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Page 1: OIL & GAS - ibef.org

For updated information, please visit www.ibef.orgMay 2021

OIL & GAS

Page 2: OIL & GAS - ibef.org

2

Executive Summary 3

Advantage India 4

Market Overview and Trends 6

Sector Drivers 9

Recent Trends and Strategies 24

Growth Drivers 30

Opportunities 36

Key Industry Contacts 38

Appendix 40

Table of Contents

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Executive summary

4. FOURTH-LARGEST LNG IMPORTER LNG import in the country accounted

for about one-fourth of total gasdemand, which is estimated to doubleover the next five years. To meet thisrising demand the country plans toincrease its LNG import capacity to50 MT in the coming years.

India increasingly relies on importedLNG. It is the fourth-largest LNGimporter.

India’s LNG import stood at 33.68billion cubic meters (bcm) in FY20.

1. SECOND-LARGEST REFINER IN ASIA As of May 01, 2020, India’s oil

refining capacity stood at259.3 million metric tonnes(MMT), making it the second-largest refiner in Asia. Privatecompanies owned about35.19% of the total refiningcapacity in FY20.

India is planning to double itsrefining capacity to 450-500million tonnes by 2030.

3. THIRD-LARGEST CONSUMER OF OIL India’s consumption of petroleum

products grew 4.5% to 213.69 MMT inFY20 from 213.22 MMT in FY19.

India retained its spot as the third-largestconsumer of oil in the world in 2019.

2. WORLD’S THIRD-LARGEST ENERGY CONSUMER According to IEA (India Energy Outlook

2021), primary energy demand is expected tonearly double to 1,123 million tonnes of oilequivalent, as the country's gross domesticproduct (GDP) is expected to increase toUSD 8.6 trillion by 2040.

1

2 3

4

Notes: MMT - Million Metric Tonnes, Mtoe - Million Tonnes of Oil Equivalent; mbpd - Million Barrels Per Day, LNG - Liquified Natural Gas

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Advantage India

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Advantage India

4. POLICY SUPPORT In Union Budget 2021, the

government allocated fundsworth Rs. 12,480 crore (US$1.71 billion) for direct benefittransfer of LPG (liquefiedpetroleum gas) and Rs. 1,078crore (US$ 147.31 million) tofeedstock subsidy toBCPL/Assam Gas CrackerComplex.

In Union Budget 2021, theFinance Minister announced toprovide 1 crore more LPGconnections under PradhanMantri Ujjwala Yojana (PMUY)scheme.

1. SUPPORTIVE FDI GUIDELINES The Government has allowed 100%

foreign direct investment (FDI) inupstream and private sector refiningprojects.

The FDI limit for public sectorrefining projects has been raised to49% without any disinvestment ordilution of domestic equity inexisting PSUs.

3. RAPID EXPANSION In February 2021, Prime Minister Mr. Narendra Modi announced

that the Government of India plans to invest ~Rs. 7.5 trillion(US$ 102.49 billion) on oil and gas infrastructure in the next fiveyears.

The industry is expected to attract US$ 25 billion investment inexploration and production by 2022. Refining capacity in thecountry is expected to increase to 667 MTPA by 2040.

2. GROWING DEMAND India is the world’s third-largest energy consumer

globally. Diesel demand in India is expected to double to

163 MT by 2029-30. Consumption of natural gas in India will increase

by more than three-folds in next 10 years (until2030).

1

2 3

4

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Market Overview And Trends

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State-owned companies dominate oil and gas in India

India remained the third-largest energy consumer in 2019.

India’s crude oil production in FY20 stood at 32.2 MMT.

The crude oil production stood at 2.5 MMT in April 2021; and was 30.5 MMT for FY21.

Assam, Gujarat and Rajasthan account for more than 96% of oil production in India.

India’s existing strategic oil reserves (SPR) is ~5.3 million tonnes.

India had 4.7 thousand million barrels of proven oil reserves and produced 37.5 million tonnes in 2019.

Oil production is expected to rise and reach 36 bcm^ by 2021.

State-owned ONGC dominate the upstream segment.

It is the largest upstream company in Exploration and Production (E&P) segment, accounting for approximately 70.0% of the country’s total oil and gas output.

IOCL operates a 14,701 km network of crude, gas and product pipelines, with a capacity of 94.6 million metric tonnes per annum of oil and 20.0 million metric standard cubic meters per day of gas.

IOCL is the largest company, controls 11 out of 22 Indian refineries, and has a combined capacity of 80.7 MTPA.

Reliance launched India’s 1st privately owned refinery in 1999 and has gained considerable market share (30%). In January 2021, the company operated its plant at 96.1% capacity.

Nayara Energy Limited’s (NEL’s) Vadinar refinery has a capacity of 20 mmtpa, accounting for almost 10% of the total refining capacity.

Indian Oil and Gas sector

Upstream segment - exploration and

production

Midstream segment - storage and transportation

Downstream segment - refining,

processing and marketing

Source: BP Statistical Review 2020, US Energy Information Administration, Petroleum Planning and Analysis CellNotes: bcm - Billion Cubic Metres, mbpd - Million Barrels Per Day, mmscmd - Million Metric Standard Cubic Metre Per Day, mmtpa -- million metric tons per annum, ^As per IEA

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Oil supply and demand in India

Source: Ministry of Petroleum and Natural Gas, BP Statistical Review 2020Note: CAGR - Compound Annual Growth Rate, mbpd - Million Barrels Per Day, P - Provisional, ^As per OPEC, Based on 50 MMT = 1 MBPD, * - Until April 2021

Diesel was the most consumed oil product in India and accounted for 39% of petroleum product consumption in 2019. It is used primarily forcommercial transportation and further, in the industrial and agricultural sectors.

