Discovered Small Field Bid Round: 2016

July 14, 2016Houston

Ministry of Petroleum and Natural GasGovernment of India

Directorate General of Hydrocarbons

Interactive Session

DGH

Agenda

2

Exploration and Production Regime in India1

Model Revenue Sharing Contract4

Discovered Small Field Bid Round2

Bid Process5

Contract Areas on Offer3

Key Success Stories6

3

Exploration and Production Regime in India

1948

State Monopoly

Public Sector Upstream Oil Companies

Nomination Era Pre-NELP PSCsNELP/CBM PSCs Future

1991 1997

Beginning of de-regulation

28 producing fields and 28 exploratory blocks offered including private

players

Liberalization of E&P Sector (1997- 2009)

9 NELP and 4 CBM rounds.254 exploratory and 33 CBM blocks

through competitive bidding

2016

Further liberalization of the sector

Discovered small field bid round-2016 HELP - Hydrocarbon Exploration licensing

policy Open acreage licensing Revenue Sharing Model Pricing Guidelines for difficult gas fields

2015

Discovered Small Field

Policy

New Domestic Gas

Pricing Guidelines

20142009

4

Why DSF Bid Round?

Increasing focus on ‘Make in India’ in India given the high reliance on oil & gas imports1

Discovered fields with low risk profile - Can be quickly monetized2

World’s 3rd Largest energy consumer and growing rapidly – concerns around energy security

3

Emphasis on infusion of innovation and technology into Indian E&P sector4

Major policy reforms that makes the fields attractive for investments 6

Fields are spread over 1500 Sq. Km comprising 20% of the area under PSC regime5

5

Attractive Features of DSF Bid Round 2016

Low regulatory burden &

transparent bid process

Ease of entry & exit

Revenue sharing model

Single license forconventional & un-conventional

fields

No oil cessCustom duty exemption

No prior technical

experience required

Pricing and marketing

freedom for Oil and Gas

Up to 100% FDI allowed

No carried interest by

NOCs

No upfront signature Bonus

Provision for sharing of common facilities

Continuous exploration

permitted during contract period

Key salient features of HELP Regime are extended to the Contract Areas offered under the Discovered Small Field Bid Round 2016

6

Model Revenue Sharing Contract (1/2)

Free pricing & marketing freedom based on ‘Arms Length Principle’

Marketing & Pricing

Effective Date – later of contract signing date or date of issue / transfer of lease

Period of 20 years or economic life of the field, whichever is less

Contract Duration

Biddable work program – Number of development/ appraisal wells

Liquidated damages (LD) - US$ 1 Mn (On-land), US$ 3 Mn. (Shallow Water) & US$ 6 Mn. (Deepwater)

Proportionate reduction in work program due to denial of clearances by Government agencies

Work Programme

7

Model Revenue Sharing Contract (2/2)

Assistance to contractors in permits, approvals, work permits, licenses, leases, right of way, etc.

Government Assistance to Contractors

Government revenue (%) determined on a linear scale interpolated between LRP & HRP

Prices as per realized average daily revenue during each month Revenue = Amount accrued (produced & saved) – Taxes on

sale – Royalty

Revenue Share

Joint development of more than one contract areas operated by more than one companies

Mutual use or development of common infrastructure

Unit Development of Reservoir & Joint use of Common Infrastructure

8

Contract Areas on OfferContract Areas Offered

46 Contract

Areas

Initial in-place

volumes

Available Geo-

scientific data

Over 48 MMT Oil volumesOver 38 BCM Gas volumes

26 Onland18 Shallow water2 Deep water

2042 LKM 2D1336 SKM 3D 130 Wells

Adjoining Facilities of ONGC and OIL

Bidders can access well head equipment, surface and nearby facilities on chargeable basis

For Further details, visit the website http://www.indiadsf.com

Assam fields – 13Reserves – 21.8 MmtoeArea – 119 SKM

Andhra Pradesh fields –15 (7 Offshore)Reserves – 4.4 MmtoeArea – 263 SKM

Tamil Nadu fields – 2Reserves – 0.4 MmtoeArea – 20 SKM

Rajasthan fields – 2Reserves – 0.1 MmtoeArea – 24 SKM

Mumbai fields – 27(all offshore)

Reserves – 55 MmtoeArea – 1001 SKM

Gujarat fields – 7 (2 offshore)Reserves – 4.1 MmtoeArea – 109 SKM

Madhya Pradesh – 1Reserves – 0.5 MmtoeArea – 15 SKM

67 fields offered under 46

contract areas

Bid Process and Important Dates

9

Bid Process

Bidders to bid* online** at

designated portal

Hardcopy submission of all supporting

documents to DGH

DGH to submit bid evaluation reports to the Government for

consideration

Ministry to accord approval based on

ECS recommendations

After due approvals, RSC***

to be finalized with awardees

*Any number of Contract Areas can be bid for** Most of the documents will be uploaded online*** Revenue Sharing Contract

Important Dates

Activity Date

Launch 25th May, 2016

Data Rooms

Noida, operationalized from 6th June, 2016

Houston opening todayCalgary and London

subsequently

Bid start date 15th July, 2016

Bid opening 31st October, 2016

Award Within 2 months

All about DSF Bid Round 2016

10

E-Bidding portal -http://mstcecommerce.com/eprochome/dsfbidding/index.jsp• User-friendly interface for uploading bid documents with easy registration process• Instruction to bidders on bid upload process, methodology of bid evaluation, etc. • Secure gateway through Digital Signature Certificate• Provision for online payment of Tender fees

