OVERVIEW OF

INDIAS ENERGY SECURITY

Apurva Chandra
Joint Secretary,
Ministry of Petroleum & Natural Gas
Government of India
June 2009
Global Economic Slowdown
Industrial recession together with
financial and housing sector crisis in
the US led to global economic
downturn.
Severest since the Great Depression of
1930s.
The World GDP annual growth rate fell
from 5% in 2007 to 3.1 in 2008
projected to be negative (-0.9%) in
2009.
Unprecedented oil price rise since 2004
aggravated the global economic
condition.
High Oil Prices initially lowered oil
consumption in the developed
countries. Economic slowdown
extended demand destruction across
the world
The World oil consumption fell to 84.46 million barrels per day in
2008 a decline of -0.6% over 2007.
The corresponding decline in US was -6.4% and in OECD -3.2%.
Price control by the Governments in developing countries helped
reduce the adverse impact of high oil prices but created an
enormous future financial burden.

3
 Indias growth story shows
resilience against global
economic slump.
Indias GDP growth during 2008-09 was 6.7% against around 9.0%
in the preceding three years.
Indias GDP projected to grow at 6.5% to 7.0% during the current
year (2009-10).
India seems to bounce back to recovery quickly the industrial
output growth during April 2009 is 1.4%. Consumer goods
production increases by 16.9%.
International Energy Agency (IEA) projects India to register
highest annual average real GDP growth of 6.4% during 2006-
2030.
Indias energy consumption is also projected to grow at 3.5% p.a.
in the next two decades.
4
Energy Consumption Per Capita : India
and the world
Country TPES
Indias per capita energy TPES / TPES/GDP
(Mtoe) Population (PPP)
consumption among the (toe/capita) (toe/000
lowest in the world 2000$)
7% of USA
USA 2321 7.74 0.21
28% of the World
India accounts for 17% UK 231 3.82 0.13
world population, but only
China 1879 1.43 0.22
about 5% of worlds primary
energy consumption, Japan 528 4.13 0.15
But projected to rise faster India 566 0.51 0.15
than developed countries
World 11740 1.80 0.20
International Energy Agency
(IEA), Paris forecasts Indias TPES : Total primary energy supply
energy consumption growth GDP in 2000 US$
at 3.5% by 2030, against Mtoe : Million ton oil equivalent
world growth of 1.6% PPP: Purchasing Power Parity
IEA : Key World Statistics, 2008
5
 Commercial Energy Mix
India World
2007
2007

2030
2031

Oil & Gas together accounted 41% of commercial energy in 2007 Oil will continue to be the single largest energy source (35%) in 2030
By 2031 Gas & Nuclear power will have an increasing share Coal share increases indicating adoption of CTL, CBM etc.

Source: 2007 :BP Statistics 2008 2031: IEP Report, Govt. of India 2006 Source : 2007: BP Statistics 2008 2030 : IEA, WEO 2007 6
Petro Product : Increasing Demand
Transportation Fuels
(Diesel, Petrol & ATF)
share 51 % of demand-
Diesel is nearly 40%.
High economic growth key
factor for higher demand.
Price restraints imposed
since 2004-05 boosted
demand.
Petro products
consumption grew at a rate
of nearly 7 % in 2006-07
and 2007-08 and fail to 3.5
Source: PPAC,MOPNG & EIA (for 2030-31)
% in 2008-09(Impact of
industrial slow down)
Demand growth projected 7
 Stagnating domestic gas 177
poised to pick up from
2008-09
Share of Private/JV
increases: RIL production in
end-2008
102
LNG availability since 2004-
05 augmenting domestic
supply
Kochi & Dabhol Terminals to
boost LNG supply by 2011-12 38
Robust gas demand at 24 30
above 6% per annum in the 11
next 25 years second
highest growth in the world
after China.

Both

Source: XI Plan Sub-Group Report & Integrated Energy Policy Report, 2006 (for 2031-32)
8
Indias Oil production stagnating
since 2000s
but Gas potential rising

No large oil finds since the Mumbai High in

1978. Oil Production stagnating around 33
MMT.
Gas production at 32.8 BCM in 2008-09 but
projected to rise substantially from 2009-10
onwards.
Private / JV share increasing : 20% in 2020.
Source: MOPNG 9
Crude Oil: Production & Import
Domestic Crude
production stagnant
at around 33 MMTPA
since the last ten
years, while demand
has risen faster.
During 2007- 08
refineries imported
around 122 MMT of
oil.
Dependence on oil
import at present
78% - Projected to
rise to 90% by 2030

Source: Petroleum & Natural Gas Statistics, MOPNG & PPAC

10
 Natural Gas: Production &
Import
32.8 BCM ( 29.5
MMtoe) gas
production in 08-09
Public Sector share is
around 75 %

Production likely to
double by 2011-12, of
which Private
Companies share
will be 60%
LNG imports during
2008-09 = 28 MMSCMD
(24% of domestic gas
consumption)

