Industry Profile Petroleum

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Industry Profile Petroleum

• Kasturi Dutta
• Khushboo Vaish
• 24th September06

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Evolution of Oil Gas Industry in India

• At Independence, domestic oil production was
  250,000 tones per annum.
• E P was controlled by the NOCs, ONGC and OIL.
• 70s Nearly 70 of the
  domestic requirement.
• 80s Production declined,
  Steady increase in consumption.
• Today Two NOCs meet about 35 of
  domestic requirement.
• Petroleum Sector Reforms, 1990
• 4th 8th bidding between 1991-94. Indian
  companies permitted to bid.
• JV Exploration Program in 1995. 25 to 40
  Participating Interest.
• Foreign Companies Exploration in India since
  early 50s.
• Indo Stanvac Project- GOI and Standard
  Vacuum oil Company, West Bengal
• offshore, in early 50s.
• Carlsbons Natomas for Bengal offshore
  in early 70s.
• Shell for Kerala offshore and Chevronn-
  Texaco in Krishna-Godavery Offshore.

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• Indian EP Companies
• Except HOEC, riding piggyback on the foreign
  companies.
• Reliance Petroleum Ltd. joined with ONGC in
  bidding for exploration and development ventures
  in India and abroad.
• Downstream companies IOC, GAIL entered
  upstream with ONGC and OIL.
• Opening of the Oil/Gas Fields for Development by
  Private Companies
• The Indian oil/gas fields discovered by the
  two NOCs, were first offered in 1992 under the
  First Offer.
• The second such offer was made in 1993.
• Development of fields
• Cost intensive venture
• Contracts have upfront payments to be made
  to the NOCs for past costs as well
  
• as in the form of signature bonds.
• Companies are also required to make
  production bonus payments.
• 74 Exploration Contracts and 28
  Development Contracts are in operation.

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Major Players in India

• ONGC
• Public sector company Contributes 77 of Indias
  crude oil production Revenue (2006) 10.5
  billion Employees 41000
• ONGC's setbacks in acquiring major oil resources
  and the government's order to help shoulder the
  burden of subsidized fuels earlier this year,
  pushed the country's biggest refiners into the
  red
• The 50-year-old firm has acquired interests in 16
  overseas projects since it started looking abroad
  in 2001.
• For three years in a row, the firm has failed to
  replace the reserves it produced.
• ONGC must boost its reserve-to-production
  ratio(22 years) by improving its drilling
  technology and management practices. In some
  onland areas the ratio is 57 years.
• ONGC lost a major offshore platform at Bombay
  High, reducing the company's output by 123,000
  barrels per day (bpd). It has since restored half
  that production.
• Oil Minister Mr Aiyar has pushed for Indian and
  Chinese firms to cooperate not compete, for
  overseas assets, but his efforts appear to have
  met with little interest in Beijing.

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• IOCL
• India's largest commercial enterprise sales
  turnover of US 36.537 billion
• IndianOil Technologies Ltd.(a wholly owned
  subsidiary company ) is the 19th largest
  petroleum company in the world
• World-class RD Centre has developed over 2,100
  formulations of SERVO brand lubricants and
  greases.
• BPCL
• 3rd largest oil company in India Owned by the
  Government of India Revenue (2005) 17.613
  billion Employees 12400
• In 1976, the Burmah Shell Group of Companies was
  taken over to form Bharat Refineries Limited.
  Renamed Bharat Petroleum Corporation Limited in
  1977
• First refinery to process newly found indigenous
  crude (Bombay High), in the country

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Global Oil Prices

• From the foundation of the Organization of
  Petroleum Exporting Countries in 1960 through
  1972 member countries experienced steady decline
  in the purchasing power of a barrel of oil. In
  March 1971, the balance of power shifted.
• Arab Oil Embargo 1973 Prices increased 400
  percent in six short months.
• Events in Iran and Iraq led to another round of
  crude oil price increases in 1979 and 1980
• Prices spiraled in 2004 and 2005 as the spare
  capacity to produce oil has been less than one
  million barrels per day which cannot cover an
  interruption of supply from almost any OPEC
  producer. In a world that consumes over 80
  million barrels per day of petroleum products,
  that adds a significant risk premium
• Fear that oil supplies might be reduced because
  of turbulence in the Middle East and Venezuela
• Other reasons US dollars slump Peak Oil Theory
  and Speculation Ever-increasing demand, as
  witnessed by oil shortages in Africa, India, and
  China.
• Today Oil prices into a downward spiral of more
  than 20 percent since the middle of July. The
  price of oil fell 4 percent just this week.
• Reasons Light hurricane season this summer, the
  cease-fire between Israel and Hezbollah and the
  fact that UN has not imposed sanctions on Iran.

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How is India Combating Price Hike?

• The oil price is increased, Revenue loss of Rs
  73,512 crore in 2006-07 fiscal.
• India's ONGC Videsh, Spanish Oil Company Repsol
  YPF and Norways Norsk Hydro to explore six
  offshore blocks in Cuba.
• India's ONGC Videsh Ltd. and GAIL together hold
  30 per cent stake in A-1 field operated by Daewoo
  of South Korea. Myanmar agreed to sell gas from
  offshore A-1 field to India through a land route
  bypassing Bangladesh.
• India is considering joining a Central Asian gas
  pipeline that originates from Turkmenistan.
• China National Petroleum Corporation (CNPC) and
  India's ONGC, jointly won a bid to acquire 37 of
  Petro-Canada's stake in Syrian oilfields for
  US573 million.
• India is seeking the revival of
  Iran-Pakistan-India pipeline deal which has
  currently reached a deadlock.
• Reliance Petroleum Ltd is working on a new
  29-million-tonne (5,80,000 barrels-a-day)
  refinery which will be housed in a SEZ adjacent
  to the existing Jamnagar refinery of Reliance
  Industries.