Technical Information Portal - http://www.indiadsf.com/• Ready reckoner on ‘how to access portal’• Bidders can view (free of cost) E&P data - Seismic 2D Lines, Field Boundaries, Geographical Locations, Well Information Contract Areas related data – Field area, quantum of E&P data, reserve estimates etc. Information guides on taxes, policies and contracts

• Physical data view room bookings, roadshow bookings, one-to-one meetings can be scheduled

• News, updates and FAQs related to the DSF Bid Round 2016

Physical Data Centers • Physical data centers with interpretation facility set up at Noida • Data centers to be set up at Calgary, Houston and London • Bidders can access technical data of various contract areas on offer• For first two days, free viewing of data and interpretation available

Facilitation Cell:0120-2472015; 7042693218

facilitationdsf@dghindia.gov.in

http://mstcecommerce.com/eprochome/dsfbidding/index.jsphttp://www.indiadsf.com/

Data Access

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Physical data room booking: The Bookings tab on the www.indiadsf.comwebsite allows users to create new booking for the data room

Purchase of Information dockets: Field information dockets can be purchased from the MSTC ebidding portal (https://www.mstcecommerce.com/)

Purchase of Data package: Data package for various fields can be purchased from the DGH office in Noida. (Please write to dsf.bidding@dghindia.gov.in)

http://www.indiadsf.com/https://www.mstcecommerce.com/mailto:dsf.bidding@dghindia.gov.in

Bid Qualifying Criteria

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1Payment of Tender Fees on or before bid closing date, by way ofpurchase of requisite Information docket (USD 1000 for 26 onlandcontract areas and USD 1000 for 20 offshore contract areas)

2 Bidder must be a company individually or in association with othercompanies, through an incorporated or unincorporated venture

3 Net worth of the bidding company’s should be equal to or more than itsParticipating Interest value of the Biddable Work Program commitment

4 Annual Report including audited annual accounts certified bycompany’s statutory auditor(s)

Bid qualified for evaluation

Bid Parameters

13

80%

20%

1.Contractor to bid the Government Share of revenue (%) against

Lower Revenue Point (LRP) ≤ US$ 0.0100 million/day Higher Revenue Point (HRP) ≥ US$ 1.000 million/day

1.Bid yielding highest NPV will get 80 marks and rest bids would be scored on pro-rata basis

1.Bid proposing maximum number of appraisal / development wells would get 20 marks

2.Rest bids would be scored on pro-rata basis

Revenue Share

Biddable Work

Program

Weights

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Key Success Stories

11Other Success Stories - Panna-Mukta | Mid & South Tapti | Kharsang | Dholka

• At the time of taking over the field, the Expected ultimaterecoverable reserves were 101 mmbl

• JV consisted of Cairn, Ravva Oil (Singapore), ONGC, Videocon• Already recovered cumulatively 277 mmbl of oil and additional

11 BCM of gas & still producing - Highest recovery factor in thecountry

• Total Investment – US$ 0.91 Billion• Cumulative revenue - US$ 14.6 Billion• Contractor share of profit – US$ 5.3 Billion

Ravva - One of the most successful discovery

• At the time of taking over the field, Oil & Gas In-place reserve(OGIP) about 1.6 BCF

• JV consisted of Niko Resources and GSPC• Already produced cumulatively 348 BCF of gas & still producing• Total Investment – US$ 0.33 Billion• Cumulative revenue - US$ 1.5 Billion• Contractor share of profit – US$ 0.68 Billion

Hazira - One of the major gas producers in Gujarat

Summarizing things that you would want to know about DSF

11

Data Availability & Accessibility+ All exploration data related

to the contract areas are available in data centers

Physical data centers available at Noida (India), Houston, Calgary and London

Existing & Nearby Infrastructure+ Existing facilities in

contracted area would be handed over to license holders - No cost/ payment to be made by the contractor to NOCs

Contractors would have access to the facilities available in nearby areas operated by ONGC/ OIL at cost

Summarizing things that you would want to know about DSF

11

Fiscal Regime+ No mandatory exploration Separate license would not be required by successful bidder for

unconventional resources viz. Natural Gas Hydrates, Shale, etc. No cost approval required from government Revenue post payment of royalty to be shared with government based on

the % share quoted by the contractor on a linear sliding scale basis Producers can sell the oil & gas freely subject to adoption of ‘Arms

length principle’ for sale & price discovery No mandatory JV with Indian companies or NOCs required No carried Interest by NOCs – 100% FDI allowed

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Thank you

Directorate General of Hydrocarbons(Under Ministry of Petroleum & Natural Gas)Phone: 0120-2472000, Fax: 0120-2472049Email: dsf.bidding@dghindia.gov.inWebsite: www.dghindia.gov.in

DGH India @DGHIndia DGH India

Slide Number 1AgendaSlide Number 3Why DSF Bid Round?Attractive Features of DSF Bid Round 2016 Slide Number 6Slide Number 7Slide Number 8Bid Process and Important DatesAll about DSF Bid Round 2016Data AccessBid Qualifying CriteriaBid ParametersKey Success StoriesSummarizing things that you would want to know about DSFSummarizing things that you would want to know about DSFSlide Number 17