ECONOMICS PROJECT
Neha
ACKNOWLEDGEMENT
Group work has always played a key role in the success of any venture. So hereby, it is our pleasure to record thanks and gratitude to the people involved. Firstly, we thank Prof. R.K.Ojha, for his continuous support in the project. He was always there to listen and to give advice. He was also responsible for involving us in the project on Petroleum Industry to come out with issues being faced there. He showed us different ways to approach a research problem and the need to be persistent to accomplish any goal. Without his encouragement and constant guidance we could not have been able to finish the project. He was always there to meet and talk about any query. Last, but not least, we would like to thank all class mates who support us throughout the project.
THANKS
INTRODUCTION
Over the years India Petroleum Industry has played an influential part in triggering the speedy expansion of the country's economy by contributing 15% in the total GDP. Further to this, petroleum exports gave new dimension to foreign exchange earnings by drawing US$ 23.64 billion in the FY 2008-09. To assist and acknowledge the expansion of the sector, the Cabinet Committee on Economic Affairs felicitated 44 petroleum research blocks on November 2008 under the New Exploration Licensing Policy (NELP-VII). Various Production Segments:
Refinery production: Refinery production in context of crude oil escalated from 156.11 MT in FY 2007-08 to 160.67 MT in FY 2008-09. Indian Oil Corporation Ltd is looking forward to elevate the capacity of its Haldia refinery and Panipat refinery plants to 7.5 million tones and 15 million tones respectively in 2010. Natural Gas Production: The natural gas production in 200809 increased from the previous year's 32.40 billion cubic metres tonnes (BCM) to 32.84 BCM. In 2009 alone the Natural gas production was registered at 33,846 million cubic metres. Crude Oil Production: The projected production of crude oil during the 11th Five-Year Plan (2007-2012) is 206.76 MMT, while that of natural gas is 255.27 BCM. Cumulative production of crude oil between April-December 2009 was 25,152 MT, while cumulative production of refinery production during the same period was 119,283 MT.
years. By 2012, the prospects in India Petroleum Industry are estimated to accomplish US$ 35 billion to US$ 40.
NEWS RELATED TO THE PRICES Oil jumps to highest since 2008 crisis,$100 eyed
Date: 24 December 2010 Column: 4 Oil prices raised above $91 a barrel to its highest price in more than two years while the crude reaching back to back 26 months highs. Traders are now looking of the Petroleum Exporting countries to signal when it might begin pumping crude oil. Top oil official said the prices have lifted to more than 20 percent in three months.US crude
for feburary rose $1.03 to settle at $ 91.51 a barrel,the highest price since oct 7,2008 when oil prices were crashing from their $147 record as the world. Financila industry reeled and investors felt risky assets. Orices hit an at peak of $ 91.63 a barrel
The government is going to take a decision on diesel price on dec22 as the oil firms are loosing RS 4.80 a lt as the price in international market is $90 barrels. If the price are raised it will have a impact on the inflation as now inflation is 8.6% and it was reduced from 11%, but again any increase in diesel price will lead to inflation as the price of petrol is deregulated and firms can fix the petrol price at their pump. So the price rise have a impact on the food inflation as well as the overall inf
demand for gas is expected to grow from the current 120 million standard cubic meter per day (mmscmd) to 400 mmscmd. This includes both CNG and LNG. Currently, gas constitutes only 9 per cent of the Indian energy basket but is expected to increase to 20 per cent by 2025.So as the demand of LNG is increasing. Consumer will not ready to pay high price so a panel is necessary to set a uniform gas price.
Oil cos to take bigger hit as government set to cap subsidy at last years outgo.
