Introduction to Indian Upstream Oil & Gas Sector
Tejas Sharma, Market Advisor Innovation Norway, New Delhi September 2010
Index
Part I Part II Part III Part IV Part V Part VI - Overview of Indian Oil & Gas - Indian Hydrocarbon Resources - Sedimentary Basins of India - Significant Discoveries & prominent basins - Drilling Rigs Scenario in India - Well Information & Challenges
Part VII - Offshore Vessel Scenario in India Part VIII - Opportunities – EPC Contracts Part IX Part X Part XI - Case Study Indo-Norway successful co-operation - INBDP’s - CBM Scenario in India
Part XII - Conclusion
Part I: Overview of Indian Oil & Gas
The Indian Oil and Gas Industry - Prime mover of the Indian economy
• • • • •
India is the fifth largest energy consumer in the world India is the sixth largest crude consumer in the world India is the ninth largest crude importer in the world Oil and Gas Industry size is estimated at about USD 110 billion. Contributes to about 64% of gross revenues of Government (both Central and State together) through taxes and duties Contributes to about 45% of India’s primary energy consumption Constitutes about 32% of India’s imports. Accounts for about 12% of India’s exports. India has the world’s sixth largest refining capacity - 2.56 million barrels per day, representing approx. 3% of world capacity
• • • •
Source: Ministry of Commerce, MoP&NG,
Yawning Demand Supply Gap
Crude Oil (MMT)
400 300 200 100 0 107 32 2001-02 135 35 2006-07 Year 172 34 2011-12 61 2024-25 368
500 400 300 200 100 0
Natural Gas (MMSCMD)
391 313 231 151 81 2001-02 95 2006-07 Year 158 170
2011-12
2024-25
Oil Demand
Production
Demand
Supply
Source: DGH Presentation
Exploratory measures initiated by Government
New Exploration Licensing Policy • 280 blocks awarded in PreNELP and New Exploration Licensing Policy (NELP) rounds
• 40+ discoveries with
Coal Bed Methane Policy
•
33 Blocks already awarded with production potential of about 35 MMSCMD under four auction rounds of Coal Bed Methane (CBM) policy Significant commercial finds in blocks held by RIL and ONGC Present commercial gas production of 0.15 MM SCMD 54 Bids received for 10 CBM blocks offered in the fourth round.7 blocks awarded. Fifth auction round on cards before end of calender year 2010
Source: DGH / Mo-PNG
•
hydrocarbon in-place reserves of over 600 MMT in last five years
• Investment commitment of
Exploratory Measures
•
about USD 5 bn in exploration phases under NELP
• Perception of prospectivity of
•
Indian sedimentary basins broadens with every NELP auction round
•
Major Offshore E&P operators in India
Oil & Natural Gas Corporation (ONGC) Reliance Industries Ltd (RIL) Cairn Energy British Gas Gujarat State Petroleum Corporation (GSPC) Hindustan Oil Exploration Corporation (HOEC) Jubilant Energy limited BHP Billiton Oil India Limited (OIL) Hardy Exploration
Part II: Indian Hydrocarbon Resources
India Hydrocarbon Resource Base
Total Hydrocarbon resource base – 32 billion tons Established Inplace hydrocarbon – 9,50 billion tons
Established Oil in place : 6,1 billion tons Established gas in place: 3,4 billion tons
Established Ultimate recoverable reserves – 3,5 billion tons
Established Ultimate Oil reserves : 1,8 billion tons Established Ultimate Gas reserves : 1,7 billion tons
Balance recoverable reserves – 1,8 billion tons
Balance Oil reserves : 0,7 billion tons Balance Gas reserves : 1,1 billion tons
Hydrocarbon Resources
Total Offshore Hydrocarbon Resources ~ 18815 MMT Total Onland Hydrocarbon Resources ~ 9270 MMT Note* - The hydrocarbon resources in Deepwater Off East Coast is likely to increase further by about 4000 MMT as per the interpretation results of surveys carried out by Directorate General of Hydrocarbons, the govt. upstream regulator