Oil demand is expected to rise by 5.8 mbpd in 2040 from 5.27 mbpd in 2019.

Oil demand increased 3.11% to 5.27 mbpd in 2019 from 5.11 mbpd the previous year.

Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation

In FY21, crude oil imports decreased to 3.96 MBPD from 4.54 mbpd in FY19.

Imports and domestic oil production in India (mbpd)

4.06 4.28 4.41 4.53 4.543.96

0.37

0.74 0.72 0.64 0.68 0.64

0.61

0.05

FY16 FY17 FY18 FY19 FY20 FY21 FY22*

Oil Imports Oil Production

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Sector Drivers

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Gas supply and demand in India

64,4

51

57,3

67

52,3

75

51,3

00

52,5

17

55,6

97

59,1

70

60,7

98

63,9

32

60,6

37

0

10000

20000

30000

40000

50000

60000

70000

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

Source: PPAC, BP Statistical Review 2020Note: F - Forecast, bcm - Billion Cubic Metres, CAGR - Compound Annual Growth Rate

Demand is not likely to simmer down anytime soon, given strong economic growth and rising urbanisation.

Gas consumption is projected to reach 143.08 bcm by 2040. The Government is planning to invest US$ 2.86 billion in the upstream oil and gasproduction to double the natural gas production to 60 bcm and drill more than 120 exploration wells by 2022 .

India’s natural gas imports increased at a CAGR of 6.92% between FY16 and FY21.

LPG penetration rate of households reached ~97% in early 2020 compared with 56% in 2016.

Proven reserves and total gas consumption in the country (MMSCM) Domestic gas production and imports (BCM)

31.24 30.92 31.80 32.88 31.1825.99

21.39 24.69 26.33 28.74 33.89

29.88

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

FY16

FY17

FY18

FY19

FY20

FY21

Gas production Gas Imports

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Exports of petroleum products from India

60.565.5 66.8

61.165.7

55.9

3.90

0

10

20

30

40

50

60

70

80

FY16

FY17

FY18

FY19

FY20

FY21

FY22

*

Source: PPAC, BP Statistical Review 2020

Note: MMT - Million Metric Tonnes, P - Provisional, HSD - High speed Diesel, MS - Motor Spirit, ATF - Aviation Turbine Fuel, LPG - Liquefied Petroleum Gas, LDO - Light Diesel Oil, SKO -Superior Kerosene Oil, LOBS - Lubricating Oil Base Stocks, ^Others includes Hexane, Benzene, MTO (Mineral Turpentine Oil), Sulphur, etc, ^- Until April 2021

42

934

458

270

1

1861

0 0 80 0 1

235

0200400600800

1,0001,2001,4001,6001,8002,000

LPG

MS!

Nap

htha

$

ATF#

SKO

HSD LD

O

LOBS

/ Lub

e O

il

Fuel

Oil

Bitu

men

Petc

oke

/ CBF

S

Oth

ers%

Product-wise exports of petroleum products from India in FY22^ (thousand metric tonnes)

India is one of the largest exporters of refinery products due to the presence of various refineries.

Exports of petroleum products from India reached 55.9 MMT in FY21 from 60.5 MMT in FY16.

The total value of petroleum products exported from the country increased to US$ 35.8 billion in FY20 from US$ 34.89 billion in FY19.

HSD was the major export item among petroleum products, followed by MS, ATF and Naptha.

Exports of petroleum products from India (MMT)

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12

Upstream segment: crude oil and gas production… (1/2)

Source: Ministry of Petroleum and Natural GasNotes: MMT - Million Metric Tonne, JV - Joint Venture, P-Provisional, * - Until April 2021

Crude oil production (in MMT)

17.9 17.6 17.5 17.3 16.2 15.1

19.1 18.4 18.116.9

16.015.4

-

5

10

15

20

25

30

35

40

FY16 FY17 FY18 FY19 FY20 FY21

Onshore Offshore

Almost half of India’s crude oil production is from offshore fields, although this share is diminishing in the past few years as production from thelarge, ageing Mumbai High field has declined.

In India, crude oil production stood at 30.5 MMT in FY21 and was 32.2 MMT in FY20

Onshore production accounted for 50.68% of total production, while offshore contributed the remaining 49.32%.

ONGC accounted for around 61.25% of total crude oil production in India in FY20P.

22.420.9 20.8 19.6 20.6 20.2

1.6

3.43.3 3.4

3.3 3.1 2.9

0.2

11.4 10.4 9.99.6 8.4

7.4

0.6

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

FY16 FY17 FY18 FY19 FY20 FY21 FY22*

ONGC OIL Pvt/JV

Annual crude oil production (in MMT)

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13

Upstream segment: crude oil and gas production… (2/2)

Source: Ministry of Petroleum and Natural GasNote: JV - Joint Venture, ^Including CBM production, * - Until April 2021

8,57

7.0

9,08

3.8

8,87

6.9

9,01

1.7

8,79

5.6

9,23

7.5

9,29

3.9

9,90

3.9

10,0

45.8

9,89

3.4

9,60

1.0

788.