29 September 2010 Page No: 9 Row: 1 This article is all about government plans to limit its share of fuel subsidy .It says that the Indian government has incurred heavy losses because of the huge fuel subsidy this would require oil marketing companies like IOC,HPCL and BPCL to absorb a substantial portion of the losses incurred in selling petro fuels below cost .A part of the subsidy will be paid by government owned oil producing companies ONGC and OIL. The finance ministry will pay its share of subsidy compensation in cash. In 2009-2010,the government agreed to bear only Rs 26000 crore of the total recovery of Rs 46051 crore. The total subsidy bill is estimated to be in the region of Rs 53000 crore this year, higher by almost Rs 7000 crore from last year figure, due to higher crude oil prices. despite a partial rise in the fuel price ,whereby oil companies are allowed to fix petrol prices. while upstream oil companies ONGC and OIL India forked out rs 14430 crore as subsidy liability, oil marketing companies had to absorb Rs 5621 crore losses on their books. The finance minister decision makes it clear that both upstream and downstream companies have to budget for higher subsidies, which will impact their bottom lines. ONGC reported 24% lower profit in the first quarter at Rs 3661 crore. The company paid Rs 5515 crore in subsidies in the first quarter as against Rs 429 crore in the year before. A final decision on the sharing of subsidy burden between the stake holders the government, oil marketing companies a upstream companies will be taken by the empowered group of ministers.
29 September 2010 Page No: 9 Row: 3 column :3 Petrol, diesel have became costlier by up to 50 paise a litre in the country,barring 13 cities , after India switched over to cleaner Euro-III fuel on September 22,eight days ahead of the schedule.The higher grade fuel mark the end of the road for Euro-II complaint automobiles in the country from October 1,leading to a 2-5% increase in the prices of certain brands.There has been city specific increase in the fuel prices,maximum upto 30 paise a litre for Euro-III diesel and 50 paise for Euro-III petrol to recover capital cost.The increase in price will not impact consumers in 13 major cities where Euro-IV fuel is sold from April 1.These cities are Mumbai, National Capital Region of Delhi, Agra, Kanpur, Lucknow, Kolkata, Chennai , Ahmedabad , Banglore , Surat, Pune, Solapur and Hyderabad . Public sector retailers Hindustan Petroleum, Bharat Petroleum and Indian Oil together spent Rs 32,000 crore in upgrading their refineries to produce better quality fuel. Higher grade fuel will reduce emission of sulphur and benzene substantially, key air pollution from fossil fuels.The government had planned to roll out Euro-III fuel all over the country on October 1.The automobile companies have already raised vehicle prices to recover additional cost in manufacturing Euro-III and IV vehicles.
CONCLUSION
The crude oil prices have finally touched $100 per barrel. The Indian crude basket has touched a high of over $92 in the new year, but is yet make a new record. Indias crude oil import bill rose by 3.48% in rupee terms and 16.67% in dollar terms during the first half of the current fiscal year. As per the Government, every one rupee appreciation in the exchange rate of Indian rupee against US dollar will help reduction in the net oil import bill by around Rs 3950 crore. It should help that the rupee is forecast to advance 3.4 percent next year to 38 per dollar by the end of December. The gross underrecoveries in 2009-2010 by the three oil marketing companies IOC, BPC and HPC were Rs 20803 crore for petrol and diesel. The estimated under recoveries by oil marketing companies during AprilSeptember 2009 have been Rs 12549 crore on petrol and diesel. If current price trends hold, the under-recoveries to the marketing companies are estimated to be around Rs 70,000 crore this financial year around o.75% of Indias GDP. This has to be shared between the three marketing companies, the upstream companies ONGC, Oil India and GAIL and the government. The upstream oil companies have already contributed Rs 8788 crore for the period AprilSeptember 2007 to partially compensate these under-recoveries by the oil marketing companies. The contribution by the upstream companies in 2009-2010 was Rs 20507 crore and is likely to rise by another 5000 crore this year.
