Discovered Small Field Bid Round: 2016

June 6, 2016

Mumbai

Ministry of Petroleum and Natural Gas

Government of India

Directorate General of Hydrocarbons

Interactive Session

DGH

Agenda

2

Evolution of Upstream Sector in India 1

Bid Process 4

Contract Areas on Offer 2

Key Success Stories 5

Model Revenue Sharing Contract 3

3

Evolution of Upstream Sector in India

1948

State

Monopoly

Nomination Era Pre-NELP

PSCs NELP/CBM PSCs Future

1991 1997

Beginning of

de-regulation

Liberalization

of E&P Sector

2016

Further liberalization of the sector Discovered small field bid round-2016

Hydrocarbon Exploration Licensing

Policy (HELP) - Open acreage

licensing

Gas Pricing Guidelines for difficult

fields

2015

Discovered

Small Field

Policy

New Domestic

Gas Pricing

Guidelines

2014

Low regulatory burden

& transparent bid

process

Attractive Features of the DSF Bid Round 2016

Ease of entry & exit

Revenue sharing model

Single license for

conventional & un-

conventional fields

No oil cess and custom

duty exemption No prior technical

experience required

Pricing and marketing

freedom for Oil and Gas

Up to 100% FDI allowed

No carried interest by

NOCs

No upfront signature

Bonus

Provision for sharing of

common facilities

Continuous exploration

permitted during

contract period

4

Contract Areas on Offer

Contract Areas Offered

46 Contract

Areas

Initial in- place

volumes

Available Geo-

scientific data

Over 48 MMT Oil volumes

Over 38 BCM Gas volumes

26 Onland

18 Shallow water

2 Deep water

2042 LKM 2D

1336 SKM 3D

130 Wells

Adjoining Facilities of ONGC and OIL

Bidders can access well head equipment, surface and nearby facilities

on chargeable basis

For Further details, visit the website http://www.indiadsf.com

Assam fields – 13 Reserves – 21.8 Mmtoe Area – 119 SKM

Andhra Pradesh fields – 15 (7 Offshore) Reserves – 4.4 Mmtoe Area – 263 SKM

Tamil Nadu fields – 2 Reserves – 0.4 Mmtoe Area – 20 SKM

Rajasthan fields – 2 Reserves – 0.1 Mmtoe Area – 24 SKM

Mumbai fields – 27 (all offshore) Reserves – 55 Mmtoe Area – 1001 SKM

Gujarat fields – 7 (2 offshore) Reserves – 4.1 Mmtoe Area – 109 SKM

Madhya Pradesh – 1 Reserves – 0.5 Mmtoe Area – 15 SKM

67 fields offered under 46

contract areas

5

Model Revenue Sharing Contract (1/2)

Free pricing & marketing freedom of crude oil and natural gas in domestic market

Minimum price for calculation of revenue & royalty shall be the monthly average of Indian crude basket for crude oil and applicable domestic gas prices as per Govt. guidelines

Marketing & Pricing

Effective Date – later of contract signing date or date of issue / transfer of lease

Period of 20 years or economic life of the field, whichever is less

Contract Duration

Biddable work program – Number of development/ appraisal wells

Liquidated damages (LD) - US$ 1 Mn (On-land), US$ 3 Mn. (Shallow Water) & US$ 6 Mn. (Deepwater)

Proportionate reduction in work program in case of reduction in contract area due to denial of clearances by Government agencies

Work Programme

6

Model Revenue Sharing Contract (2/2)

Government will extend assistance to contractors subject to compliance to applicable laws & relevant procedures – permits, approvals, work permits, licenses, leases, right of way, etc.

