Exploration, Production &Amp; Distribution Of Oil And Natural Gas In India &Amp; Indonesia

Oil & Natural Gas Market

Brief Study of the Oil & Gas Industry in India & Indonesia

INDIA MARKET

OIL SECTOR

India was the fifth largest consumer of oil in the world during 2006 and 2007 (According to EIA estimates). According to Oil & Gas Journal (OGJ), India had 5.6 billion barrels of proven oil reserves as of January 2007, the second-largest amount in the Asia-Pacific region (behind China).

Much of India’s crude oil reserves are located off the western coast (Mumbai High) and in the northeast of the country, although substantial undeveloped reserves are located in the offshore Bay of Bengal and in Rajasthan state. EIA estimates that India registered oil demand growth of 100,000 bbl/d during 2006. EIA forecasts suggest the country will experience similar gains during 2008.

Market Description

India’s oil sector is dominated by state-owned enterprises, although the government has taken steps in recent years to deregulate the hydrocarbons industry and encourage greater foreign involvement.

Major Players

Upstream: India’s state-owned Oil and Natural Gas Corporation (ONGC) is the dominant player in India’s upstream sector, accounting for roughly three-fourths of the country’s oil output during 2006, according to Indian government estimates.

Downstream: The Indian Oil Corporation (IOC) is the largest state-owned company in the downstream sector, operating 10 of India’s 17 refineries and controlling about three-quarters of the domestic oil transportation network. Reliance Industries, a private Indian firm, opened India’s first privately-owned refinery in 1999, and has gained a considerable market share in India’s oil sector.

GAS SECTOR

Market Description

According to OGJ, India had 38 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2007. The bulk of India’s natural gas production comes from the western offshore regions, especially the Mumbai High complex. The onshore fields in Assam, Andhra Pradesh, and Gujarat states are also major producers of natural gas. Major Players

ONGC and Oil India Ltd. (OIL) are the largest companies by production volume, while some foreign companies participate in upstream developments in joint-ventures and production sharing contracts (PSCs).

Reliance Industries, a privately-owned Indian company, will also have a greater role in the natural gas sector in the coming years, as a result of a large natural gas find in 2002 in the Krishna Godavari basin.

The Gas Authority of India Ltd. (GAIL) holds an effective monopoly on natural gas transmission and distribution activities. (In 2004, GAIL piped 88 percent of the natural gas consumed in India).

Energy Overview (INDIA)

Proven Oil Reserves (January 1,2007E): 5.6 billion barrels

Oil Production (2006E) 846,000 barrels per day (77% crude oil)

Oil Consumption (2006E) 2.63 million barrels per day

Crude Oil Distillation Capacity (January 1, 2007E) 2.25 million barrels per day

Proven Natural Gas Reserves(January 1, 2007E) 38 trillion cubic feet

Natural Gas Production (2004E) 996 billion cubic feet

Natural Gas Consumption(2004E) 1,089 billion cubic feet

INDONESIA MARKET

OIL SECTOR

In 1962, Indonesia joined the Organization of the Petroleum Exporting Countries (OPEC) and became a net importer of oil in 2004

Market Description

In October 2001, new Oil and Gas Law No. 22/2001 forced state-owned oil company Pertamina to relinquish its role in granting new oil development licenses and Pertamina’s regulatory and administrative functions were transferred to the new regulatory body, Badan Perlaksanaan Minyak Gas, or BP Migas. Pertamina maintains a dominant position in Indonesia’s downstream sector, operating all eight of the country’s refineries.

President Yudhoyono announced a sharp rollback of subsidies in September 2005. Prices of retail gasoline and diesel rose by an average of 125 percent as a result. Despite this one-time move, fuel consumption subsidies still take up a sizable portion of government expenditures.

Major Players

Indonesia’s oil sector is dominated by several international oil companies (IOCs). The single largest oil producer is Chevron, which controls Caltex Pacific and Unocal’s former Indonesian assets. BP, ConocoPhillips, ExxonMobil, and Total are also significant oil producers in the country, with China’s state-owned companies PetroChina and China National Offshore Oil Corporation (CNOOC) also having a considerable presence.

GAS SECTOR

Market Description

Indonesia is the tenth largest holder of proven natural gas reserves in the world and the single largest in the Asia-Pacific region. Indonesian natural gas production has been geared toward export markets, but the country has made an effort to shift natural gas toward domestic uses in recent years as a substitute for the country’s declining oil output.

Major Players

PT Pertamina and six major international companies dominate Indonesia’s natural gas industry, accounting for more than 90 percent of the country’s production. The six companies are: Total (estimated market share in 2004, 30 percent), ExxonMobil (17 percent), Vico (a BP-Eni joint venture, 11 percent), ConocoPhillips (11 percent), BP (6 percent), and Chevron (4 percent). Natural gas transmission and distribution activities are carried out by the state-owned utility Perusahaan Gas Negara (PGN). The other major players in the gas distribution Industry are Energasindo Heksa Karya, Bayu Buana Gemilang, Banten Inti Grasindo, and Sadikun.

Energy Overview (INDONESIA)

Proven Oil Reserves (January 1,2006E) 4.3 billion barrels

Oil Production (2006E) 1,105 thousand barrels per day (81% crude