b k bakhshi

8/2/2019 B K Bakhshi

1/21


2/21

2

Oil - Price Peaks & Effect on IndianEconomy

SrNo

Year GDPGrowth (+/-)

Inflation Event

1. 1973 - 0.3 % 20 % Yom KippurWar oct 73

2. 1979 - 5.2 % 17 % IranianRevolution

3. 1990 + 1.3 % 14 % 1st Gulf War

4. 2008 - Fromexpected9% to lessthan 8%

12 % + From KatrinaOnwards


3/21

3

CRUDE OIL PRICES(Indian Basket)

Peak July 08 - $142/BBL

Sr No. Year Price ($/BBL)

1. March 2003 23

2. 2005 52

3. 2006 63.35

4. 2007 70.06

5. 2008 (avg 1st 6 months) 110.52


4/21

4

VERTICAL INTEGRATION HELPS OIL MAJORS

Integrated International Majors profits go down when crudeprice go down and profits go up when crude price are up.

Examples: The slump in crude prices to less than $15 per bbl in 1998 led

to mergers such as Exxon Mobil, Philips Conoco, etc.

When crude prices rose from $33 per bbl in April 2004 to70.25 per bbl in Aug 2005 2 weeks after Katrina Hurricane.Gasoline prices in USA peaked to $3.06 per USG. Thecombined net income of Exxon Mobil, BP, Royal Dutch, Shell& Conoco Philips totaled $ 32.8 Billion during the quarterending Sept 2005 on a revenue of $ 378 Billion.

* Source Black Gold by George Orwell, page 147


5/21

5

Governments liberalization drive hastened the pace ofhydrocarbon market development in India.

Journey so far

1950 1990 2007-08 Comments

1 Population (bn) 0.36 0.84 1.13 2nd most populous country

2 GDP Growth Rate (%) 3.9@ 5.58$ Around 9 >8% for last four years

3Crude Production(MMT)

0.26 32.6 34 Almost stagnant since 1990

4 NG Prodn (MMSCMD) NA 49.3 91 Bulk production from Mumbai High field

5Refining Capacity(MMT)

0.25 51.85 149 6th largest refining capacity in world

6 Crude import (MMT) 3.05* 20.7 12229% & 44% of total import & export invalue

7 Pipelines (kM) 37^ 9,945 31,061 Worlds longest operating LPG pipeline

8Product Consumption(MMT)

3.3 55 129>11% growth in MS/HSD & 14% in ATFlast yr

9 Product Export (MMT) 0 2.6 39.320.2% growth in POL export over 2006-07(32.7 MMT)

10 Retail Outlets NA 14,264 34,696#

Catering to more than 80 mn motor

vehicles*1955 figure @1950-60 Avg #As on 1.4.07 $1990-200 Avg ^Product pipeline


6/21

6

Upstream sector in India is a relatively unexplored market with reservesestimated in only 15 of the 26 sedimentary basins.

26 sedimentary basins: 3.14 mn sq kM

(44% onland and 56% offshore)

Prognosticated Hydrocarbon reserves: 28

BTOE (


7/21

7

NELP rounds have opened up large sedimentary areas forexploration to private and JV companies leading to decrease inunexplored or poorly explored areas from 67 to less than 37%

Out of total 205 bn bbl of prognosticated resources in 15 basins, 66 bn bblshave been established since 1947. 15 bn bbl in-place reserves were addedduring last 7 years

Exploration Acreage

April 96

Exploration Acreage

April 07

Source: Directorate General of Hydrocarbon

Moderate to

well

explored

16%

Poorly

Explored

18%

Exploration

initiated

17%

Unexplored

49%

Moderate towell

explored

20%

Poorly

Explored

21%

Exploration

initiated

44%

Unexplored

15%

Sedimentary Area

Yet to offer

32%

Area under

License

68%

Sectoral Overview Upstream


8/21

8

Overall Demand-Supply Gap (MMSCMD)Natural Gas

2008-09 2009-10 2010-11 2011-12

Supply

Domestic 120 140 147 170

LNG 34 52 70 70

Total 154 192 217 240

Demand 197 222 265 282

GAP MMSCMD 43 30 48 42

MMT 14.9 9.9 15.84 13.9


9/21

9

LNG TerminalsRated Capacity

Company/Location 2008-09 2009-10 2010-11 2011-12

Petronet-Dahej 5.00 10.00 10.00 10.00

Shell-Hazira 2.50 3.50 3.50 3.50

RGPPL-Dabhol - 2.90 5.00 5.00

Total 7.50 16.40 18.50 18.50


10/21

10

Expected Share of Natural Gas in the Energy Basket in India(Hydrocarbon Vision 2025)

Year 2006-07 2011-12 2024-25

Coal 50 53 50

Oil 32 30 25

Gas 15 14 20

Nuclear 1 1 3

Hydel 2 2 2

100 100 100


11/21

11

Indias downstream sector is dominated by NOCs.

