EXPLORATION & PRODUCTION BUSINESS
Mailing Information :
Contact Information:
* Hindustan Petroleum Corporation Limited Corporate office : Petroleum House, 17, J. Tata Road, Churchgate, Mumbai 400 020 (INDIA).
* Mr. S. P. Singh General Manager-E&P, HPCL spsingh@hpcl.co.in Tel. +91-98180 94481
Delhi office : UCO Bank building, 3rd floor, Parliament Street, New Delhi 110 001 (INDIA). www.hindustanpetroleum.com * Prize Petroleum Company Limited 803, Tower-B, Millennium Plaza, Sector-27, Gurgaon 122 002. Haryana (INDIA).
* Dr. M. N. Prasad CEO-Prize Petroleum mnprasad@prizepetro.com Tel. +91-124-2806074 Fax +91-124-2806072
EXPLORATION & PRODUCTION BUSINESS
Mailing Information :
Contact Information:
* Hindustan Petroleum Corporation Limited Corporate office : Petroleum House, 17, J. Tata Road, Churchgate, Mumbai 400 020 (INDIA).
* Mr. S. P. Singh General Manager-E&P, HPCL spsingh@hpcl.co.in Tel. : +91-11-2373 8719 Fax : +91-11-2335 9948
Delhi office : UCO Bank building, 3rd floor, Parliament Street, New Delhi 110 001 (INDIA). www.hindustanpetroleum.com * Prize Petroleum Company Limited 803, Tower-B, Millennium Plaza, Sector-27, Gurgaon 122 002. Haryana (INDIA).
* Dr. M. N. Prasad CEO-Prize Petroleum mnprasad@prizepetro.com Tel. +91-124-2806074 Fax +91-124-2806072
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INDIAN ECONOMY & MARKET OVERVIEW
The Indian economy continues to be one of the most dynamic economies in the world and became a trillion dollar economy this year. Only ten other countries in the world have this distinction. Economic growth has been 9% for last two years and is also expected grow at the same rate this year. Capital inflows have supplemented domestic savings, boosting capital formation in the country. Goldman Sachs in follow-up report to their famous BRIC paper has projected India's sustainable growth rate at about 8% till 2020. Energy demand including oil demand has increased in tandem with economic growth. India's petroleum product consumption has doubled in last fifteen years. Current consumption of petroleum products in the country is about 120 MMTPA. Production of oil in the country has stagnated around 33 MMTPA for last few years. India currently imports over 70% of its crude oil requirements. Economic growth is linked to the growth of energy sector and it is expected that oil demand in India would grow three fold by 2020. The demand for gas is expected grow at a faster rate than oil. However, large gas reserves off the East coast are expected to ease supply situation. Unique Attributes of Indian Petroleum Sector : •
Sixth largest Crude Oil Importer & Consumer
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Oil & Gas CAGR during last 10 years is 3 times world avg. consumption
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Fifth largest producer of Petroleum products
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India is set to be third largest refining location
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HPCL history
Hindustan Petroleum Corporation Limited (“HPCL”) is a key public sector player in India's oil and gas industry with 51% Government ownership. The Company is ranked 336th amongst the elite “Fortune-500” group of 2007. The Turnover during 2006-07 was Rs. 91,448 crores (US $ 22.1 billion) and Net Profit after Tax was Rs.1,571 crores (US $ 359 million). It has been in operation for over 5 decades since the erstwhile ESSO and Caltex assets of 1950s. HPCL is currently categorized as one of the “Navratnas” or nine jewels by the Government of India, with a Net Worth of US $ 2.2 billion. It is listed on Bombay Stock Exchange and National Stock Exchange and has a market capitalization of approximately US$ 2 billion. A refining and marketing company, HPCL – has a 10.3% of India's refining capacity under two 100% owned refineries at Mumbai and Visakh with a total processing capacity of 16 million metric Tons per annum (MMTPA) equivalent to 320,000 barrels per day. After the ongoing Refinery upgrading projects get completed at both refineries, total refining capacity would be enhanced to 18 MMTPA, besides producing Euro-III / Euro-IV Gasoline and Euro-III Diesel and gaining flexibility to process higher quantum of heavier and sour crudes. The Corporation owns and operates India's largest Lube refinery at Mumbai, with annual capacity of 335,000 Tons, which accounts for 40% of the total domestic production. It
