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Cairn Oil & Gas

Gas in India
A PERSPECTIVE

September 1, 2020
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OUR JOURNEY IN KEY MILESTONES…

HIIP – ~7.1 bn boe

Production till date > 1000 mmboe across RJ, Ravva and Cambay
Contribution to Exchequer ~ USD 31 Bn
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CAIRN OIL & GAS: INDIA’S LARGEST PRIVATE O&G PLAYER

PSC Blocks OALP & DSF Blocks

13x Acreage increase from 5,000 sq. km. to 65,000 sq. km. spread across basins in India
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CONTRIBUTION TO EXCHEQUER
CONTRIBUTING TO NATION BUILDING

01 02 03
ROYALTY CESS & NCCD PROFIT PETROLEUM
$ 6 Billion $ 6 Billion $ 16 Billion

04 05
SALES TAX & VAT CORPORATE TAX & DDT
$ 2 Billion $ 2 Billion

Total Contribution $ 31 Billion

Delivering long-term value to Government, Local Communities and all Stakeholders

Contribution till Jun’20
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NATURAL GAS REPRESENTS UNIQUE OPPORTUNITY:

A RESPONSIBLE CHOICE TO DELIVER CLEAN, CHEAPER AND ABUNDANT ENERGY

Gas consumption as % of total energy mix India Energy Mix vs. World
India 6%
Renewables
China 7%

Brazil 10% Hydro electric

Indonesia 18%
Nuclear energy
Germany 23%
Coal
US 31%

UK 35% Natural Gas

Italy 39%
Oil
Russia 54%

Egypt 54% 0% 10% 20% 30% 40% 50% 60%

Qatar 75% World India

Trinidad 86%
Coal dominates India’s energy mix in sharp contrast to the
0% 20% 40% 60% 80% 100%
energy mix of developed markets where Oil, Gas and Coal
World average: 24% consumption is more balanced
Currently, gas plays a peripheral role in India’s
energy mix
Source: BP Statistical Review of World Energy, 2019, Vision 2030 - PNGRB
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CURRENT ENERGY MIX: A SIGNIFICANT POTENTIAL EXISTS

FOR INCREASING THE GAS SHARE
Current Energy Mix: India

Vision………. 4%
3% Oil

Gas
To increase the share of natural 30%

gas in India’s energy mix to

Coal

Nuclear
15% by 2030 6% Hydro
56%
Renewables

Total consumption: 16.5 Mboepd

• By 2030, total energy consumption in India expected to be ~ 22Mboepd
• India’s gas vision translates to tripling of gas consumption in India – from 1Mboepd to ~ 3Mboepd
Source: Vision 2030 - PNGRB 6
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GAS SUPPLIES: DOMESTIC & IMPORTED LNG

India - 5 Year Gas Demand Gas Supply India Gas Source Trend (Net Sales) - CY20
175 10%
LNG 57% 175

150
8% Domestic 43% 150

125
NOC/Others 93% 125

%age Growth
6%
Cairn
mmscmd

100 7% 100

mmscmd
75
4% 75

50 Gas Demand
50
2%
25 Fertilizer 30%
25
0 0% Power 20%
2015 2016 2017 2018 2019 0
CGD 20% Mar'19 Mar'20 April'20 May'20 June'20 July'20
India - production India - LNG imports % growth in gas demand
Others 30% ONGC OIL Pvt India - LNG imports

Source: PPAC

• Gas demand has not witnessed quantum • Gas production has traditionally been in the hands
jump, however, steps like LNG retailing, new pipelines of the NOCs
likely to make 2021 & 2022 nos. quite different • Domestic gas meets ~40% of demand, overall
demand back to pre-covid levels.

Source: 2019-20 data, PPAC & internal analysis;

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MOPNG HAS BEEN RESPONDING TO HON’BLE PM’S VISION

Cess made ad-valorem

Policy on testing
Natural Gas price reforms discoveries in NELP blocks PSC extension policy
for Discovered fields

November October February March

2014 2015 2016
October April March

PSC provision Relaxation Marginal Field Policy Natural Gas Price

policy reforms (difficult
fields)
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REFORMS SHOULD CONTINUE THE MOMENTUM

Streamlining PSCs;
Unconventional
Hydrocarbon Policy
CBM pricing &
Hydrocarbon marketing freedom DGH circular on self
Exploration & Pre-NELP PSC Discovered Small certification regarding
Licensing Policy Extension Policy Fields Bid Round II ease of doing business

May June October

2016 2017 2018 2020
March April February August April

Discovered Small Enhanced

OALP
Fields Bid Round 2016 Recovery Policy
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AT CAIRN, WE ARE ALIGNED WITH GOI’S VISION OF

INCREASING DOMESTIC PRODUCTION

• Set for rapid expansion with OALP win of 51 new blocks spread across India

• Capex Investment of $3.2 billion to drive Growth in existing fields to ramp up oil
and gas production through increased exploration, enhanced oil recovery, and
development projects.

• Raageshwari Deep gas project is an opportunity to substantially increase gas

volumes.
• Increase in expected EUR by 57% to 121mmboe due to efficiencies, induction of cutting-
edge technologies, due to drilling of new infill wells and increasing field offtake
• To ramp up production to ~7mmscmd by Q4 FY21 from current ~3.5mmscmd
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TO SPUR ADDITIONAL INVESTMENTS & EXPEDITIOUSLY

ENHANCE THE SHARE OF NATURAL GAS, INDIA SHOULD
CONSIDER THE FOLLOWING:

• Complete marketing and pricing freedom for upstream producers

• Bringing gas under GST regime that would result in availability of input tax credit
• Reduction/suspension of taxes and levies on production and sale of domestic gas.
• Removal of gas ceiling price for the production coming from deep-water and
HP/HT fields
• Unbundling of transportation and marketing of gas
• Encourage use of natural gas in Power plants that are currently stranded
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IMPACT OF COVID19

• Quick & early adaption to new technology helped to manage business without any
disruptions
• Normal production operations not affected – strict implementation of GOI
guidelines and proactive measures
• Drop in gas sales in April & May - cascading effect of total lockdown across India
• Growth projects slowdown till end May, momentum picked up by end July
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THANK YOU