March reforms and expected natural gas price hike. Valuation and view: On the back of ongoing reforms, we continue our positive

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1 Special Reports: (a) Result update ONGC, Oil India, GAIL, BPCL, HPCL and IOCL. Cut in OPEC supply strengthens crude prices: Brent prices moved up to USD 116/bbl (+3% MoM) in Feb-13, mainly due to supply cuts by OPEC (~1 mmbbl/d) and returning positive sentiments on the demand front. Reuters Singapore GRM up 48% MoM to USD1.5/bbl: Driven by high auto fuel cracks and large shutdowns. Medium-term GRM outlook continues to be subdued due to over capacity and sluggish global demand. Expect GRM to be volatile (occasional spurts) due to occasional bunching up of shutdowns. Petchem margins seem to be in recovery mode: Key product margins are marginally up MoM (except PVC) and seem to be in the recovery mode. Domestic price premium in PP/PVC improved marginally MoM while premium to PE reduced. Stock performance: OINL was the top performing stock in O&G space in Jan-13 with 2% absolute and 5% relative return. We expect ONGC and OINL to continue to rally on back of diesel reforms and expected natural gas price hike. Valuation and view: On the back of ongoing reforms, we continue our positive stance on upstream (ONGC/OIL) and OMC's. BPCL is top pick among OMC's for its E&P upside potential. RIL's new refining/petchem projects likely to add to earnings from end-fy15/fy16, but medium-term outlook on core business remain weak with RoE reaching sub-13%, Neutral. Neutral on GAIL/GSPL due to headwinds on incremental gas. However, domestic gas scarcity augurs well for Petronet LNG. Chart of the month Reuters Singapore GRM (USD/bbl) Gasoline cracks (USD/bbl) Feb-1 Feb-11 Feb-12 Feb-13 Feb-1 Feb-11 Feb-12 Feb-13 1-M Relative Stock Performance HPCL (6) Valuation: Coverage universe Reco M Cap P/E (x) P/B (x) EV/EBITDA (x) USD b FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E Integrated/Upstream RIL* Neutral ONGC Buy CAIRN Neutral OINL Buy OMCs IOC Buy BPCL Buy HPCL Buy Independent Refiners MRPL Neutral 1.8 NA CPCL Buy.3 NA NA Gas Companies GAIL** Neutral GSPL Neutral PLNG Buy IGL UR *No. of shares adj. for treasury shares; **P/E adj. for investments Intg/Upstream OMC's Gas/CGD Refiners RIL CAIRN ONGC OINL BPCL IOC MRPL CPCL GAIL GSPL PLNG IGL (6) (4) (5) (3) (2) (2) () () (1) March

2 Index Special Report 3QFY13 Results Update: (ONGC, Oil India, GAIL, BPCL, HPCL, IOCL) Oil market trends. 9 US weekly petroleum data...1 GRM and product spreads...11 Petchem margin trend Refinery throughput and domestic consumption...16 Update on under-recoveries and domestic fuel pricing..17 Industry News O&G stock performances during the month...22 Valuation comparison to Global peers March 213