Basin wise Hydrocarbon Resources
Basin
Mumbai Offshore Assam Arakan Cambay Upper Assam KrishnaGodavari Cauvery Rajasthan Kutch 270 550 430 380 210 700 380 760
Offshore
9190 555
Onland
3180 2050 1860 575
Total (MMT )
9190 3180 2050 1860 1130
Basin wise Hydrocarbon Resources
Basin
Andaman-Nicobar Kerala-Konkan Saurashtra Ganga Valley Bengal Himalayan Foreland Mahanadi Deepwater*
Offshore
180 660 280 30 100 7000
Onland
230 160 150 45 -
Total (MMT )
180 660 280 230 190 150 145 7000
Part III: Indian Sedimentary Basins
Sedimentary Basins
Indian Sedimentary basins - Facts
• • • • • 26 Sedimentary Basins identified 7 basins have commercial production Total Sedimentary Area - 3.14 MM square KM including deepwater areas (~4% of world sedimentary area) Approx. 22% area explored excluding deepwater area Sedimentary area distribution: • Onshore (1.39 MM Sq KM) • Shallow water up to 200 mts water depth (0.40 MM Sq KM) • Deepwater (1.35 MM Sq KM) • • Almost 1/3 of the sedimentary area remains unexplored/poorly explored. NELP launch have been significant in exploring hydrocarbon potential of the sedimentary basins in India
Categorisation Of Sedimentary Basins (up to 200 Meters Isobath)
Category I – Basins with established Commercial Production Basin Cambay Assam Shelf Mumbai Off KG Cauvery Assam Arakan Rajasthan Onland 51000 56000 28000 25000 60000 126000 Offshore 2500 116000 24000 30000 Total (Sq Km) 53500 56000 116000 52000 55000 60000 126000
Categorisation of Sedimentary Basins
Category II – Known accumalation of Hydrocarbons but no commercial production as yet Basin Kutch Onland 35000 Offshore 13000 14000 41000 Total (Sq Km) 48000 69000 47000
Mahanadi -NEC 55000 Andaman Nicobar 6000
Categorisation of Sedimentary Basins
Category III – Indicated Hydrocarbon – considered geologically prospective Basin Himalayan Foreland Ganga Vindhyan Saurashtra Kerala Konkan Bengal Onland 30000 186000 162000 52000 57000 Offshore 94000 32000 Total (Sq Km) 30000 186000 162000 52000 94000 89000
Categorisation of Sedimentary Basins
Category IV – Uncertain potential which may be prospective by analogy with similar basins in the world
Basin Karewa Spiti-Zanskar Satpura Narmada Decan Syneclise Bhima Kaladgi Cuddapah Pranhita-Godavari Bastar Chattisgarh
Onland 3700 22000 46000 17000 273000 8500 39000 15000 5000 32000
Offshore -
Total (Sq Km) 3700 22000 46000 17000 273000 8500 39000 15000 5000 32000
Part IV: Significant Discoveries and prominent basins
Significant discoveries from 2000-2009
Offshore Field Location & Water Depths
Western Offshore
•Shallow – Large Continental Shelf •Monsoon – July to October
1000m 2000m 3000m 100m 500m
100m 1000m 2000m
Eastern Offshore
•Small continental shelf •Steep slopes •Two monsoons, Operating window Jan - May •Cyclone & Tsunami affected
4000m
KG Basin 3000m
4000m
Offshore Basins – West Coast
Prominent sedimentary basins on western coast of India are:
Kutch - Saurashtra Basin
Kutch - Saurashtra Basin Category II basin Mumbai Offshore Basin Category I basin Kerala - Konkan Basin Category III basin
Mumbai Offshore Basin
Kerala - Konkan Basin
Mumbai offshore has been the in production for more than 30 years Deep water prospectivity on West coast is under study
Offshore Basins – East Coast
Prominent sedimentary basins on eastern coast of India are: Mahanadi - NEC Basin Category II basin Krishna Godavari Basin Category I basin Cauvery Basin Category I basin
