India Day - A New E&P Paradigm

Transcription

1 Ministry of Petroleum and Natural Gas Government of India India Day - A New E&P Paradigm DGH Directorate General of Hydrocarbons Offshore Europe th September 2017 Aberdeen

2 Agenda 1 India s Energy Outlook 2 Policy Reforms in Indian E&P Sector 3 HELP A Paradigm Shift 4 Discovered Small Field Bid Round 5 Open Acreage Licensing Programme 6 Production Enhancement Contract 7 Key Success Stories

3 India s Energy Outlook Historic Trend - Oil and Gas Demand Supply Future Demand Outlook 300 Total Primary Energy Consumption (MTOE) % Total Production (O+OEG) Total Consumption (O+OEG) India is the 3 rd largest consumer of oil and petroleum products after USA and China India s share of global demand is expected to grow from current 5.5% to 9% by 2035 India has emerged as a leading energy consumer in the World Source : BP Statistical Review 2017, BP Energy Outlook, Country and Regional Insights - India

4 India s Conventional Hydrocarbon Potential 11 7 Himalayan Foreland 150 MMT Rajasthan Basin 380 MMT 3.14 Million Sq. Km. of area spread across 26 sedimentary basin 12 2 Ganga Valley 230 MMT Upper Assam 3180 MMT 1 Cambay Basin 2050 MMT 6 Assam- Arakan 1860 MMT 8 Kutch Basin 760 MMT 16 Bengal Basin 190 MMT 14 Saurashtra Basin 280 MMT 9 Mahanadi Basin 145 MMT 3 Mumbai Offshore 9190 MMT 4 Krishna Godavari 1130 MMT 15 Kerala-Konkan 660 MMT 10 Andaman Nicobar 180 MMT Deepwater 7000 MMT 5 Cauvery Basin 700 MMT Category I: Proven Commercial Productivity Category II: Identified Prospectivity Category III: Prospective Basins Category IV: Potentially Prospective Deepwater Areas Pre-Cambrian Basement- Tectonised Sediments Conventional hydrocarbon prognosticated resources in 15 sedimentary basins is ~28 Billion Tonnes (O+OEG); Yet to Find Oil & Gas Potential of Billion Tonnes of O+OEG (100 billion Barrels) Source: DGH

5 Policy Reforms in Indian E&P Sector Availability & Upgradation of E&P Data National Data Repository (NDR) Operationalised Regulatory Framework for E&P Hydrocarbon Exploration and Licensing Policy (HELP) Improved Market Access New Domestic Gas Pricing Guidelines Appraisal of Unapprised Areas Survey of Offshore areas through Multi-client Speculative Mode Re-assessment of Prognosticated Hydrocarbon Resources of India Open Acreage Licensing (OAL) Discovered Small Field Policy Good International Petroleum Industry Practices (GIPIP) Policies for reducing regulatory burden & contractual inflexibility in Production Sharing Contracts (PSC) Marketing and pricing freedom for gas produced from Deepwater, Ultra deepwater and High Pressure High Temperature (HPHT) areas Full Marketing and Pricing Freedom under HELP and DSF Plans for Free Market Pricing for existing domestic production Transforming India s E&P sector through a series of proactive policy reforms

6 Earlier Regime: Production Sharing Contracts (PSC) New Exploration and Licensing Policy (NELP) launched in Discoveries made under PSC regime Total investment under PSCs till date is USD 40 billion with further USD 12 billion in the pipeline. Production Sharing Contract (PSC) with Pre Tax Investment Multiple (PTIM) Based on Cost Recovery mechanism Government carved out blocks for bidding with limited choice for investors Currently there are about 130 blocks in PSC/ NELP regime Currently, 8864 Sq.Km of area is under Mining Lease

7 HELP A Paradigm Shift for Indian E&P Sector Hydrocarbon Exploration and Licensing Policy (HELP) Open Acreage Licensing Reconnaissance Contract (RC) Petroleum Operations Contract (POC) Salient Features Revenue Sharing Model Full Marketing & Pricing Freedom Fiscal Incentives Unified License for all type of Hydrocarbons Freedom to carve out blocks National Data Repository

8 India now offers Entire Sedimentary Basins under the New Policy Regime with several attractive features through: Discovered Small Fields Bid Round st Round Concluded Subsequent rounds under Planning Open Acreage Licensing Program Petroleum Operations Contract (POC) Reconnaissance Contract (RC) Operating Mature Fields of NOCs Production Enhancement Contract (PEC)

9 Discovered Small Field Bid Round I Success of DSF Bid Round 2016 in the face of global economic slowdown and low oil prices manifests the benefits of new E&P regime for investors 134 e-bids received from 47 Companies 13 New entrants to E&P industry 20 Companies awarded 30 Contracts awarded (23 Onland & 7 Offshore) Government of India is planning to launch the Round II of Discovered Small Field Bids and likely to announce contract areas by Q4, 2017