3 SPECIAL REPORT 3QFY13 Results Update: ONGC ONGC reported net sales at INR21b (v/s est of INR199b, adj. for subsidy), EBITDA at INR112b (v/s est of INR13b, adj. for subsidy), and PAT at INR56b (v/s est of INR52b, adj. for subsidy), up 2% YoY and down 6% QoQ. Reported numbers were above estimates primarily due to (a) higher standalone oil sales at 4.9mmt (v/s est 4.7mmt) due to reduction in BS&W (basin sediments and water) content and (b) higher VAP realizations. 3QFY13 gross realization stood at USD11/bbl (flat QoQ and v/s USD111.7/bbl in 3QFY12). Subsidy was below estimate at USD62.2/bbl (v/s est of USD64.4/ bbl; USD63 in 2QFY13 and USD66.8 in 3QFY12), lower by ~USD2/bbl than our estimate, primarily due to higher oil sales (used in denominator to calculate per bbl subsidy) and resulting in higher net realization at USD48/bbl (v/s USD46.8/bbl in 2QFY13 and USD45 in 3QFY12). Subsidy sharing for the quarter in absolute terms stood at INR124.3b, largely flat on a YoY and QoQ basis. D,D&A at INR44b was marginally higher, while other income was marginally lower than estimate at INR14b (est INR15b). FY14 oil production guidance higher than our estimate: ONGC expects FY14 domestic oil production at 29.1mmt (standalone: 25.8 and JV: 3.3) and gas production at 26.5bcm (standalone: 24.6 and JV: 1.8) v/s our estimate of domestic oil production at 28.1mmt and gas production at 26.6bcm. Upstream sharing in 9MFY13 at 36%; we model 4% in FY13: ONGC's 3QFY13 subsidy stood at INR124b and its share in upstream stood at 82.4% (v/s 82% in 9MFY13 and 8.8% in FY12). With FY13E under-recoveries at >INR1.6t (v/s INR1.4t in FY12) and given the precarious government financials, we believe FY13 upstream will be higher and model upstream subsidy sharing at 4%. Valuation and view: We estimate gas price of USD7/mmbtu from FY15E for ONGC. Also, in line with the announced reforms, we estimate a 3% and 5% reduction in under-recoveries in FY14E and FY15E respectively from the FY13 base. However, we have conservatively assumed a higher upstream sharing of 5%/6% in FY14E/15E to compensate for increased earnings. Our SOTP-based target price for ONGC stands at INR42/sh. Buy. 3 March 213

4 SPECIAL REPORT 3QFY13 Results Update: Oil India Unrest in Assam impacts 3QFY13 performance: Oil India reported EBITDA of INR11.2b for 3QFY13 (v/s our estimate of INR12.9b, adjusted for subsidy) - down 16% YoY and 2% QoQ. EBITDA was below our estimate, as unrest in Assam resulted in lower production. PAT was also lower at INR9.4b (-7% YoY and -1% QoQ). Oil production for 3QFY13 was.92mmt (-4% YoY and QoQ) while gas production was.68bcm (flat YoY and down 2% QoQ). Management has hinted that production is gradually nearing normal levels post the unrest. Expect upstream to share 4% subsidy for FY13 against 9MFY13 average of 36%: In 3QFY13, Oil India's subsidy share was INR19.5b and its share in upstream subsidy was 12.9%. Upstream sharing in 9MFY13 was at ~36% of the total under recoveries. We estimate Oil India's share at 13.3% of the upstream sharing (4%) for FY13. Net realization at USD52.6/bbl: Oil India's gross realization was in line at USD18.6/bbl (v/s our estimate of USD19/bbl) and subsidy burden stood at USD56/bbl, resulting in net realization of USD52.6/bbl (v/s USD57/bbl in 3QFY12 and USD52.5/bbl in 2QFY13). DD&A at INR2.2b: DD&A was INR2.2b (v/s our estimate of INR3b), lower sequentially due to decrease in dry well expenses from INR1.2b in 2QFY13 to INR.7b. However, decrease in DD&A was negated by lower other income of INR4.9b (v/s our estimate of INR5.5b). Valuation and view: We have factored in gas price of USD7/mmbtu from FY15 onwards for Oil India. Also, in line with the announced reforms, we have assumed a diesel price hike of INR.45/liter/month. We estimate 3% and 5% reduction in underrecoveries for FY14 and FY15, respectively. Of the INR753b reduction in under-recoveries in the next two years, we believe 9% would go towards reducing government subsidy and expect only 1% benefit for upstream companies, resulting in the upstream sharing increasing to 5%/6% in FY14/FY15 from the current 4%. The stock trades at 6.6x FY15E EPS of INR8.9. Our target price is INR635/share. Buy. 4 March 213

