1.1 Overview- Indian E&P Industry 1.1.1 History

1.1.2 India Today

India remains energy deficit country - imports 77% of total domestic demand of 145

million MMT

The sedimentary basins of India:

Onland and offshore up to the 200m isobaths: 1.79 million sq.km Beyond 200m isobaths, deep water: 1.35 million sq-km

Total: 3.14 million sq-km

Sedimentary Basins of India

1887 •Oil Struck : Makum in Assam

1889 •First commercial oil discovery : Digboi.

1899 •Assam Oil Company formed.

1947 •India's Domestic Oil Production : 250,000 tonnes per annum.

1955 •ONGC set up.

1958 •Oil India Limited (OIL) set up.

1974 •Discovery of Bombay High Field

1991 •Liberalized exploitation and exploration policy.

1993 •DGH is formed

1994 •4th, 5th, 6th, 7th & 8th rounds of exploration bidding

1998 •New Exploration Licensing Policy (NELP)

2011 •From 1998 held 9 NELP rounds.

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Total demand of Crude oil projected: over 4 million bbls/day in 2013 – 14 and 6 million bbls in 2021-22

Projected growth rate in production as per 12th 5-Year Plan:

E&P Players in India:

E&P Companies with Offshore Assets in India o ONGC: the largest entity employing 40 rigs out of 51 offshore rigs deployed o RIL / BP: 2nd largest in offshore operations, primarily in DW segment o Other companies are BG, CAIRN, GSPC, Hardy, HOEC …

TOTAL - 69 E&P PLAYERS

National Oil Companies

Number : 10 Majors: ONGC, OIL,

GAIL & GSPC

Pvt Cos/ JVs Number : 59

Majors: Cairn Energy, Ril, BP, BG,

Essar and HOEC

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Share of total oil and oil equivalent gas (O+OEG) production in 2012:

Total No. of Exploration

Wells planned during the period from 2012 – 2017 is 1310:

The E&P companies vis-à-vis their operated blocks is represented by the following matrix :

STATUS NAME OF OPERATOR SHALLOW

WATER DEEP

WATER LOCATION

NO

C (P

SU) ONGC Yes Yes East, West

OIL Yes No East

GSPC (State) Yes No East, West Coast

PRIV

ATE

BHP Billiton Petroleum International Pty. Ltd Yes Yes MB, KK-East Hardy Exploration & Production (India) Inc. Yes Yes Cauvery British Gas Exploration & Production Ind Ltd. Yes Yes Tapti,

Mumbai, KG Bengal Energy International Inc. Yes No Cauvery- East Cairn Energy India Pty. Limited Yes Yes East, West BP Exploration Alpha Limited No Yes KG-East Reliance Industries Limited Yes Yes East, West Focus Energy Limited Yes West Adani Enterprise No Yes North East

Coast Essar Oil Limited No Yes North East

Coast ENI India Limited No Yes Andaman OAO Gazprom No Yes North East

Coast Petrogas Limited Yes East

(Mahanadi)

55%

8%

37%

0%

20%

40%

60%

ONGC OIL Pvt. Co. / JV

SHARE OF TOTAL OIL & OIL EQUIVALENT GAS (O+OEG) PRODUCTION 2012

611

ONGC

525

Pvt. Co. / JV's

174 OIL

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STATUS NAME OF OPERATOR SHALLOW WATER

DEEP WATER

LOCATION

Santos No Yes North East Coast

Hindustan Oil Exploration Company Limited Yes No Cauvery-east 1.1.3 Various Regulatory bodies and their roles in Drilling Sector

A. Institutional Arrangement under MOPNG:

B. Directorate General of Hydrocarbons (DGH) • Monitoring all activities of NELP & Pre-NELP blocks/fields. • To prepare various data related to rigs and wells. • Evaluation of work programmes and approval budgets • Evaluation applications and issue EC related to drilling wells, rigs, OSVS etc. • Estimation of cost of unfinished drilling work programme of operators. • Technical scrutiny of all matters related to drilling/work-over activities.

C. Oil Industry Safety Directorate (OISD)

• Framing the Safety Regulations for the Oil and Gas Industry • Audit oil and installations for safety compliance

IGL

MGL

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C. Directorate General of Mines Safety :

• Regulator of Mines in India, limited role over offshore installations, specifically Drilling Rigs.

D. Petrofed

• Facilitator for Oil Industries in India in Coordination with Governments, Regulatory Agencies and other representative bodies in the petroleum industry.

• Promote Safety, Healthy Environment and Energy conservation • Award the Industry Leaders • Organise Seminars, Conferences, Training programmes, lectures and publication of

Technical papers & newsletters. E. Other Government Bodies and their role in connection offshore Drilling:

Agency Short Name Issues related Offshore Drilling

Ministry Of Petroleum And Natural Gas

MOPNG For Approvals As Required Under PSC.

