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Contents Market Overview Government regulations & policy Business opportunities and Advantage India www. imacs. Contents Market Overview Government regulations & policy Business opportunities and Advantage India www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 2

Indian Oil and Gas Industry - Prime mover of the Indian economy ¨ Oil Indian Oil and Gas Industry - Prime mover of the Indian economy ¨ Oil and Gas Industry Size is estimated at USD 110 bn (about ¨ 15% of Indian GDP) Contributes to about 64% of gross revenues of Government ¨ ¨ (both Central and State together) through Taxes and Duties Total Contribution to Government exchequer in 2004 -05 = USD 27 bn Contributes to about 45% of India’s primary energy o India is the Fifth largest energy consumer in the world o Primary Energy Consumption (2005) – 387. 3 MMTOE o Oil and gas accounts for 44% of India’s primary energy consumption Compounded Annual Growth ¨ Constitutes 30. 87% of India’s imports in 2005 -06 ¨ Accounts for 11. 21% of India’s exports in 2005 -06 rate of Energy Consumption ¨ India is the Sixth largest crude consumer in the world (1996 -2005) – 3. 62% ¨ India is the Ninth largest crude importer in the world ¨ India’s has the sixth largest refining capacity - 2. 56 million barrels per day representing 2. 99% of world capacity o o Energy-GDP Elasticity = 0. 58 India’s GDP would fall by 1. 5% for every USD 10 increase in the price of oil per barrel Source: Integrated Energy Policy; BP Statistical Review 2006, Ministry of Commerce, Mo. P&NG, Stg Comm Report, FICCI Report, ABN AMRO , IMa. CS Analysis© IMa. CS 2006 Printed 17 -Mar-18 www. imacs. in Page 3

Supply has failed to keep pace with demand Source: DGH Presentation o Yawning Demand-Supply Supply has failed to keep pace with demand Source: DGH Presentation o Yawning Demand-Supply Gap : Need to v Intensify exploration efforts to convert the remaining prognosticated hydrocarbon reserves to established reserves v Increase recovery factor of producing fields v Tie up crude oil and gas imports – setting up of LNG Regasification terminals/ laying of transnational pipelines v Scout for equity oil and gas from abroad v Explore new technologies like coal gasification, coal to oil conversion, gas hydrates exploration, coal bed methane extraction etc. © IMa. CS 2006 www. imacs. in Printed 17 -Mar-18 Page 4

Intensive Exploration & Production a must …. o Sedimentary Area – 3. 14 million Intensive Exploration & Production a must …. o Sedimentary Area – 3. 14 million sq km o Only 19% of the area extensively explored o Domestic Hydrocarbon Scenario (as on 1. 04. 2006): Prognosticated Resources (Oil + Oil Equivalent Gas) 28 -32 BMT Established Geological reserves (O + OEG) 8. 2 BMT O + OEG already produced 1. 42 BMT Balance Recoverable Reserves (O + OEG) 1. 85 BMT Current Oil Production Current Gas Production www. imacs. in 32. 19 MMT 88. 22 MMSCMD © IMa. CS 2006 Printed 17 -Mar-18 Page 5 Source: DGH / Mo. P&NG

Exploratory measures initiated by Government…. New Exploration Licensing Policy o 110 Production Sharing contracts Exploratory measures initiated by Government…. New Exploration Licensing Policy o 110 Production Sharing contracts in 5 New Exploration Licensing Policy (NELP) rounds o 30 discoveries with hydrocarbon in-place reserves of over 600 MMT in last 3 -4 years Coal Bed Methane Policy o o Investment commitment of about USD 5 bn in exploration phases under NELP Perception of prospectivity of Indian sedimentary basins reflected in NELP VI response www. imacs. in o Exploratory Measures 16 Blocks already awarded with production potential of 25 MMSCMD under Coal Bed Methane (CBM) I & II rounds o Significant commercial finds in blocks held by RIL and ONGC o First commercial production of CBM by 2007 -08 o 54 Bids received for 10 CBM blocks offered in the third round o Award of blocks in near future © IMa. CS 2006 Printed 17 -Mar-18 Page 6