5 3QFY13 Results Update: GAIL GAIL India posted EBITDA of INR19.7b for 3QFY13 (up 12% YoY and 43% QoQ), marginally lower than our estimate after adjusting for actual subsidy. However, PAT was above estimate at INR12.9b (up 18% YoY and 3% QoQ), driven by higher other income at INR1.8b (v/s our estimate of INR.6b), which includes ~INR1b of dividend income from ONGC. Subsidy payout was INR6.1b after adjusting INR.9b of excess subsidy accounted in 2QFY13. The government usually finalizes the subsidy towards the end of the year; we expect higher subsidy in 4QFY13. Overall reported segmental EBIT (before subsidy) was INR23b, marginally lower than our estimate of INR24b. However, PAT was higher than our estimate, led by higher other income. Natural Gas Transmission volumes were down 12% YoY and 1% QoQ at 15mmscmd (v/s our est of 13mmscmd; EBIT was above est at INR6.2b, boosted by ship-or-pay revenues (mostly for RIL's KG-D6 volumes). LPG Transmission EBIT was INR133m, impacted by lower volumes due to shutdown in Kandla port (733kt in 3QFY13 v/s 813kt in 2QFY13). Natural Gas Trading EBIT was INR3b, down 8% YoY but up 22% QoQ. Petchem EBIT grew 5% QoQ to INR4.4b, boosted by higher volumes, partly negated by higher opex due to use of LNG led by shutdown at PMT fields. Other Segments reported EBIT loss of INR834m (could be from E&P segment write-off). LPG & Liquid Hydrocarbons segment realizations were higher at USD1,27/ MT v/s benchmark realizations of USD995/MT, resulting in EBIT of INR12b. SPECIAL REPORT Valuation and view We expect GAIL's earnings to remain flat in the medium term, as headwinds on incremental gas availability continue. We model transmission volumes of 16mmsmcd in FY13 and FY14. Adjusted for investments, the stock trades at 7.7x FY14E EPS of INR32.9. Our SOTP-based fair value estimate is INR377/share. Maintain Neutral. 5 March 213

6 SPECIAL REPORT 3QFY13 Results Update: BPCL 3QFY13 results better than expected: BPCL s PAT for 3QFY13 was INR16.5b (v/s our estimate of a loss of INR1.4b) as against INR31.4b in 3QFY12 and INR5.3b in 2QFY13. EBITDA was INR22.6b, higher than our estimate of INR5.1b, led by (a) net overrecovery of INR2.2b (v/s our estimate of net under-recovery of INR12b), (b) adventitious gain (on product inventory) of INR3.3b, and (c) staff cost being lower by ~INR.8b, though the benefits were partly offset by forex loss of INR2.2b. Given the ad-hoc subsidy sharing, we believe quarterly financials are not indicative of the likely full year performance. 9MFY13 PAT negative despite government subsidy: The upstream companies have compensated BPCL INR19b in 9MFY13 and the government has already provided a support of INR132b. However, this compensation was inadequate and resulted in INR59b loss for BPCL in 9MFY13. As in previous years, we model that major portion of the government subsidy would be received in 4Q. For FY13, similar to FY12, we model subsidy sharing of 6% by the government, 4% by upstream, and nil by OMCs. Valuation and view Our positive stance on the stock is driven by the recently announced diesel reforms, following which gross under-recoveries are likely to reduce by 5% by FY15. For OMCs, in the initial period of reforms, stock performance will largely be led by re-rating. The earnings benefit will be limited, as we already assume nil subsidy sharing in FY14. We model monthly hike of INR.45/liter in diesel price and expect OMCs to be fully compensated by upstream (4% share) and the government (6% share) for the under-recoveries on controlled products. The stock trades at 13.3x FY14E EPS of INR3.3. Adjusted for investments, it trades at.8x FY14E BV. BPCL is our top pick among OMCs. Maintain Buy. 6 March 213

7 SPECIAL REPORT 3QFY13 Results Update: HPCL PAT higher than expected: HPCL posted a PAT of INR1.5b for 3QFY13 (we had estimated a loss of INR2.3b) as against INR27.3b in 3QFY12 and INR23.3b in 2QFY13. Given the ad-hoc subsidy sharing, we believe quarterly financials are not indicative of the likely full-year performance. EBITDA in-line: EBITDA at INR3.9b was in line with our estimate, led by (a) net over-recoveries of INR1.9b, and (b) adventitious gain (on products) of INR.7b, which were equally offset by (a) lower GRM of USD1.9/bbl (v/s our estimate of INR4.1/bbl), and (b) forex loss (~INR1b). 9MFY13 PAT negative despite government subsidy: Upstream companies compensated HPCL INR1b in 9MFY13 and the government has already provided a support of INR122b. However, this compensation was inadequate and resulted in INR67.7b loss for HPCL in 9MFY13. As in previous years, we model that major portion of the government subsidy would be received in 4Q. For FY13, similar to FY12, we model subsidy sharing of 6% by the government, 4% by upstream, and nil by OMCs. Valuation and view Our positive stance on the stock is driven by the recently announced diesel reforms, following which gross under-recoveries are likely to reduce by 5% by FY15. For OMCs, in the initial period of reforms, stock performance will largely be led by re-rating. The earnings benefit will be limited, as we already assume nil subsidy sharing in FY14. We model monthly hike of INR.45/liter in diesel price and expect OMCs to be fully compensated by upstream (4% share) and the government (6% share) for the under-recoveries. The stock trades at 11.8x FY14E EPS of INR27.6 and.7x FY14E BV. Buy. 7 March 213

