CHALLENGES IN THE UPSTREAM HYDROCARBON SECTOR V K

CHALLENGES IN THE UPSTREAM HYDROCARBON SECTOR V. K. Sibal Director General Directorate General of Hydrocarbons New Delhi

PRESENTATION OUTLINE • Current Scenario • Specifics of E&P Industry • Challenges • Way forward - Policy Reforms • Conclusions

CURRENT SCENARIO RESOURCE BASE Sedimentary Area : 3. 14 Million Sq. Km. >4% of the world’s sedimentary area Sedimentary Basins : 26 Exploration initiated in 15 Prognosticated Resources : 205 Billion Barrels of O+OEG For 15 Sedimentary Basins only; needs up-gradation Established reserves : 60 Billion Barrels of O+OEG (As on 01. 04. 2005)

CURRENT SCENARIO EXPLORATION STATUS Initiated 37% • Only 19% of the total 3. 14 million sq. km. has been extensively explored Poorly Explored • < 30% of total prognosticated resources established • Reserves estimated in only 15 out of 26 basins • Very low drilling density 22% 19% Unexplored Well Explored

SPECIFICS OF E&P UPSTREAM • Knowledge & Technology Intensive • Cost sensitive • Inexact Science

CHALLENGES ……. . • Stagnant oil and gas production • Increasing Domestic Demand • Rapidly Growing Economy Declining self sufficiency Requiring intensified exploratory efforts

OIL & GAS DEMAND, PRODUCTION & IMPORT TRENDS NATURAL GAS (MMSCMD) CRUDE OIL (MMT) 400 376. 5 Demand Production 300 391 Demand Supply 313 300 231 199. 6 200 140 114. 3 99. 7 158. 05 100 81. 4 61. 4 0 151 32. 03 33. 05 33. 98 33. 47 2001 -02 2002 -03 2005 -06 2011 -12 2024 -25 Year 170 94. 84 0 2001 -02 2006 -07 2011 -12 Year To Bridge the gap is the greatest challenge 2024 -25

KEY ISSUES • Technology / Knowledge Gap • Theoretical R&D • Scattered Geoscientific Information • Energy Policies - Misplaced

WAY FORWARD

POLICY REFORMS • National Level Energy Apex body Conventional Non - Conventional Scientific, Technical & Research Bodies Free data/Knowledge flow Effective coordination Dynamic Forecasting Centralized NDR

POLICY REFORMS • National Level ü Policy on Geoscientific Information Ø National Data Repository Ø Sharing of data in public domain Ø Regulation regarding distribution of data acquisition, ü Policy for E&P Service Sector archival &

POLICY REFORMS • Company Level ü Restructuring the Boards distancing CEO & CFO from the Board. ü Proper representation of Core competencies within the Board ü NOCs to focus on areas of their core competency. ü HRD to be aligned with the Company Objective ü Curriculum policy for Academia in consultation with the Industry ü R&D to be Market relevant

CONCLUSIONS • Policy on curriculum for School / College & University level based on interaction with Industry • Policy on Data availability for Academia, Industry & Public to boost R&D • Synergetic approach through administrative reforms • Policies for Infrastructure incentive based E&P Services • Restructuring of PSUs for effective governance

CONCLUSIONS POINTS TO PONDER • Forecasting • Energy Portfolio • Related Infrastructure • Integrated Approach ü Mass storage systems ü Evacuation ü Parallel actions for technology changes w. r. t. changing fuels Thank You