Government Assistance to Contractors

Government revenue (%) to be determined on a linear scale interpolated between Lower Revenue Point (LRP) & Higher Revenue Point (HRP) for each month based on the realized average daily revenue during the month

Revenue = Amount accrued (produced & saved) – Taxes on sale – Royalty

Revenue Share

Contractors may undertake Joint development of more than one contract areas operated by more than one companies to maximize the recovery

Two contractors authorized for separate contract areas can mutually agree for use or development of common infrastructure

Unit Development of Reservoir & Joint use of Common Infrastructure

Bid Process and Important Dates

7

Bid Process

Bidders to bid*

online** at

designated portal

Hardcopy submission

of all supporting

documents to DGH

DGH to submit bid

evaluation reports to

the Government for

consideration

Ministry to accord

approval based on

ECS

recommendations

After due

approvals, RSC***

to be finalized

with awardees

*Any number of Contract Areas can be bid for

** Most of the documents will be uploaded online

*** Revenue Sharing Contract

Important Dates

Activity Date

Launch 25th May, 2016

Data Rooms

Noida from 6th June,

2016

Calgary, Houston and

London subsequently

Bid start date 15th July, 2016

Bid opening 31st October, 2016

Award Within 2 months

All about DSF Bid Round 2016

8

E-Bidding portal - http://mstcecommerce.com/eprochome/dsfbidding/index.jsp

• User-friendly interface for uploading bid documents with easy registration process

• Instruction to bidders on bid upload process, methodology of bid evaluation, etc.

• Secure gateway through Digital Signature Certificate

• Provision for online payment of Tender fees

Technical Information Portal - http://www.indiadsf.com/

• Ready reckoner on ‘how to access portal’

• Bidders can view (free of cost)

E&P data - Seismic 2D Lines, Field Boundaries, Geographical Locations, Well Information

Contract Areas related data – Field area, quantum of E&P data, reserve estimates etc.

Information guides on taxes, policies and contracts

• Physical data view room bookings, roadshow bookings, one-to-one meetings can be

scheduled

• News, updates and FAQs related to the DSF Bid Round 2016

Physical Data Centers • Physical data centers with interpretation facility set up at Noida

• Data centers to be set up at Calgary, Houston and London

• Bidders can access technical data of various contract areas on offer

• For first two days, free viewing of data and interpretation available

Bid Qualifying Criteria

9

1 Payment of Tender Fees on or before bid closing date

2 Bidder must be a company individually or in association with other companies, through an incorporated or incorporated venture

3 Net worth of the bidding company’s should be equal to or more than its Participating Interest value of the Biddable Work Program commitment

4 Annual Report including audited annual accounts certified by company’s statutory auditor(s)

Bid qualified for evaluation

Bid Parameters

10

80%

20%

1.Contractor to bid the Government Share of revenue (%) against

Lower Revenue Point (LRP) ≤ US$ 0.0100 million/day Higher Revenue Point (HRP) ≥ US$ 1.000 million/day

2.Bid yielding highest NPV will get 80 marks and rest bids would be scored on pro-rata basis

1. Bid proposing maximum number of appraisal / development wells would get 20 marks

2.Rest bids would be scored on pro-rata basis

Revenue Share

Biddable Work

Program

Weights

11

Key Success Stories

11

• At the time of taking over the field, the Expected ultimate recoverable reserves were 101 mmbl

• Already recovered cumulatively 277 mmbl of oil and additional 11 BCM of gas & still producing - Highest recovery factor in the country

• Total Investment – US$ 0.91 Billion

• Cumulative revenue - US$ 14.6 Billion

• Contractor share of profit – US$ 5.3 Billion

Ravva - One of the most successful discovery

Hazira - One of the major gas producers in Gujarat

• At the time of taking over the field, Oil & Gas In-place reserve (OGIP) about 1.6 BCF

• Already produced cumulatively 348 BCF of gas & still producing

• Total Investment – US$ 0.33 Billion

• Cumulative revenue - US$ 1.5 Billion

• Contractor share of profit – US$ 0.68 Billion

Other Success Stories - Panna-Mukta | Mid & South Tapti | Kharsang | Dholka

12

Thank you

Directorate General of Hydrocarbons

(Under Ministry of Petroleum & Natural Gas) Phone: 0120-2472000, Fax: 0120-2472049

Email: dsf.bidding@dghindia.gov.in

Website: www.dghindia.gov.in

DGH India @DGHIndia DGH India