Oil and Gas Industry Dynamic and Growing March

Oil and Gas Industry Dynamic and Growing March 2005

Oil and Gas ØIndia - An Overview ØMarket and Growth Potential ØPlayers ØOpportunities ØContact in India March 2005

India - An Introduction ØPopulation Over 1 bn ØStates/UTs 35 ØGeographical Area 3. 3 mn sq kms ØLanguages recognised 22 ØBusiness language English ØPer Capita Income** US$ 534 ØGDP** US$ 650 bn **(at factor cost & at current prices) 1 USD=43. 54 INR (as on July 4, 2005) Source: CSO Statistics

India - Fast pace Growth Ø Largest democracy Ø 4 th largest economy by PPP index Ø 6 th largest energy consumer Ø For. Ex reserves skyrocket from US$ 42 bn (2001) to US$ 133 bn (February, 2005) Ø GDP growth to continue between 6 -8% Ø 3 rd largest economy by 2050: Goldman Sachs Ø Leading in IT & BPO Ø Oil & Gas and Biotechnology sunrise industries March 2005

India - Leading the world Ø Hero Honda - largest manufacturer of motorcycles Ø Moser Baer - among the top three media manufacturers in the world Ø Pharmaceutical Industry - 4 th largest in world Ø Walmart, GAP, Hilfiger sources more than USD 1 bn worth apparel from India Ø 100 Fortune 500 have set R&D facilities in India including GE, Delphi, Eli Lilly, HP, Heinz and Daimler Chrysler March 2005

Oil and Gas ØIndia - An Overview ØMarket and Growth Potential ØPlayers ØOpportunities ØContact in India March 2005

Oil and Gas Market Size US$ 90 bn (16. 5% of GDP) Employment 650, 000 Contribution to treasury over 30% Energy requirement served by sector 35% March 2005

Upstream Ø Domestic crude oil production 33. 38 mn tonnes Ø Over 100 operating PSCs Ø CBM - 16 blocks awarded Ø Overseas E&P acreage in 9 countries Ø Recent foray in deepwater drilling March 2005

Midstream Ø Product pipelines Ø Gas pipelines Ø City gas supply networks exist in 3 cities - to expand to 72 cities Ø First LNG terminal (5 MMTPA) commissioned Ø First LNG ship commissioned March 2005

Downstream Ø 10 th largest refining capacity (2. 28 mn bopd) -- 18 refineries Ø Largest grassroots refinery (540, 000 bopd) and 7 th largest refinery Ø Longest LPG pipeline of 1270 kms Ø Existing outlets – Petro retail (19, 800) – LPG distributors (8, 100) – SKO dealers (6, 500) Ø Construction of 3 refineries under progress March 2005

Energy Consumption March 2005

Oil and Gas ØIndia - An Overview ØMarket and Growth Potential ØPlayers ØOpportunities ØContact in India March 2005

Domestic Players Bharat Petroleum Corporation Ltd (BPCL) Indian Oil Corporation Ltd (IOCL) ONGC Videsh Ltd Reliance Industries Ltd (RIL) Hindustan Petroleum Corporation Ltd (HPCL) Essar Oil Ltd GAIL India Ltd March 2005

Foreign Investments Ø Shell LNG & Lubes (US$ 1 bn) Ø BG Upstream & city gas distribution (US$ 1 bn) Ø Cairn Energy Upstream (US$ 500 mn) Ø Niko, Tullow Oil Upstream Ø Total Underground LPG storage tanks Ø Total, Bp, Exxon. Mobil, Chevron. Texaco Lubes March 2005

Foreign Interests Ø BP Ø Kuwait Petroleum Corporation Ø Saudi Aramco Ø Abu Dhabi National Oil Co Ø Petronas Foreign companies participating in acquisition opportunities (Over US$ 0. 5 bn to US$ 1. 5 bn) March 2005

Oil and Gas ØIndia - An Overview ØMarket and Growth Potential ØPlayers ØOpportunities ØContact in India March 2005

Investment Potential Next 5 years US$ 18 -20 bn Ø Upstream sector US$ 13. 05 bn Ø Downstream sector US$ 8. 03 bn Next 25 years March 2005 US$ 110 bn

Business opportunities Ø NELP rounds Upstream Ø EOR projects (Estimated investments US$ 3 bn) Ø Oil Field services (Committed investments US$ 2. 5 bn) Ø Deep Water drilling Ø Farm in Opportunities Ø Coal Bed Methane Ø Underground coal gasification March 2005 Ø Gas hydrate

Business Opportunities Midstream and downstream Ø Refineries (Upgradation) Ø Planned product pipelines 12, 272 km (US$ 5 bn) ØNew retail outlets planned (US$ 7 bn) Ø New Terminals, depots & LPG infrastructure March 2005

Business Opportunities Midstream and downstream Ø Building strategic oil reserves Ø Planned gas distribution pipeline – 14, 915 kms (USD 7 bn) Ø City gas projects - 22 cities March 2005

Business Opportunities JV & Cooperation Indian Downstream companies are scouting for investment opportunities Ø Africa Ø CIS Ø Bangladesh Ø Srilanka Ø Nepal ØSE Asia March 2005

Policy Advantage Ø 100% FDI permitted under automatic approval route in following sectors: - petroleum product marketing - petroleum product pipelines - oil exploration in small & medium sized fields Ø 100% FDI permitted for natural gas / LNG pipelines subject to approval from FIPB Ø LNG exempt from CVD / excise duty. March 2005

Union Budget 2005 -06 Key Features • A financial Special Purpose Vehicle (SPV) to be established to finance infrastructure projects. • Service tax on pipeline transmission at 10. 2% • Crude oil customs duty reduced to 5%. Peak duty reduction on petroleum products to 10%. • Customs duty on coking coal cut from 15% to 5%. March 2005

Evolving Regulatory Regime Ø New Exploration Licensing Policy (NELP) -Entire value chain has been privatised -E&P acreage offered under competitive bidding (since 1999) -Decontrol of Oil sector since April 2002 Ø Draft petroleum & natural gas policy released Ø Draft gas pipeline policy released Ø Common Carrier Pipeline Policy allows 2 or more companies to use single pipeline Ø Indian Hydrocarbon Vision 2025 March 2005

Oil and Gas ØIndia - An Overview ØMarket and Growth Potential ØPlayers ØOpportunities ØContact in India March 2005

Contact in India Confederation of Indian Industry (CII) 249 -F, Sector 18, Udyog Vihar Phase IV Gurgaon 122015 Tel 0091 124 5014060 -67 Fax 0091 124 5014080/5013874 E mail v. raghuraman@ciionline. org March 2005