Krishna Godavari is believed to be the GoM for India with gas reserves of ~ 25 tcf Some Deepwater blocks have started producing since last year
Part V: Drilling Rig Scenario in India
Offshore rigs operating in Indian waters
Sr No. 1 Operator Oil & Natural Gas Corporation Rig Type Number Cantilever Jack Up 17 Cantilever HPHT Jack UP 2 Slot Jack Up 1 Mat Supported Jack Up 2 Mat Supported HPHT Jack Up 1 Semi-submersibles 2 Drillships 4 Drilling Barge 1 30 Subtotal Drillships 6 Reliance Industries Semi-Submersibles 1 Ltd Subtotal 7 British Gas Cantilever Jack Up 1 Subtotal 1 Gujarat State Pet.Corp Semi-Submersibles 1 Subtotal 1 Total 39
2
3 4
Upcoming requirement of Offshore Drilling rigs in India
Sr No. 1 Operator Oil & Natural Gas Corporation Limited Rig Nos. 6 Nos. 3 Nos. 2 Nos. 1 No. 1 No. 1 No. 1 No Rig Type Duration Shallow Water Drilling Cantilever Jack Up - substitute rigs against de-hiring 3 years Cantilever Jack UP 3 years Floater 3 years HPHT Mat Type 3 years Cantilever Jack Up Cantilever Jack Up Deepwater Drilling Floater Floater 2 years 1 year 2 years Timeline Q3 2011 Q2 2011 Q2 2011 Q3 2011 Q4 2012/Q1 2013 Q1 2013 Q1 2015
2 Cairn Energy 3 OIL India 1 BHP Billiton
2 Oil & Natural Gas Corp. Ltd 1 No.
3 years Q4 2011/ Q1 2012
Part VI: Well Information & Challenges
Well Statistics:
Financial Year Number of Wells Meterage Drilled ( x 1000 mts) 223 242 201 258 252 2004-05 69 2005-06 74 2006-07 66 2007-08 88 2008-09 81
The above stats are for the following offshore basinal areas
Mumbai
Offshore Krishna Godavari Mahanadi
Challenges faced by operators in India Hole Plugging
•
With ageing fields and depleting reservoirs on the western coast horizontal/multilateral well drillings is common in practice to maximize production
•
Remedial engineering incase of thin layer reservoirs is difficult Plugging of holes is a problem incase any of the branches start producing water.
•
Challenges faced by operators in India
Drilling Fluid Loss
•
Operators in India need assistance of experts in the field of reservoir characterization To predict pressure sink areas which accounts for great amount of drilling fluid loss is difficult Tools and softwares for encountering low pressures zones are in demand
•
•
Challenges faced by operators in India Slot Utilization
•
Lack of technology for drilling multiple wells from a single slot reduces drilling efficiency
Casing Wear
•
The wells in Mumbai High field on the western coast are approx. 40 years old and so are the casing pipes Frequent requirement of patching the casing pipes in the areas of thining or rupture
•
Part VII: Offshore Vessel Scenario in India
Supply Scenario Indian Flagged Vesssels
•
• •
• • •
•
195 Indian flag vessels are dedicated for offshore sector • 158 Offshore Vessels • 37 Specialized Offshore Vessels Indian Fleet dominated by AHTS Gradual acquisition and hiring of PSV, which started in early 2000 • Trend likely to continue Indian flagged PSV have young fleet Fleet acquisition dominated in AHTS, PSV and MSV segment AHT has a small and old fleet, and has not been ordered by Indian companies in last decade • These ships are hired on spot charter for short duration – gap mainly filled by boats from Singapore Ships in Crewboat, Utility boat are owned by smaller companies, mostly older fleet
Note:
Fleet breakup - Indian Flag
Others 11% AHT 6%
Utility 5% CrewBoat 5% OSV 9% AHTS 54%
PSV 10%
Source: Mantrana Maritime Advisory
AHTS – Anchor Handling Tug and Supply PSV – Platform Supply Vessel MSV – Multi Service Vehicle
Supply Scenario- Foreign Flagged Vessels
449 Foreign Flagged Offshore Vessels Licensed in 2008-09