The impact of Contraction of economic output 0.25 to 0.50% per $10/barrel of increase in oil prices. Rise in cost of production of goods and services, depending on oil intensity of sectors/activities. Trade deficits due to higher cost of exports. Higher general price levels/inflation, with possible wage-price spirals as experienced during first oil price shocks of 1970s.Unemployment triggered by cost-cutting measures by manufacturers/service providers. Volatility in equity and bond valuations, and in currency exchange rates due to changes in economic activity, corporate earnings, inflation and monetary policy. Incentives for energy suppliers to increase production (to the extent there is scope for it) and investment, including investment in non-oil energy options. Reduction in oil demand where prices are passed through to consumers. Impact on GDP Decline in world GDP growth by about 0.7% during 2009-2010, when oil prices rose steeply.Consistent decline in oil intensity of GDP irrespective of oil price trends. No marked change in per capita oil consumption. Up till 2010, oil markets may remain broadly balanced, with incremental oil demand being met mostly by higher non-OPEC production. However, prospects for higher spare capacity are unfavourable, so market will likely remain tight and vulnerable to risk of large, unexpected price changes. From 2010 onward, OPEC supply may increase significantly as non-OPEC production peaks while global demand continues to rise. However, there would be growing upside risks to prices due to:strong demand side pressures from Asian countries, particularly China, continued tightness in North American gasoline markets political instability, especially in the Middle Eastlong lead times and high costs of establishing new refining capacity underinvestment in supply infrastructure in various countries.
Page 1 State-Run ONGC and Russian conglomerate Sistema have agreed to merge their oil and gas businesses in Russia under a joint venture, in a no-cash deal where the Indian firm will have a 25% share holding with a say in its management. The frame-work agreement was signed by Sistema Chairman Vladimir Evtushenkov and ONGC Videsh Managing Director R S Butola during Russian President Dmitry Medvedevs India visit. The mega merger of three companies- Bashneft, RussNeft and Imperial Energy will make ONGC a shareholder in Russian firms annual oil production of 25 million tonne, their refineries totalling 20 million tonne capacity and ONGC will merge its wholly-owned subsidiary Imperial Energy in exchange . The companys foreign arm, ONGC Videsh, had acquired ,which produces about 1 million tonne of crude oil annually, for $2.1 billion in 2008. The Indian Explorer would be practically managing oil and gas assets of the merged entity due to its experience. Staterun Indian Oil Corp (IOC), the countrys largest refiner , will join ONGC in the venture. Sistema , a diversified group , had been scouting for a strategic partner with experience in the oil and gas sector and it is a financial corporation that manages companies in telecommunications , high technology , energy, aerospace, banking, retail, tourism and healthcare services. The deal will be concluded by June 30, 2011. The prospective partners had agreed to jointly invest in key countries in the future ,but the names of those countries could not be ascertained.
fields
First Column
Reliance Industries prolific D-1 and D-3 gas fields off the east coast ,which have seen a 15% drop in production in recent times, are likely to touch a peak output of 80 millions standard cubic metres per day in 2012-2013. According to the directorate general of hydrocarbons report to the oil ministry, the Dhirubhai-1 and 3 fields-also known as D-1 and D-3 in the KG-D6 block are likely to produce 80mmscmd of gas for six years, from 2012-2013 TO 2017-18. Together with gas output from the MA FIELD in the same block , KGD6 production in 2012-2013 will touch 88.5 mmscmd.
LPG cylinder may leave your wallet lighter by Rs 100 & Global LPG price hits $ 1,000/tonne
Dec 20 , 2010 Page 1 Second Column
The oil ministry plans to raise cooking gas prices by Rs 50-100 per cylinder as international prices of LPG have jumped by almost 66% since August. The rise in global prices is hurting oil firms as India is the largest consumer of LPG in southeast Asia who meets its domestic demand by importing about 3 million tonnes of cooking gas .The government is also planning to shore up the finances of firms such as Indian Oil Corp., which is planning to raise Rs 20,000 crore from a public issue in 2011. Global LPG prices have soared due to winter demand and the consequent impact is visible in India. As a result, the subsidy on every cylinder will jump to Rs 367 per refill on Jan 1, 2011 which is more than the retail price of Rs 345.35 in the capital, as its import price for the next month has soared. According to Oil Ministrys arm Petroleum Planning and Analysis Cell estimates domestic LPG demand at 14 million tonnes for 20102011. The countrys dependence on LPG imports is increasing due to 5%-8 % annual growth in consumption. Oil firms have raised petrol prices by about Rs 3 per litre last week, but they do not have the freedom to raise prices of diesel ,cooking gas and kerosene. Diesel and LPG rates have not been changed since the end of June although the cost of crude oil has increased 18%, putting severe strains on the finances of the oil companies , as diesel and cooking gas accounts for about 60% of all oil products sold in the country. Due to surging gobal crude oil prices , state-run oil firms-IOC , BPCL and HPCL- had raised petrol prices last week to partly make up for higher cost of crude oil, but could not raise diesel prices , a regulatory fuel item like LPG, where they are losing about Rs 5 a litre.
