OPPORTUNITIES IN THE INDIAN OIL AND GAS SECTOR BUSINESS SWEDEN June 2015 India
BUSINESS SWEDEN
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SUMMARY OF ANALYSIS India is the fourth-largest consumer of oil and petroleum products in the world after the US, China, and Japan The country is heavily reliant on the import of crude oil, growing at 7.7% CAGR over the past 7 years. 80% of crude oil demand is met through imports and rest from local production. During the last 7 years, natural gas imports has witnessed a growth of 8.5% CAGR, where as the local production of natural gas has been volatile in the range of 32 to 52 BCM per year. Production is well balanced between onshore and offshore for crude oil. In contrast, 75% of natural gas is produced offshore. India has 762 MMT (0.3% of the world’s) recoverable reserve of crude oil, and 1,427 BCM (0.7% of the world’s) recoverable reserve of natural gas. These reserves should be sufficient to meet 20 years of crude oil production and 30 years of natural gas production with the current production capacity. Indian private companies play a prominent role during the exploration, well-development and refining stages of the oil and gas value chain. Crude oil and natural gas pipeline infrastructure is dominated by public sector companies, and private firms own 10% length of this infrastructure. Despite allowing 100% Foreign Direct Investment in exploration, refining, pipeline, and marketing of oil & gas, there are limited number of foreign companies operating in India, where the British (including Scottish) and Dutch companies are predominant international players. Vast opportunities exist for Swedish companies to tap-in across the oil and gas value chain from setting up of refinery infrastructure, pipeline transportation, providing professional services, to Shale gas exploration, and technology partnership in upstream. BUSINESS SWEDEN
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ABBREVIATIONS Public sector companies
Joint venture companies (non-exhaustive)
AGC: Assam Gas Company Limited
BORL: Bharat Oman Refineries Limited
BPCL: Bharat Petroleum Corporation Limited
HMEL: HPCL-Mittal Energy Limited
CPCL: Chennai Petroleum Corporation Limited
GAIL: Gas Authority of India Limited
Industry terminologies
GSPL: Gujarat State Petronet Limited
LNG: Liquefied Natural Gas
HPCL: Hindustan Petroleum Corporation Limited
O&G: Oil and Gas
IOCL: Indian Oil Corporation Limited
PSU: Public Sector Undertaking
MRPL: Mangalore Refinery and Petrochemicals Limited OIL: Oil India Limited
Measurement units
ONGC: Oil and Natural Gas Corporation
BCM: Billion Cubic Metres of natural gas MMT: Million Metric Tons of oil equivalent
Private sector companies
EOL: Essar Oil Limited
MMSCMD: Million Metric Standard Cubic Metre Per Day
RPL: Reliance Petroleum Limited
BUSINESS SWEDEN
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KEY PLAYERS IN THE INDIAN OIL AND GAS VALUE CHAIN
Ministry of Petroleum and Natural Gas
Upstream (exploration and production)
ONGC
OIL
Private/ JVs
Downstream (refining , transportation and marketing)
ONGC
IOCL
BPCL
Industry bodies / Others
Petroleum Planning and Analysis Cell
Center for High Technology
Petroleum Conservation Research Institute
BUSINESS SWEDEN
GAIL
Private/ JVs
Petro Fed
Oil Industry Safety Directorate
Petroleum India International
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OIL AND GAS COMBINED, IS THE SECOND LARGEST SOURCE OF ENERGY CONSUMPTION IN INDIA
Globally, India is the fourth-largest consumer of oil and petroleum products after the US, China, and Japan
Total energy consumption in India 2013
Oil and gas constitutes over one-third of India’s energy usage
7%
4%