4

43,6

45.1

38,4

74.8

31,8

02.3

26,3

95.2

24,8

60.6

23,0

11.7

22,0

38.2

22,0

10.6

22,1

17.1

20,6

31.1

18,4

27.2

1,80

6.6

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

*

Onshore^ Offshore21

,177

22,0

88

23,4

29

24,6

75

23,7

46

21,8

72

1,726

8,235 6,872 6,338 5,477

4,766

4,319

711

2,838 2,937 2,881 2,722

2,668

2,480

215

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

FY16 FY17 FY18 FY19 FY20 FY21 FY22*

ONGC Pvt/JV OIL

Annual gas production (million metric standard cubic metre)Annual gas production (million metric standard cubic metre)

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14

Upstream segment: exploration and development activities

5985

149

266

0

50

100

150

200

250

300

350

400

Offshore Onshore

Wells Meterage ('000 metres)

Source: Ministry of Petroleum and Natural Gas, BMINotes: P- Provisional, *OALP - Open Acreage Licensing Policy

63

338165

649

0

200

400

600

800

1000

1200

Offshore Onshore

Wells Meterage ('000 metres)

In FY19P, 1,228,000 metres of wells were explored and developed and 545 wells were drilled in the country.

State-owned oil companies undertake most of the upstream drilling and exploration work.

The Government is planning to invest US$ 2.86 billion in the upstream oil and gas production to double the natural gas production to 60 bcm anddrill more than 120 exploration wells by 2022.

Development drilling activities (FY19P) Exploration activities (FY19P)

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Pipelines: crude pipeline network

40.97%

32.86%

6.09%

20.08%ONGC

IOC

OIL

Others*

50.88%

11.45%

12.31%

25.36%

IOCL

OIL

ONGC

Others*

Source: Ministry of Petroleum and Natural GasNote: km - Kilometre, mmtpa - Million Metric Tonnes Per Annum, *Others includes HMEL, BPCL and Cairn

Shares in crude pipeline network by capacity (out of 147.9 mmtpa, as of May 01, 2021)

As of May 1, 2021, India had 10,419 kms of crude pipeline, with capacity of 147.9 mmtpa.

In terms of length, IOCL accounts for 50.88% (5,301 kms) of India’s crude pipeline network.

In terms of actual capacities, ONGC leads with 40.97%, followed by IOCL at 32.86%.

Shares in crude pipeline network by length (out of 10,419 kms, as of May 01, 2021)

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Pipelines: existing pipelines in India

IOCL BPCL(1) HPCL(2) OIL ONGC Cairn HMEL Others (GAIL and Petronet India.) Total industry

Length (kms)

Product Pipeline 9,400 2,241 3,775 654 - - - 2,395 18,465

Crude oil Pipeline 5,301 937 - 1,193 1,283 688 1,017 - 10,419

Total 14,701 3,178 3,775 1,847 1,283 688 1,017 2,395 28,884

Capacity of Crude Oil Pipelines (mmtpa)

Product Pipeline 46 19.5 34.7 1.7 - - - 9.4 111.3

Crude oil Pipeline 48.6 7.8 - 9 60.6 10.7 11.3 - 148

Total 94.6 27.3 34.7 10.7 60.6 10.7 11.3 9.4 259.3

Source: Ministry of Petroleum and Natural Gas

Note: kms - Kilometres, mmtpa - Million Metric Tonnes Per Annum, (1)Includes Petronet Cochin-Coimbatore-Karur Product pipeline, (2)Includes Petronet Mangalore-Hassan-Bangalore Product Pipeline

Length and capacity of products and crude oil pipeline by company (as of May 01, 2021)

Government of India is planning to invest Rs. 70,000 crore (US$ 9.97 billion) to expand the gas pipeline network across the country.

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Pipelines: refined products and LPG pipeline network

69.39%

13.23%

8.53%

1.82% 0.91%6.13% GAIL

GSPL

PIL

Reliance

IOCL

Others

50.91%

20.44%

12.14%

3.54%

12.97%IOC

HPCL

BPCL

OIL

Others

Source: Ministry of Petroleum and Natural Gas

Shares in products pipeline network under operation by length (out of 18,465 kms, as on May 01, 2021)

Shares in products pipeline network under operation by length(out of 17,016 kms, as on December 31, 2020)

With 9,400 kms of refined products pipeline in India, the Indian Oil Corporation (IOC) leads the segment with 50.91% of the total product pipelinenetwork, as of May 01, 2021.

Top three companies IOCL, HPCL and BPCL contribute more than 80% of the total length of product pipeline network in the country.

As of December 31, 2020, Gas Authority of India Ltd. (GAIL) had the largest share (69.39% or 11,884 kms) of the country’s natural gas pipelinenetwork (17,126 kms).

In November 2020, oil regulator Petroleum and Natural Gas Regulatory Board (PNGRB) simplified the country's gas pipeline tariff structure tomake fuel more affordable for distant users and attract investment for building gas infrastructure.

