Oil & Gas Analysis
Oil & Gas Analysis
Oil & Gas Analysis
India – Statistics
270
BCM
ØOffshore
Crude
785 Oil
reserves:
BCM
ØOnshore
357 MT
ØOffshore
368 MT
Ø India has
about 0.4% of
the world’s
proven
Production
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Demand in 2024-25
Oil 376.50 MT
Ø To remember: DEMAND bound to increase
till the petroleum
Gas products prices
142.715 BCMstay
subsidized in India
Ø IF GoI :
180%
300% Click to edit Master text styles increase
280% Second level
● Third level
260% 150%
● Fourth level increase
240%
● Fifth level
220%
200%
%
180%
160%
140% 23-30%
120% increase
100%
2004 2005 2006 2007 2008
Year
1% increase
Brent Crude Indian Crude basket Petrol
Diesel Kerosene LPG
Source:
IOCL
website
Inadequate and ad-hoc price revisions
Impact on Indian Economy
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Sources: Petroleum Planning and Analysis Cell and the Reserve bank of India
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q GoI initiatives
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in oil sector
has been explored so far..
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discoveries have
been made in the
recent years..
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● Fourth level
● Fifth level
Salient features
Total exploration period shall: max. 7yrs. (4+3 OR 5+2)
•
Royalty: 12.5% (oil); 10% (gas) ; Deep water: 5% (7 yrs) & 10% later
Bidders are exempted from the payment of customs duty on all imports
for petroleum operations under the contract
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● Fourth level
● Fifth level
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*Provisio
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Windfall profits
● Fourth level
● Fifth level
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E&P WILL REPLACE REFINING AS THE LARGEST EBIT CONTRIBUTOR FOR RIL
conversion to FPSOs
Considering buying a 3rd one
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● Fifth level
● Fourth level
● Fifth level
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Average well-head price: US$ 55 / bbl
Revenue cost recovery: max. 90%
Royalty rate: 5% for first 7 years, 10% for later years
Income tax: Tax holiday for first 7 years of commercial operations; 34% Income
tax after that
Operating costs: US$2.50 / bbl
Debt-equity: 70:30;cost of debt 8%;debt repayment: 8 yrs
Weighted average depreciation rate: 9%
DCF discount rate: 12% Click to edit Master text styles
Second level
● Third level
● Fourth level
● Fifth level
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Net profit per barrel for first 7 years :
$55 / bbl received LESS
- $15.5 for recovering Capex
- $ 2.5 as operation costs
- $ 2.75 as royalty
- $ 0.00 as income tax
- $ 2.80 as cost of debt
- $ 0.12 as depreciation
● Fourth level
● Fifth level
● Fourth level
● Fifth level
over 22
years : US$ 106.06b
Ø Cost of repaying debt: approx. US$
1.5b
US$ 19b
Value points
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Even as explained that with IEA putting the price at $80 / bbl
(2009). Here, with lower oil prices the investment multiple also
reduces & hence the government gets lesser portion of the profits
● Fourth level
● Fifth level
Geoglobal resources
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Australian company
Click to edit Master text styles
Market cap US$11 billion Second level
● Third level
● Fourth level
Involved in E&P activities ● Fifth level
world wide
Essar offshore
● Fourth level
● Fifth level
GSPC : EBIT
indicates falling
profits as percentage
of revenue over a
period of 4 years
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Aban offshore
Historic graph :
In 1 year : 90 % fall in share price compared to a
60 % fall in SENSEX
Indicative of the drastic fall in day rates of rig
contracts. One of the businesses to get affected first
by the volatility of crude prices is definitely that of providing
oil field services
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● Fourth level
● Fifth level
● Fourth level
● Fifth level
Business model risk ?
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PT Sempec, Indonesia
Ø Past experience
1,500 MT offshore oil & gas process deck and 1,000 MT 6-leg
jacket for Korea Development Company Poleng Project, Java Sea
1,200 MT offshore LPG refrigeration deck and 300 MT 4-leg
jacket and loading terminals, including subsea pipelines for
PetroChina Indonesia Betara Development Project, Sumatra
Offshore
2 other major onshore projects
Outsourcing of fabrication
The Wellhead Platforms form part of the Heera
Redevelopment Project
Inferences
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Pipavav Shipyard
23% stake
Afcons Infrastructure
OGSP:
Increased Challenges, Increased Opportunities
Basic analysis
● Fifth level
To make it simpler to field
engineers who are generally not
familiar with certain intricate
financial knowledge
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Ø FPSOs’
to complete
• This increase is indicative of the growth in the rig
Le Tourneau Technologies
October – November 2008: Export duty on almost all steel items withdrawn
DEPB benefits on steel has been reintroduced
5% import duty on steel introduced
Current domestic prices: Rs.40,000 – Rs.42,000 per ton for HR Coil
Rs.38,000 – Rs.39,000 per ton for TMT bars
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Landed price v/s imported price & even then there is a huge gap between
the two
Reports (*28th Nov.):
China steel sector
China offering steel at US$440 per ton
Domestic prices in India are ruling at almost US$700. So, the latest duty
would push import cost by just US$22 per ton
Important to plot using past data:
Ø Vendors rates v/s trends in steel prices*
Ø Vendor may be of another country & could be
affected differently
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Cont’d
For the next 12 to 13 yrs. Annual profits of about US$ 26 M
can be expected
This calculation keeps day rate assumption at US $ 100,000
for a jack-up rig. But demand for jack-ups may decrease when
most of the shallow regions have been explored
For semi-submersibles & other deep water rigs, this is not a
drawback.
After say 10yrs there may be need to upgrade the rig due to
advances in technology, but then even the day rates would
increase
Also, rig usage is assumed to be 100%, which is not the case.
Ideally, it would be 80 – 85 % a medium demand market
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Other areas
Thank You’