"India Oil & Gas Report Q3 2013" Published

Production at the Reliance-operated KG-D6 gas block continued to fall throughout the end of 2012 and the beginning of 2013. The government is clearly concerned and the field partners, now including BP, are being forced to overhaul investment plans and strategy. India remains confronted by a major gas dilemma, with soaring demand pointing to increased imports, but onshore (CBM and shale) and offshore resource potential still suggests scope for dramatically higher domestic supply. In the meantime, the slow progression of import infrastructure development threatens to constrain long-term consumption.

The main trends and developments we highlight for the Indian oil and gas sector are:

* BMI estimates that Indian total liquids production averaged 1mn barrels per day (b/d) in 2012. This figure is very close to the previous year's outturn, but volumes should head higher in 2013 on the back of rising production from the Mangala fields in the Rajasthan block. Production at Mangala has ramped up, but remains far below its expected 240,000b/d level. BMI's demand outlook suggests consumption of an estimated 3.58mn b/d in 2012 will rise steadily to 4.20mn b/d by 2017. Given forecast consumption of 4. 90mn b/d, implied 2022 oil net imports are put at 3.8mn b/d.
* Gas demand is rising fast across the industrial, residential and power sectors and consumption has risen by almost 400% since 1995. Average annual demand growth of at least 6% is forecast over the next several years, accelerating as domestic field development and liquefied natural gas (LNG) import deals make more gas available. We have reduced our production forecast following the announcement of further production declines at the KG-D6 block. We see national output falling to 40bn cubic metres (bcm) in 2013 before rising to 54bcm by 2018. We are predicting total gas consumption of at least 116.4bcm in 2017, up from an estimated 69.1bcm in 2012. By 2022, demand is put at 160bcm, requiring net imports of around 102.5bcm.
* India has set up a committee to review the country's existing production sharing contracts (PSCs) with oil and gas companies. According to an official statement, the objective is to look into the design of future PSCs in order to 'enhance production of oil and gas and the government's share' while 'minimising procedures for monitoring the expenditure of producers'. The main issues in this review are: profitsharing mechanisms in PSCs; alternative models that can maximise output (and the government's associated share) more effectively; how to improve the management of PSC implementation; and possible reforms to the gas price regulatory mechanism.

Full Report Details at
- http://www.fastmr.com/prod/607159_india_oil_gas_report_q3_2013.aspx?afid=302

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