8 SPECIAL REPORT 3QFY13 Results Update: IOCL 3QFY13 results better than expected: IOCL s PAT for 3QFY13 was INR33b (v/s our est. of INR1.1b) as against INR24.9b in 3QFY12 and INR96.1b in 2QFY13. EBITDA was INR51b, higher than our estimate of INR21.6b, led by (a) net over-recovery of INR4b (v/s our estimate of net under-recovery of INR26.7b), and (b) higher GRM of USD6.2/bbl against our estimate of USD4.8/bbl (resulted in additional EBITDA of ~INR8.5b), though the benefits were partly offset by (a) higher staff costs to the tune of INR2.9b, and (b) adventitious loss (on products) of INR3.6b. Interest expenses and depreciation were broadly in line at INR13.2b and INR16.7b, respectively. Given the ad-hoc subsidy sharing, we believe quarterly financials are not indicative of the full year performance. 9MFY13 PAT negative despite government subsidy: The upstream companies have compensated IOCL INR243b in 9MFY13 and the government has already provided a support of INR296b. However, this compensation was inadequate and resulted in INR132b loss for IOCL in 9MFY13. As in previous years, we model that major portion of the government subsidy would be received in 4Q. For FY13, similar to FY12, we model subsidy sharing of 6% by the government, 4% by upstream, and nil by OMCs. Valuation and view Our positive stance on the stock is driven by the recently announced diesel reforms, following which gross under-recoveries are likely to reduce by 5% by FY15. For OMCs, in the initial period of reforms, stock performance will largely be led by re-rating. The earnings benefit will be limited, as we already assume nil subsidy sharing in FY14. We model monthly hike of INR.45/liter in diesel price and expect OMCs to be fully compensated by upstream (4% share) and the government (6% share) for the under-recoveries. Buy. 8 March 213

9 OIL: Brent up 3% MoM due to supply cuts by OPEC Brent averaged USD116/bbl (+3% MoM) mainly due to supply cuts by OPEC. OPEC production has fallen from mbpd in 1HCY12 to 3.2mbpd in Jan-213 Global product demand: Jan-13 average at 89.6mmbbl/d was.4% higher than 3-yr avg of 89.3mmbbl/d OPEC spare capacity has averaged at ~3.5mmbbl/d in the last 3 months YoY oil production and demand change (%) Oil Product Demand (mmbbl/d) YoY Change (%) - RHS 94 8% 89 4% 84 % 79-4% Jan-5 Jan-7 Jan-9 Jan-11 Jan-13 OPEC crude supply (mmbbl/d) Spare Capacity (RHS) OPEC SUPPLY Jan-5 Jan-7 Jan-9 Jan-11 Jan-13 Brent oil price trend (USD/bbl) Brent forward curve (USD/bbl) Brent oil price in USD/bbl and INR/bbl 15 Brent Spot Aug-4 Mar-6 Brent (USD/bbl) Brent (INR/bbl) - RHS Mar-1 Mar-11 Feb , , , , ,4-3 Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 Dec-1 Apr-5 Aug-8 Jan-12 May-15 Sep-18 Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 Crude price differentials (USD/bbl) Brent-WTI spread (USD/bbl) Indian basket price trend (USD/bbl) Arab L-H WTI - Maya (RHS) Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 Brent less WTI (USD/bbl) Oil to gas ratio (x) - RHS Feb-5 Feb-7 Feb-9 Feb-11 Feb Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 9 March 213

