Oil, gas & carbon sector in India Stampa E-mail

by Sridhar Samudrala | President International Energy Consultant Corporation (IECC), India
by Giorgio Dodero | President IPG Industrial Project Group, Italy

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L’India dipende dalle importazioni di petrolio per i tre quarti dei propri consumi interni. Questo forte sbilanciamento ha stimolato, negli anni più recenti, una massiccia campagna di nuove esplorazioni che ha coinvolto anche imprese private locali e straniere. Mentre la produzione di oil è rimasta tutto sommato stagnante, interessanti prospettive si sono aperte nel comparto gas.
Gli investimenti nella ricerca di nuove riserve si sono concentrati soprattutto nelle aree offshore.
In tempi recenti, massicci investimenti hanno riguardato anche il settore della raffinazione, al punto che oggi l’India è diventato un esportatore netto di prodotti derivati dal petrolio.
La risorsa di riferimento resta comunque il carbone. Le riserve stimate recuperabili ammontano a 101,9 miliardi di tonnellate, circa il 10 per cento del totale mondiale, e i consumi di questa fonte continuano a crescere con ritmi superiori rispetto alla media planetaria. Carbone e lignite soddisfano attualmente circa il 50 per cento della domanda interna di energia. I tre quarti dei consumi riguardano il settore power.
Anche nel comparto carbone si segnalano “opportunità interessanti e crescenti” per gli investitori locali ed esteri.

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Despite increased exploration and production activities in the country by both national oil companies and private players, India depends on imported crude to meet 75% of domestic demand. As of April 1, 2009, India had total reserves of 775 million tonnes of crude oil and 1,074 billion cubic meters of natural gas.
Production of crude oil has stagnated, but there have been a number of natural gas discoveries in India. With the discovery of gas in the Krishna-Godavari Basin (KG Basin), there has been a perceptible change in the estimates of natural gas reserves in India’s sedimentary basin. Most of the new gas discoveries have been made by private players who have bid for the exploration blocks under the GoI’s New Exploration Licensing Policy (NELP).
Crude oil production during 2008-09 at 33.51 MMT was 1.79% lower than the previous year. However, gross production of natural gas in the country stood at 32.85 BCM in the same period and 1.33% higher than the previous year.
During 2008-09, 381 exploratory and development wells totaling 888,000 meters were drilled in onshore and offshore areas. The onshore regions are predominantly in the states of Assam and Gujarat while the offshore regions are near Mumbai.

In 1999, the NELP took effect. Since then, the Ministry of Petroleum and Natural Gas has signed 203 production-sharing contracts under seven rounds of bidding. In the seventh round of bidding under NELP VII, 181 bids were received from 95 companies including 21 foreign companies.
The NELP has facilitated 68 oil and gas discoveries made by private and joint venture companies in 19 blocks, adding more than 600 MTOE hydrocarbon reserves. As of April 1, 2009, investment commitment on exploration under NELP was about 10 billion dollars, against which actual expenditure so far is about 4.7 billion dollars. In addition, 5.2 billion dollars has been invested on the development of discoveries.

The NELP effort opened up deepwater offshore areas of the country for exploration, and seven rounds of NELP increased the area under exploration to 48% of the Indian sedimentary basin area from 11% before the implementation of NELP. Hydrocarbon reserves accretion had been more than 600 million tonnes of oil equivalent. Under the NELP program, 68 oil and gas discoveries have been made in 19 exploration blocks. A total of 149 blocks are under operation under productionsharing contracts.
NELP VIII in 2009 offered 70 exploration blocks comprising 24 deepwater blocks, 28 shallow-water blocks, and 18 onshore blocks. These 70 blocks cover a sedimentary area of about 164,000 km2, or about 5.2% of the Indian sedimentary basin area. The 18 onshore blocks fall in the states of Assam (2), Gujarat (8), Haryana (1), Madhya Pradesh (3), Manipur (2) and West Bengal (2). In the western, eastern, and Andaman Offshore regions, there are 28 shallow-water and 24 deepwater blocks.

