1. India Energy Conference 2008 Session 2 – Taking Upstream to the Next Level Sanjiv Kumar ONGC 3-4 October 2008

2. 2 Presentation overview E&P global scenario Indian E&P Industry To the NEXT level

3. 3 3 Challenge to sustain supply of Oil & Gas The Scenario Oil & Gas at ‘Premium’

4. 4 Stagnant production Balance Reserves Source: MoP&NG, GOI Production hovering around Oil: 34 MMT; Gas: 32 BCM India’s total reserve (~1812 MTOE) 0.56% of World Reserve Production

5. 5 Poorly Explored: 21% Moderate/ well explored: 20% Unexplored: 15% Exploration initiated: 44% 80% of Sedimentary basins not well explored Level of exploration Source: Petroleum Exploration & Production Activities, India, 2006-07, DGH

6. 6 Increasing interest NELP Bidders NELP-VI: 55 Blocks 165 Bids 65 Companies Foreign: 35 Indian: 31 NELP-VII: 57 Blocks 181 Bids 96 Companies Foreign: 21 Indian: 75

7. 7 Limited presence of oil majors Initial interest limited low oil price regime Increasing oil price increasing interest Limited presence of Oil Majors Perception of low prospectively

8. 8 The Challenges Lack of resources –Non availability of Rigs and technology –shortage of manpower Little or poor seismic data available Delay in NELP award due to still complex process Delay in required approvals from other departments Regulatory procedures still unclear Lack of clarity on tax structure

9. 9 To the next level Strengthening ongoing efforts Technology & skills Resources Fiscal Incentives To the NEXT level Enabling regulations Free market dynamics

10. 10 To the next level: Making NELP regime more attractive NELP process –Time-period ‘Announcement’ to ‘Award’ –Any sudden change in policies … confusion among prospective bidders Open acreage system –Availability of blocks year-round Natural gas pricing –Gas from challenging frontiers require huge investment –Industry expects market determined gas price as per PSC terms –However, Govt. having final say on pricing –Linking NELP gas price with pre - determined fuel basket

11. 11 To the next level: Making NELP regime more attractive Government take of profit Petroleum in ‘KIND’ –Govt. able to address the needs of critical sectors –Difficult for producer to enter in to long-term supply agreements –Subsidized allocation to priority sector - a deterring factor for free market dynamics Integration of regulations –PSC terms under NELP require clarity even if read with other regulations –Ambiguities need to be addressed and resolved –Regulations to be integrated & complimentary

12. 12 To conclude To take Upstream to the next level Increased and more intensive exploration –Move to Open Acreage R&D collaboration & greater infusion of technology Resource sharing Clarity on policy issues –Natural gas pricing –Govt. take of profit share – cash or kind Enabling regulations & policies Public-Private Partnership Simpler processes

13. 13 Thank You