10 US Weekly Petroleum Data: Oil inventory up US crude inventory increased to mmbbl in the last week of Feb-13, highest since July 212, on back of higher imports and decline in demand. US refinery utilization averaged ~84% in Feb-13 down from ~86% in Jan-13 mainly due to maintenance shutdowns. Distillate inventories are ~13% below the last 5-year average US crude oil inventory (mmbbl) US distillate inventory (mmbbl) US gasoline inventory (mmbbl) Range (28-12) Average (28-12) Week Range (28-12) Average (28-12) Week US total product supplied (mmbbl/d) US refinery utilization (%) US crude imports (mmbbl) Range (28-12) Average (28-12) Week 23 Range (28-12) Average (28-12) Range (28-12) Average (28-12) Week Week 1 March 213

11 GRM: Up 48% MoM led by gasoline cracks Reuters Singapore GRM up 48% MoM to USD1.5/bbl: This is primarily driven by higher auto fuel, especially higher gasoline cracks due to maintenance shutdowns in US. While, the medium term GRM outlook continues to remain subdued, we expect GRM to be volatile (occasional spurts) due to occasional bunching up of shutdowns Reuters Singapore GRM (USD/bbl) Feb-5 Feb-6 Feb-7 Feb-8 Feb-9 Feb-1 Feb-11 Feb-12 Feb-13 Gasoline spreads (USD/bbl) Diesel spreads (USD/bbl) LPG spreads (USD/bbl) Feb-5 Feb-7 Feb-9 Feb-11 Feb Feb-5 Feb-7 Feb-9 Feb-11 Feb Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 Naphtha spreads (USD/bbl) Jet/Kero spreads (USD/bbl) Fuel oil spreads (USD/bbl) Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 1 Feb-5 Feb-7 Feb-9 Feb-11 Feb Feb-5 Feb-7 Feb-9 Feb-11 Feb March 213

12 GRM: Over capacity + sluggish demand = range bound margins Singapore GRM up MoM and YoY (USD/bbl) Oil, Product Prices and Cracks (USD/bbl) 12 March 213

13 Polymer Margins: Up ~2% MoM, except PVC Domestic price premium in PP/PVC is improved marginally MoM, however the premium to PE continued its downward slide, probably due to higher imports International polymer/naphtha prices were up 4% /5% MoM. Petchem margins seem to be in recovery mode (Key product margins are up ~2%MoM, except PVC) Key polymer price trends (INR/kg) PE PP PVC Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 Premium/discount to international prices (INR/kg) 6 4 PE PP PVC 2-2 Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 PE spread over naphtha (INR/kg) PP spread over naphtha (INR/kg) PVC spread over naphtha (INR/kg) Apr 5 yr range Last 5 yr avg. FY13 May Jun July Aug Sept Oct Nov Dec Jan Feb Mar Apr 5 yr range Last 5 yr avg. FY13 May Jun July Aug Sept Oct Nov Dec Jan Feb Mar Apr 5 yr range Last 5 yr avg. FY13 May Jun July Aug Sept Oct Nov Dec Jan Feb Mar PE spread overn naphtha (USD/mt) PP spread over naphtha (USD/mt) PVC spread over naphtha (USD/mt) Naphtha Ethylene Polyethylene 2, 1,5 1, 5 Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 Naphtha Propylene Polypropylene 2,4 1,8 1,2 6 Feb-5 Feb-7 Feb-9 Feb-11 Feb-13 Naphtha Price Ethylene PVC 1,8 1, Feb-5 Feb-7 Feb-9 Feb-11 Feb March 213

14 Polymer Margins: International prices increased ~3.5% MoM 14 March 213

15 Polyester Margins: Largely flat on MoM basis POY and PSF price trend (INR/kg) PTA and MEG price trend (INR/kg) PTA spread over naphtha (INR/kg) POY PSF Cotlook A (cents/lbs) - RHS Feb-5 Feb-7 Feb-9 Feb-11 Feb PTA MEG Feb-5 Feb-7 Feb-9 Feb-11 Feb Apr 5 yr range Last 5 yr avg. FY13 May Jun July Aug Sept Oct Nov Dec Jan Feb Mar POY spread over naphtha (INR/kg) PSF spread over naphtha (INR/kg) MEG spread over naphtha (INR/kg) 68 5 yr range Last 5 yr avg. FY yr range Last 5 yr avg. FY yr range Last 5 yr avg. FY Apr May Jun July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec Jan Feb Mar 15 March 213