Offshore Vessels by Number
Other, 45
AHT, 44
Survey, 34
AHTSV, 18 MSV, 6 OSV, 68
215 Vessels
• • • • •
Source: Compiled by Mantrana
449 Vessels
Offshore vessels dominate list of foreign flagged ships in Indian coastal waters Anchor Handlers & OSV dominate the offshore ships deployed in India Young fleet is chartered for deployment in environmentally harsh conditions Older fleet have less charter rates, they are preferred in the fair weather season The period of charter ranged from 1 week to several months
Offshore Vessels – Delivery Schedule
Delivery Schedule of Offshore Vessels as on March, 2010 Calendar Years Garware Offshore Great Offshore GreatShip (India) MSV MSV AHTS MSV PSV AHTS PSV AHTS AHTS 2010 2 1 3 2 1 1 1 11 2 1 1 4 2 4 14 2011 2012 Total 2 1 2 4 3 12 3 1 6 34
ONGC Samson Maritime TAG Offshore Shipping Corporation Total
8
1 9
Garware Offshore 1 MSV ordered at Havyard Greatship (India) limited has committed a Capital investment of US$ 365 M for ongoing fleet expansion • New company with young fleet, subsidiary of India’s largest shipping company in private sector Tag Offshore is developing its fleet focusing opportunities in India ONGC ships are managed by Shipping Corporation, would be deployed in India for ONGC project Shipping Corporation would deploy all its ships in India, may be on ONGC projects
36
DP Systems installed on Indian Ships (Major Owners)
Owned DP Under DP on under Remarks • Out of 28 offshore vessels (supply) owned by Greatconstruction Vessel DP installed Construction Offshore about 8 have • All the ships belonging to Great Ship has DP 2 (except 1) Great Offshore 28 8 1 • All 7 offshore vessels owned by Tag offshore has DP Greatship 10 10 7 • Shipping Corporation owned Shipping Corporation 10 10 6 ONGC Tag Offshore Varun Shipping Samson Maritime Garware Offshore Total 31 7 4 10 11 111 7 4 4 4 47 3 2 29 3 2 17 12 1 7 6 Confirmed Confirmed Confirmed Not Available Confirmed Estimates Estimates Estimates
Source: Mantrana Maritime Advisory • • • • Great Offshore has DP-1 installed on their ships All the ships of Greatship (except 1) have DP-2 installed on their ship Shipping Corporation did not have DP onboard their ships, However company has got it retrofitted ONGC has placed orders for 12 offshore vessels to Pipavav shipyard at close to US$ 120 mn, at this price it would not be possible to supply offshore vessels with DP systems. • All Ships of Tag Offshore has DP 1 installed on them Note: DP System – Dynamic Positioning System
37
Part VIII: Opportunities - EPC Contracts
Offshore Facilities
Western Offshore: Process Platforms Well Platforms Clamp On : 36 : 161 : 76
Submarine Pipeline (Kms) : 5000+ Eastern Offshore: Well Platforms :4 Submarine Pipeline (Kms) : 50+
Opportunities for Norwegian companies in India
The Indian Oil & Gas sector looks upon Norwegian companies as their preferred technology partner in the fields of,
• • • • • • • • •
Exploration in Western & Eastern Offshore New & Marginal Fields Deep waters in India Early exploration & development of NELP (New Exploration Licensing Policy) Blocks Mature fields reservoir complexities Drilling Challenges in mature fields Completion problems Process/Production Challenges Offshore Logistics Challenges
Areas of Cooperation for Norwegian companies
Domain
Drilling & Completion
Activities
Well Design/ Drilling/ Completion at Western Offshore
Remarks
Well Bore stability in highly heterogeneous carbonate reservoirs at plateau stage Best Practices
Deepwater
Training/ Skill development in Deepwater/ Subsea
Field Development Process Reservoir Mgmt.