HPCL FORAY INTO E&P BUSINESS
also has 17% stake in a Joint Venture (JV) refinery at Mangalore with a capacity of 9 MMTPA. HPCL is promoting 9 MMTPA state-of-the-art grass-root Refinery project at Bhatinda, Punjab with M/s. Mittal Energy Investments Pte. Ltd. as JV partner. This project is expected to be completed in 4 years at a cost of Rs. 18,000 crores and would cater to its marketing requirement in North India. The Corporation has a country-wide marketing network and controls about 16% market share equivalent to around 22 MMTPA and majority revenue is from its over 7900 Retail outlets. The Marketing division focuses on Quality and Quantity assurance to customers. It is the industry leader in automation of facilities and aggressively markets Lubricants, Industrial and Consumer products, Aviation fuel and Bitumen besides penetrating to rural and highway segments. The two cross-country pipelines enhance product availability and minimize transportation cost from its refineries with over nearly 7 MMTPA thruput. Another major pipeline project of over 1000 kms. with nearly 6 MMTPA capacity from Mundra to Delhi has been completed. HPCL has invested in existing business and diversified areas through its Joint Venture Companies (JVC) for grass-root refinery projects, upstream business, natural gas distribution, LPG import and value-added Bitumen and pipelines.
Although, refining and marketing is the core area, HPCL has ventured into new business opportunities for additional revenue streams and emerge as an integrated energy company. Accordingly, the Corporation has ventured in upstream business, marketing of natural gas and city gas distribution, Bio-diesel production, Wind Power project and has undertaken development of a Petrochemical complex. The E&P projects are expected to harness equity oil for the nation’s energy security. An investment outlay of nearly Rs 11,500 crores has been earmarked during XIth 5-Year Plan till 2012. HPCL, in partnership with consortium companies currently has 20 nos. E&P blocks in India and 2 nos. overseas blocks, including a service contract for the Western offshore marginal fields under Cluster-7 near Mumbai High. Its upstream JVC M/s Prize Petroleum Co. Ltd. was formed in 1998 and currently operates marginal fields in Gujarat and Mumbai High and onshore blocks in Gujarat and Madhya Pradesh. A brief information of E&P blocks possessed by HPCL with
participating interests during the past four years, is as under :1) NELP-IV round : Two blocks were awarded during 2004 under NELP-IV in offshore deepwater of Kerala-Konkan basin (KK-DWN-2002/2 & KK-DWN-2002/3) wherein HPCL holds 20% participating interest & balance 80% is with ONGC as operator. Another NELP-IV block was awarded during 2004 in Cambay- Gujarat onshore basin (CB-ONN-2002-3) where M/s Prize Petroleum as a consortium partner held 15% participating interest & M/s GSPC Ltd. as the operator with 55%, Jubiliant Enpro Pvt. Ltd. with 20% and Geo Global Resources Limited with 10%. The Prize Petroleum stake is now held by HPCL. Discovery of oil was reported in one exploratory well. 2) NELP-V round: HPCL was awarded during 2005, one onshore block under NELP-V round in Assam (AA-ONN2003-3) where HPCL as a consortium partner holds 15% participating interest & balance 85% is with M/s Oil India Ltd. as the operator.
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HPCL FORAY INTO E&P BUSINESS contd.
3) Cluster-7 marginal fields : Three offshore shallow- water fields were awarded by ONGC (B-192, WO-24 & B-45) under the service contract for development of Cluster-7 to a consortium consisting of M/s Prize Petroleum as operator (10%), M3Nergy, Malaysia (30%) and HPCL (60%). The Service Contract was signed with ONGC during Sept. 2006. First production of oil is expected in early 2009. 4) Oman Block-56 : One onshore block-56 at Southern Salt basin was awarded during 2006 in Oman wherein M/s Oilex Ltd. as operator holds 25% participating interest, GAIL : 25%, Videocon Intl. : 25%, HPCL : 12.5% & BPCL : 12.5%. It was the first overseas investment by HPCL in E&P sector.