Coal Solid biomass & waste
Industry dynamics
22%
44%
Petroleum
Highly regulated industry, where fuel prices for consumers is regulated
Natural gas
Fuel subsidies are shouldered by the government and state-owned upstream companies
Nuclear & other renewables
23%
An inconsistent energy sector reform
SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION BUSINESS SWEDEN
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INDIA IS HEAVILY DEPENDENT ON IMPORTS, WHERE 80% OF ITS CRUDE OIL DEMAND IS IMPORTED… Crude oil production and imports in India in MMT*, FY 2008-14
33
33
37
38
37
37
10%
2010-11
2011-12
2012-13
2013-14
OIL
34
2009-10
Private/ JVs
2008-09
30%
2007-08
CAGR 1.4%
60%
121
132 159
163
171 184
189
CAGR 7.7% Production
Onshore 49%
51% Offshore
Import
SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA BUSINESS SWEDEN
ONGC
* MMT: MILLION METRIC TONS 6
…AND IMPORT OF NATURAL GAS HAS SHOT UP BY 65% OVER THE PAST FIVE YEARS Natural gas production and imports in India in BCM*, FY 2008-14 CAGR 1.5% 52 47
28%
Private/ JVs
7%
OIL
65%
ONGC
47 40 35
13
14
2013-14
2010-11
11
2012-13
2009-10
11
2011-12
2008-09
32
2007-08
32
18
18
18
25%
CAGR 8.5%
Onshore Offshore
75% Production
Import
SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA BUSINESS SWEDEN
* BCM: BILLION CUBIC METRES 7
THE LIMITED O&G RESERVE IS SUFFICIENT TO MEET 30 YEARS OF PRODUCTION WITH CURRENT CAPACITY Crude oil recoverable reserve 2014
Natural gas recoverable reserve 2014
World 238,000 MMT
India 762 MMT 99.7%
6%
3%
0.7%
14% Offshore Assam
50%
Gujarat Rajasthan Others
SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA BUSINESS SWEDEN
99.3%
0.3%
18%
23%
India 1,427 BCM
World 183,618 BCM
Offshore
3% 5%
Assam Gujarat
10% 68%
Andhra Others*
* OTHER STATES WITH MAJOR RESERVES OF NATURAL GAS ARE TRIPURA, TAMIL NADU, MADHYA PRADESH, WEST BENGAL, JHARKHAND AND RAJASTHAN 8
ONGC AND PRIVATE FIRMS ARE PUSHING FORWARD EXPLORATION AND WELL DEVELOPMENT Status of wells in India in number of wells, FY 2013-14
Exploratory & development drilling by companies in number of wells, FY 2013-14 Total wells: 682
Total wells: 29,830 7% 13 620
57%
207
475
303 194
7 019 2007-08 4 044
2013-14
Exploratory
2007-08
2013-14
Development
2 306
2 111 730 Oil
Gas
Dry
Under test
Injector
389
34
259
ONGC
OIL
Private/ JVs
Others
SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA BUSINESS SWEDEN
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RELIANCE, INDIA’S BIGGEST PRIVATE COMPANY HAS THE LARGEST PETROLEUM REFINING CAPACITY Petroleum refining capacity in India Total: 215 MMTPA, 2014
56%
Public sector
37%
7%
Private sector
JVs
Public sector firms: 120 (in MMTPA)
Private sector firms: 80 (in MMTPA)
JV firms: 15 (in MMTPA)
IOCL: 54
Reliance Industries: 60
BPCL, BORL: 6
BPCL: 21
Essar Oil: 20
HMEL: 9
HPCL: 14 CPCL: 11 MRPL: 15 WITH 215 MMTPA REFINING CAPACITY, INDIA IS THE SECOND LARGEST REFINER IN ASIA AFTER CHINA SOURCE: INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA BUSINESS SWEDEN
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STATE OWNED FIRMS DOMINATE THE PIPELINE INFRASTRUCTURE IN INDIA... Crude oil pipeline infrastructure 2014 Pipeline length: 9,573 km
8%
Private/ JVs
10%
BORL
11%
HMEL
12%
OIL
12%
47%
ONGC
Ownership by pipeline length
IOCL
7%
Onshore Refinery Crude oil pipeline
Offshore 93%
SOURCE: ENERGY INFORMATION ADMINISTRATION, INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA BUSINESS SWEDEN
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...AND PRIVATE FIRMS OWN ONE-TENTH OF O&G PIPELINE INFRASTRUCTURE 16%
Private/ JVs
6% 6%
AGC ONGC
12%
GSPL
Natural gas pipeline infrastructure 2014 Pipeline length: 18,020 km
Ownership by pipeline length 60%
GAIL
8% Onshore Offshore 92%
