Professional Documents
Culture Documents
RK Sinha
RK Sinha
Presentation Outline
Petroleum Regulatory Framework
Types of Agreements
Contracts in India PSC Regime
Conclusions
2
CONCESSION
JOINT VENTURE
SERVICE CONTRACT
HYBRID
PSC 4
Global Energy Resources Management Structure More countries adopting the "separation of roles for Resource Management
Ministry Regulator
Policy
Regulations
NOC/IOC/ JV
Business
5
Types of Agreements
Types of Agreements
Concessions
Joint Ventures
Service Contracts
Concession
Contractor has exclusive rights to explore, develop, sell, and export oil/gas from a specified area for a fixed period of time Equity or Royalty & Tax structure Maximum control to Contractor Oldest & most widely used
Joint Venture
Private/Foreign Companies and NOC form a Joint Venture Each JV partner pays/receives its share proportion to its Participating Interest. in
JV pays royalty, income tax and usually some form of Petroleum Revenue Tax (PRT)
Service Contract
Contractor costs pays all exploration and development
Contractor works under governments mandate and is paid for its work Government maintains ownership and title of minerals Most suitable for Contractor for risk-free operations and for States having Producing Assets
11
Contractor finances exploration and development. If successful, Contractor will recover its costs and earn a profit by receiving a share of production. Royalty & Income Tax are paid as applicable
Hybrids
Combinations of Concession /JV / PSC, royalty, tax, cost oil / profit oil shares and fees etc. Efforts to develop a world model Hybrid agreement have been unsuccessful because structures are becoming more diverse Host governments seeking structures that suit their particular needs
13
Hybrid
PSC
Mixed
Exploration risk Share in reward
Mixed
Share in reward
14
Joint venture
Service contract Hybrid PSC
31
2 16 40
Source: Macleod Dixon Workshop, 2007
15
CONCESSIONS (59)
UK, US , Norway, Australia, Canada, Peru, Namibia, Thailand, Sudan, Ecuador, Kuwait, Bahamas Colombia, Cameroon, Netherlands, Pakistan Egypt, Yemen, Angola, Indonesia, India, Guatemala, Sri Lanka
SERVICE CONTRACTS (2) Iran , Qatar HYBRID (16) Libya, China, Malaysia, Kenya, Tanzania, Gabon, Myanmar
16
interests
Takes into consideration the communities or entities not party to the deal but who will be interested or affected by it
17
leasing approach
Many developing countries use consensual
approach and prefer mining agreements Political will of host country to develop resources is key and expressed through regulatory instruments, Contractual guidelines obligations, National Policies and
PSC in India
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Historical Background
First concept for PSC was introduced in Bolivia in 1950
Legal Framework
Constitution of India, 1950 The Oilfields (Regulation and Development) Act, 1948 The Petroleum and Natural Gas Rules, 1959 & Amendments Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 Income Tax Act, 1961 Customs Act, 1962 Foreign Exchange Management Act, 1999 Environment Protection Act, 1986
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Hydrocarbon sector vision Role for different sectors in energy fuel mix
Managing resource base Bringing accountability Managing licensing Mandate for data repository
1950s-93
REGULATOR
Upstream: DGH Downstream: Gas Regulator
Public (Central): ONGC OIL GAIL
OPERATOR
Public (State): GSPC
Private: Reliance Jubilant Videocon Essar Foreign: BG ENI Cairn 23 Niko
Exploration
& Appraisal
Development
Abandonment & Reclamation
Production
10
20
30
40
24
Cost Petroleum
Profit Petroleum
Development
Contractors share
Governments share
Governments take
Income tax
Contractors take
25
25
Cost Petroleum (includes Royalty, OPEX and allowed cost recovery of CAPEX)
Contractors take
Contractors net cash flow = Contractors take ( Production cost (OPEX) +Royalty ) Contractors Cumulative net cash flow
PTIM
PTIM Tranches
Upto 1.5 3.5 and above
27
2. Work Programme
1 2 3 3D seismic surveys Exploratory wells Other Surveys 1. Cost recovery 2. Profit share to Government
3.Fiscal Package
33.66%
29
100%
120%
20%
40%
60%
80%
0%
100%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
0.00%
5.00%
G Au st ar al ia O ns ho re re en la nd
Ar ge nt ia In d ia NE LP
(10%-12.5%)
Ka za kh st an
Royalties
Co
ng o
Bo
liv ia Co Te xa s lo m bi a O ffs ho Ve ne zu
re
al a
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POLICY REFORMS
New Exploration Licensing Policy (NELP)
New Exploration Licensing Policy announced in 1997, Effective since 1999
100% FDI in E&P sector approved Seven rounds of international bidding completed
(NELP)
bidding
Fast track approval mechanism, DGH as single
window clearance
No State participation or any carried interest International pricing for Crude oil Approval of price formula/ basis of Natural gas by
2009
AREA AWARDED
AREA awarded : 2.15 Million Sq Km (68%)
Area Opened up
180
Growth of Discoveries
11-12 10-11
107
Actual
Projected
99-00
200 120
160
80
40
KG, 43%
Rajasthan, 15%
CAIRN 22%
GSPC 18%
ONGC 11%
RIL 36%
HARDY 1%
BGEPIL NIKO 1% 2%
Indias Perception
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Indias Perception
Prospectivity
Materiality and scale of opportunities are world class - as proved by Barmer Basin oil and KG Basin gas discoveries
Market
Gas market policies and regulatory framework are in place now gas pricing and marketing rules are simple and clear
Competition
Its a level playing field bid evaluation system is more transparent, fair and competitive. Technical and commercial merits weights have been optimized
Undeveloped
Indonesia 2007
Data availability
Weak
Norms & Benchmarking Administered Pricing
Strong
Nigeria 2006
Indonesia 2007
Marketbased
Competitive Landscape
Brazil Round 9
USGOM
Diversi -fied 47
PARTNERING OPPORTUNITIES
NATIONAL OIL COMPANIES
ONGC OIL HPCL Reliance Essar Videocon Tata Adani HOEC Jubilant Aban Deep Welspun BPCL IOC NTPC BP Eni Statoil Gazprom Cairn Santos Tullow Hardy NIKO Petrobras Naftogaz Canoro M3energy Geoglobal BG
FOREIGN PLAYERS
Best
1 worst 2 3 4 5 A
In terms of Oil Sector Operations Risk, India scores in the low risk range (B).