shares for face value of face value of Rs. 10, one free share for each held and split each stock in two. This way ONGC is making it self ready unwanted increase in crude oil price. So it can maintain its way safe form coming loss due sudden price rise. The government is also selling its 5% stake which will help ONGC to build hospital, ports and power station in Asias second fastest growing major economy.
successful launch of it FPO. The ONGC being the most known firm of the country will be helped by this decision of splitting of it shares this may raise their hold in the Indian petroleum industry.
ONGC, OIL, Gail team up to buy 25% stake in Australias Advent for $1b
Nov 3, 2010 Page 1 Second column
A consortium of Indias top state-run energy firms , led by exploration giant Oil and Natural Gas Corp., is in talks to acquire a 25%stake in Australias Advent Energy for around $1 billion ONGC , along with the smaller exploration and production (E&P) firm Oil India (OIL) and gas transmission company Gail India, hopes to grab a share in the massive natural gas reserves of the Perth , western Australia-based unlisted Advent to help secure energy supplies for the countrys rapidly expanding economy. Advent Energy has large gas reserves, including one block in the Sydney Basin that has an estimated 13.2 trillion cubic feet of recoverable natural gas ,which is more than what Reliance Industries has discovered so far. Thus , Australia has emerged as a new source of energy for India , which has traditionally relied on the Middle East for its LNG sourcing.
The improvement in refining margins and the growing Asian market for fuels has boosted Reliance industries ,which runs the worlds biggest refinery complex in Jamnagar ,and helps Indias most valuable company build on the last quarters 28% surge in net profit. The company was optimistic about the refining margins which have improved in last quarter to $7.9 per barrel in the last quarter from $6.0per barrel a year ago. Reliances Sophisticated refinery has the ability to procees low quality grades of crude ,which are relatively cheaper , and produce high-quality products which meet the tough specifications of all the developed markets. It has gained from the rise in Asian demand for petroleum products. When its new, export-focused plant was built , the company was looking at exporting gasoline and diesel to the U.S. and Europe. But now, its over half its sales were in Asia , where it also gained from lower freight rates compared with the distant American market.
So , the company is also expecting an upside in petrochemicals business because of rising demand.
ONGC may buy Tullows 60% stake in inland block & ONGC Q2 net rises 6%
29 October 2010, Page No.7 The ONGC may be buying Tullow India operation Ltd. up to 60% of its stake in the inland block is an exploration block. The Tullow India was awarded 60% of the block in northern eastern India while ONGC holds the rest. This acquisition will help to ONGC gain the boom in the Indian petroleum market as Government Company taking up the private company. This will also help ONGC to attract several investors for investment in its stake as there is minimum or no risk in investing in Government Company as the return is assured. The firm as also reported a 6% rise in its net profit to Rs. 5,388.77 crore in the quarter ended September 30. The sale of ONGC has also increased to Rs. 18,238.98 crore in the current fiscal year. The firm has also paid 3,019 crore toward the fuel subsidy which also good sign of growth of the petroleum industry.