Regasification plant Natural gas pipeline
SOURCE: ENERGY INFORMATION ADMINISTRATION, INDIAN PETROLEUM AND NATURAL GAS STATISTICS 2013-14, GOVERNMENT OF INDIA BUSINESS SWEDEN
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OVERVIEW OF CURRENT REGULATORY SCENARIO IN THE INDIAN O&G SECTOR FDI limit varies with type of business activity in India Sub-category
Entry Route
FDI Limit
Exploration activities of oil and natural gas fields
Automatic
100%
Marketing and related infrastructure of petroleum products & natural gas
Automatic
100%
Petroleum product pipeline, natural gas/pipelines
Automatic
100%
LNG re-gasification
Automatic
100%
Market study and formulation, and petroleum refining in private sector
Automatic
100%
Petroleum refining by PSUs
Automatic
Up to 49%
100% FDI IS ALLOWED IN EXPLORATION, REFINING, PIPELINES AND MARKETING OF OIL & GAS SOURCE: MINISTRY OF PETROLEUM AND NATURAL GAS BUSINESS SWEDEN
* PSU: PUBLIC SECTOR UNDERTAKING 13
BRITISH AND DUTCH COMPANIES ARE PREDOMINANT INTERNATIONAL PLAYERS IN INDIAN O&G SECTOR Only a handful of foreign companies have presence in the Indian oil and gas sector British Petroleum is the largest international oil company in India. It has a gas value chain alliance with Reliance Industries Ltd. covering exploration, production, gas marketing, and sells Castrol lubricants
Cairn India is one of the largest independent oil and gas exploration and production companies in India, having a portfolio of 9 blocks (onshore/offshore) BG Group of Scotland has presence in the upstream exploration and production, and in the downstream through LNG shipping and marketing
Shell is so far the only international company to enter the Indian fuel retail market. It operates LNG storage, re-gasification terminal, and has a presence in lubricants and bitumen business SOURCE: COMPANY WEBSITES BUSINESS SWEDEN
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VAST OPPORTUNITIES EXIST FOR SWEDISH COMPANIES IN INDIA ACROSS THE O&G VALUE CHAIN
Refinery infrastructure
Professional services
Equipment companies
Swedish companies can invest in export-oriented infrastructure for refinery, including export terminals
Swedish professional service firms can provide advisory and financial services across the oil and gas value chain
48% of India’s sedimentary area is yet to be explored, along with the setting-up of the city gas distribution network. This offers untapped opportunities for Swedish equipment companies
Pipeline transportation
Technology partnership in upstream
Shale exploration
Swedish firms can invest in pipelines, as only 35% of petroleum product movement happens by pipeline in India, in contrast to 60% in the US and other developed markets Opportunities exist for Swedish companies with technical expertise, in exploration of deep & ultra-deep water oil & gas resources
India has recoverable shale gas resources of nearly 96 Trillion cubic feet, which essentially provides major opportunities for Swedish exploration firms
INVESTMENTS WORTH USD 600 BILLION IS EXPECTED DURING 2012-30 ACROSS THE O&G VALUE CHAIN SOURCE: FICCI, MAKE IN INDIA BUSINESS SWEDEN
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CONTACT US BUSINESS SWEDEN IN INDIA NEW DELHI Business Sweden Embassy of Sweden, Nyaya Marg, Chanakya Puri, New Delhi-110021, INDIA T +91 11 46067100
[email protected] www.business-sweden.se/indien
BANGALORE Business Sweden Kheny Chambers, 4/2 Cunningham Road, Bangalore 560052 T: +91 80 415 29100
[email protected] www.businesssweden.se/indien
We are located in India since 1995 and have offices in Bangalore and New Delhi. From our offices in India, we also cover Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka
