Discovered Small Field Bid Round: 2016

September 12, 2016London

Ministry of Petroleum and Natural Gas Government 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 PSCs

NELP/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

Contract Areas on Offer (1/2)

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

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 SKM67 fields offered

under 46 contract areas

Rajasthan fields – 2Reserves – 0.1 MmtoeArea – 24 SKM

5

Contract Areas on Offer (2/2)

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

46 contract areas containing 67 Discovered Small fields in 9 sedimentary basins 26 Onland 18 Shallow Water 2 Deepwater fields

Over 1500 sq. kms. of area on offer comprising 20% of the area under development

Initial In-place Volume: Over 48 MMT of Oil reserves (Onshore: 17.85 MMT, Offshore: 30.19 MMT) Over 38 BCM of Gas reserves (Onshore: 7.20 BCM, Offshore: 31.18 BCM)

Geo-scientific data available for: 2042 LKM 2D 1336 SKM 3D 130 Wells

Many of the blocks offered are located in the vicinity of the existing operating fields of ONGC/ OIL enabling possibility of use of existing facilities by successful bidders

Terms of the Offer (1/2)

6

No prior technical experience required

Ease of Entry –encourages entry of start-up, juniors and non-E&P firms into Indian E&P sectors

Revenue sharing modelNon-intrusive and simplified contract regime – encourages efficient & low cost operations

Free pricing and marketing freedom Higher revenue realization for producers

Up to 100% FDI allowed Enables and encourages entry of foreign players

No upfront signature bonus and zero book value

No upfront payment to ONGC/ OIL or Government

No carried interest by NOCs

Encourages participation of global and Indian private firms

Terms of the Offer (2/2)

7

Fair and transparent process improves investor confidenceLow regulatory burden & transparent bid process

No mandatory minimum work program

No exploration obligation Development work program is biddable

Single license forconventional & un-conventional fields

Maximizes resources potential from all type of hydrocarbons including CBM, Shale Gas/Oil, Tight Gas, Gas Hydrates etc.

No oil cess,Custom duty exemption Improves the cost of production for operator

Continuous exploration permitted during contract period

Operational flexibility to operators to maximize the hydrocarbon recovery

Provision for sharing of common facilities

Common use to result in optimization of costs and early monetization

8

Model Revenue Sharing Contract (1/2)

Free pricing & marketing freedomMarketing & 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 and extendable upto 10 years

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

1

2

3

9

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

Joint use of Common Infrastructure & Provision for Unit Development of Reservoir

4

5

6

A Safe Investment Opportunity

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1 Low geological risk as the fields offered are already discovered

2 Low market risk – due to free pricing, marketing freedom and robustdemand for oil & gas

3 Availability of processing and evacuation Infrastructure throughnearby ONGC and OIL facility

4 Large amount of data available for the offered fields for viewing andinterpretation

5 Synergy and consistency with the upcoming exploration auctionsunder HELP regime

DSF Bid Round 2016 Information Access

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Technical Information Portal http://www.indiadsf.com/

• Ready reckoner on ‘how to access portal’• Bidders can view E&P data, Contract Areas

related data, Information guides (free of cost)• Schedule bookings for Physical data room

viewing, roadshows, one-to-one meetings

E-Bidding portal http://mstcecommerce.com/eprochome/dsfbi

dding/index.jsp• User-friendly interface for uploading bid

documents with easy registration process• Instruction to bidders on bid upload process• Secure gateway - Digital Signature Certificate• Field information dockets can be purchased

DSF Bid Round 2016 Information Access

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Physical Data Centers• Data centers with interpretation facility at Noida • Data centers setup at Calgary and Houston and

soon in London• For first two days, free viewing of data and

interpretation available• All exploration data related to the contract areas

are available in data centers• Bookings tab on www.indiadsf.com allows users to

create new booking for data room

Virtual Data Centers• All G&G data with required software license

is made available with VDR• VDR booking can be done by 6 users in a

day as per their suitability and time zone.• Confirmation of bookings will be provided

after the realization of payment. • VDR booking via www.indiadsf.com

Bid Process and Important Dates

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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

Data centers at Noida, Houston, Calgary operationalized

Data Centre at London shall be operationalized

soon

Virtual Data Room

Operationalized since 23rd August, 2016

Bid start date 15th July, 2016

Bid closing 31st October, 2016

Award Within 2 months

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 all 26 onlandcontract areas and USD 1000 for all 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)

All the above criteria needs to be fulfilled for qualification

Bid Parameters

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80%

20%

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

Lower Revenue Point (LRP) ≤ US$ 0.0100 mn/dayHigher Revenue Point (HRP) ≥ US$ 1.000 mn/day

2. 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

14Other 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 mmbbl 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

Ready Reference for Bidders (1/2)

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Existing & Nearby Infrastructure

• Connectivity through existing facilities/wells in contracted area would be handed over to license holders at no cost

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

• Use of ONGC/ OIL facilities is not mandatory. Bidder is free to setup independent facilities or use any other operator’s facilities.

Indicative Viability Calculator

• Familiarize potential bidders/ investors with the key factors that influence the viability of E&P projects

• User-friendly dashboard where user can fill in the parameter inputs as per their choice in order to understand the viability of the project

• Available for download at DSF website

Facilitation Desk for Bidders

• Bidders can address their queries and provide feedback through the Facilitation Desk provided in website

• Queries related to Roadshows/Upcoming events, bidding procedure, data rooms booking, Technical data purchase, contract, online bidding, etc. will be addressed by the Facilitation desk as soon as possible

DSF Calculator

• Familiarize bidders with the bid evaluation demonstrating ranking of bids

• No of wells, LRP% and HRP% input values can be entered by user

• Calculator will rank bids basis scoring of average NPV of GOI share of Notional Revenue Profile and number of wells

• Available for download at DSF website

Ready Reference for Bidders (2/2)

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Bid Evaluation & Process

• No reserve price for any discovered small field

• Book value of offered Discovered Small Fields is NIL

• Notional Revenue Profile given on website will be used for evaluation of bid

• MSTC bidders guide is available at e-bidding portal which clearly demonstrates step-by-step bidding details

• Consortium of companies are allowed to participate in the bid round

Reduced Fiscal Burden

• 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

• Free/hassle-free transfer of Participating Interest (PI)

• No mandatory JV with Indian companies or NOCs

• No upfront payment, No signature bonus and No carried Interest by NOCs

• No step-in rights for contractors• Increased tax stability to bidders

through exemption from custom duty• Government would extend all possible

assistance to awardees’ in acquisition of various approvals

•

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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 IndiaDownload DGH One Touch App on App Store and Google Playstore