EOR/ IOR Activities
Consultants for EOR/ IOR activities for both Offshore & Onshore fields
Floating LNG Fracture Delineation
Knowledge & Technology Highly heterogeneous multi layer reservoir with various pressure zones & unstable shale
Areas of Cooperation for Norwegian companies
Domain
Marine Survey Logistics
Activities
Geo-Hazards at Offshore Construction of MSVs/ ISVs Hiring/ acquisition of SAR Helicopters
Remarks
For deepwater east coast Competence enhancement in Mari-time & Offshore operations
Environment
Platform de-commissioning / Debris removal at Offshore
Talk with M/s Proserv carried out. To be expedited Technology & Mechanism To reduce carbon foot print
Security Renewable/ Alternates
Offshore Security Wind Mills at Offshore for power
Gas Hydrates
Huge potential in India
Offshore projects under tendering
Sr.No Name of Project Purpose Estimated Timeline of tender award 1 B-193 Pipeline Project 2 B-46 Series Well Platform 3 B-46 Series Pipelines 4 WIN Revamp Project Marginal Field Development Marginal Field Development Marginal Field Development Revamp of existing facility Q2 2011 Q2 2011 Q2 2011 Q1 2011
Total Investment envisaged with projects under tendering – US$ 780 MM Total Investment envisaged with projects under tendering – US$ 780 MM
Upcoming Offshore projects
Sr. No Name of Project 1 WO-16 Facilities / Scope of Work Well Platform Hydrocarbon exploitation 2 Conversion of Sagar Samrat from MODU to MOPU 3 Cluster-7 Development Conversion of Jack Up rig to mobile product unit Well platforms For O&G processing facility of marginal fields Hydrocarbon exploitation Q2 2012 Q3 2011 Purpose Estimated Timeline Q4 2011
Total Investment envisaged with upcoming projects – US$ 1866 MM Total Investment envisaged with upcoming projects – US$ 1866 MM
Upcoming Offshore projects
Sr.No Name of Project Facilities / Scope of Work 4 SW work of G1/GS-15 field development Installation of risers,hookups,pipelines testing,modification at GS-15-4 5 DW works of G1/GS-15 field development Subsea manifold installation, laying of umbilical,hookup testing and precommissioning Hydrocarbon exploitation on east coast Q4 2011/Q1 2012 Hydrocarbon exploitation on east coast Q4 2011/Q1 2012 Purpose Timeline
Upcoming Offshore Revamp projects
Sr.No Name of Project Facilities / Scope of Work 6 Revamp of 39 well platforms in Mumbai High and Heera field 7 Revamp of 13 well platforms in Neelam field 8 Water Injection South Revamp Project Revamp of well platforms in Mumbai offshore Revamp of 13 well platform in Mumbai Offshore Revamp of Platform Revamp of existing platforms Revamp of existing platforms Revamp of existing platforms Q3 2011 Q4 2011 Purpose Estimated Timeline Q3 2011/ Q4 2011
Upcoming Offshore Deepwater Project
Operator Project Detail Estimated Timeline Oil & Natural Gas Corporation Hiring FPSO for D1 marginal filed on west coast Hiring FPSO for Cluster 7 marginal field on west coast S1 Vashistha field development Q4 2011 Q3 2012 Q2 2012 DPS,UK has been hired as consultant Tender is on for consultant hiring until Sept 26,2010 FEED awarded to Pegasus-L&T in July 2010 Remark
Upcoming Offshore Deepwater projects
Operator Project Detail Estimated Timeline Reliance Industries Limited KG-D6 Phase II development Q4 2011 Mustang-Bechtel awarded the FEED in August 2010 Remark
Gujarat State Petroleum Corporation
Process Platform for Deendayal development
Q3 2011
Re-tendering
Total Investment envisaged with upcoming deepwater projects – US$ 2 billion ++ Total Investment envisaged with upcoming deepwater projects – US$ 2 billion ++
Part IX: Case Study – Indo Norway Successful Co-operation
Successful cooperation India-Norway
Project: Development of Dhirubhai-6 offshore deepwater field in the Krishna- Godavari basin on the Eastern coast of India Field Operator: Reliance Industries Limited, India Subsea Contractor: Aker Solutions, Norway Project Highlites: • An upstream project with record discovery to development time of 7 years as against the world average of 9 - 10 years. • • First of its kind deepwater development project in India. The output from D6 field has doubled the national gas production levels from 80mmscmd to 160mmscmd, drastically changing the natural gas market in India.
Successful cooperation India-Norway
• The KG-D6 project is one of the world’s largest subsea engineering contract valued at USD 400M • • The D6 field’s oil and gas producing ship Dhirubhai-1 is India’s first FPSO. Dhirubhai-1 has been constructed by Aker Floating Production and is one of the most advanced FPSO’s operating in any of the world’s oil and gas fields today • Aker Borgestad Operations has been awarded the operation and maintenance contract for Dhirubhai-1 FPSO for 10 years • According to Aker Solutions, a so complex deepwater project has never before been delivered quicker from a supplier standpoint.