Note: km - Kilometre, mmtpa - Million Metric Tonnes Per Annum, LPG - Liquefied Petroleum Gas, IOC - Indian Oil Corporation, HPCL - Hindustan Petroleum Corporation Ltd, BPCL -Bharat Petroleum Corporation Ltd, OIL - Oil India Limited, (1)Others include GAIL and Petronet India

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Downstream segment: refinery crude throughput… (1/2)

108.03 112.5 112.17 112.13 115.11 122.58 130.57 134.22 134.73 144.20 154.30 160.77 169.16 164.80143.80

13.30

33.43 38.29 48.5474.44 81.38 81.18

88.27 88.23 88.53 88.66 91.09 91.16 88.04 89.50

78.00

6.60

0

50

100

150

200

250

300

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

*

Public sector Private sector

Source: Ministry of Petroleum and Natural GasNote: MMT - Million Metric Tonne, Public Sector includes IOCL ,BPCL ,HPCL, CPCL and ONGC, Private sector includes RIL and NEL, * - Until April 2021

India has 23 refineries - 18 are in the public sector, two in the joint sector and three in the private sector.

India’s state refineries have upgraded their facilities to comply with a new government requirement to produce oil products with the equivalent ofEuro VI emission standards.

Crude oil throughput of public sector refineries increased at a CAGR of 2.06%, from 108.03 MMT in FY07 to 143.8 MMT in FY21. At the sametime, crude oil throughput of private sector refineries recorded a CAGR of 6.24%, from 33.43 MMT to 70.0 MMT.

The share of private sector refineries throughput in the total crude throughput grew from 29.99% in FY07 to 35.19% in FY20.

Refinery crude throughput (MMT)

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19

27.89%

27.29%15.33%

10.84%

8.00%

6.04%

4.60%IOC

RIL

BPCL

HPCL

NEL

ONGC

CPCL

Downstream segment: refinery crude throughput… (2/2)

116.

89

120.

07

120.

07

120.

07

120.

07

135.

07

139.

00

142.

10

142.

07

161.

70

162.

10

161.

7076.5

0

93.0

0

95.0

0

95.0

0

95.0

0

95.0

0

95.0

0

105.

50

110.

00

88.2

0

88.2

0

88.2

0

0.00

50.00

100.00

150.00

200.00

250.00

300.00

Public sector Private sector (incl JV)

Source: Ministry of Petroleum and Natural Gas, PPAC

Total installed refinery capacity (MMT)

Note: MMT - Million Metric Tonne; HPCL - Hindustan Petroleum Corporation Ltd, BPCL - Bharat Petroleum Corporation Ltd, OIL - Oil India Limited, ONGC - Oil and Natural Gas Corporation, IOCL - Indian Oil Corporation Ltd, CPCL - Chennai Petroleum Corporation Limited, * - Until April 2021

As of May 01, 2021, the sector’s total installed provisional refinery capacity stood at 249.9 MMT; and IOC emerged as the largest domestic refiner,with a capacity of 69.7 MMT.

In FY21, the top three companies, IOC, RIL and BPCL, contributed 70.6% to India's total refining capacity.

249.9 MMT

Shares in India's total refining capacity (as of May 01, 2021)

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Downstream segment: petroleum products

Consumption of petroleum products in India increased to 213.7 MMT in FY20 from 194.60 MMT in FY17.

Petroleum products derived from crude oil include light distillates such as LPG, naphtha; middle distillates such as kerosene; and heavy ends suchas furnace, lube oils, bitumen, petroleum coke and paraffin wax.

Production of petroleum products by fractionators reached 4,212.18 TMT in FY21.

Source: Ministry of Petroleum and Natural Gas

3,65

7.15

3,37

7.16

3,45

7.75

4,60

8.00

4,93

1.22

4,75

9.56

4,21

2.18

366.00

FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22*

Production of petroleum products by fractionators (TMT)

Note: MMT - Million Metric Tonne, TMT - Thousand Metric Tonne, P – Provisional, * - Until April 2021

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21

Downstream segment: distribution and marketing

85.1

0

89.5

7

97.7

0

104.

50

110.

50

114.

30

111.

30

111.

30

112.

20

109.

72

97.3

6

97.3

6

96.6

1

107.

58

102.

36

107.

50

93.6

9

93.6

9

0.0

50.0

100.0

150.0

200.0

250.0

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22#Product pipeline Natural Gas Pipeline

Downstream distribution statistics (MMT)

PipelineCapacity (mmtpa)

as of May 01, 2021

Length (kms)as of

May 01, 2021

Crude Pipeline 147.9 10,419

Product Pipeline 112.2 18,465

Natural Gas Pipeline* 337.3 17,126

Note: MMT - Million Metric Tonne, mmtpa - Million Metric Tonnes Per Annum, OMC - Oil Marketing Companies, (P) - Provisional, PSU - Public Sector Unit, *- on December 31, 2020 for natural gas pipeline, #- on May 1, 2021 for product pipeline

The total number of OMC retail outlets increased to 77,215, as ofMay 01, 2021 (P), from 59,595 in FY17.

In India, IOCL, as of May 01, 2020 (P), owned the highest number ofretail outlets (32,126), followed by BPCL (18,639) and HPCL(18,663).

As of May 01, 2021 (P), there were 25,097 LPG distributors (underPSUs) in India.

