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Energy Scenario Report PDF
Energy Scenario Report PDF
Foreword
2
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Contents
Indias impending energy crisis
Key issues limiting growth and development of Indias oil and gas industry
A. Upstream
B. Midstream
C. Downstream
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Currently, India is one of the worlds fastest-growing
economies. During the period between 2006 and
2010, the countrys gross domestic product (GDP)
increased at a CAGR of 8.2%, while global GDP
increased at a CAGR of 4.5%.1 The rapid increase in
economic activity has been accompanied by rising
energy consumption. During the period between
2006 and 2010, Indias primary energy consumption
increased at a CAGR of 8.3%, from 381.4 million tons
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and natural gas are major sources of primary energy
in India, accounting for 52.9%, 29.6% and 10.6%,
respectively, of the primary energy consumption.
78
140
120.7
128.9
74.9
71.9
137.8
141.8
75.6
73.5
74
73.4
72
70
80
68
60
40
76
34
34.1
33.5
33.7
37.7
64
20
0
FY07
FY08
FY09
FY10
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Percentage
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120
100
133.6
62
60
FY11
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BP Statistical Review of World Energy 2011
Currently, around 32% of demand for gas in the
country is unmet as domestic supplies are not
adequate enough to meet current demand. In FY10,
the domestic gas supply scenario improved, with the
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However, a steady drop in production from the KG-D6
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of domestic gas.8
of price affordability and pipeline infrastructure.
3.
4.
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natural gas (LNG) terminals were located in the
western part of the country. As a result, the pipeline
infrastructure was concentrated only in the western
India, which has adversely impacted the availability
of gas in the rest of the country. The low availability
of gas and limited infrastructure has curtailed
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methane (CBM) and new LNG facilities. In spite of the
demand for gas in the country.
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According to the Integrated Energy Policy by the
Government of India (GoI), Indias requirement of
primary commercial energy is projected to increase
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Rising consumption will be driven by economic
growth and high fuel demand. The global average
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substantial potential for growth in energy demand.10
To meet the growing energy demand over the next
few years, India will have to enhance its energy
security by procuring energy supplies at affordable
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and is an exporter of petroleum products, major
investments will have to be made in the domestic
upstream industry and to acquire hydrocarbon
reserves abroad.
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The Economic Times, 9 February 2011, via Factiva, 2011 The Times of India Group
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7. PPAC, Data for Crude and Products - Value in Rupees, accessed 7 December 2011
8. Reliance Industries Limited, Analyst Presentations, July 27, 2010 and November 2011
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Inadequate upstream
infrastructure11
The upstream oil and gas infrastructure in India is
inadequate due to underinvestment in the past.
As a result, the production of oil and gas remained
rise in demand. The sector has limited participation
from foreign and private players as is visible from
their declining participation in New Exploration
Licensing Policy (NELP) rounds. For instance, a total
of 21 foreign companies participated in NELP-VII
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NELP-IX (2011).12 Further, companies have spent just
US$7.2 billion, out of their investment commitment
of US$20.7 billion until NELP VII.13 Although
the unexplored sedimentary area in the country
decreased from 41% in FY99 to 12% in FY10, the
level of exploration will have to be further raised to
increase hydrocarbon production.14
and gas discoveries. Since the introduction of
NELP in 1999, there have been 60 discoveries,
out of which 51 are gas discoveries. However,
out of these 51 discoveries, only two have
entered production phase.
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in the manufacture of rigs, particularly deepwater rigs,
and the time lag in the delivery of new rigs. Further,
most of the rig assets held by Indian companies are
have to be retired or substantially upgraded to remain
shortage. In addition to rigs, there is a scarcity of
other upstream-related infrastructure such as process
platforms, pipelines, collecting stations and other
surface facilities to transport oil and gas from wells to
delivery points.
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upstream segment have decreased from 41,415
in 2005 to 33,351 in 2010.
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supporting the growth of the domestic oil and gas
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of mineral oil for seven years including initial
assessment year. However, in the initial years
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Minimum Alternative Tax (MAT):*
granted by way of tax holiday is partially offset
since no exemption has been granted from levy
of MAT.
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Reimbursement of expense taxed under section
44BB of the Act (for service providers):
number of judgments have held that the amount
received as reimbursement of expenses does not
accrue or arise from the performance of any services
under the contract and hence, are not part of the
contractual revenues. The reimbursements are in
respect of amounts spent by the contractor on behalf
of the principal and accordingly, the same do not
constitute income in the hands of the contractor.
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contrary position that provisions of Section 44BB
of the Act apply to all amounts received and there
is no scope for a differential treatment in respect of
reimbursement expenses. Accordingly, the Revenue
authorities have consequently taxed reimbursements
of expenses.
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Estimated pipeline
density (km/sq. km.)
0.003
The UK
0.05
The US
0.05
0.01
China
0.004
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LNG (Contracted)
Dahej terminal
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Absence of a clear regulatory framework for
developing CGD networks: The absence of clear
regulatory provisions has hampered the development
of the domestic CGD industry. Licenses for CGD
projects under round 2 and round 3 of CGD bidding
are yet to be awarded. Moreover, the uncertainty over
the bidding criteria recently led to the cancellation
of the fourth round of CGD bidding. Eligibility criteria
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bids have been invited for areas, which are too small
or underdeveloped to sustain the CGD business
at all.
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