Reportlinker Adds Power and Oil/Gas Infrastructure in India

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Jun 28, 2011, 04:40 ET

NEW YORK, June 28, 2011 /PRNewswire/ -- Reportlinker.com announces that a new market research report is available in its catalogue:

Power and Oil/Gas Infrastructure in India

http://www.reportlinker.com/p0546870/Power-and-Oil/Gas-Infrastructure-in-India.html?utm_source=prnewswire&utm_medium=pr&utm_campaign=Oil_and_Gas_energy

It is well accepted in Indian and international policy circles that bottlenecks in infrastructure in most subsectors– electric power, roads, ports, airports and sanitation, with the possible exception of telecommunications, are acting as a serious impediment to rapid and sustained economic growth in India. The World Bank and the Indian Planning Commission have independently estimated that economic growth in India is on average between 1-3 percentage points lower than what it could have been if infrastructure bottlenecks were not as severe as they currently are. Indeed, India seriously lags behind not just advanced OECD economies in infrastructure development, but even other developing countries of comparable size such as Brazil and China. The UPA government, currently in its second successive term, has prioritized the development of infrastructure in an aggressively drawn out plan stretching over the remainder of the Eleventh Five-Year Plan (2007-12) and the Twelfth Plan (2012-17). However, given the sheer size and diversity of the country and the extent of the catch-up, sustained policy commitment is required over the next two decades to bring India's infrastructure up to world class standards.

While the power sector in India has witnessed a few success stories in the last 4-5 years, the road that lies ahead of us is dotted with innumerable challenges that result from the gaps that exist between what's planned versus what the power sector has been able to deliver. This document highlights and quantifies some of these gaps and attempts to analyze the problem. The document builds on the risks prevalent in the industry, some prominent hurdles that the power sector has already crossed, and more importantly - others that various players have to overcome. Understanding these core issues and risks of the power sector help in identifying the opportunities that lie ahead; for example why is private sector participation an important requirement. A short peek at our past performances indicate that during the last three five year plans (8th, 9th and 10th), we have barely managed to achieve half of the capacity addition that was planned.

As per the infrastructure target in power sector for 11th Five year plan, we need to attain additional power generation capacity of about 90,000 MW, reaching electricity to all un-electrified hamlets and providing access to all rural households through Rajiv Gandhi Grameen Vidyutikaran Yojna (RGGVY). As we enter the fourth year of the 11th five year plan, we have already seen slippages on the planned approx. 90 GW capacity addition. Once we break the problem down and identify the bottlenecks, we may be able to better understand the integration challenges that such large projects pose. While there may be heavy dependencies on equipment suppliers and challenges around logistics and work-front availability – with the right and timely application of project management principles along the lifecycle of the project, one can strive to achieve increased project completion against baselines. Certain best practices around stakeholder management, integrated project and asset development and interdependency mapping across various entities can help improve overall project planning. Once we understand the practical implementation challenges, various teams and people get aligned to the overall strategy, then the delivery on our estimated plans becomes more of a reality.

One of the focus areas of this report is the electric power sector in India, which is projected to grow rapidly over the next two decades. In particular, it discusses policy developments in the sector, especially since the passage of the landmark 'new' Electricity Act (2003), the sector-specific issues that still remain unresolved, primarily due to a combination of a complex administrative structure and the reluctance of the State Electricity Boards (SEB, hereafter) to accede to a new policy framework that would dilute their unchallenged authority, and the contours of future development, especially the opportunities for private-sector participation, both domestic and foreign, in the development of the power sector in India. Also, Indian power policy permits 100 percent FDI (except atomic energy) in electricity generation, transmission, and distribution and trading; establishing power plants without any license; transmission services for Independent power transmission companies.

The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. India has total reserves (proved & indicated) of 1,201 million metric tonnes (MMT) of crude oil and 1,437 billion cubic metres (BCM) of natural gas as on April 1, 2010, according to the basic statistics released by the Ministry of Petroleum and Natural Gas. The country exported 50.974 MMT of petroleum products during 2009-10. In the eighth round of the New Exploration Licensing Policy (NELP-VIII), 1.62 sq km area will be covered comprising 70 blocks. Out of 70 blocks, 36 have been awarded under NELP-VIII, according to the Economic Survey 2009-10. Union Minister of Petroleum & Natural Gas launched the ninth round of NELP (NELP-IX) in New Delhi on October 15, 2010. NELP-IX round offers 34 exploration blocks comprising of 8 deepwater blocks, 7 shallow water blocks and 19 onland blocks. Moreover, the government is planning its first ever offer of shale gas exploration in 2012. According to Mr. Deora, the then Union Minister of Petroleum & Natural Gas, "Shale gas (gas locked in sedimentary rocks) is an emerging area. It has become an important source of energy in a few countries that have been able to commercially exploit this resource."

Oil and gas accounts for 41 percent of India's energy consumption and there is unlikely to be any significant scaling down of dependence on these fuels in the next five to ten years. The sustained economic growth in the country over the last five years has led to concurrent growth in energy demand across industrial, transportation, commercial, and residential sectors. "To meet this considerable demand, the oil and gas sector is expanding its refining capacity to drive output and export of petroleum products," says an industry expert. "However, this could widen the gap between domestic demand and supply of crude oil." A substantial increase in the domestic supply of natural gas and reduced prices of liquefied natural gas (LNG) are likely to encourage gas consumption in power, fertilizer, city gas distribution, and other industrial segments. Owing to the rising consumption of oil and gas, the Government has framed favorable policies to promote exploration and production. This move has caused a quantum leap in domestic natural gas supply. Government policies have also supported the growth of export-oriented refining capacity in the country.

The natural and technological limitations in enhancing global oil production are likely to restrain supply from keeping pace with demand in the long term. This, in turn, could lead to a continued increase in the base-level prices of crude oil. In India, the pricing of petroleum products and natural gas continues to be regulated by the government. "Though international crude oil prices have come down in the short term, they are expected to rebound and rise in a sustained fashion in the long term." The oil and gas sector will have to strategize to deal with volatile prices on the supply side and government-regulated product prices in the coming years.

Table of Contents

Executive Summary

Overview of the Sectors

Comparison of Indian Market vis-à-vis the Global Market

Key Players Landscape

Government Regulations & Reforms for the Sector

Oil/Gas Sector in India

Comparison of Indian Market vis-à-vis the Global Market

Key Players Landscape

Government Regulations & Reforms for the Sector

Scope of industry/market in India: Future Potential and Forecasting/ market in the next 5 years

New Developments in the Industry