Source: Ministry of Petroleum and Natural Gas

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22

State-wise list of CNG stations in the country

Source: Ministry of Petroleum and Natural Gas

State CNG Stations as of November 30, 2020

Andhra Pradesh 72

Assam 1

Bihar 9

Chandigarh, Haryana, Punjab & Himachal Pradesh*

15

Dadara & Nagar Haveli 7

Daman and Diu 4

Daman and Diu & Gujarat 9

Goa 4

Gujarat 709

Haryana 137

Haryana & Himachal Pradesh* 2

Haryana & Punjab* 4

Himachal Pradesh 1

Jharkhand 13

Karnataka 37

Kerala 12

Madhya Pradesh 70

State CNG Stations as of November 30, 2020

Madhya Pradesh & Rajasthan* 2

Madhya Pradesh & Uttar Pradesh* 2

Maharashtra 397

Maharashtra & Gujarat 12

National Capital Territory of Delhi (UT)

421

Odisha 19

Puducherry & Tamil Nadu* 1

Punjab 69

Rajasthan 39

Tamil Nadu 2

Telangana 73

Tripura 11

Uttar Pradesh 340

Uttar Pradesh & Rajasthan* 25

Uttar Pradesh & Uttarakhand* 1

Uttarakhand 10

West Bengal 13

Total 2,543

* Some of the GAs authorized by PNGRB span areas in more than one state; Compressed natural gas (CNG)

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23

Key domestic oil and gas companies

Source: Company’s Annual Report 2019-20

Company Ownership (%) as of FY20

Total Income from Operations in FY20

(US$ billion)

Indian Oil Corporation Limited 56.98% state-owned 79.97

Reliance Industries Public Listed 87.1

Bharat Petroleum Corporation Limited

54.31% state-owned 46.78

Hindustan Petroleum Corporation Limited

51.11% state-owned (through

ONGC)37.83

ONGC 68.07% state-owned 13.57

GAIL India Limited 53.59% state-owned 9.43

Oil India Limited 66.13% state-owned 1.93

Note: : FY - Indian Financial Year from April-March

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24

Recent Trends and Strategies

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25

Notable trends in the oil and gas sector

5. Open Acreage Licensing Policy• Open Acreage Licensing Policy (OALP),

which allows an explorer to study the dataavailable and bid for blocks of his choice,has been initiated to increase foreignparticipation by global E & P companies likeShell, BP, Conoco Phillips etc.

• In January 2020, Open Acreage LicensingProgramme Bid Round-V offered 8sedimentary basins and 11 blocks with atotal area of 19,789.04 sq.km.

1. Coal Bed Methane (CBM)• CBM policy was designed to be liberal and

investor-friendly. The 1st commercialproduction of CBM was initiated in July2007 at about 72,000 cubic metres per day.

• Production in 2019-20 stood at 655.44million cubic metres.

.5

4

3

2

1

4. Oil Pricing• Organisation of the Petroleum Exporting

Countries (OPEC) meets 78% of India'scrude oil demand, 59% LPG needs and~38% LNG consumption as of 2020.

• In November 2020, the Indiangovernment urged OPEC to removepricing anomalies for different regionswith a view to help the Corona-batteredglobal oil industry get back to normalcy.

2. Underground Coal Gasification (UCG)• The technology was first widely used in

the US in 1800s and in India (Kolkata andMumbai) in early 1900s.

• UCG is currently the only feasibletechnology available to harness energyfrom deep unmineable coal seamseconomically and in an eco-friendlymanner. It reduces capital outlay,operating costs and output gas expensesby 25-50% vis-a-vis surface gasification.

3. Gas hydrates and bio-fuels• The Government initiated the National Gas Hydrate

Programme (NGHP), a consortium of national E & Pcompanies and research institutions, to map gas hydratesfor use as an alternate source of energy.

• Bio-fuels (bio-ethanol and bio-diesel) are alternate sourcesof energy from domestic renewable resources. Thesehave lower emissions compared to petroleum or diesel.

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Strategies adopted … (1/4)

Source: Bloomberg reports, News Articles

1Expansion In February 2021, Petronet LNG announced its plans to increase in its Dahej terminal's capacity by 29% to 22.5 million tonnes per

annum (mtpa) to meet the rising demand. Key Indian oil retailers such as Bharat Petroleum and Hindustan Petroleum have announced plans to increase the capacity of their

outlets in rural areas in 2021. In February 2021, ONGC announced that by May 2021, it would increase natural gas output from a KG basin block to 2.5-3 million

standard cubic meters per day. In February 2021, the government launched key oil & gas projects in Assam, such as INDMAX Unit at Indian Oil’s Bongaigaon

Refinery, Oil India Limited's secondary tank farm at Madhuban, Dibrugarh and a ‘Gas Compressor Station’ at Hebeda Village, Makum and Tinsukia remotely from Dhemaji in Assam.

In February 2021, the government launched key oil and gas projects such as the Ramanathapuram – Thoothukudi natural gas pipeline and Gasoline Desulphurisation Unit at Chennai Petroleum Corporation Limited, Manali.

As per the Union Budget 2019-20, under scheme ‘Kayakave Kailasa’, the Ministry of Petroleum & Natural Gas enabled SC/ST entrepreneurs in providing bulk LPG Transportation. State run energy firms Bharat Petroleum, Hindustan Petroleum and Indian Oil Corp have plans to spend US$ 20 billion on refinery expansions to add units by 2022.