16 India Refinery throughput and domestic fuel consumption Refinery throughput trend Total consumption (kbpd) Petrol consumption (kbpd) Diesel consumption (kbpd) 3,25 Total YoY (%) 3% 3, 2% 2,75 1% 2,5 % 2,25-1% Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Domestic fuel consumption statistics 4 Petrol YoY (%) 3% 35 2% 3 1% 25 % 2-1% Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 1,7 Diesel YoY (%) 3% 1,5 2% 1,3 1% 1,1 9 % 7-1% Jan-9 Jan-1 Jan-11 Jan-12 Jan March 213

17 Under recoveries trend and domestic fuel pricing Latest fortnight daily under recovery run-rate at INR4.3b, implying annual under recovery at INR1.6t. Impact of INR1/ltr price hike on under recoveries Diesel : ~INR8b Kerosene: ~INR1b LPG hike of INR25/cyl: ~INR26b Petrol and diesel price difference (INR/lt) 8 Petrol Diesel Domestic retail petrol price trend (INR/lt) Petrol (INR/ltr) Chg (%) - RHS Dec-4 Feb-6 Feb-7 Feb-8 Feb-9 Feb-1 Feb-11 Feb-12 Feb-13 2% 1% % -1% -2% Fortnightly diesel under recoveries (INR/lt) Fortnightly kerosene under recoveries (INR/lt) Fortnightly LPG under recoveries (INR/cyl) Domestic retail diesel price trend (INR/lt) Domestic retail Kerosene price trend (INR/cyl) Domestic retail LPG price trend (INR/cyl) Diesel (INR/ltr) Chg (%) - RHS 2% 1% % -1% -2% Kerosene (INR/ltr) Chg (%) - RHS 3% 2% 1% % -1% LPG (INR/Cyl) Chg (%) - RHS 2% 1% % -1% -2% Dec-4 Feb-6 Feb-7 Feb-8 Feb-9 Feb-1 Feb-11 Feb-12 Feb-13 Dec-4 Feb-6 Feb-7 Feb-8 Feb-9 Feb-1 Feb-11 Feb-12 Feb-13 Dec-4 Feb-6 Feb-7 Feb-8 Feb-9 Feb-1 Feb-11 Feb-12 Feb-13 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Dec-4 Dec-5 Dec-6 Jan-8 Jan-9 Jan-1 Jan-11 Feb-12 Jan-13 Feb-13 Feb-13 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb March 213

18 Under recoveries: Model upstream sharing at 4% We model upstream sharing at 4% in FY13/FY14/FY15 Note: We have assumed a diesel price hike of INR.45/lt every month in our estimates 18 March 213

19 Industry News - International Oil Demand growth estimates from IEA, OPEC, EIA Oil demand growth (mmbbl/d) Remarks IEA (Oil Market Report).9.8 Revised 213 oil demand downwards by.9mmbbl/d, as IMF trimmed their GDP forecast to 3.5%, from 3.6% previously, increased Chinese demand OPEC (Monthly Oil Market Report).8.8 Maintained 213 oil demand, expects major growth from developing countries EIA (Short-Term Energy Outlook).8 1. Expects non-oecd countries to drive growth momentum in 213 Japex to buy stake in Canada LNG, shale gas project from Petronas Japan Petroleum Exploration Co. (Japex) agreed to join the proposed British Columbia Pacific Northwest LNG venture and to buy a stake in the North Montney shale gas project from Malaysia s Petronas. The price was not disclosed. British Columbia Pacific Northwest is among a number of proposed LNG export terminals in the US and Canada. Petronas acquired the Pacific Northwest LNG export terminal project last year when Petronas bought Progress Energy Resources Corp. for $5.4 billion. Petronas plans to make a FID on the LNG project by Dec. 31, 214. Commercial operations could start by the end of 218. Japex said it plans to receive 1.2 mmtpa of LNG from the project ExxonMobil to Invest USD19B Over Next 5 Years on New Resource Opportunities Exxon Mobil Corp. will increase its annual spending on energy projects by $1 billion, Chairman and CEO Rex Tillerson said in the company's annual analyst meeting in New York. The increase will bring capital spending levels to about $19 billion over the next five years, or $38 billion per year, a new record for the oil giant. Mr. Tillerson said the company's production of oil and other liquids is expected to increase by an average of 4% per year from 213 through 217 as Exxon starts production at 28 major oil and gas projects, 24 of which are heavy in liquids. New production startups in the next five years will total about one million oil-equivalent barrels, Mr. Tillerson said. Rosneft Unit Buys Stake In ExxonMobil Gulf Of Mexico Exploration Blocks Neftegaz America Shelf LP, an indirect subsidiary of Russian oil producer Rosneft (ROSN.L), has acquired 3% interest in 2 deepwater exploration blocks in the Gulf of Mexico held by ExxonMobil Corp. The 2 blocks have a total area of about 111,6 acres in water depths ranging between 2,1 and 6,8 feet. Seventeen are located in the Western Gulf of Mexico and three are in the Central Gulf of Mexico. ExxonMobil retains 7% interest in the blocks and remains operator. Analysis of seismic data is under way. There is currently no production on the blocks. 19 March 213

