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India – Oil & Gas Yatra 2011
Gas-tronomical potential
Our 3rd annual Oil & Gas Yatra* (Tour)
Our 3nd annual Oil & Gas Yatra provided investors an opportunity to participate in
our forensics first hand. In addition to top management across upstream players
in India, we also met consumers, regulators, consultants, geologists, exploratory
directors, infrastructure and service providers. In addition, we extended our Yatra
into China for the first time; meeting companies, consultants and the regulator.
Gas-tronomical potential
India‟s per-capita energy consumption is less than 1/3rd of China‟s, and is slated
to grow by at least 10 times before possibly plateauing. Gas has grown from 9%
to 14% in India‟s energy consumption basket, and increasing supplies supported
by growing pipeline networks is driving the shift away from more expensive liquid
fuels. Areas in which exploration is initiated have grown from 18% to 44% in the
past decade, & intensive exploration is in progress, driving the shift towards gas.
Regulatory slowdown a near-term impediment
Participants highlighted that a slowdown in government approvals is proving to
be an impediment to growth. Nevertheless, Cairn India‟s recent conversations
with the government, a fresh guard at the petroleum ministry and BP‟s interest in
RIL‟s blocks suggest early signs of potential revival of the approval process.
India even more under-explored than China
Chinese companies demonstrated that China holds large potential as 1/10th
(~79k) the wells have been drilled vs USA (~230k) during the period 2001-2006.
We note that India‟s exploration is even more nascent, as it has drilled only 1257
wells in its entire history. While China‟s oil potential has plateaued, India enjoys
both oil & gas potential. India‟s offshore and onshore potential is being tapped by
deploying the highest number of rigs globally (after North America). Indian
companies have the world‟s lowest finding & development cost at US$4-5.3/bbl,
partially as gas price is amongst the lowest at US$4.2/mmbtu or US$25/boe.
Shale gas – the next frontier
India‟s leading shale gas expert Dr. Rao highlighted that very preliminary studies
suggest India's prognosticated shale gas resources are 2000 TCF – (estimated
to meet India‟s gas demand for the next 500 years), compared with Halliburton‟s
estimate of ~3000 TCF each for North America and SE Asia. India enjoys very
thick shale plays with high total organic content (TOC), but the gas is mainly dry.
China Oil Yatra takeaways
Chinese gas consumption is expected to grow at a 15-20% CAGR till 2050.
Shale gas contribution is expected to rise from 5% in 2015 to global levels of
20% by 2020. Industry experts expect gas prices to rise, and for LNG and transnational
pipeline imports to rise to 100bcm (25% supply) each by 2020.
Top picks: Reliance Industries & GAIL
GAIL: Management expects the recent Dahej expansion and Dabhol LNG start
(2HCY11E) to exceed near-term decline in RIL‟s gas volumes. Common
infrastructure and expeditious order placement for long lead items should enable
it to double its highly profitable petrochem capacity in 3 years.
RIL: We believe BP‟s considerable global deep water expertise can strongly
complement RIL‟s significant upstream portfolio. In the near term, refining and
petrochem margins are poised to gain further.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India – Oil & Gas Yatra 2011
Gas-tronomical potential
Our 3rd annual Oil & Gas Yatra* (Tour)
Our 3nd annual Oil & Gas Yatra provided investors an opportunity to participate in
our forensics first hand. In addition to top management across upstream players
in India, we also met consumers, regulators, consultants, geologists, exploratory
directors, infrastructure and service providers. In addition, we extended our Yatra
into China for the first time; meeting companies, consultants and the regulator.
Gas-tronomical potential
India‟s per-capita energy consumption is less than 1/3rd of China‟s, and is slated
to grow by at least 10 times before possibly plateauing. Gas has grown from 9%
to 14% in India‟s energy consumption basket, and increasing supplies supported
by growing pipeline networks is driving the shift away from more expensive liquid
fuels. Areas in which exploration is initiated have grown from 18% to 44% in the
past decade, & intensive exploration is in progress, driving the shift towards gas.
Regulatory slowdown a near-term impediment
Participants highlighted that a slowdown in government approvals is proving to
be an impediment to growth. Nevertheless, Cairn India‟s recent conversations
with the government, a fresh guard at the petroleum ministry and BP‟s interest in
RIL‟s blocks suggest early signs of potential revival of the approval process.
India even more under-explored than China
Chinese companies demonstrated that China holds large potential as 1/10th
(~79k) the wells have been drilled vs USA (~230k) during the period 2001-2006.
We note that India‟s exploration is even more nascent, as it has drilled only 1257
wells in its entire history. While China‟s oil potential has plateaued, India enjoys
both oil & gas potential. India‟s offshore and onshore potential is being tapped by
deploying the highest number of rigs globally (after North America). Indian
companies have the world‟s lowest finding & development cost at US$4-5.3/bbl,
partially as gas price is amongst the lowest at US$4.2/mmbtu or US$25/boe.
Shale gas – the next frontier
India‟s leading shale gas expert Dr. Rao highlighted that very preliminary studies
suggest India's prognosticated shale gas resources are 2000 TCF – (estimated
to meet India‟s gas demand for the next 500 years), compared with Halliburton‟s
estimate of ~3000 TCF each for North America and SE Asia. India enjoys very
thick shale plays with high total organic content (TOC), but the gas is mainly dry.
China Oil Yatra takeaways
Chinese gas consumption is expected to grow at a 15-20% CAGR till 2050.
Shale gas contribution is expected to rise from 5% in 2015 to global levels of
20% by 2020. Industry experts expect gas prices to rise, and for LNG and transnational
pipeline imports to rise to 100bcm (25% supply) each by 2020.
Top picks: Reliance Industries & GAIL
GAIL: Management expects the recent Dahej expansion and Dabhol LNG start
(2HCY11E) to exceed near-term decline in RIL‟s gas volumes. Common
infrastructure and expeditious order placement for long lead items should enable
it to double its highly profitable petrochem capacity in 3 years.
RIL: We believe BP‟s considerable global deep water expertise can strongly
complement RIL‟s significant upstream portfolio. In the near term, refining and
petrochem margins are poised to gain further.
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