India targets US$ 100 billion worth investment in gas infrastructure by 2022 and to add another 228 cities to the gas distribution (CGD) network. This would include setting up RLNG terminals, pipeline projects, completion of the gas grid and setting up of CGDnetwork in more cities.

On September 15, 2020, the Prime Minister, Mr. Narendra Modi inaugurated the three petroleum sector projects in Bihar which costmore than Rs. 900 crores (US$ 122 million)

In October 2020, Torrent Gas Ltd. announced plan to spend Rs. 8,000 crore (US$ 1.1 billion) over the next five years to expand its urban gas operations with the aim of setting up 500 CNG dispensing pumps by March 2023.

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Strategies adopted… (2/4)

Source: News Articles, techARC1

Notes: ISEER - Indian Seasonal Energy Efficiency Ratio

2Diversification• Oil companies are focusing on vertical integration for next stage of growth. For instance, oil producer Oil India Ltd. is planning to build

and operate refineries, while Indian Oil is planning to enter oil and gas exploration.

3Investments to enhance production • The Indian oil and natural gas sector is likely to witness an investment of US$ 206 billion in the next eight to ten years.• Indian Oil Company (IOC) is planning to invest Rs. 1.43 lakh crore (US$ 22.19 billion) to double its oil refining capacity to 150 million

tonnes by 2030.• ONGC plans to invest more than US$ 500 million in Mumbai High.• In February 2020, Indian Oil Corporation (IOC) announced plans to invest Rs. 500 crore (US$ 71.54 million) at Chitradurga in Karnataka.• In December 2020, the Indian Oil Corporation (IOCL) announced plans to invest Rs. 1,689 crore (US$ 228.81 million) in new projects in

Andhra Pradesh. This includes Rs. 1,522 crore (US$ 206.19 million) on petro products infrastructure and Rs.167 crore (US$ 22.62million) on LPG storage facilities.

4Commercial use of oil• In October 2020, the Cabinet Committee on Economic Affairs (CCEA) allowed Abu Dhabi National Oil Co. (ADNOC) to commercially use

50% of the oil it had stored in Indian underground strategic reserves. • This flexibility will encourage the company to store more oil in the three strategic petroleum reserves built at Visakhapatnam, Mangalore,

and Padur and will act as an insurance against supply and price disruptions.

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Strategies adopted… (3/4)

Source: CEAMA, India Retail Report, Business Line, IMAP India, News Sources

6Move to non-conventional energy resources • The Government is planning to set up around 5,000 compressed biogas (CBG) plants by 2023.• JBM signed an MoU with the Ministry of Petroleum and Natural Gas (MoPNG), Govt. of India, for the development of Compressed

Biogas (CBG) Projects.• In December 2020, the Minister for Petroleum & Natural Gas and Steel Mr. Dharmendra Pradhan laid the foundation stone for the

Leafiniti Bioenergy’s CBG plant in the Bagalkot district of Karnataka. This plant will utilise 200 TPD (tonnes per day) of press mud and willbe commissioned at an estimated cost of Rs. 42 crore (US$ 5.6 million).

7More focus upon small companies• Private sector units like Adani, Sun Petrochemicals and few new entrants have bagged 1/3rd of small oil and gas fields.

5Pilot project Initiated for Shale Gas Production in India • Oil and Natural Gas Corp (ONGC) has started Shale Gas exploration by spudding the first Shale Gas well RNSG-1 in Burdwan district of

West Bengal. • In 2018, Great Eastern Energy Corp (GEECL) announced to invest US$ 2 billion over the next ten years in West Bengal to explore shale

gas reserves.• As of March 2017, 22 assessment wells (5 exclusive shale gas in Cambay basin and 17 dual objective wells) in 19 Petroleum Mining

Lease (PML) blocks have been drilled and required data are being generated/evaluated for shale gas/oil assessment.

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Strategies adopted… (4/4)

Source: CEAMA, India Retail Report, Business Line, IMAP India, News Sources

9High Octane Petrol• In December 2020, Indian Oil launched a world-class premium grade Petrol (Octane 100) in India. Branded as XP100, the premium-

grade petrol was launched in 10 cities.

8Innovate for India• In February 2021, IndianOil Corp. Ltd. signed a ‘statement of intent’ with Greenstat Hydrogen India Pvt. Ltd. to establish a centre of

excellence for Hydrogen value chain and other related technologies such as hydrogen storage, fuel cells, etc.• In December 2020, the Minister for Petroleum & Natural Gas and Steel Mr. Dharmendra Pradhan has appealed to the scientific

community to Innovate for India (I4I) and create competitive advantages to make India ‘Aatmanirbhar’.

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Growth Drivers

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Growth drivers

Source: Ministry of Petroleum and Natural Gas, US Energy Information Administration, BP Statistical Review of World 2015 Energy, June 2012; BMINotes: TCM - Trillion Cubic Metres, EandP - Exploration and Production

Growing demand

Robust growth in domestic market

Increasing demand for natural gas

Favourable business condition

Abundant raw material

Skilled labour

Government support

100% FDI investment allowed

Favourable policies

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Rising demand

Energy demand of India is anticipated to grow faster than energy demand of all major economies on the back of robust economicgrowth.Consequently, India’s energy demand as a percentage of global energy demand is expected to rise to 11% in 2040 from ~6% in 2017.