20 Industry News - Domestic Cairn commenced exploration drilling in Rajasthan Cairn India has commenced drilling of the first exploration well, following endorsement of the exploration work programme for the Rajasthan block by the management committee two weeks ago. The company started exploration drilling after a gap of more than four years, in the prolific Barmer oilfields, Cairn said in a statement. "This is pursuant to the clarity in policy by the government, allowing for exploration operations in development blocks. This has enabled Cairn India to commence its planned aggressive exploration drilling programme to help harness the full potential of the Barmer Basin in Rajasthan,"" it said. This will help the Cairn and ONGC joint venture to realise the basin production potential of 3, bopd from the block, it said. The JV is currently producing 17, -175, bopd from the Rajasthan block with a strong focus on exiting the year FY at a production rate of 2,-215, bopd from the block. Reliance Industries, BP to invest USD5b to boost natural gas field output BP CEO Bob Dudley and RIL Chairman Mukesh Ambani have promised to accelerate investment of $5 billion in the next few years to boost natural gas output gradually from 214 while the government has assured quick resolution of pending issues, including approvals for the D6 block, government and company officials said. The investment includes testing of a new layer of natural gas under the rapidly depleting fields in the KG-D6 fields, a joint statement from Reliance and BP said. It said "optimisation" plan from the existing field will reverse the fall in D6 output from next year, while other developments in the same block will deliver results by 217. Dudley, who is a member of the business delegation accompanying British Prime Minister David Cameron, and Ambani gave the assurances in separate meetings with Prime Minister Manmohan Singh and Oil Minister Veerappa Moily, officials said. GAIL commissions INR4,5 cr Dabhol- Bengaluru gas pipeline GAIL has commissioned a INR4,5 crore pipeline carrying gas from the just operationalised Dabhol LNG terminal into Bengaluru that promises to change the energy landscape of the region. The 1,-km pipeline will feed industries at Belgaum, Dharwad, Gadag, Bellary, Davanagere, Chitradurga, Tumkuyr, Ramanagaram and Bengaluru who have till now been using costlier and polluting liquid fuels like naphtha and diesel as feedstock. Gas will help the state power generation utility save INR8 crore annually by reducing cost, improving efficiency and drastically cutting down pollution caused by using liquid fuels. The pipeline, he said, will be extended to Mangalore this year and further to Kochi in Kerala by end of next year. The Dabhol-Bengaluru pipeline has a capacity to carry 16 mmscmd. GAIL also signed an agreement to supply.6 million tonnes of LNG to Karnataka Power Corp Ltd's proposed 1,4MW Bidadi power plant. 2 March 213

