#1सत्यमेव जयते Ministry of Petroleum and Natural Gas Government of India India's new Hydrocarbon Exploration and Licensing Policy (HELP) A Prelude Directorate General of Hydrocarbons DGH March 6, 2017 Houston CERA Week#2Agenda 1 India's Energy Outlook 2 Exploration & Production Regime in India 3 Architecture of E&P Policy 4 Key Insights - HELP, NDR and OAL LO 5 6 Open Acreage Licensing Process Bid Qualifying & Evaluation Criteria#3MTOE India's Energy Outlook 800 700 Primary Energy Consumption CAGR -5% 250 India Oil and Gas Consumption- Production Snapshot 600 500 400 300 200 100 200 150 100 50 50 300 Widening gap in demand and 250 supply for oil & gas 200 150 100 50 50 0 0 2010 2011 2012 2013 2014 2015 1985 1990 1995 2000 2005 2010 2015 Source BP Statistical Review 2016 Gas Production (MTOE) Oil Production (MT) Total Production (O+OEG) Gas Consumption (MTOE) Oil Consumption (MT) Total Consumption (O+OEG) Source BP Statistical Review 2016 ■ India is the 3rd largest consumer of oil and petroleum products after USA and China India's oil & gas demand has outpaced the supply significantly. This gap is expected to widen in future as India becomes the leading energy consumer in the World#4Exploration and Production Regime in India State Monopoly Liberalization of E&P Sector (1997-2009) 9 NELP and 4 CBM rounds. 254 exploratory and 33 CBM blocks through competitive bidding New Domestic Gas Pricing Guidelines Successful completion of DSF 2016 134 e-bids received for 34 contract areas ✓ 31 contract areas awarded ✓ 22 Companies shortlisted (15 new Entrants) 2009 1948 1991 1997 2014 2015 2016 Beginning of de-regulation 28 producing fields and 28 exploratory blocks offered including private players Nomination Era Pre-NELP PSCs Discovered Small Field Policy NELP/CBM PSCS Further liberalization of the sector ✓ Discovered small field bid round 2016 ✓ Hydrocarbon Exploration & Licensing Policy ✓ Open Acreage Licensing ✓ Revenue Sharing Model Pricing Guidelines for difficult gas fields Future#5Sedimentary Basins of India India has 26 sedimentary basins covering an area of 3.14 million square kilometres fadas Fa ARABIAN SEA 400 m 2000 ☐ CATEGORY-I BASIN (Proven Commercial Productivity) Assam- Arakan, Cambay, Cauvery, Krishna- Godavari Offshore, Mumbai CATEGORY BASIN (Identified Prospectivity) Kutch, Mahanadi-NEC, Andaman-Nicobar CATEGORY-III BASIN (Prospective Basins) Bengal, Ganga, Himalayan Foreland, Kerala- Konkan Lakshadweep CATEGORY-IV BASIN (Potentially Prospective) Basar, Bhima Kaladgi, Chhatisgarh, Ciddapat, Deccan Syneclise, Karewa, Narmada, Pranhita Godavari, Satpura-S. Rewa-Damodar, Spiti Pre Cambrian Basement/Tectonised Sediments#6Architecture of the New E&P Policy Hydrocarbon and Licensing Policy (HELP) Discovered Small Field Open Acreage License Policy Revenue Sharing Model Full Marketing & Pricing Freedom Fiscal Incentives National Data Repository (NDR)#7Attractive Features of HELP Open Acreage Licensing Revenue Sharing Model Full Freedom for Marketing and Pricing Single license for conventional & un-conventional hydrocarbons Continuous Increased exploration exploration phase permitted during contract period Low Royalty for Offshore Fields Up to 100% FDI allowed Equal weightage of work programme & fiscal share No carried interest by NOCS Low regulatory burden Transparent bidding model#8Fiscal & Taxation Regime A liberalized regime for investors ✰ Low Royalty Rates to incentivize exploration in offshore areas Type of Hydrocarbons Duration Royalty Rates (Oil) Royalty Rates (Natural Gas) Onland Throughout 12.5% 10% Shallow water Throughout 7.5% 7.5% Deep water First 7 years Nil Nil After 7 years 5% 5% Ultra-Deep water First 7 years Nil Nil After 7 years 2% 2% No oil cess will be applicable on crude oil production from the blocks Custom duty exemption on goods and services imported for petroleum operations Benefits under Income Tax Act#9National Data Repository ■ Central repository for E&P data of India ◉ High level of Security ■ Ease of Access ■ Automatic reporting ■ Integrated with GIS browser ■ Facilitates sharing among users and domain Storage Viewing Facilitation of data viewing through: NDR Portal FA Retrieving Usage Physical Data Room Virtual Data Room#10Data loaded in National Data Repository (NDR) 2D Seismic 3D Seismic Wells ~1.7 million LKM of 2D seismic data ~0.6 million SKM of 3D seismic data ~8,500 well logs and ~11,900 well header data Total of 160 TB data is available in NDR as on 28th February 2017#11Open Acreage Licensing 1 Flexibility for Investors to carve out blocks of their choice through a minimum [10'x10'] grid 2 Easy Access to existing G&G data through NDR 3 ■ 4 Flexibility to choose contracts - Petroleum Operations Contract (POC) Reconnaissance Contract (RC) Incentives to Early Bidders - Originator incentive, Migration incentive from RC to POC 5 Six months periodicity of bid rounds#12Area offered under HELP through OAL Total Sedimentary Area = 3.14 million sq. kms. Total Area offered under OAL = ~2.7 million sq. kms. * Onshore = ~1.5 million sq. kms. ✰ Offshore = ~1.2 million sq. kms. Zone 1 & 2 Sufficient to Moderate Data Coverage 5,64,000 sq. kms. Zone 3 Sparse Data Coverage 21,36,000 sq. kms.#13Open Acreage Process Investor studies G&G data available on NDR RC Contract Period - 3 years Carves out blocks for interested area for any of the 2 contracts POC Contract Period 8 years: Exploration 20 years: Development and Production Submission of EOI Finalization of Block and Invitation to Bid through NIO Bid Submission, Evaluation Award of Contract Legend - POC Petroleum Operations Contract RC Reconnaissance Contract - Eol Expression of Interest NDR National Data Repository - - NIO Notice Inviting Tender POC RC#14Bidder Qualifying & Evaluation Criteria Reconnaissance Contract (RC) Technical Qualification No technical criteria Financial Qualification Bid Evaluation Criteria ■ Balance Sheet Strength ■ Work Program Originator Incentive Petroleum Operation Contract (POC) Operatorship Experience Acreage holding or production Balance Sheet Strength Work Program ■ Revenue Share Originator Incentive#15सत्यमेव जयते Ministry of Petroleum & Natural Gas Government of India Thank you Directorate General of Hydrocarbons (Under Ministry of Petroleum & Natural Gas) Phone: 0120-2472000, Fax: 0120-2472049 Email: [email protected] Website: dghindia.gov.in PRELUDE HYDROCARBON EXPLORATION & LICENSING POLICY (HELP) A market driven policy framework to provide operational flexibility to the E&P players, and realize the true potential of Indian sedimentary basins f DGH India @DGHIndia in DGH India DGH DIRECTORATE GENERAL OF HYDROCARBONS (Under Ministry of Petroleum & Natural Gas, Govt. of India)