19 refineries with 149 MMTPA installed capacity

105% capacity utilization in 2007-08

Refined product consumption 129 MMT

Refined product consumption: 7% annual growth

Refined product net exports 39 MMT, Grossexports $26.8 bn 07-08 (50% growth over 2006-07)

Product pipelines stretch over 9,500 km

New entrants in the oil marketing business includeRIL, Shell, EOL, MRPL and NRL

Domestic auto sales 14.1% CAGR (06-07 over 01-02); petroleum products consumption jumped by7% from last year

Over 34,000 retail outlets

Major Downstream Players as on April 1, 2008

Essar,

10.5, 7%

HPCL,

13.0, 9%

IOC, 60.2,

40%

RIL, 33.0,

22%

BPCL,

22.5, 15%

ONGC,

9.8, 7%

vt

10%

HPCL

19%

BPCL

21%

IOC

48%

Other(PSUs)

2%

Refining capacity (MMTPA)

Market Share of sale of Petroleum Products (in Volsales excl. CNG & LNG)

Source: MoPNG

Source: Monthly IPR

Sectoral Overview Downstream

Key Facts


12/21

12

Refining industry in India is poised for rapid growth with additionalinvestments planned over the next decade supported by GoIs intentionto promote India as an integrated refining and petrochemical export hub.

Developments

Investments

241 MMTPA refining capacity by 2012

38 MMTPA addition in the Pvt sector

Private investments from Chevron/Mittal

RIL/Essar/IOC venturing abroad (Kuwait, Africa,Turkey etc.)

Crude import and product exports expected tojump

Investment of over $22 bn estimated for creatingnew refining capacity

Refinery upgradation projects to requireinvestments of the order of $2.5 bn

148.9

194.7

210.21

225.88 240.96

170.41

150.51

120.37

107.27

195.49

2008 2009 2010 2011 2012

Refining Capacity Vs. Crude Import in MMTas on April 1

Source: XI FYP, MoPNG

Sectoral Overview Downstream


13/21

13

Oil Companies Under Recoveries 2007-08 On price controlled products

Sr.No.

2007-08 Under-Recovery(Rs Crs)

1. LPG 15,000

2. MS 7,000

3. SKO 19,000

4. HSD 35,000

Total 77,000

This is BORNE By

Sr.No.

Agency (Rs Crs)

1 UpstreamCompanies

26,000

2. OIL Bonds 35,000

3. OILCompanies

16,000

Total 77,000


14/21

14

High Taxes on Transport Fuel

Sr.No

Item MS Percentage HSD Percentage

1. Basic Price

(Rs/KL)

23,149.33 50.9% 23,241.11 73.18%

2. Custom/Exchange

Sales/Other Taxes(Rs/KL)

22,370.67 49.1% 8518.89 26.82%

3. Total Retail Price

Rs/KL

45,520.00 100% 31760.00 100%


15/21

15

SHARE OF OIL REVENUE IN TOTAL REVENUE IN 2002-05

Year Accrued to Oil Revenue(Rs. Crs)

Total Revenue(Rs. Crs.)*

Share of OilRevenue in Total

Revenue (%)

2002-03 Centre 64595 236936 27.3

States 32156 178001 18.1

Total 96751 414937 23.3

2003-04 Centre 69195 263027 26.3

States 35180 203746 17.3

Total 104375 466773 22.4

2004-05 Centre 77692 300904 25.8States 43254 235283 18.4

Total 120946 536187 22.6

*Centres revenue is taken as net of transfers to States. States revenue is the total receipts of own tax and non-tax revenue.

Source: Report of the Standing Committee on Petroleum & Natural Gas in Parliament, Government of India; StateFinances, A study of Budget of 2004-05, RBI, Government of India; Budget documents, Government of India.


16/21

16

Renewable Energy Sources Potential

Source/Technology

Units Potential/Availability

Potential Exploited

Units Percentage

Biogas Plants Million 12 3.2 26.8

Biomass-based Power.

MW 19,500 384 1.9

Efficient wood

stoves.

Million 120 33.9 28.2

Solar Energy. MW/Sq. Km 20 1.7 8.7

Small Hydro MW 15,000 1,398 9.3

Wind Energy. MW 45,000 1,367 3.0

EnergyRecovery fromWastes.

MW 1,700 16.2 0.9

Hydel. MW 148,700 16,083 10.8

* Table 7.3.3/7.3.16 10th plan document


17/21

17

Biofuels Activities

JV under formation with ChhattisgarhGovernment to produce 30,000 MTPABiodiesel

2000 ha revenue wasteland allotted byGovernment of M.P. In Jhabua district forenergy crop plantation. Investment approvalbeing obtained

10% ethanol blends in MS by 2012 (The endof the 11th plan)

Discussions with U.P. and RajasthanGovernment for creating Biodiesel units.


18/21

18

Status - Hydrogen Activities of IOC

IOC R&D had set up the Indias first Hydrogen DispensingStation in October, 2005 which is being used for fueling testvehicles.

A similar Hydrogen-CNG Dispensing Station is being set up atDelhi in Dwarka by IndianOil which will be commissioned byend of 2008.

IOC R&D working closely with SIAM members under an

MNRE project for optimisation of various vehicles toHydrogen-CNG.

IOC R&D planning further projects related to Hydrogenproduction, development of codes & standards etc.


19/21

19

Planning Cycle Key Corporate Activity

VisionPerspective

PlanLong Term

Plan

5 Year PlanAnnual Plan

K l d E l i


20/21

20

Knowledge Explosion

Knowledge Doublingitself every 5-7 years

The importance ofR&D escalating

exponentially

Rate ofChange ofEverything isHyperbolic

Years


21/21

21

Formula for Organisational Perpetuity

1. Creativity Without which no new Technologiesproducts goods & services can

emerge.

2. Continuity Without which in a changing environmentthe sense of purpose and/or directions mayget lost and develop aberrations.

3. Discontinuity The essence of discontinuity / changeis to discard the irrelevant / obsolete on acontinuous basis. Without it no forwardprogress can take place.

b k bakhshi

Documents