5) Western Australia WA-388-P : One block was awarded during 2006 to HPCL in offshore deepwater Carnarvon basin in consortium with M/s Oilex Ltd.-Australia, GSPC, Videocon International & BPCL, with each partner having 20% participating interest. 6) NELP-VI round : HPCL participated in NELP-VI round last year for all types of blocks in India : deepwater, shallow water and onshore, along with major operators like : ONGC, OIL, GSPC and GAIL. The Govt. of India awarded 15 nos. blocks during 2007 which have HPCL's participation interest ranging from 10% to 20%, consisting of 11 nos. deep-water blocks in KG and Cauvery basins, 2 nos. shallow-water blocks in Mumbai High and 2 nos. onshore blocks in Rajasthan.
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Our E&P strategy
HPCL's recent foray into E&P for vertical integration would enable acquisition of equity crude oil. In order to accomplish this objective, HPCL has adopted a two-pronged approach and unique business model :a. HPCL has entered into strategic partnerships and participated in bidding rounds through consortia to build a portfolio of exploration assets in India and overseas. b. HPCL's JV; M/s Prize Petroleum Co. Ltd. with 50% HPCL equity and balance 50% equity by financial institutes, would continue to focus on upstream technical services and as an operator for field development and production. It would also complement and technically support HPCL in its E&P activities. HPCL intends to leverage and consolidate its current position and implement a strategy for E&P based on active portfolio management both within and outside India. HPCL would build strong positions in developing regions managed through investments and tie-ups in production-led exploration & reserve enhancement and focused acquisitions. The international practice of forming strategic alliances or unincorporated JV with companies in E&P business will be pursued for specific projects in selected countries and geographical areas.
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OUR E&P OPERATOR COMPANY
Promotion of a Joint Venture (JV) company in 1998 named M/s Prize Petroleum Co. Ltd. was a proactive initiative of HPCL. M/s Prize Petroleum was formed, with financial institutions as initial equity partners. The Equity participants are : HPCL : 50%, ICICI & Associates : 45% and HDFC : 5%. It is intended to progressively bring in additional equity and technical partners to expand its equity base and boost developmental activities. Prize Petroleum has a core group of E&P experts and has developed expertise to conduct in-depth study of engineering and geological data to assess volumetric reserves of producing and non-producing opportunities. Prize Petroleum now has skills in the entire spectrum of E&P opportunities like : evaluation, bidding and acquisition processes, both in India and abroad. Prize has also developed a highly sophisticated system and procedures for evaluating oil and gas reserves for bidding
and for future development decisions. Over the years it has bid for a number of opportunities in acquiring equity oil assets in India and abroad. Some of the important milestones achieved by the JVC are :1) Marginal Fields in Gujarat and Mumbai High : A Consortium of M/s Prize Petroleum & Aban Lloyd (50% / 50%) was awarded 3 marginal onshore fields of ONGC in Gujarat viz. : Hirapur, Khambel and West Bechraji, under revenue sharing arrangement during 2004. Prize achieved recognition as an operator company since then. The drilling of more wells and work-over program would enhance the production further. Prize Petroleum is the operator for offshore marginal fields near Mumbai High for development and production of oil and gas from the Cluster-7 fields. The consortium for providing services to ONGC consists of Prize Petroleum (10%), HPCL (60%) and M3Nergy, Malaysia (30%). 2) Production Sharing contract : A Joint operatorship (50% / 50%) was awarded during 2004 under production sharing contract to M/s Prize Petroleum and Hydrocarbon Resources Development Co. Pvt. Ltd. (HRD) at one onshore field in Gujarat at Sanganpur. The block is at development stage and drilling is planned for more wells. 3) NELP-VI round : One onshore block in South Rewa-MP was awarded to consortium of M/s Prize Petroleum (10%) as operator and M/s Jaiprakash associates (90%). The Production Sharing Contracts (PSC) was signed with MOP&NG-Govt. of India in March 2007. The requisite petroleum exploration license (PEL) is awaited to commence field activities.
