PwC Petroleum Federation of India April 13, 2006 India Oil & Gas Overview & Opportunities Deepak Mahurkar Oil & Gas Industry Practice

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 2 Agenda Macroeconomic & Energy Indicators Overview of India’s Petroleum Sector Destination India Opportunities in Upstream Sector Opportunities in Downstream Sector Opportunities in Natural Gas Sector Opportunities in Services Sector Destination Philippines

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 3 India is a unique economy. Energy challenge is of fundamental importance to India’s economic growth imperatives. Population : 1.1 bn to 1.47 bn in 2031 Energy consumption : 304 to 1,112 kgoe/capita in 2031 Two Wheelers : 0.6 mn to 41.5 mn over 30 years Cars : 0.54 mn to 5.71 mn over 30 years ending 2002 CAGR 1.1% CAGR 5.1% CAGR 15.3% CAGR 8.2% Electricity : absent in 84 mn households in % of total Macroeconomic and Energy Indicators Renewables in use. GHG emissions low.~ 3% of Globe

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 4 India has an ambition of high Economic Growth Rate. Macroeconomic and Energy Indicators

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 5 Energy intensity and elasticity are on downtrend already. Future growth would need relatively more energy. GDP Intensity GDP Elasticity Source : MoPNG, CSO, PwC Analysis Macroeconomic and Energy Indicators

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 6 Despite fuel prices being high on PPP basis, import dependent R&M companies seek to raise consumer prices to recover costs and remain financially strong. Domestic production is therefore a thrust area. Source : GTC, International Fuel Prices 2005 Diesel Price Nov 2004 in US Cent per Litre Gasoline Price Nov 2004 in US Cent per Litre Macroeconomic and Energy Indicators

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 7 Agenda Macroeconomic & Energy Indicators Overview of India’s Petroleum Sector Destination India Opportunities in Upstream Sector Opportunities in Downstream Sector Opportunities in Natural Gas Sector Opportunities in Services Sector Destination Philippines

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 8 Coal was the primary source of commercial energy and diesel was the highest consumed refined fuel in Overview of Petroleum Sector Commercial Energy (333 MMTOE) POL and Gas (158 MMTOE) Source : MoPNG, PwC Analysis

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 9 Robust hydrocarbon demand imparts element of necessity of sector development for sustained economic growth and the GoI recognizes latter would be compromised if supply challenges are not met. Overview of Petroleum Sector CAGR of Products and NG upto 2030 under BAU & HOG Scenario, per cent CAGR (%) Multiple in 27 years Source : PetroFed projections by PwC-IRADe

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 10 Oil & gas sector is crucial to Indian economy. Apart from fuelling it, the fiscal contributions by sector are significant. Largest contributor to exchequer in Sixth largest crude oil consumer in the world Crude imports as total imports exports & imports All 5 Indian companies in F500 operate in the Oil & Gas sector USD 27 bn MMT 33 & 31% resp. Ranks 6 th in world refining with 3% capacity. 3 rd largest refinery. Overview of Petroleum Sector

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 11 Attractive fiscal and contractual terms with recently demonstrated prospectivity is fast changing investor’s perception about India’s upstream sector Overview of Petroleum Sector - Upstream 26 sedimentary basins: 3.14 mn sq kM (1.39 mn sq kM onland and 1.75 mn sq kM offshore Hydrocarbon resources: 28 BTOE (<25% established) 22% area unexplored with another 22% area poorly explored Directorate General of Hydrocarbons (DGH) invested with upstream regulatory functions Crude oil prodn – MMT (April’05 – Feb’06) E&P interests in 13 countries of OVL and in more by other PSUs/ Pvt companies Key Facts Major Upstream Players - Production RIL, BG, GSPC, HOEC, Cairn Energy, Niko Resources, Hardy, Jubilant Enpro 110 PSCs signed in the last 5 rounds NELP VI – 55 O&G and 10 CBM blocks on offer Exploration coverage has trebled from 0.35 mn sq kM in 2000 to 1.04 mn sq kM in 2005 World class O&G discoveries by RIL, Cairn and GSPC $US 5 bn committed under NELP I to V NELP Success

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 12 India is refining surplus and plans to be an export hub leveraging on capability to operate at high refining margins Overview of Petroleum Sector - Downstream No. of refineries - 18 Installed refining capacity – MMT (’04-05) Total Crude Throughput – MMT (’04-05) 99.8% capacity utilization in Petroleum product consumption – MMT Petroleum product consumption registered over 3.5% yoy growth for last 3 years Petroleum product exports – 8.7 MMT New entrants in the oil marketing business include RIL, Shell, EOL, MRPL and NRL Auto sales 14.2% CAGR (’04-05 over ’00-01) Over 31,500 retail outlets including private companies Major Downstream Players Key Facts Refining capacity (MMTPA) Market Share of Petroleum Products (in Vol)

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 13 Natural gas market is supply constrained and needs to be developed. Overview of Petroleum Sector – Natural Gas Production : ONGC, OIL, RIL, BG, NIKO, GSPC Transmission : GAIL, GSPL, GSPL City Gas : IGL, MGL, GGCL, AGCL, BGL LNG : PLL, Shell GAIL’s Proposed National Gas Grid Major Market Players Supply scenario In-place reserves up by 50% in last 2 ½ years Natural Gas prodn – BCM (April’05 – Feb’06) New domestic discoveries – RIL, GSPC and ONGC on the east coast 2 operational LNG terminals at Dahej (5 MMTPA) & Hazira (2.5 MMTPA) on west coast

