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India Oil and Gas Report Q1 2012
Business Monitor International, Jan 2012, Pages: 101
Business Monitor International's India Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India's oil and gas industry.
BMI View:
While India's upstream oil prospects appear to be limited, the discovery and ongoing development of significant gas resources has changed the import picture for the better, but has thrown the gas sector into turmoil as the industry struggles to assess its future LNG needs. Demand trends remain healthy, requiring continued investment in refining capacity and a growing reliance on foreign crude.
The main trends and developments BMI highlights for India's Oil and Gas sector are:
- India's average oil and liquids production for 2011 is assumed by BMI to have been 1.04mn barrels per day (b/d). BMI is predicting 1.06mn b/d of peak production in 2012, which is expected to decline to 950,000b/d by 2016. Given forecast consumption of 4.29mn b/d, implied 2016 oil imports are 3.34mn b/d. BMI's demand outlook suggests that consumption of an estimated 3.44mn b/d in 2011 will rise steadily to 4.29mn b/d by 2016.
- Gas demand is rising fast, with India developing gas-fired power stations. Consumption has risen more than 160% since 1995. Average annual demand growth of at least 6% is forecast over the next several years, accelerating as domestic field development and LNG import deals mean more gas is available. BMI is assuming that 2011 gas production will have been around 50bn cubic metres (bcm). BMI is predicting total gas consumption of around 81bcm in 2016, up from an estimated 58bcm in 2011.
- Regional gas producer GSPC has received approval from the country's Directorate General of Hydrocarbons (DGH) to develop the Deen Dayal gas field in the KG Basin. The field, which is estimated to hold reserves of around 56.6bcm, was discovered in 2005. Gas production from Deen Dayal is expected to reach an annualised 2.1-3.1bcm. The field covers an area of around 125sq km and is located in the southern part of the block.
- State-controlled oil and gas producer ONGC has released its estimate for total gas volumes at its discoveries in the deep water DWN 98/2 block in the KG Basin. ONGC said on June 22 2011 that the block holds initial in-place gas reserves of 101bcm. The company said it believes the discoveries in the northern portion of the block are commercial and that a 'declaration of commerciality', which was submitted in July 2010, is being considered by upstream regulator DGH.
- At time of writing, BMI assumes an OPEC basket oil price for 2011 of US$101.90 per barrel (bbl), falling to US$99.40/bbl in 2012. Global GDP in 2011 is forecast at 3.2%, down from 4.3% in 2010 reflecting slowing growth in China, a faltering recovery in the US and a worsening eurozone debt crisis. For 2012, growth is put at 3.6%.
- The cost of Indian crude imports in 2011 is assumed by BMI to have been US$89.5bn, and should total US$113.6bn in 2016. Net gas imports are expected to have cost US$4.10bn in 2011, potentially falling to US$2.68bn by 2016, dependent on domestic field development and LNG import commitments. India's petroleum imports bill could reach US$116.3bn by 2021.
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