10 Discovered Small Field Bid Round II 37 Fields Initial inplace volumes Adjoining facilities of ONGC and OIL 16 Onland 21 Offshore Over 146 MMTOE Bidders can access wellhead equipment, surface and nearby facilities on chargeable basis Proposed Fields Offered Rajasthan fields 2 Reserves 1.71 Mmtoe Gujarat fields 7 (7 offshore) Reserves Mmtoe Mumbai fields 8 (all offshore) Reserves Mmtoe 37 fields expected to be offered Assam fields 9 Reserves 8.56 Mmtoe Andhra Pradesh fields 11 (6 Offshore) Reserves Mmtoe The exact fields and related data shall be provided in Round II Bid Document expected to be notified by Q4 2017

11 Areas Offered under OAL 1 Degree X 1 Degree Map Data Available on NDR 1.72 million LKM of 2D seismic data 0.61 million SKM of 3D seismic data 11,600 well log data * Area offered includes 7 producing areas 2.84 Million Sq. Km 0.7 Million Sq. Km 2.14 Million Sq. Km Bidders can carve out their own blocks (min 10 by 10 Grid 336 Sq. Km) Total Area offered across 26 Sedimentary Basin Zone I (Sufficient Data) Zone II & III (Moderate to Sparse Data) Zone I is available for Petroleum Operation Contract only Zone II & III are available for Reconnaissance Contract and Petroleum Operation Contract Note Min. 1 X1 Grid allowed for adjoining areas to existing blocks and areas where it is not possible to carve 10X10 Grid

12 Open Acreage License Process RC Contract Period 2 to 3 years Investor studies G&G data available on NDR Carves out blocks for interested area for any of the two contracts POC Contract Period 8 to 10 years: Exploration 20 to 30 years: Development and Production Submission of EOI Key Points - Party submitting EOI for an area shall be Originator EOI for POC would be preferred over RC for same area EOIs can be submitted in two cycles per annum (every 6 months) Finalization of Block and Invitation to Bid through NIO Bid Submission, Evaluation Award of Contract Legend - POC Petroleum Operations Contract RC Reconnaissance Contract EoI Expression of Interest NDR National Data Repository NIO Notice Inviting Offer POC RC Enabling Ease of Doing Business for E&P Investors through OAL Process

13 OAL Timelines Timeline (Closing Dates) Key Milestones Window 1 Window 2 15 th Nov 15 th May 15 th Dec 15 th June 16 th Dec 16 th June 15 th Feb 15 th Aug 31 st Mar 31 st Oct 15 th May 15 th Nov Last Date of EOI Submission Finalization and Review of EOI Issue of Bid Document Bid Submission Deadline Bid Evaluation and Award (on or before) Contract Signing (on or before) Timing is critical to avail originators incentive Investors have two windows for submission of EOIs DGH to Evaluate EOIs and Issue Bid within 1 month Carved out contract areas available for bidding to all parties (2 months) Contract signing and post-award facilitation by DGH

14 Reconnaissance and Petroleum Operation Contracts Reconnaissance Contracts (RC) Exploration activities, surveys and drilling of wells is covered Contract Period: 2+1 years Right to lease data for 12 years Reconnaissance Contracts are exclusive but contractor can allow other parties to conduct survey at its discretion Migration from RC to POC Condition Precedents Completion of 80% Work Programme Intent to Migrate at least 90 days prior to expiry of RC Meets Technical & Financial Eligibility for POC Petroleum Operation Contract (POC) Exploration Period of 8 & 10 years for onland/shallow water and deepwater/ frontier blocks respectively Development Period of (20+5+5) years Marketing & Pricing Freedom on arm s length basis Government s Revenue Share based on a linear scale Well defined timelines Contractual model significantly lowers the regulatory burden and provides operational flexibility to E&P operators

15 Ease of Entry 1 Nominal Application Fees and Reasonable Bid Participation Bond at the time of submitting the EOI 2 Reasonable Technical Qualification Criteria for Reconnaissance Contracts (RC) and Petroleum Operation Contract (POC) 3 Low Financial Qualification Criteria - Positive Networth for RC and Minimum Networth equal or more than higher of expenditure or LD value of Committed Work Programme for POC 4 Due Diligence Report of the geological prospectivity of areas for which EOI is submitted (subject to availability of sufficient G&G Data)