PSUs
for Cairn
There is no counter bid by oil PSUs for Cairn India because the price at which Vedanta is acquiring Cairn India is already too high.The board of ONGC ,which is a 30% partner of Cairn India in the prolific Rajasthan oilfields that are at the centre of its parent Cairn energys deal with Vedanta , is likely to be briefed about the possible scenarios.Cairn India is selling upto 51% out of its 62.37 stake in Cairn India to Vedanta ,which is the mining company controlled by NRI billionaire Anil Agarwal. The firm wrote to the oil ministry dealing the Vedanta deal. The ministry was not satisfied with the details and wrote to Cairn energy seeking explanations on provisions of the production sharing contract (PSC) in case of stake transfer. The ministry feels government approval is a pre-requisite for conclusion of Cairn-Vedanta deal.
Reliance Industries (RIL) has agreed to buy 60% stake in Marcellus shale acreage in the U.S. for $392 million(approx Rs 1810 crore in its third investment in four months to cash in on a boom in a vast new energy resource that is promising to change the global energy scenario. Shale gas is extracted from a common rock formation found in most parts of the world by pumping water. RIL, Indias biggest company , will pay $340 million up front for the acquisition of the shale gas acreage in central and northeast Pennyslvania, which is equally owned by Carrizo and its partner ACP-II Marcellus, an affiliate of private equity firm Avista Capital Partners. RIL will pay $52 million to cover part of drilling costs in two years . This is the cheapest of the three assets RIL bought so far. In April , RIL had acquired a 40% stake in Atlas Energys Marcellus share acreage in the U.S. , gaining access to approx 34300 acres of undeveloped land with estimated gross resources of over 13 trillion cubic feet of gas. It paid $1.7 billion for the purchase. In June, RIL bought a 45% stake in pioneer natural resources for $1.15 billion , gaining access to 210,00 acres of land.
CONCLUSION
The acquisition will help ONGC to gain the boom in the Indian petroleum market as it is taking up the private company. Since ONGC is a government company, so it will attract investors for investment in its stake, as a result, investment in government companies will increase which will have an impact on Aggregate expenditure. Since , investment is an important component of Aggregate expenditure, Aggregate expenditure will increase and as a result ,GDP will increase in the economy. The ministerial panel on financial matters has also accepted splitting each share of ONGC into two which will become automatically attractive and affordable for the retail investors. This will also create a safe passage of ONGC for coming future problems of price hike. Because of this share split, the firm will have an increase in the number of investors as each investor will have double the number of shares and prices will become half, as a result, investment will increase which is an important component of Aggregate expenditure, so due to increasing Aggregate expenditure the GDP will increase in the economy. The increase in the price of crude oil form todays price can also reach up to $100, the firm like ONGC has a policy of transferring a part of one-third of its subsidy bill of the oil marketing on the production. Due to this, the operating cost of the firm will increase, so the government has to increase the subsidy on crude oil. Because of this, the firm aggregate supply will increase. The cooking gas price has increased by Rs 50-100 per cylinder as international prices of LPG had increased to almost 66% since august. The rise in global prices is increasing is hurting oil firms ,putting severe strains on the finances of the oil companies, as diesel and cooking gas accounts for about 60% of all oil products sold in the country. The countrys dependence on LPG imports is increasing due to 5%-8 % annual growth in consumption as the country meets its domestic demand by importing 3 million tons of cooking gas .As a
result, cost of production will increase in the companies, which will increase the aggregate demand which will in turn increase the GDP in the economy.
NEWS RELATED WITH STOCK MARKET ONGC plays santa, clears stock split, bonus, payout
17 December 2010 Page 14 ONGC has approved a special dividend, free shares and a stock split before the governments planned sale of a stake in the company. The government is selling 5% stake to build hospital, ports and power station. The stake may rise $3.1 bn. The dividend paid by ONGC is higher than what many people think of, it was Rs 32 each share as it may help the government to get more interst in the share sale.ONGC are required to supply oil at discount to refiners including IOC. The total dividend payout will be Rs 6,844 crore, of which Rs 5,074 crore will go to the government and this payment will lead to fall in cash reserves to 70 billion rupees from 150 billion. It is the highest dividend paid out by the company.