Cooperation between IN New Delhi and INTSOK
•
INTSOK has entered into an agreement with IN New Delhi to hire regional assistance for its partner companies in India free of cost for five days annually
•
The scope of the agreement in addition to the local assistance to INTSOK partner companies includes updates on the upcoming opportunities as regards projects and tenders in the Indian market
•
INTSOK and IN New Delhi are in process of hosting a Business delegation to India in end October 2010 to facilitate a platform wherein Norwegian companies can promote their niche technologies to the Indian clients thereby establishing business relations
•
The Business delegation will include the O&G sector
Part X: INBDP
Info on INBDP’s:
2 Nos. INBDP projects under process.The reporst shall be submitted by end December 2010.
1. EOR activities in Indian upstream sector: (Report by Dec 2010) 2. Pipeline Projects: (Report by Dec 2010)
1 No. INBDP project proposed for next year.The report shall be submitted by end Deember 2011
1. Overview of LNG market in India
Part XI: Coal Bed Methane Scenario in India
Coal Bed Methane Scenario in India
India’s proven coal resources - 495 billion tons Prognosticated CBM resources - 50 trillion cubic feet Established resources – 8.4 trillion cubic feet 33 Blocks awarded in 4 auction rounds 26.000 Sq Kms - Total Sedimentary area for CBM exploration 17.327 Sq Kms of area awarded 300 CBM Wells drilled so far (Core Hole/Test Well/Pilot Well) 3 Producing blocks namely Raniganj (S), WB & Sohagpur (E) , Sohagpur (W) in MP Present gas production from above 3 blocks is 0,15 MMSCMD Expected gas production by 2013 is 7,5 MMSCMD Approved gas sale price is 6,79 $/MMBTU
Major Operators in CBM space
Oil & Natural Gas Corporation Limited Great Eastern Energy Corporation Limited Arrow Energy Reliance Industries Limited Essar Oil Limited Tata Power Company Limited Gas Authority of India Limited Indian Oil Corporation Gujarat State Petroleum Corporation limited Reliance Natural Resources Limited
Investments expected in CBM space
Essar Oil, Arrow Energy and Great Eastern have committed investments worth US$ 158 MM for development of 7 CBM blocks awarded in latest auction round from MoPNG – (August 2010)
Essar Oil has declared investment of US$ 800MM to develop its 3 CBM blocks awarded in first 3 CBM rounds having recoverable gas reserves of 7 tcf. - (June 2010)
Great Eastern Energy to invest US$ 500MM for development of its CBM assets in Eastern India during next 3 yrs – (September 2009)
Part XII: Conclusion
To Conclude..
• Immense possibilities are available for the Norwegian oil and gas companies in the Indian oil and gas sector • Field Development - 23 Exploratory wells in 2011 by ONGC 11 Developmental wells in 2011 by GSPC • Rig Hire – 16 Nos. (14 Shallow & 2 Nos Deepwater ) • Rig Purchase – 3 to 4 Offshore rigs ( Capex US$ 850 MM) • US$ 780 MM worth projects under tendering • US$ 1866 MM worth shallow water projects in near future • US$ 2 billion ++ worth deepwater projects in coming 3-4 years • With deepwater development projects taking place especially on the Eastern coast of India, Norwegian companies, being the technology master, can play a key role. Remember Aker Solutions. • • Bureaucracy, Corruption, Voluminous documentation requirements, etc. may pose as obstacles to Norwegian companies desiring to make their mark in India Innovation Norway, New Delhi is just a mail/call away for answer to your queries to prosper in this growing oil and gas market.
Thank you for your attention
Name: Tejas Sharma, Market Adviser Address: Innovation Norway; New Delhi Royal Norwegian Embassy 50-C Shantipath, Chanakyapuri, New Delhi – 110021 Contacts: +91-11-41779254 E-mail:
[email protected] Web: www.innovasjonnorge.no