Airvoice Oil Natural Gas Private Limited

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Indian E&P Companies
Most of the Indian companies barring HOEC have been riding piggyback on the foreign companies for exploration and development ventures in India. In this regard, Reliance Petroleum Ltd. has taken the first step by joining up with ONGC in bidding for exploration as well as development ventures in India and abroad. Some of the downstream companies like IOC, GAIL has entered also upstream in consort with ONGC and OIL.

Opening of the Oil/Gas Fields for Development by Private Companies
The Indian oil/gas fields discovered by the two NOC’s, were first offered in 1992 under the First Offer. The second such offer was made in 1993. Development of fields is characterized by a comparative lack of business risk but is a cost intensive venture. Only those companies who have previous experience of field development can undertake such ventures. Unlike the Exploration blocks, field development contracts have upfront payments to be made to the NOC’s for past costs as well as in the form of signature bonus. At the stage of oil/gas production, companies are also required to make production bonus payments. Lack of previous experience forces the Indian companies to seek foreign partners not only to work as Operator but also to share costs. It would help Indian cause if the government were to introduce the practice of Pure Service Contract like in some of the other producing countries.

Today 74 Exploration Contracts and 28 Development Contracts are in operation. There are a total of 103 PSC’s in operation. This is a sizable number but unfortunately this is not made known to a large number of people/enterprises. The Development Contracts are likely to add about 150,000 barrels of oil per day (or about 7.5 MMT per year) and about 7 million cubic meters per day of gas production. In terms of money about 4 billion dollars are expected to be pumped into these ventures over the next 10 to 15 years.

During much of 2004 and 2005 the spare capacity to produce oil has been less than one million barrels per day. A million barrels per day is not enough spare capacity to cover an interruption of supply from almost any OPEC producer. In a world that consumes over 80 million barrels per day of petroleum products, that adds a significant risk premium to crude oil price and is largely responsible for prices in excess of $40 per barrel.

Oil Prices went into a downward spiral of more than 20 percent since the middle of July. While energy prices remain high, they have not risen to heights that many analysts had feared, in part because of a light hurricane season this summer, the cease-fire between Israel and Hezbollah and the fact that UN has not imposed sanctions on Iran. While there is no sense of urgency about oil price increases, some members of Opec are beginning to express anxiety about further price declines.

The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. The petroleum and natural gas sector which includes transportation, refining and marketing of petroleum products and gas constitutes over 15 per cent of the GDP. Petroleum exports have also emerged as the single largest foreign exchange earner, accounting for 17.24 per cent of the total exports in 2007-08. Growth continued in 2008-09 with the export of petroleum products touching US$ 23.63 billion during April-December 2008. In November 2008, the Cabinet Committee on Economic Affairs awarded 44 oil and gas exploration blocks under the seventh round of auction of the New Exploration Licensing Policy (NELP-VII). With NELP VIII, the overall number of blocks brought under exploration exceeded 200. The allocation brought in investments worth US$ 1.5 billion. The eighth round of auction which ended on October 12 2009 attracted over US$1.34 billion in minimum investment.

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