Page 7 In the last four month the price of oil has risen by almost 20% to $90 barrel and it has again made the finance minister and other ceos thought that if the price of oil is again going to touch the price of $147 barrels. There is a little possibility that the price will rise again to that level as there is enough spare capacity to ramp up the oil production. The price rise is there because after recession the global economies bounce back. In 2011 the oil price may rise above $100 barrels but any increase in production may lead to another banking crisis in Europe. There is also a steady decline in inventories. The rising price has started to show its impact on India , as it mostly dependent on import of oil products and also any price above $70 barels is not good for the oil companies of India as it has a major implication on Government as it has to shell out more on fertilizer and food subsidies.
have 25% stake but they are not favorably placed there and also OVL is the only Indian company recognized as an operator in Angola. The 5349 km block lies between 1400 m and 2700 m of water depth and will produce 300,000 barrels of crude oil per day while in India the peak production is estimated 175,000 barrels per day. India will now import 9 million tones of crude oil from there. By 2025, the demand for oil projected to touch 370 million tones and for this India should produce at least 110 million tones per year. Hence to maintain this level, we need to add 60 million tones of oil every year. The acquisition will benefit India to hunt for the natural recourses to feed the fast economic growth. It will also give an edge over china on hunt for natural recourses as both the country are two most growing economy of the world and to cater this economic growth both countries need large amount of natural resources. OVL acquisition also make it a international player in the oil market and due to high expectation the Shares in ONGC,which was valued at about $63 billion, was trading 1.5% higher at Rs1,322.80 the next day in Mumbai stock exchange.
CONCLUSION
Oil prices have been closely following the US stock market trends. The short-run share of the economy going toward oil is price elastic, which means that the share increases when the price of oil does. When oil takes up a higher share of the economy, like today with respect the 1990s, it implies that a change in the price of oil could be more harmful than when oils share was smaller. So, for example, a 1 percent change in the price of oil today could do more damage than a 1 percent increase in 2011. This correlation between the two will encourage the companies to increase their investments. This will surely increase the imports which in turn will result in the decrease in the GDP of the country. But the future increase in the price of oil will be much more then these investment today. Hence these investments are likely to grow the economy in future.
ABSTRACT NEWS Tax Evasion worth Rs 6 crore in oil import:4 companies booked
Date: 24 December 2010 Column: 1 Central Revenue Intelligence recently conducted a check on oil containers docked in the port and found that first grade oil has been imported as waste oil Four companies were booked on charges of allegedly evading tax to the tune of Rs 6 crore in the import of lubricant oil.30 containers were seized.3 coimbatore based companies and 1 kochi based companies were caught and notices has been sent to the companies and penal taxes will be collected from them.
keeping the cost of crude price and cane price at the back of their minds. Pricing also depends on import parity and availability State Government is encouraging setting up of a Distilleries to convert all available molasses to alcohol Liberal funding of Distillery projects through the SDF Mechanism and speedy clearance from MOEF / State Pollution Control Board. Assured long term off-take at firm prices by Oil Marketing Companies and reducing import duties on imported industrial alcohol to remove any perceived threat of availability to the chemical industry.
US had been piling up crude oil inventory in anticipation of future growth in the demand and rise in prices. As the world is seeing now that the prices of oil in US has been moving along with the equity market. Hoping that this is just a temporary trend, everybody is waiting to get things back to normal. Another phenomenon that has happened is that US being unable to anticipate the rising inventories will not be able to compensate for the dull growth in the demand. But the question lies in the fact that whether this phenomenon is micro or macro in nature. The correlation between equity and oil prices has been rising and might become a bigger problem if it continues to be the same persistently.
