Oil & Gas
Oil & Gas - Key Developments and Investments

  • India and Nepal have decided to take forward the proposal to build a 41 kilometers (kms) petroleum pipeline between the two countries at a cost of about Rs 100 crore (US$ 19.23 million). The pipeline is to be laid between Raxaul in Bihar to Amlekhgunj in Nepal.
  • Kerala State Industrial Development Corporation Ltd (KSIDC) has partnered with Gail Gas Ltd to set up a joint venture (JV) company, to implement Supplementary Gas Infrastructure in Kerala. The JV company formed is known as Kerala Gail Gas Ltd (KGGL).
  • Oil and Natural Gas Corporation's (ONGC) overseas investment arm, ONGC Videsh, sealed a deal to take 25 per cent stake in Kazakhstan's Satpayev acreage in the Caspian Sea, marking India's first firm foothold in the hydrocarbons-rich Central Asia.
  • Reliance Industries Ltd (RIL) and British Petroleum Plc (BP) on November 21, 2011, have announced the formation of India Gas Solutions, an equal joint venture (JV) that would focus on global sourcing and marketing of natural gas in India.
  • Gas Authority of India Ltd (GAIL), the country's largest marketer and transporter of natural gas, has become the first Government-owned energy company to get a foothold in the US market. It has entered into a deal with Carrizo Oil and Gas Inc for acquiring 20 per cent stake in Eagle Ford shale acreage.
  • Bharat Petroleum Corporation Ltd (BPCL) plans to achieve refining capacity of nearly 42 MT by 2015-16 where the focus will be on low-cost expansions. These initiatives on the refining front will form part of BPCL's Rs 40,000 crore (US$ 7.67 billion) investment outlay over the next five years.
  • India has grown phenomenonally from 194 MTPA currently, and this is projected to reach 238 MTPA by 2013. The boost in refining capacity will be initiated by BPCL and its partner with a 120,000 b/d refinery coming up at Bina in Madhya Pradesh. In 2011, HPCL and Mittal will commission an 180,000 b/d plant at Bathinda in Punjab.
  • Essar Oil will be expanding its capacity of Vadinar refinery from 300,000 b/d to 375,000 b/d in 2012, while Nagarjuna Oil and Indian Oil will be adding capacities of 120,000 b/d and 300,000 b/d, respectively, by 2012-13.

Oil & Gas - Government Initiatives

The India Hydrocarbon Vision 2025 envisages a demand of about 391 million standard cubic feet per day (MMSCMD) of gas by the year 2020-25. The current production of natural gas in the country is about 150 MMSCMD and is expected to go up to about 192 MMSCMD by the year 2011-12.

  • New Exploration Licensing Policy (NELP), implemented by Government of India, permits 100 per cent FDI for small and medium sized oil fields via competitive bidding.
  • Public-private partnerships (PPP) as well as only private investments can foray into the refining sector. In case of an Indian private company, 100 per cent FDI is allowed.
  • 100 per cent FDI is allowed for petroleum products and pipeline sector as well as natural gas/ LNG pipeline, for infrastructure related to marketing of petroleum products, market study of formulation and investment financing.
  • Minimum 26 per cent equity is covered over five years, in case of trading and marketing.
  • The Government is determined to protect the interest of common man while providing quality petroleum products at reasonable prices, asserted Mr S Jaipal Reddy, Minister of Petroleum and Natural Gas in a recent meeting. He further added that with a view to reduce burden on consumers as well as oil marketing companies (OMCs), the Government has eradicated the Customs Duty on Crude Oil and trimmed Customs Duty on petroleum products by 5 per cent. Excise Duty on diesel was also reduced by US$ 0.056 per litre.

Oil & Gas - Road Ahead

India's demand for liquid petroleum products is projected to grow at a 4.7 per cent compound annual growth rate (CAGR), during the next five years, while the demand for gas is expected to grow at a CAGR of 14 per cent. Presently, natural gas accounts for around 10 per cent of India's primary energy basket. India is also increasing its current RLNG re-gasification capacity from the current 13 MTPA to well over 30 MTPA by 2015. To carry gas across the length and breadth of India, 8,000 kms of gas pipelines are being laid while another 5,000 kms are under the bidding process. All these are pointers to the attractiveness of India as a stable gas market with an assured demand.

India's oil companies are present in around 24 countries including Egypt, Kenya, Uganda, Tanzania and Mauritius. The total overseas investment by our public sector oil undertakings is about US$ 13 billion which includes two pipeline projects in Sudan and Myanmar. India being a US$ 1.8 trillion economy, aims to grow steadily at 8-9 per cent per annum, it seeks to build a long term partnership with oil rich African countries to meet its growing energy needs.

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