21 Industry News - Domestic HPCL to partner Shapoorji Pallonji Group for LNG terminal HPCL and Mumbai-based infrastructure major Shapoorji Pallonji plan to set up a terminal for import of liquid gas (LNG) at a cost of Rs 5, crore at Chhara in Gujarat's Junagadh district through a 5:5 joint venture. SP Ports is already developing a greenfield, all weather, direct berthing port in Junagadh district. HPCL and SP Ports are carrying out a detailed feasibility study for establishing technical and commercial viability of setting up a LNG import and regasification terminal of 5 million tonnes per annum capacity at the proposed Port. The port is connected to a gas pipeline grid and evacuation of the fuel would not be an issue, they said. Gujarat already has two functional ports at Dahej and Hazira. A third one is under planning by Gujarat State Petroleum Corp (GSPC) and Larsen & Toubro (L&T) at Mundra. The Chhara terminal would be the fourth in the state. The sources said the Chhara import terminal may take a minimum of three years to build Veerappa Moily red-flags Finance Ministry proposal on fuel pricing Red-flagging the Finance Ministry move to cut subsidises by changing fuel pricing norm, Oil Minister M Veerappa Moily said not compensating oil PSUs for their losses will put question mark on their survival. The Finance Ministry wants petrol and diesel to be priced at a rate they can get in export market, rather than current practice of pricing the fuels after adding transportation and customs duty to the international price. "From 25-6, the oil marketing companies have not been adding any margin on crude oil or on petroleum products. What is import price plus transportation and taxes is all that is there in the selling price, OMCs are together projected to end the fiscal with a revenue loss of INR 163bn. Of this, the Finance Ministry wants to shave off Rs 17, crore by changing methodology to export parity pricing (EPP). "If you decrease their compensation by Rs 17, crore, where will they get money for expansion and modernisation of refineries, Videocon starts selling stake in Mozambique gas field Videocon Industries has initiated the process to sell its 1% stake in the Mozambiquebased Rovuma offshore gas field in a deal that may fetch the company $2.5-$3 billion. The company, along with US based Anadarko Petroleum Corp, is in the process of together auctioning 2% stake in the oil field to raise an aggregate of $5-6 billion. The first round of bid is scheduled for March 14. Anadarko Petroleum, which holds 36.5% in the property, said that it intends to sell up to 1% stake in the Rovuma Offshore Area 1 but would retain operatorship of the asset. Anadarko Petroleum did not confirm details of the auction; Videocon declined to comment. Industry sources revealed that India's Oil India, ONGC and international players like Shell, PetroChina, and Exxon Mobil Corp may acquire the stake in gas. Mozambique, is pegged to emerge as a major global supplier of liquefied natural gas, and its gas reserves are pegged at 15 trillion cubic feet. 21 March 213

22 O&G stock performance Absolute stock performance (%) 1 MONTH ABSOLUTE GSPL (4) PLNG IGL Cairn IOC BPCL HPCL GAIL OIL ONGC RIL (7) (9) (9) (4) (5) (6) (1) (4) (1) 2 3 MONTH ABSOLUTE GSPL (1) PLNG (7) IGL () Cairn (7) IOC BPCL HPCL GAIL () OIL ONGC RIL MONTH ABSOLUTE GSPL (11) PLNG (1) IGL Cairn (1) IOC BPCL HPCL GAIL (7) OIL ONGC RIL YEAR ABSOLUTE GSPL (6) PLNG (1) IGL (27) Cairn (17) IOC BPCL HPCL GAIL (9) OIL ONGC RIL (2) 2 (5) 5 (5) 5 (5) 5 Relative stock performance (%) 1 MONTH RELATIVE GSPL () PLNG IGL Cairn IOC BPCL HPCL GAIL OIL ONGC RIL (6) (6) (4) (2) (3) (1) () MONTH RELATIVE GSPL (4) PLNG (1) IGL Cairn IOC BPCL HPCL GAIL OIL ONGC RIL (11) (4) (4) MONTH RELATIVE GSPL (22) PLNG IGL Cairn IOC BPCL HPCL GAIL OIL ONGC RIL (22) (18) (12) (11) (6) (4) (3) YEAR RELATIVE GSPL (16) PLNG IGL (37) Cairn IOC BPCL HPCL GAIL OIL ONGC RIL (27) (2) (19) (6) (1) (4) (1) (5) 5 1 (3) (1) 1 3 (4) (2) 2 (4) (2) 2 22 March 213

23 Valuation comparison to Global peers *All averages are weighted averages 23 March 213

24 Valuation comparison to Global peers: Integrated Companies *All averages are weighted averages 24 March 213

25 N O T E S 25 March 213

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