Crude oil consumption is expected to grow at a CAGR of 3.60% to 500 million tonnes by 2040 from 221.56 million tonnes in 2017.

Natural Gas consumption is forecast to increase at a CAGR of 4.18% to 143.08 million tonnes by 2040 from 58.10 million tonnes in 2018.

Diesel demand in India is expected to double to 163 million tonnes (MT) by 2029-30.

As of May 20, 2020, Oil Marketing Companies (OMCs) delivered 6.8 crore LPG cylinders to Pradhan Mantri Garib Kalyan Package (PMGKP)beneficiaries.

India’s oil demand is projected to rise at the fastest pace in the world to reach 10 million barrels per day by 2030, from 5.05 million barrel per dayin 2020.

According to government data, India's natural gas production increased by 22.7% YoY in April 2021, as Reliance Industries Ltd. and its partner,BP plc, increased production in the KG-D6 block on the east coast.

Source: BP Statistical Review of World Energy 2019, BP Energy Outlook 2019Notes: F-Forecast, MT - Million Tonnes, BCM - Billion Cubic Metres

Crude oil consumption and forecast (MT)

221.

56

500.

000

100

200

300

400

500

600

2017 2040F

Natural gas consumption and forecast (BCM)

58.1

0

143.

08

0

20

40

60

80

100

120

140

160

2018 2040F

CAGR 3.60% CAGR 4.18%

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Regulatory overview of the industry

Source: CEAMA, India Retail Report, Business Line, IMAP India, News Sources

1National Policy on Biofuels, 2018• Proposed an indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030.• Promoted advanced biofuels through a viability gap funding scheme of Rs. 5,000 crore (US$ 745.82 million) in six years for 2G ethanol

Bio refineries along with additional tax incentives.

2Ethanol Procurement Policy• The Ministry of Petroleum and Natural Gas released an ‘Ethanol Procurement Policy’ on a long-term basis under the ‘Ethanol Blended

Petrol (EBP) Programme’ (October 11, 2019), which covers modalities for long-term ethanol procurement, proposed mechanisms for long-term procurement contracts, pricing methodology and other topics.

3Liquefied natural gas (LNG) policy• The Ministry of Petroleum and Natural Gas released a draft LNG policy that aims to increase the country's LNG re-gasification capacity

from 42.5 million tonnes per annum (mtpa) to 70 mtpa by 2030 and 100 mtpa by 2040.

4Open Acreage Licensing Launched in June 2017, it allowed companies to carve out area for petroleum exploration and production. The policy, launched under

Hydrocarbon Exploration and Licensing Policy (HELP), replaced New Exploration and Licensing Policy under which bidders did not have the freedom of carving out areas for E&P.

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FDI investments in petroleum and gas in India

Source: Department Of Promotion Of Industry And Internal Trade

FDI inflow in India’s petroleum and natural gas sector stood at US$ 7.91 billion between April 2000 and December 2020.

India has invited global firms to invest in its strategic petroleum reserves (SPRs) owing to the country’s rising energy consumption. India’s share inglobal energy consumption is set to rise from 7% to 12% in 2050.

FDI Inflow in Petroleum and Natural Gas between April 2000 and September 2020 (US$ billion)

2.70

7.82

0.10

2.10 0.10

1.10 0.070.18 0.03 0.14 0.81

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

FY01-FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY01-FY20

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M&A activities in the Indian oil and gas sector

Source: Thomson Banker, News Articles

Date announced Acquirer name Target name Value of deal (US$ million)

Mar 2021 Oil India Ltd. (54.16%), Engineers India (4.4%) and Government of Assam (3.2%)

Bharat Petroleum Corporation (Numaligarh Refinery 61.5% stake) 1,361

Jan 2021 Total Adani Green Energy (20% minority stake) 2,500

Dec 2020 Bharat Petroleum Corporation Bharat Oman Refineries (BORL) (36.62% stake) Not disclosed

Mar 2019 BrookfieldEast West Pipeline (EWPL) (Previously known as Reliance Gas Transportation Infrastructure)

1,800

Apr 2018 Indian Oil Corporation Ltd (IOCL) Shell Exploration & Production, Oman 329

Feb 2018 ONGC HPCL (51.11% stake) 57,020.39

Feb 2018 ONGC Videsh Abu Dhabi National Oil Co (10% stake in offshore oilfield) 600

Aug 2017 Rosneft Essar Oil (49% stake) 1,290

Dec 2016 Oil and Natural Gas Corp's Gujarat State Petroleum Co's 1,200

Dec 2015 ONGC Videsh Ltd. (OVL) Vankor oil field 1,260

Jan 2015 Bharat Forge Mecanique Generale Langroise 12.82

Jun 2014 Gulf Petrochem Ltd. Sah Petroleums Limited 7.13

Mar 2014 IOCL Progress Energy Canada Ltd. Not disclosed

Mar 2014 IOCL Progress Energy Canada Ltd. Not disclosed

Mar 2014 IOCL Progress Energy Canada Ltd. Not disclosed

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Opportunities

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Opportunities

2

1

32. Down stream segment India is already a refining hub with 21 refineries, and expansion is planned for tapping foreign

investment in export-oriented infrastructure, including product pipelines and export terminals. Development of City Gas Distribution (CGD) networks similar to Delhi and Mumbai’s CGDs.• India is set to expand India’s natural gas grid to 34,500 kms by adding another 17,000 km

gas pipeline. The regasification capacity of the existing 42 MMT per annum will be expandedto 61 MMT per year by the year 2022.