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KEY COMPETENCIES OF PRIZE PETROLEUM
Besides being an operator company, Prize Petroleum has been advising HPCL in pursuing various business interests in E&P field. Prize Petroleum has also offered consultancy services to other firms also using its variety of software namely : Interpretation Software: Geographix suite of software, including Co-ordinate Manager, Geoatlas (mapping), LandNet, Prizm (Log Analysis), Seisbase, Seisvision, Well Base, Xsection and Zone Manager. Modeling Software: LogM Model Builder and Struct (Stratigraphic Modeling, Structural Modeling) LogM Advanced Synthetics : Synthetic/Well editor, Turbo synthetics and Reformat and F/K migration. Well test Software: Pan System Reservoir Modeling Software: Pan Mesh Combining all the above, Prize Petroleum is in an advantageous position to offer quality advisory services and carry out analysis of any asset right from seismic interpretation to final development plan of the field and monitoring the field operations. The future cash flows from the exploration block awarded in Madhya Pradesh and marginal fields near Mumbai High at Cluster-7 would ensure both stability and long-term growth of the company. Prize Petroleum has been actively looking out for operator-ship of oil and gas properties abroad consisting of acquisition of discovered fields and producing blocks through bidding or through direct negotiations with Government and oil companies.
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hpcl & Prize petroleum E&P blocks
HPCL E&P Blocks Sl.No.
P-5
Blockname
BlockLocation
Bidround
Operator
Area sq.kms
HPCL's share 15%
ONLAND BLOCKS :
P-1 to 4 4
2
1
CB-ONN-2002/3
Cambay onland
NELP-IV
GSPC
285
2
AA-ONN-2003/3
Assam onland
NELP-V
275
15%
3
Block-56
Oman onland
Oman 2006
OIL Oilex
5,809
12.5%
4
RJ-ONN-2004/1
Rajasthan-onland
NELP-VI
GSPC+GAIL
4,613
20%
5
RJ-ONN-2004/3
Rajasthan-onland
NELP-VI
OIL
1,330
15% 60%
SHALLOW-WATER BLOCKS :
5
6
Cluster-7
Western offshoremarginal
2005
Prize
140
7
MB-OSN-2004/1
Mumbai High shallow-water
NELP-VI
GSPC
1,520
20%
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MB-OSN-2004/2
Mumbai High shallow-water
NELP-VI
Petrogas
741
20%
DEEP-WATER BLOCKS :
1
7
21
9
KK-DWN-2002/2
Kerala-Konkan deepwater
NELP-IV
ONGC
22,810
20%
10
KK-DWN-2002/3
Kerala-Konkan deepwater
NELP-IV
ONGC
20,910
20% 20%
11
WA-388-P
Australia deepwater
Aust. 2006
Oilex
4,290
12
CY-DWN-2004/1
Cauvery Basin-deepwater
NELP-VI
ONGC
10,302
10%
13
CY-DWN-2004/2
Cauvery Basin-deepwater
NELP-VI
ONGC
12,059
10%
14
CY-DWN-2004/ 3
Cauvery Basin-deepwater
NELP-VI
ONGC
12,017
10%
15
CY-DWN-2004/4
Cauvery Basin-deepwater
NELP-VI
ONGC
12,025
10%
16
CY-PR-DWN-2004/1
NELP-VI
ONGC
13,451
10%
NELP-VI
ONGC
9,994
10%
NELP-VI
ONGC
11,951
10%
17
CY-PR-DWN-2004/2
Cauvery Basin-deepwater Cauvery Basin-deepwater
18
KG-DWN-2004/1
KG Basin-deepwater
19
KG-DWN-2004/2
KG Basin-deepwater
NELP-VI
ONGC
11,851
10%
20
KG-DWN-2004/3
KG Basin-deepwater
NELP-VI
ONGC
6,205
10%
21
KG-DWN-2004/5
KG Basin-deepwater
NELP-VI
ONGC
11,922
10%
22
KG-DWN-2004/6
KG Basin-deepwater
NELP-VI
ONGC
10,907
10%
20
6/P6
PRIZE PETROLEUM E&P Blocks
18
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Sr.#
19
22
17 15 9 10
12
P1
P2
PRIZE SHARE
AREA sq. kms.
Prize
50%
10.85
KHAMBEL
Prize
50%
1.3
Prize
50%
3.2
Prize/HRD
50%
4.4
Prize
10%
13,227
Prize
10%
140
onshore marginal P3
13
WEST BECHRAJI onshore marginal
P4
SANGANPUR PSC contract South Rewa-MP SR-ONN-2004/1
16 Block-56 in Oman
HIRAPUR
OPERATOR
onshore marginal
P5
3
BLOCK NAME
P6
14
11 Block WA-388-P in Australlia
Cluster - 7 Offshore marginal
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