11
Source: Petroleum & Natural Gas Statistics, MOPNG & PPAC
12
 New Exploration Licensing
Policy-NELP
Notified in 1999
Award of licenses through international competitive bidding
Fast track approval mechanism of bids through single
window Empowered Committee of Secretaries (ECS)
Up to 100% foreign participation
No Investment by Government of India
Freedom to contractor to market oil and gas in the domestic
market at market determined prices
100% cost recovery of Exploration & Development
expenditure
Fiscal stability over the contract period
Government gets Profit Petroleum in addition to Royalty

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NELP- Augmenting Domestic
Production
203 production sharing contracts signed since 2000
Area under exploration increased more than four times
from 0.35 million sq. km in 2000.
68 hydrocarbon discoveries under NELP Regime.

Major gas discoveries by domestic and foreign

companies Gas self sufficiency likely in the medium
term.
The Eighth Round of NELP expected in 2009- 70
exploration blocks to be offered for bidding
During the 11th Plan, 80% of Indian sedimentary
basins to be covered under exploration 100 %
targeted by 2015. 14
15
Refineries in the Country
(Capacity in MMT)

BHATINDA PANIPAT
(9.0) (12.0) DIGBOI
(0.65)
BONGAIGAON
(2.35)
MATHURA
(8.0) BARAUNI
(6.0) GUWAHATI NUMALIGARH
VADINAR BINA (1.0) (3.0)
(10.5) (6.0)
BARODA
JAMNAGAR
(13.7)
(33.0,29.0) HALDIA (6.0)
PARADIP (15.0)
CUDDALORE (6.0)
BOMBAY
(12,5.5) VISAKH
(7.5)
TATIPAKA Existing
(0.08) New
MANGLORE
(9.69)
CHENNAI
(9.5)

COCHIN NARIMANAM
(7.5) (1.0)

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 Refining Self Sufficiency achieved
since 2001-02
Refining Self -Sufficiency is
an important part of
countrys energy security

Private Sector share is 41%

(February 2009)

At present , Surplus
Refining Capacity is 23 %

Exports account for nearly

30 % of total refinery
production in 2008-09

Indias refining industry is

well-placed to become
Asias Refining Hub. 17
Distribution Infrastructure

18
Distribution Infrastructure: 2002
to 2008
Unit 1.4.2002 1.4.2008 % Growth

Retail Outlets Number 18848 36921 95.9

SKO Dealers Number 6451 6624 2.7

LPG Distributors Number 7486 9365 25.1

LPG Bottling Plants Number 128 181 41.4

LPG Bottling Capacity TMT 6263 8697 38.9

LPG Tankage TMT 532 670 25.9

Pipeline length Kms 5530 16805 203.9

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 Concept of National Gas Grid
(NGG)
(NGG
The 2006 Pipeline Policy
envisages NGG
About 6500 km NG
transmission pipeline
already laid
RILs 1375 km East-
West Pipeline (Kakinada-
Bharuch) nearing
completion
Study being undertaken
by the Government with
technical assistance from
United States Trade
Development Agency
(USTDA)
Total Investment
Projected at USD 7.5
Billion (2006 Prices) Source: XI Plan Sub-Group Report, 2006
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 Transnational Pipelines to India
Pipeline Pipelin Estimated
72% of world gas e Volume
Length (MMSCMD
supply is through
(Kms) )
pipelines
Imports from Iran
Both supply and Iran Pakistan India 2000 60-90
pipeline
upcoming demand
is around Asia
Imports from Turkmenistan
Pipeline is vital to Turkmenistan-Afghanistan- 1700 40-70
develop a stable Pakistan-India pipeline
Asian gas market

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 15 MMT in phases
5 MMT under construction

Padur (2.5 MMT)

Mangalore
Vizag
(1.5 MMT)
(1 MMT)
Strategic Storage to provide for
Emergency Response Mechanism
against supply disruptions 22
23
 Domestic Prices linked to
International Price Trend
Year $/bbl
2002-03 26.7
2003-04 28.0
2004-05 39.0
2005-06 55.7
2006-07 62.5
2007-08 79.3
2008-09 83.6
2009-10 (Up to May 09) 58.0

Indias Oil Import dependency is projected to rise from 80 % today to 90

% by the year 2030.
Oil price changes in International markets, therefore, affects domestic
prices in India.
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 Petrol / Diesel Pricing
Administered Pricing Mechanism abolished from April 2002.
22 Price revisions were carried out during 2002-2004 in line
with import parity price.
The super spike in oil prices since 2004 necessitated price
control to minimise adverse impact on the economy and the
people.
In order to ensure life line energy, i.e. Kerosene & LPG, to the
weaker sections of the society & to contain inflation, Government
moderated the consumer prices of Petrol, Diesel, LPG and
SKO.
Lower domestic prices resulted in huge under-realization of
revenue by the Oil Marketing Companies(OMCs).
OMCs received price discount from Public Sector upstream
companies and Oil bonds from the Government.