D F
Canada Australia United Kingdom Bahrain Norway United States Chile United Arab Emirates Malaysia Qatar Thailand Ghana Oman Trinidad China Brazil Mozambique Nicaragua Madagascar Mauritania Morocco India Mexico Viet Nam Egypt Cuba Gabon Congo Brazzaville Kuwait Libya Peru Saudi Arabia Equatorial Guinea Colombia Angola Angola-Offshore Syria Azerbaijan Russia Sao Tome Argentina Indonesia Iran Algeria Bangladesh Kazakhstan Pakistan Timor Leste Turkmenistan Papua New Guinea Chad Bolivia Venezuela Nigeria-Offshore Ecuador Yemen Nigeria Iraq Sudan
Best
1 worst 2 3 4 5
In terms of Entry Risk, India scores in the medium risk range (B), while many major resource holders are in the D to F range
C D F
Canada United States United Kingdom Peru Colombia Australia Madagascar Ghana Nicaragua Gabon Mauritania Thailand Timor Leste Morocco Cuba Argentina Pakistan Mozambique Papua New Guinea Congo Brazzaville Nigeria-Offshore Norway Equatorial Guinea Trinidad Chile Libya Qatar Angola-Offshore Bangladesh India Sao Tome Bahrain Syria Yemen Malaysia Egypt Oman Chad Brazil Sudan Indonesia Kazakhstan China Azerbaijan Viet Nam Angola Nigeria United Arab Emirates Bolivia Russia Turkmenistan Algeria Ecuador Mexico Iraq Venezuela Kuwait Iran Saudi Arabia
Indias Politics and Economics scores are among the highest in Asia, Oil Sector Entry scores are average for the region.
3.91
0.47
0.45 0.44 0.86 0.39 0.47 0.84 0.80 0.65 0.84 0.76 0.76 0.57 0.30 0.67 0.55 0.40 0.88 0.23 0.35 0.73 0.59 0.63 0.57 0.51 0.58 0.67 0.30 0.70 0.58 0.25 0.35 0.62 0.23 0.54 0.14 0.30 0.83 0.79 0.80 0.35 0.42 0.42 0.44 0.42
3.66
3.63
3.49
3.33
3.33
3.32
3.17
2.96
0.47
0.80
0.70
1
0.84
0.77 0.49
0.76
0.82
0.78
0.66
0.72
0.68
0.66
0.66
0.72
0
Malaysia Thailand China India Vietnam Bangladesh Indonesia Timor-Leste Papua New Guinea Pakistan
Economics
Source: PFC Energy
Politics
Social
5= best
4
4.17
0.47
Compared to other Deepwater Players, Oil Sector Entry scores are higher than major resource holders such as Mexico and Brazil.
3.74
0.45
3.63
0.49
3.63 3.43
0.39 0.43 0.42 0.38 0.67 0.67 0.68 0.23 0.31 0.80 0.66 0.58 0.39 0.25 0.77 0.76 0.86 0.50 Mexico Nigeria-Offshore 0.35 0.77 0.16 0.45 0.63 0.76 0.38 0.45
3.33
3.14
3.07
0.86
3
0.65
0.79
0.69
0.76
0.59
0.47 0.35
0.74 0.30
0.88
1
0.84
0.94
0.65
0.76
0.78
0.68 Angola-Offshore
0.68 Indonesia
0
Malaysia Economics Equatorial Guinea Social India Oil Sector Entry Oil Sector Operations Oil Sector Surprises
Conclusions
Indian PSC is considered to be Progressive & investor friendly India has large prospectivity unexplored area with uncertain
Needs extensive exploration and risk capital PSC enables exploration at no cost to Government Cost Recovery acts as incentive exploration till success is achieved to continue
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