Ministry Of Environment & Forests MOEF Monitors E&P Operators, primarily on Drilling Fluid

Ministry Of Defence MOD Security Clearance For Vessels In Indian Waters and Crews

Ministry Of Finance MOF Tax and Customs Duty Director General Shipping DGS Approval For Hiring Foreign Vessels Director Of Explosives DOE Importing / Stocking Explosives Coast Guard CG Security And Hazard Issues For

Offshore Installations Commissioner Of Customs & Excise CCE Imports / Exports Commissioner Of Income Tax CIT Income Taxation Registrar Of Companies ROC Registration Of Company

Statutory Returns Reserve Bank Of India RBI Payments In Foreign Currency

1.1.4 Other Industry bodies and their roles

IADC: Very active and has strong representation specifically in ONGC and offshore drilling

industry SPE: Very active, arranges technical conferences; a great place to meet the Asset Owners. CII: Represents Industry bodies to Government in Policy Issues. FIICCI: Representing Industry bodies to Government in Policy Issues. Petrotech: Arranges the largest oil and gas conference in India AOGO: An Association exclusively for E&P Operators;

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1.2 Drilling Outlook – Indian Offshore 1.2.1 Drivers :

Pressure/targets for domestic production

Improve recovery from 28% to 40%-Mumbai High Redevelopment /other through IOR/EOR

Operators keen to monetize discoveries

1.2.2 Exploration Activities:

Driven primarily by NELP commitments (MWP)

During the last 3 NELP rounds: • 19 DW blocks and 20 SW blocks were awarded; • Seismic work is in progress/completed. • Drilling yet to be started

As per 12th 5-Year plan forecast Exploration Wells during 2012 – 2017:

o ONGC: 611 o OIL: 174 o Pvt Co/ JVs: 525 o Total: 1310

RIL to invest USD 1.53 billion for exploration of satellite blocks of KG D6 [water depth 700m

(2,297ft) and 1,700m (5,577ft)]

1.2.3 Activities Outlook: Development & Production- Shallow Water:

Co Requirement Status ONGC Development/Redevelopment plans being

launched for Mumbai High/Others in early 2000 in order to achieve the recovery factor to 40% till 2030 from the current level of sub 30% . Expansion Mumbai offshore to develop 3 more cluster in 3- 4years.

Rolled out plans to invest USD 7.7 Billion for redevelopment of existing field and exploration of satellites

Cairn 6 months, starting mid 2013, mat rig Tender process to start Addl Development beginning 2014, 2 Rig

Years Budgeted, Subject to Geological Work

BG Two rigs till 2014, Chetna and ENSCO 54 likely to continue

New Tender subject to JV decision

GSPC To drill 15 HPHT wells by 2014 at East Coast – Platform Rig

Already resourced

BP/RIL New Discoveries, Drilling to commence by mid-end 2014

Under Development Planning

Others Hardy, ENI (DW), AWEL, HOEC, NIKO Details not available

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1.2.4 Deepwater- Snapshot :

10-15 years firm development drilling is foreseeable with a likely deployment of 4-5 deepwater/ultra deepwater floaters in Offshore India

RIL & ONGC have substantial numbers of gas discoveries on the East Coast

Development of RIL’s NEC & KG discoveries may result in long term intensified drilling

activities from 2013 onwards

Post on-going appraisal, ONGC’s FDP for KG & MN expected to result in incremental drilling programme (50 wells) commencing 2014/15

Discoveries like D6, UD-1 essential for continued interest among the operators community

Govt’s willingness to optimize the gas pricing would help efficient monetization, a rethink on calculation for FDP approval

India moving towards increased gas consumption (Power plants, cross country pipelines, CGD) good domestic market

1.2.5 Looking Ahead :

Shallow Water Deep Water

• Present level OF development activities to

continue on the foreseeable future

• Exploration backlog to last at-least for another 10 years, some upsurge in mid water activity in mid term

• ONGC expected to remain dominant

player

* A temporary pause in the development

activities for various reasons, expected to pick up substantially in next 2-3 years

* DW blocks awarded under NELP 8 & 9 th

round expected to further maintain the drilling momentum from 2014 onwards

* Application of new technology on the

west coast (sub Basalt Mapping etc) may lead to Phase-II entry in MB/KK exploratory blocks for operators and which may result in incremental drilling commitments

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1.2.6 Current Market Analysis for Offshore Drilling Rigs

12

8

6 5 4

3

3 2

8

Market Share- 2012 Transocean

ONGC

Aban

Nabors

Jindal

GreatOffshore

Jagson

Greatship

Others (1 Rig)

32 7

7

4 1

Market Share by Rig Type

Jack up

Platform

Drillship

Semi

Barge

22

9 1 1 1

17

Type of Contracts 3 Years

5 Years

4 Years

1.5 Years

18 Wells

Well Contracts

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1.2.7 Current Market Analysis for Offshore Jack-up Rigs

7

6

5

4

3

2

2 1 1 1

Market Share in Jack-up Rigs - 2012

Transocean

ONGC

Aban

Jindal

Jagson

Greatship

GreatOffshore

Deepwater

Focus

Foresight

17

8

3 2 2

Utilisation of Jack-up Rigs by Type

300 IC

350 IC

375 IC

250 IC

250 MS

4

4

4

3 3 2

2

2

8

Utilisation of Jack-up Rigs by Design F&G L 780

KFELS B Class

LET 116C

BMC 300 IC

LET 53C

ETA

Hitachi

LEV 111C

Others (1 Rig)

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1.2.7 Current Market Analysis for Floaters

1 1

1

1

1 2

5

Market Share of Floaters in Indian Waters

Aban Offshore

GOL Offshore

Jet Drilling

Noble

Vantage Drilling

ONGC

Transocean