25
 Diversifying Energy
Sources : Towards a
sustainable Energy Future

26
 Acquisition of Equity Oil
Abroad

Indian companies present in 22 countries and 43

projects
ONGC Videsh Limited (OVL) leads a group of Public Sector
and Private sector companies in overseas E&P acquisitions
OVLs oil and gas production in 2007-08 reached 8.8
MMtoe -14% of domestic production of oil & gas

27
Exploitation of Coal Bed Methane
(CBM)
Comprehensive CBM policy in July1997.

26 CBM blocks already awarded under the first

three rounds of international offer.
6 TCF reserves of CBM Gas established in four
blocks.
First CBM commercial production in July 2007
in Raniganj (WB) by Great Eastern Energy
Corporation Limited.

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 Underground Coal
Gasification (UCG)
The estimated UCG potential in India is
equivalent to 19 Trillion cubic metres of Natural
Gas.
ONGC in collaboration with Skochinsky Institute
of Mining, Russia carries out seismic survey.
Vastan in Gujarat & Hodu Sindri in Rajasthan are
the first two blocks suitable for UCG stations.
Pilot production to commence in 2009-10
Coal-to-Liquids (CTL) in pilot stage

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 Gas Hydrates
In 2007, road map for National Gas Hydrate
programme prepared.
About 2000 TCF reserves estimated
The drill ship JOIDES Resolution has collected
good quality gas hydrate samples from deep
water basin.
Presence of 128 m thick gas hydrate layer
detected.
India is one of the three countries in the world to
have physically collected gas hydrate samples.
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 Biofuels
Ethanol-blended petrol (EBP) constrained by
restrictive taxes imposed by states. About 5%
ethanol blending on all-India basis has been
possible, except a few states.
Stability in supply and compatibility with
automotive engines key to sustained
development of EBP to reach the long term
target of 10%.
Bio-diesel yet to take off.
National Bio-Fuel Policy of the Government for
long term development
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 Nuclear Energy

Electricity is the backbone of Indias energy

structure

Nuclear fuel is projected to contribute 11% of

electricity generation by 2031-32

The Nuclear Supplier Groups (NSG) exemption to

India recently is a watershed in the development of
nuclear power in the country

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 Renewable Energy
Reliable, affordable, socially acceptable and
environmentally sustainable energy for the
millions of households, who live outside
countrys Energy Highway
Wind, Solar and Bio-energy constitute the core
In wind power, India ranks fourth in the world
Power generation potential = 45,000 MW
Currently generated = Around 8,000 MW (17%)
Solar energy for lighting and cooking
12 lakh solar lanterns and cookers supplied
Remote Village Electrification programme
completed in 4200 villages / hamlets
39 lakh biogas plants in States/UTs

33
Energy Efficiency and Demand
Side Management
Limited conventional energy reserves and constraints of
harnessing non-conventional energy resources call for
greater emphasis on energy efficiency and conservation.
Energy efficiency measures will provide the most
important virtual energy supply sources in the next 25
years.
Substantial energy saving potential 19% of total
energy demand.
Bureau of Energy Efficiency(BEE) promotes and
regulates energy efficiency measures in the country.

34
 Controlling Air Pollution by
Automobiles in the Country
India has adopted Euro standards of Fuel Quality for
Petrol and Diesel.
The existing standards are: Euro III grades fuel for 13
most polluting cities and Euro II equivalent grade for
rest of the country.
Euro-IV grade fuel in the most polluting cities from
April 2010 and Euro-III in the rest.
Compressed Natural Gas (CNG) is being sold as fuel
for automobiles all public transport buses in Delhi
converted to CNG.
Auto LPG is also being sold as alternative motor fuel.
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Summing up

36
To sum up, management of oil and gas sector in
India will be focussed on the following:
Enhancing customer satisfaction through
efficient and transparent marketing and
distribution methods as well as through
dissemination of information for making informed
choices
Expediting E&P efforts to augment domestic
production and reduce dependence on unstable
sources abroad
Improving domestic pipeline infrastructure and
promoting trans-national pipeline projects to
strengthen the distribution network

37
Promoting Bio-fuels and Non-conventional
energy to supplement the conventional
sources as well as improve environment.
Accelerating R&D to enhance recovery
from the conventional sources as well as
harness the potential of new energy
sources
Managing geo-politics through diplomacy
and regional cooperation for reducing
supply risks
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