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 14 Agenda Macroeconomic & Energy Indicators Overview of India’s Petroleum Sector Destination India Opportunities in Upstream Sector Opportunities in Downstream Sector Opportunities in Natural Gas Sector Opportunities in Services Sector Destination Philippines

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 15 The Demand Drivers  Growing economy with Industrial, Services and Agriculture – all three heavily dependenton petroleum sector.  Growing income levels and therefore disposable incomes  Rise in energy intensity  Urbanization and higher energy penetration India is poised to grow in energy consumption. Share of hydrocarbons is expected to be constantly high. Combined with this, India has very attractive investment environment. Destination India The Facilitators  Young Talent Pool (>50% population <50 yrs age)  Growing Business Opportunities  Stable Political Environment  Strong Govt. Owned and Private Oil Companies  Attractive Income Tax Regime (Sec 44BB including)  Progressive Indirect Tax Regime Fast Maturing  VAT with credits  Goods & Services Tax with cross credits  Reduction in Customs Duty  Very attractive SEZ Act 2005  Cost competitive work force  100% FDI allowed* in Petroleum Sector investments

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 16 Agenda Macroeconomic & Energy Indicators Overview of India’s Petroleum Sector Destination India Opportunities in Upstream Sector Opportunities in Downstream Sector Opportunities in Natural Gas Sector Opportunities in Services Sector Destination Philippines

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 17 Foreign Direct Investments are allowed in Indian petroleum sector. Upstream sector signifies complete liberalization achieved. Various avenues are available for investors. Acquisition of Blocks under periodic bidding rounds - NELPNELP Farm-Ins Technology tie-ups with PI with Indian oil companies Service contracts for Marginal Fields IOR/EOR projects – ONGC Open Acreage Licensing – the future way Acquisition of CBM blocks in periodic rounds Destination India – Opportunities in Upstream Sector

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 18 Agenda Macroeconomic & Energy Indicators Overview of India’s Petroleum Sector Destination India Opportunities in Upstream Sector Opportunities in Downstream Sector Opportunities in Natural Gas Sector Opportunities in Services Sector Destination Philippines

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 19 Refinery investments are being planned by India for exports and for petrochemical feed-stock purposes. Major oil companies can participate in the activity. Refinery expansions and upgradation Grass-root refineries Integrated complexes – petrochemical & VA products Tankages and strategic storage Pipelines – crude and products IOCs interested in retail marketing segment use refining or LNG investment opportunities to help cross the minimum investment condition for retail market entry Destination India – Opportunities in Downstream Sector

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 20 Agenda Macroeconomic & Energy Indicators Overview of India’s Petroleum Sector Destination India Opportunities in Upstream Sector Opportunities in Downstream Sector Opportunities in Natural Gas Sector Opportunities in Services Sector Destination Philippines

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 21 The allied infrastructure needs strengthening. Gas demand and supply imbalance would call for import infrastructure. Gas grid connecting producing and consuming locations LNG regasification terminals Gas Distribution networks Fractionators / Extractions Petrochemical and VA products Destination India – Opportunities in Natural Gas Sector

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 22 Agenda Macroeconomic & Energy Indicators Overview of India’s Petroleum Sector Destination India Opportunities in Upstream Sector Opportunities in Downstream Sector Opportunities in Natural Gas Sector Opportunities in Services Sector Destination Philippines

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 23 More than 800 wells are committed for blocks awarded upto NELP V. The number would go up with ensuing rounds and with discoveries. Service sector is to be in demand. Government of India has recognized need for quality, timely and cost optimal services for upstream sector and is ready to offer best investment environment to companies. Destination India – Opportunities in Services Sector

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 24 Agenda Macroeconomic & Energy Indicators Overview of India’s Petroleum Sector Destination India Opportunities in Upstream Sector Opportunities in Downstream Sector Opportunities in Natural Gas Sector Opportunities in Services Sector Destination Philippines

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 25 In many ways the petroleum sector is well liberalized in Philippines offering opportunity to Indian companies. The delegation may guide the industry accordingly. PNOC stake sale in Malampaya. Opportunity? Refineries at 80% capacity. Opportunity for new refineries? Development of upstream resources. September rounds? Deregulation caused retail market rush. Space for new entrant? Market determined pricing. New Players’ Association active? LNG supply by BP yet to be binding. Scope of gas distributors? City gas & CNG transports. Opportunity for Indian companies? Destination Philippines – Opportunities

PwC Thank you © 2006 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the context requires, other member firms of PricewaterhouseCoopers International Ltd., each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP. India Oil & Gas Practice PricewaterhouseCoopers Pvt. Limited Sucheta Bhawan 11- A, Vishnu Digamber Marg New Delhi – Hotline: +91 (11) Fax: +91(11) /6

PricewaterhouseCoopers PetroFed: India Oil & Gas Overview & Opportunities Page 27 Upstream sector in India is a relatively unexplored market with reserves estimated in 15 of the 26 sedimentary basins. Upstream Policy approved in Feb 1997 International competitive bidding Single window ECS approval mechanism Up to 100% foreign participation Fiscal stability provision Level playing field – NOCs vs. Pvt companies Contract finalization based on MPSC Freedom to market O&G in domestic market No signature, discovery or production bonus NELP