DEDUCTIONS
Petroleum Industry accounts as one of the vital sector across the globe. Oil books for a large percentage of the worlds energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other geographic regions consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world at huge consumes 30 billion barrels (4.8 km) of oil per year, and the top oil consumers largely consist of developed nations. In fact, 24% of the oil consumed in 2004 went to the United States alone. According to estimation, about 70% Crude is imported from other nations in India. (Sources) Petroleum Cycle: Current Production: It is believed that the investment in producing-fields will continue as long as the price covers their cash costs. India also looking forward for deepwater & shale gas explorations in future. Many basins are still
waiting to come under NELP. Rajasthan Unconventional Hydrocarbon finally discovered & Large scale production soon. Reliance too emerged as the major domestic player after the deep water explorations at KG Basins. Many international firms are too going to be part of upcoming NELP. Recovery factor issue at a halt, only 30% Crude recovered out of total production, which is very low as compared to other countries recovery. Expensive projects for enhanced oil recovery are being vulnerable. Bombay High production already at declining stage & ONGC planning to invest millions on its recovery. Other undiscovered fields are still out of consideration because of heavy costing & bidding procedures. Sunken economy is also one the reason for the price rise & surplus demands. It also holds the explorations activities in underway fields. Many projects are on paper only. There is also risk, if Exploration & Production activity goes on the then what will happen to importing companies like IOC, BPCL, HPCL. These are some firms where profits in billion US dollars. In India, Government holding the major stack in countrys Oil & Gas production. Policies are so rigid & complicated, that Individual companies cant participate alone in auction. Pricing & Costing regulations are the toughest norm under Govt policies. Foreign players still far away from Indias E&P Segment. Big numbers of service providing firms than bidders. Government stock-still security on larger share of economic rents through tax hikes and further changes left to availability of resources. Social Factors: (taunting factors) o Pricing Freedom & Regulation: No Privatization o Highest Consumption: Home & Automobile both o Proposed Plan to eliminate subsidy on LPG or Kersense seems positive. o Sophisticated & Costly Technology o Demographic Situation: High Court holding on pricing issue of KG Basin o OPEN Policies & Norms o NYMEX Trading & Dollar X Factor Keeping in mind all these factors price are still to rise in the future. Future will sure be coming with increase in the government expenditure in this sector which will result in the growth of GDP but a bigger question is whether or not this increase will be able to compensate for the increase in the imports in the country. India is the 6th largest consumer of petroleum. By the year 2010, India is expected to rank 4th in terms of consumption of energy. The contribution of the Indian Oil and Natural Gas Industry is nearly US$ 13.58 billion. All of the oil refineries in India, apart from two are
operated by the states. The total refinery output in the period 200506 was 130.11 million tones. The growth rate of the refinery output was increased by 2.1 % in the year 2005-06. The crude oil output at the end of 2006-07 was 33.98 million tones. The growth rate of the crude oil output was increased by 5.6% in the year 2006-07. The production of natural gas in the year 2006-07 was 31.55 billion cubic meters. Indian petroleum demand depends highly on import of oil and natural gas. Around 70% of the demands are fed by the imports of oil and natural gas. The security pertaining to energy has become one of the primary concerns of the Central Government. Presently India is trying to grab a share of the oil and gas fields from Central Asia to Myanmar and Africa. The area of interest for the Indian Oil and Natural Gas Industry is to search for petroleum in both offshore and onshore blocks Role of Oil and Natural Gas Industry in India GDP-World's refiner
The cost effective refining in India is attracting the attention of several international players India is one of the most important markets for petroleum products and crude oil The crude oil from Middle East is easily transported to India by means of the sea routes
India is one of the largest investors in oil fields located abroad Most of the Government owned oil companies have share in the oil and gas fields in different places of the world such as Sudan, Egypt, Libya, Ivory Coast, Vietnam, Myanmar, Russia, Iraq, Qatar, and Australia India has 20 % share in Sakhalin-I oil project in Russia The Oil and Natural Gas Corporation (ONGC) has entered into an agreement with ENI to acquire 20-25 % share of the Congo oil block
(Ref.: http://globalthoughtz.com)