 9Determination of Tariff for Petroleum Product pipelines Under Preparation

17. Infrastructure Development Environment Social Development

18. Environment Energy Security Energy Efficiency

19. Govt. Controlled Liberalized Mature Nascent OIL GAS MARKETMARKET MARKET OPENING

20. Companies for Mkt Competition 123456 HHI* 100001000050003324250020001653

21.  Ensuring Energy security through  Extensive exploitation of sedimentary basins  CBM to have high priority  Underground coal gasification  National Gas Hydrates programme prioritization  Non Conventional energy resources  Infrastructure development for mid and down stream – NGG and CGD  Infrastructure status for CGD networks apart from NGG  Priority allocation of gas for CGD networks  Cutting Edge Technologies and Innovation  Health, Safety and Environmental aspects

22.  Regulations - Level playing field with predefined rules brings competition conducive to  Private sector investment complimenting public sector investment  Reduce vulnerability to prices and supply shocks  Bring in efficiency  Enhance infrastructure in energy sector transport  Emergence of retail gas user  Process of bringing competition is a single factor changing the market scenario  HHI is the indicator of competition in the market