Government’s exploratory measures bearing fruits. . Major Upstream Players Major Discoveries Year British Gas Government’s exploratory measures bearing fruits. . Major Upstream Players Major Discoveries Year British Gas Discovery Operator HOEC OIL Cairn www. imacs. in Oil & Gas Krishna Godavari Deep waters Cairn 2002 Gas KG Basin Deep waters (World’s biggest discovery for the year) RIL Oil in Barmer-Sanchor basin (Rajasthan) Cairn 2004 Gas in Mahanadi basin shallow waters RIL 2005 ONGC Cairn 2003 RIL Gas – Gulf of Cambay 2001 GSPC 2000 Gas in KG Basin shallow waters GSPC 2005 Oil in KG Basin shallow waters RIL © IMa. CS 2006 Printed 17 -Mar-18 Page 7 Source: DGH

Oil Refining Capacity … from shortage to surplus Refinery Capacity in MMT Refineries Refinery Oil Refining Capacity … from shortage to surplus Refinery Capacity in MMT Refineries Refinery Throughput 127 MMT (2005) No June 06 2006 -07 2011 -12 IOC Group 10 60. 2 72. 2 BPC Group 3 22. 5 30. 5 HPC 2 13. 0 16. 2 25. 2 ONGC/ MRPL 2 9. 8 RIL 1 33. 0 60. 0 12. 0 153. 7 210. 0 Essar 18 138. 5 ¨ Imported Crude – 78% ¨ Domestic Crude – 22% Refining Capacity more than doubled between 1998 and 2006 © IMa. CS 2006 www. imacs. in Printed 17 -Mar-18 Source: Mo. P&NG, BP Statistical Review 2006 Page 8

Petroleum product exports - a major Foreign Exchange earner Consumption 2005 -06 (MMT) Product Petroleum product exports - a major Foreign Exchange earner Consumption 2005 -06 (MMT) Product Exports MMT % 40. 2 35. 9% Petrol 8. 6 7. 7% LPG 10. 3 9. 4 8. 4% FO/LSHS 12. 7 11. 4% Naphtha 12. 2 10. 9% Bitumen, ATF, Lubes, Solvents 18. 5 16. 5% 111. 9 Exports increased by about 65% from 2004 9. 2% Kerosene Sector with vast export potential ¨ Diesel ¨ 100% -05 to 2005 -06 © IMa. CS 2006 www. imacs. in Printed 17 -Mar-18 Source: Mo. P&NG, Ministry of Commerce & Industry Page 9

Inland Petroleum transportation – gradual shift from railways to pipelines Mode of Transportation o Inland Petroleum transportation – gradual shift from railways to pipelines Mode of Transportation o Share of pipeline transportation in India much lower as compared to USA, inspite of its advantages o Total POL pipeline length currently under operation in India – 12, 204 kms o POL pipelines under implementation – 5, 561 kms (Investment of USD 1. 5 bn) www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 10 Source: Mo. P&NG, Infraline, IMa. CS analysis

Presence of both State and Private players in the Indian oil market… Marketing Infrastructure Presence of both State and Private players in the Indian oil market… Marketing Infrastructure – Oil Marketing Companies Company Marketing Infrastructure Others Retail Outlets LPG Distributors SKO Dealers IOC 11, 739 4, 856 3, 564 ONGC 1 HPCL 7, 313 2, 202 1, 648 NRL 58 BPCL 7, 318 2, 123 1, 014 RIL 1, 218 IBP 3, 468 89 381 Shell 12 29, 838 9, 270 6, 607 Essar 516 Administered Pricing www. imacs. in Market Determined Pricing Company Retail Outlets Controlled Pricing © IMa. CS 2006 Printed 17 -Mar-18 Page 11 Source: Mo. P&NG

