1. Oil Price Volatility Consequences & Policy Responses By Dr Avinash Chandra ED & Business Head - Oil & Gas Jindal Petroleum

2. The reason for Oil Price collapse The advent of “Shale Era” changed the rules of oil markets Technology Innovation fanned the growth of shale oil and gas. USA reduced oil imports leaving surplus oil in the world Opec Countries currently not in a position to develop this new shale resource so they decided to change the economics Saudi Arabia lead Opec to continue production at old levels due to extra oil prices dropped. The price decline can continue until sufficient amount of non-Opec supply reduces (mainly from Shale basins of USA)

3. Various Adjustments taking place in Oil & Gas Market Due to low cost technology upgradation US shale oil production continued longer than expected but slowly wells/fields are shutting down. This has reduced limited oil supplies However, slow down in economic growth of several countries e.g. Europe and mainly China reduced oil demand and prices have continued to drop A lot of oil has been stored but world can run out of storage both of onland tanks & also floating oil tankers on the sea. Eventually, the forward price curves may flatten out but speculative stocks may reenter the market & delay price recovery of oil

4. Crystal ball gazing for oil prices It is virtually impossible to predict with certainty how the “Oil Price Volatility” may behave as it depends on numerous factors like supply and demand of oil and gas, political, economic and a host of other features An attempt is made based on the projections given by several international agencies and companies dealing with energy intelligence. Broadly it appears that prices will gradually rise in the next 2-3 years as given below Crude Prices by the end 2016 may be around $40-$50/bbl By the second quarter of 2017 they may reach $60-$65/bbl, By the end of 2017 prices may reach upto $70/bbl By the mid or end of 2018 price may be $80 or max. $85/bbl Due to balancing effect of Shale oil the future oil prices may not increase beyond $ 90 /bbl

5. Change in production (2015-2020) of US tight oil for a range of 2020 oil prices -4 -3 -2 0 1 2 $40/bbl$50/bbl$60/bbl$70/bbl$80/bbl$90/bbl$100/bbl mb/d Source Energy Intelligence