The refining capacity in the country stood at 177.97 million tonnes per year on April 1, 2009, an increase of more than 19% over the previous year. Consequently, total refinery throughput in 2008-09 of 160.77 million tonnes was up 3% over the previous year, with a pro-rata capacity utilization of 107.9%.
Consequently, the country is a net importer of crude oil (128.155 million tonnes valued at 72.8 billion dollars) while being a net exporter of petroleum products (18.647 million tonnes valued at 12 billion dollars). India is emerging as a refinery hub as more capacity is added and Indian companies are venturing abroad to set up refineries.

Liquefied natural gas (LNG)
Importing LNG is one of the ways India is bridging the demand-supply gap of energy sources. Two LNG terminals, both in Gujarat, currently are operating: the 6.5-MTPA Dahej terminal and the 2.5-MTPA Hazira terminal. Four more terminals are at various stages of development.

Coal provides more than one-quarter of the world’s primary energy and is used to generate nearly 40% of its electricity. India’s coal consumption ranks third in the world, and the country’s demand for coal continues to grow much faster than the world average. Experts estimate its recoverable reserves at 101.9 billion tonnes, about 10% of the total world reserves of both lignite and coal.
Coal and lignite meet about 50% of India’s commercial energy requirements. More than 75% of the coal and lignite is consumed by the country’s power sector. Cement and steel (coking coal) are the other significant consumers. The Planning Commission’s Integrated Energy Policy anticipates a steep rise in demand for coal, particularly to meet the country’s power needs.
The Ministry of Coal determines policies and strategies for exploration and development of coal and lignite reserves as well as all matters relating to coal production, supply, distribution, and pricing. Its public-sector undertakings include Coal India Ltd. (CIL), Neyveli Lignite Corporation Ltd., and the Singareni Collieries Company Ltd. (SCCL), which is a 51-49 joint sector undertaking between the Government of Andhra Pradesh and the GoI.
The public sector still dominates the mining and production of coal in India. CIL, along with its subsidiaries, has a market share of over 83%. The next-largest - the joint state and central government SCCL - has an 8.6% share. But opportunities for foreign and private investment can also be found.
In June 2010, South Africa-based Sasol Ltd. announced plans to spend 10 billion dollars in a 50-50 joint venture with Tata Group on a coal-to-fuel project in Orissa, with the goal of producing 80,000 barrels-per-day of motor fuel by 2018. And CIL scheduled a 2.8-billion dollars initial public offering for late July 2010, although it was subsequently postponed to September.

Exploration and recovery
The Geological Survey of India, Central Mine Planning & Design Institute Ltd., and Mineral Exploration Corporation Ltd. have estimated total coal reserves at 267.21 billion tonnes as a result of exploration activities carried out at depths up to 1,200 meters. Many coal resources are available in sedimentary rocks of older Gondwana Tertiary formations of northeastern/northern hilly region. Based on the results of regional/promotional exploration, where the boreholes are normally placed 1-2 km apart, the resources are classified as indicated or inferred. Subsequent detailed exploration in selected blocks, where boreholes are less than 400m apart, upgrades the resources into the more reliable proved category.
Thus, of the estimated reserves of 267 billion tonnes, 105 billion tonnes are Proved. Even on the conservative assumption of 60% recoverability for the Proved resources, about 64 billion tonnes could be recovered. This could sustain a production level of over 1,800 million tonnes per year for the next 30 years.
Up to December 2007, the Ministry of Coal had allocated 172 Coal Blocks with reserves of coal of 38.05 billion tonnes to eligible companies. The private sector was allocated 79 blocks with geological reserves of 12,254 MT.
Private-sector participation in the coal sector is restricted to joint ventures and companies that can use coal for captive purposes. If the production is greater than what is required for internal use, the balance must be sold to Coal India Ltd. As of 31 March 2009, 201 coal blocks with reserves of 45.89 billion tonnes had been allocated to eligible companies.
Of the 201 blocks, 97 have been allocated to Public Sector Undertakings. Private companies have been allocated 100 blocks with geographical reserves of 17.93 billion tonnes and production has begun in 23 blocks.
During 2007-08, 45 coal blocks with total geological reserves of 11.386 billion tonnes were allocated to public and private companies, of which 21 blocks with total geological reserves of 8.64 billion tonnes were allocated to public and private companies in the power sector.

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