Indian companies are expected to spend Rs.100 billion (US$ 1.35 billion) over three years on1,000 liquefied natural gas (LNG) stations along main roads and industrial corridors and inmining areas to cut diesel consumption.

3. Upstream segment Locating new fields for exploration: 78%

of the country’s sedimentary area is yet tobe explored.

Increasing the share of natural gas: Thegovernment is working towards increasingthe share of gas from 6.2% (currently) to15% of the energy mix by 2030.

Development of unconventionalresources: CBM fields in deep sea.

Opportunities for secondary/tertiary oilproducing techniques.

Higher demand for skilled labour andoilfield services and equipment.

.

1. Midstream segment Expansion in the transmission network of

gas pipelines. LNG imports have increased significantly.

This provides an opportunity to boostproduction capacity.

In light of mounting LNG production, hugeopportunity lies for LNG terminaloperation, engineering, procurement andconstruction services.

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Key Industry Contacts

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Contact information

Name Address Contact person Telephone E-mail

Oil Industry Development Board (OIDB)

3rd Floor, Tower C, Plot No. 2, Sector - 73, Noida, Uttar Pradesh - 201301

Mr. Ajay Srivastava, Financial Adviser and Chief Accounts Officer

0120-25946300120-2594603 [email protected]

Petroleum Conservation Research Association (PCRA)

Sanrakshan Bhavan, 10 Bhikaji Cama Place, New Delhi -110066

Mr. Alok Tripathi, ED 91-11- 26198799 Ext.301 [email protected]

Bureau of Energy Efficiency (BEE)

Ministry of Power, 4th floor, SEWA Bhawan, RK Puram, New Delhi - 110066

Mr. Abhay Bakre, Director General

91-11- 26178316, 91-11- 26179699 [email protected]

Oil Industry Safety Directorate

Ministry of Petroleum & Natural Gas, 8th Floor, OIDB Bhawan, Plot No 2, Sector-73, Noida, Uttar Pradesh-201301

Mr. Varanasi Janardhana Rao, ED 0120-2593800 [email protected]

Petroleum Planning and Analysis Cell (PPAC)

Ministry of Petroleum and Natural Gas, 2nd floor, Core-8, SCOPE Complex, 7 Institutional Area, Lodhi Road, New Delhi -110003

Mr. Vinod Kumar, Deputy Director -Information Technology

011-24306153 [email protected]

Directorate General of Hydrocarbons

Ministry of Petroleum and Natural Gas, OIDB Bhawan, Plot No 2, Sector 73, Noida

Mr. Atanu Chakraborty, Director General 0120 - 2472001 [email protected]

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Appendix

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Glossary

B/D (or bpd): Barrels Per Day

MBPD (or mbpd): Million Barrels Per Day

BCM (or bcm): Billion Cubic Metres

CBM: Coal Bed Methane

CGD: City Gas Distribution

EandP: Exploration and Production

FDI: Foreign Direct Investment

FY: Indian Financial Year (April to March)

FY20 implies April 2019 to March 2020

GoI: Government of India

Rs.: Indian Rupee

PM: Prime Minister

LNG: Liquefied Natural Gas

MMT (or MMT): Million Metric Tonne

MMTPA (or mmtpa): Million Metric Tonnes Per Annum

EBITDA: Earning Before Interest Taxes Depreciation Amortisation

NRL: Numaligarh Refinery Limited

CPCL: Chennai Petroleum Corporation Limited

HPCL: Hindustan Petroleum Corporation Limited

BPCL: Bharat Petroleum Corporation Limited

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Glossary

IOC: Indian Oil Corporation Ltd

EOL: Essar Oil Ltd

RPL: Reliance Petroleum Limited

MRPL: Mangalore Refinery and Petrochemicals Limited

PCCK: Petronet Cochin-Coimbatore-Karur

PMHB: Petronet Mangalore-Hassan-Bangalore

OALP: Open Acreage Licensing Policy

TOE (or toe): Tonnes of Oil Equivalent

US$ : US Dollar

ONGC: Oil and Natural Gas Corporation of India

IOCL: Indian Oil Corporation Limited

mn bbl: Million Barrels

CAGR: Compound Annual Growth Rate

JV: Joint Venture

UCG: Underground Coal Gasification

NGL: Natural Gas Liquids

OMCs: Oil Marketing Companies

NHGP: National Gas Hydrate Programme

Wherever applicable, numbers have been rounded off to the nearest whole number

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Exchange rates

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year Rs. Equivalent of one US$ 2004-05 44.952005-06 44.282006-07 45.292007-08 40.242008-09 45.912009-10 47.422010-11 45.582011-12 47.952012-13 54.452013-14 60.502014-15 61.152015-16 65.462016-17 67.092017-18 64.452018-19 69.892019-20 70.492020-21 73.20

Source: Reserve Bank of India, Average for the yearNote: As of April 2021

Year Rs. Equivalent of one US$2005 44.112006 45.332007 41.292008 43.422009 48.352010 45.742011 46.672012 53.492013 58.632014 61.032015 64.152016 67.212017 65.122018 68.362019 69.892020 74.182021* 74.94

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