16 Bid Parameters Petroleum Operations Contract Weights Revenue Share Bidders to quote Low Revenue Point (LRP) and Higher Revenue Point (HRP) percentage share to be linearly interpolated between the two points 50% Biddable Work Program Bidders to quote for 2D seismic, 3D seismic, exploratory wells, core analysis 45% Originator Incentive Originators to be assigned highest marks on a First Come First Served Basis 5% For Reconnaissance Contract - 70 marks is for biddable work program (2D, 3D, exploratory wells), 25 marks for Data Price and 5 marks for Originator Incentive

17 Bid Incentives to Bidders Originators Incentive Investors submitting EOI for RC or POC shall be called as Originators on First Come First Served Basis Originators of successful fields will be awarded Incentive (5 Marks) at the time of bid evaluation provided the composition of Consortium remains same Migration Incentive Contractors migrating from RC to POC are provided Migration Incentive (5 Marks) This incentive is only provided if the RC Contractors remains Operators for POC in the bid

18 Fiscal Incentives to Bidders Fiscal incentives are provided to investors under the Hydrocarbon Exploration and Licensing Policy (HELP) regime Low graded Royalty Rates (Deepwater areas, in particular) Exemption of Oil Cess and Custom Duty Benefit under Section 42 of Income Tax Act Type of Hydrocarbons Duration Royalty Rates (Oil) Royalty Rates (Natural Gas/CBM) Onland Throughout 12.5% 10% Shallow water Throughout 7.5% 7.5% Deep water Ultra-Deep water First 7 years Nil Nil After 7 years 5% 5% First 7 years Nil Nil After 7 years 2% 2% Royalty rates applicable under the HELP are one of the lowest when compared to rates levied by various countries globally

19 OAL Information Access National Data Repository (NDR) Access to India s Online Exploration Database Users can register and login to view E&P data Users can order data through portal and can make online payment Users can also explore NDR databases through a Browsable Catalogue For Queries: indr@dghindia.gov.in EOI Submission Portal Bidders can register and login to submit their EOIs online Users can view sectors for which EOIs are already received Users need to fill in application form and upload a Due Diligence Report and scan copy of Participation Bond as per OAL document For queries: facilitationoal@dghindia.gov.in

20 Production Enhancement Contract (PEC) PEC Potential Area under Nomination Fields Sq. Kms Current Production from Nomination Fields Oil MMT Gas - 24 BCM Maximize production from mature fields Encourage private & foreign investments Key Policy Goals Infusion of best-in class management practices Infusion of world class E&P technologies Government plans for a PEC Policy in Nominations fields operated by NOCs Two models under consideration: Farm-in Model and Technical Services Model

21 Key Success Stories RJ-ON 90/1 Block - One of the successful discoveries in Barmer, Rajasthan Early exploration done by ONGC & Shell PI transferred from Shell to Cairn Already recovered cumulatively 60 mmt of O + OEG Total Investment US$ 6 Billion Cumulative revenue - US$ 30 Billion Contractor share of profit US$ 10 Billion KG Basin - India s most prolific deepwater gas discovery Awarded to RIL & NIKO in NELP-I BP acquired 30% PI from RIL Already recovered cumulatively 3.7 mmt of Oil and 77.8 BCM of Gas Total Investment US$ 8.9 Billion Cumulative revenue - US$ 13.2 Billion Contractor share of profit US$ 1.2 Billion Other Success Stories - Hazira Panna-Mukta Mid & South Tapti Kharsang Dholka Currently, 130 contracts are operational under PSC/ NELP regime

22 Focus on Higher Production and Low Government Take 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Average Government Take for 30 Contract areas awarded under DSF Bid Round Sanarudravaram Achanta Bhimanapalli Koravaka Kherem Hilara Duarmara Jeraipathar N.Patharia Charaideo Barsilla Laxmijan Dipling Elao Khambel Kamboi South Patan West Bechraji Nohta Sadewala Bakhri Tibba Karaikal Neduvasal KD B 15 B 174 B 9 B 127E B 80 GS 59 Royalty Government's Share of revenue (%) Total Government Take 32.3% The average total government take from the total revenue for the 30 contract areas awarded under DSF Bid Round I is ~32% which is among the lowest compared to other countries Source: DGH, Note: 1) Royalty rates as applicable 2) Government s Share of revenue based on LRP +5% 3) The total government take does not include corporate / Sales tax

23 A Promising Investment Opportunity 01 Low Demand Risk A ready market with robust oil & gas demand 02 Low Market Risk Full marketing and pricing freedom for Oil & Gas 03 Low Regulatory Burden Easy to administer revenue sharing contracts with operational autonomy to contractor 04 Transparent and Full Availability of Data Large amount of data available (in NDR) for the Sedimentary basins Easy, fair and transparent access to Investors 04 Low Government Take Governments focus on higher production and not higher revenue share

24 Thank You Directorate General of Hydrocarbons (Under Ministry of Petroleum & Natural Gas) Phone: , Fax: Website: dghindia.gov.in DGH DGH India