Massive Investments planned in gas pipelines… Total Investment required in the proposed projects is Massive Investments planned in gas pipelines… Total Investment required in the proposed projects is about USD 15 -20 bn Transnational Gas pipelines planned q Iran-Pakistan-India pipeline q Myanmar-India Pipeline q Turkmenistan-Afghanistan-Pakistan -India pipeline Source: Mo. P&NG, Infraline, IMa. CS Research www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 12

Contents Market Overview Government regulations & policy Business opportunities and Advantage India www. imacs. Contents Market Overview Government regulations & policy Business opportunities and Advantage India www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 13

Government regulations have evolved over time in tune with domestic compulsions and international hydrocarbon Government regulations have evolved over time in tune with domestic compulsions and international hydrocarbon scenario…. 1947 -1962 Upstream Setting up of Public Sector Upstream Oil Companies – ONGC (1956) and OIL (1959) Free Investment Downstream www. imacs. in Multinationals like Shell, Caltex, and Esso conducting operations 1962 -1970 Government, the only player Increasing Government participation Formation of national oil refining companies 1970 -1990 Offer of exploration blocks to international oil companies (1979 onwards) Nationalization of foreign Companies (1970) Strict Government Coexistence of controls Public and Private Sectors 1990 -2000 Post 2000 Setting up of regulator – DGH (1993) Implementation and award of NELP blocks Introduction of NELP CBM policy Delicensing of Refinery sector (MRPL – 1996) Open marketing of many products Selective private participation Dismantling of APM (2002) Passing of Petroleum and Natural Gas Regulatory Board Act, 2006 Liberalised. FDI regime © IMa. CS 2006 Printed 17 -Mar-18 Page 14

Policy initiatives to attract Foreign Direct Investment… ¨ Upto 100% FDI through automatic route Policy initiatives to attract Foreign Direct Investment… ¨ Upto 100% FDI through automatic route ¨ Through incorporated/ unincorporated Joint Ventures or directly ¨ Upto 100% FDI if set up as a private Indian company ¨ Upto 26% in case of state owned companies Marketing ¨ Upto 100% FDI through automatic route Product Pipelines ¨ Upto 100% FDI through automatic route ¨ Upto 100% FDI allowed ¨ Approval required from Foreign Investment Promotion Board. Exploration & Production Refining Natural Gas/ LNG pipelines www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 15

Contents Market Overview Government regulations & policy Business opportunities and Advantage India www. imacs. Contents Market Overview Government regulations & policy Business opportunities and Advantage India www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 16

India offers significant advantages for the domestic and global oil and gas majors… q India offers significant advantages for the domestic and global oil and gas majors… q Strategic location v Nearness to the premier crude oil and gas supply market (Middle East) v Geographical Proximity to the major petroleum product importers – China and Japan q Well Developed Maritime infrastructure q Government policies conducive to the growth of the sector – tax holidays, Special Economic Zones for Petroleum products q Availability of experienced manpower at lesser costs –Cost advantage q Existence of hi-tech indigenous EPC Companies – lower construction periods 183 q Large domestic market v Anchor customer of the various petroleum products 71 v Possibility of achieving economies of scale www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 17 Source: IMa. CS Research

Significant Business Opportunities exist foreign players… ¨ NELP rounds and Open acreage system (Opportunities Significant Business Opportunities exist foreign players… ¨ NELP rounds and Open acreage system (Opportunities for providers of ¨ services – platforms, rigs, Offshore vessels etc. ) Redevelopment of existing fields to improve recovery factor ¨ Offer of CBM blocks through Competitive bidding route. Natural gas hydrate programme Underground coal gasification Coal to oil conversion o Upstream Refining – Expansion of existing capacities, setting up of new refineries, ¨ ¨ ¨ o Midstream/ Downstream o o acquiring stakes in these refineries Ethanol and Biodiesel production – cultivation of Sugarcane and Jatropha Petroleum marketing – setting up of retail outlets, new product pipelines. LNG imports v Setting up of LNG Regasification terminals. v Offshore Transshipment (Single Buoy Mooring) q Laying of cross country gas grid and transnational gas pipelines q City Gas Distribution including laying of CGD and CNG networks www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 18

