REGULATORY FRAMEWORK ON OIL & GAS SECTOR

by B.S. NEGI Member Petroleum and Natural Gas Regulatory Board, India

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• •     

Oil & Gas Sector Overview

Up stream Infrastructure Regulatory regime

Key Imperative and Suggestions

Mid stream and Down stream

 

Infrastructure Regulatory regime



Issues

Key Imperatives for India

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• • • • •

India’s Sedimentary Basins- 26 Total Area- 3.14 million Square km.(msqkm) On land- 44% Shallow water- 14% Deep water- 42%

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Area (msk) (%) On land Shallow water Deep water Area under License 2.15

(68%) 46% 14% 40% Yet to License 0.99 (32%) 40% 10% 50% 4

• • • •

Gas Resources- 400 tcf ( in 15 basins) CBM resources- 50 tcf (in 26 blocks) Total Natural Gas Resources- 450 tcf



Gas resources Established

From HC E&P- 114 tcf   From CBM 6 tcf Total Reserves- 120 tcf 5

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Process of Award Nos. of Blocks Pre NELP 28 Up to NELP-VI NELP-VII 206 44 NELP-VIII 100 Remarks 11, relinquished Total awarded Awarded, Dec’08 On bid, expected March, 2009 7

Accretion per Annum of Reserves 2014-15 1% *mmscmd 12* 2017-18 2020-21 76 145 2023-24 2026-27 191 214 2% 24 152 290 382 428 5% 58 378 728 956 1072 8

 NELP - Fiscal benefits  NELP VII onwards no tax holiday for gas blocks, mineral oil definition limited to oil  Gas Hydrates – from limited participation of GAIL, OIL, ONGC, OIDB, NGRI – a more wider participation of interested parties with equity infusion as per the plan needs to be developed. Funds inflow could also be sought from international agencies  Open acreage for exploration as a part of NELP where parties spend money for searching the reserves. Allocation policy of such blocks to be decided by the regulator  Technical Standard – To follow the public consultation process

• • Refining capacity – 148 MMTPA Pipeline infrastructure  Natural Gas – 8000 km (including regional Network) •  Petroleum Product pipelines – 10000 kms CGD networks – 21 cities having gas supply, 10 Cities  in Project stage 0.85 million house hold connected  0.60 million vehicle on CNG Total infrastructure inadequate to meet the country’s requirements except oil 10

Regulatory Scenario Policy for marketing of transport fuels Policy on Refining Product Pipeline Policy Policy on NG Pipelines and CGD networks Petroleum & Natural Gas Regulatory Board Act

Perform other functions entrusted by Central Government Lay down technical standards , specifications including safety standards Protect consumer interest by fostering fair trade & competition Functions of the Board Register & Authorise entities Declare pipeline as common / contract carrier Maintain databank of information Regulate access & transportation rate on common / contract carrier / CGD network Monitor prices & prevent restrictive trade practices Enforce retail & marketting service obligation Ensure adequate availability, and equitable distribution

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S No.

1 2 3 4 5

Regulation

Levy of Fee and Other Charges Meetings of the Board Appointment of Consultants Conduct of Business, receiving and investigation of complaints Authorizing entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution networks

Notified on

26-11-2007 26-11-2007 30-11-2007 30-11-2007 19-03-2008 6 7 Determination of Network Tariff for City or Local Natural Gas Distribution Network and Compression Charges for CNG Exclusivity for City or Local Natural Gas Distribution Networks 19-03-2008 19-03-2008 13

S No.

8 9 10 11 13

Regulation

Authorizing entities to Lay, Build, Operate or Expand Natural Gas Pipelines Access Code for Common Carrier or Contract Carrier Natural Gas Pipelines Technical Standards and Specifications including Safety Standards for City or Local Natural Gas Distribution Network Determination of Natural Gas Pipeline Tariff

Notified on

06-05-2008 Affiliate Code of Conduct for Entities Engaged in Marketing of Natural Gas and Laying, Building, Operating or Expanding Natural Gas Pipeline 17-07-2008 17-07-2008 27-08-2008 20-11-2008 14

S No. Regulation

1 Technical Standards and Specifications including Safety Standards for Natural Gas Pipelines 2 3 4 5 Emergency Response and Disaster Management Declaring pipeline as Common Carrier or Contract Carrier Procedure for Standards Development Authorizing entities to Lay, Build, Operate or Expand Petroleum Product Pipelines

Notified on

Public Consultation completed. Public Consultation completed. Public Consultation completed. Public Consultation completed. Web hosted for public comments 15

S No. Regulation

6 Methodology for determination of capacity for pipeline and CGD Networks

Notified on

Under preparation 7 8 Access Code for Petroleum Product pipelines Quality of Service for CGD Networks Under Preparation Under Preparation 9 Determination of Tariff for Petroleum Product pipelines Under Preparation 16

Infrastructure Development

Energy Security

M A R K E T Mature OIL Nascent Govt. Controlled MARKET OPENING GAS Liberalized

Companies for Mkt Competition

HHI* 10000

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10000

2

5000

3

3324

4

2500

5

2000

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1653

      Ensuring Energy security through  Extensive exploitation of sedimentary basins   CBM to have high priority Underground coal gasification   National Gas Hydrates programme prioritization Non Conventional energy resources Infrastructure development for mid and down stream – NGG and CGD Infrastructure status for CGD networks apart from NGG Priority allocation of gas for CGD networks Cutting Edge Technologies and Innovation Health, Safety and Environmental aspects

 Regulations - Level playing field with predefined rules brings competition conducive to   Private sector investment complimenting public sector investment Reduce vulnerability to prices and supply shocks      Bring in efficiency Enhance infrastructure in energy sector transport Emergence of retail gas user Process of bringing competition is a single factor changing the market scenario HHI is the indicator of competition in the market