Key Players in the Indian Oil and Gas Sector Company Fortune Profile 500 Rank Key Players in the Indian Oil and Gas Sector Company Fortune Profile 500 Rank q India’s largest company by sales (Turnover of USD 37 bn) q India’s flagship Downstream company - Along with subsidiaries accounts for 47% of Petroleum market share among Public Sector Oil Companies, 41% of National 153 refining capacity and 51% downstream pipeline capacity q www. imacs. in India’s largest private sector company on all major financial parameters q Presence in Upstream, midstream and downstream segment PSU engaged in refining and marketing of petroleum products q Has two subsidiary companies – Kochi Refineries Ltd. And Numaligarh Refineries Limited q 368 q q 342 Operates the largest and widest network of petrol and diesel stations in the country Refining Capacity – 22. 5 MT (16. 25% of India’s refining capacity) © IMa. CS 2006 Printed 17 -Mar-18 Page 19

Key Players in the Indian Oil and Gas Sector Company Fortune Profile 500 Rank Key Players in the Indian Oil and Gas Sector Company Fortune Profile 500 Rank q Turnover of about US$ 17 Billion Accounts for about 10% of India’s total refining capacity q India’s Flagship E & P Company q Accounts for 77% of crude oil and 81% of natural gas produced in India q 402 q q 378 Another mega Public sector company with focus on refining and marketing Venturing into downstream refining and marketing All the five Indian companies in the Fortune 500 list are from the oil and gas industry www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 20

Global majors present in India q q Plans to develop a 2. 5 MTPA Global majors present in India q q Plans to develop a 2. 5 MTPA LNG Terminal at Kakinada q Participated in the CBM III and NELP VI bidding rounds – expected to win some blocks q One of the bidders for strategic sale of HPCL q Presence in both upstream and downstream q Stakeholders in Tapti gas fields and Panna/Mukta oil and gas fields, Cambay basin block q Interests in city gas distribution through participation in Gujarat Gas Limited and Mahanagar Gas Limited q Leverages its distribution assets to operate Broadband service, Iqara q Among the top FDI investors in India (Hazira port and LNG terminal project – milestone for FDI in the sector) q www. imacs. in 71% stakeholder in Castrol, India’s major lubricant company Interests in both upstream and downstream (LNG, Lubricants, LPG, Bitumen, retail fuels and even solar energy) © IMa. CS 2006 Printed 17 -Mar-18 Page 21

Global majors present in India q Owns 10% stakeholder in Petronet LNG Limited, a Global majors present in India q Owns 10% stakeholder in Petronet LNG Limited, a JV promoted by Indian public sector companies to set up LNG terminals to import LNG q 5% stakeholder in Reliance Petroleum Limited’s proposed new refinery at Jamnagar q Possibility of increasing the stake to 29% q q Another 100% subsidiary Elf. Gas India Ltd owns and operates LPG Import Terminal at Mangalore q www. imacs. in Wholly owned subsidiary Total. Fina. Elf, a major player in lubricants market 50% stakeholder in LPG Import terminal at Visakhapatnam © IMa. CS 2006 Printed 17 -Mar-18 Page 22

The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry. The Foundation’s primary objective is to build positive economic perceptions of India globally India Brand Equity Foundation c/o Confederation of Indian Industry 249 -F Sector 18, Udyog Vihar Phase IV Gurgaon 122015, Haryana, INDIA Tel +91 124 401 4087, 4060 - 67 Fax +91 124 401 3873 Email ajay. [email protected] org Web www. ibef. org www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 23

Disclaimer q This presentation has been prepared jointly by the India Brand Equity Foundation Disclaimer q This presentation has been prepared jointly by the India Brand Equity Foundation (“IBEF”) and ICRA Management Consulting Services Limited, IMa. CS (“Authors”) q All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. q This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of the Author’s and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. q The Author and IBEF neither recommend or endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed in this presentation. q Neither the Author nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation. ICRA Management Consulting Services Limited www. imacs. in © IMa. CS 2006 Printed 17 -Mar-18 Page 24