11 th Petro India, New Delhi, 11 th Dec’12

11th Petro India,New Delhi, 11th Dec’12

Potential For Co-operation Between Neighboring Countries

Upstream / Refining & Marketing /Gas

Ashok DharPresident (Industrial Marketing)

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Forward looking statementsThis presentation contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends ” “projects ” “estimates” or other words of similar meaning. All statements that address expectations or projections about the future, including, but not limited to, statements about the strategy for growth, product development, market position, expenditures & financial results, are forward looking statements.Forward-looking statements are based on certain assumptions & expectations of future events. The companies referred to in this presentation cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements These companies assume no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events, or otherwise.

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Contents

South Asia – Regional Constituents Regional Indicators. Dependency on Fossil Fuels (Global &

South Asia). Energy Trade Patterns and Potential

areas of Co-operation. Trade Inhibiting factors. Way forward.

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South Asia: Regional Constituents

South Asia – A region of huge potential, both in human capital and natural resources, where people are dreaming for a better tomorrow.

South Asia – Regional Indicators

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South Asia: Demographic & Economic Indicators

South Asia, home to 1.6 billion people, facing challenges of hunger & poverty, rich in resources, not well distributed, has still turned into a region of developing economy inspite of all odds.

Source: www.cia.com, World fact book

Particulars Afghanistan Bangladesh Bhutan India Maldives Myanmar Nepal Pakistan Sri Lanka

Area ('000 sqkm) 652 144 38 3,287 0.298 677 147 796 66Population (in mm) (Jul’12 est.) 30 161 1 1,205 0 55 30 190 21

GDP (PPP in $ bn) (2011 est.) 29.74 283.5 4.31 4421 2.8 82.68 38.08 488.4 116.3

GDP real growth rate (%) (2011 est) 5.8 6.5 5.3 6.8 5.8 5.5 3.9 3.0 8.30

GDP per capita (in$) (2011 est.) 1,000 1,900 5,800 3,700 8,600 1,300 1,200 2,800 5,700

Coast line (in kms) Landlocked 580 Landlocked 7,000 644 1,930 Landlocked 1,046 1,340

Natural Resources

natural gas, coal, petroleum, lead, copper, chromites, talc, barites, zinc, sulfur, iron ore, salt, precious and semi precious stones

natural gas, arable land, timber, coal

timber, hydropower, gypsum, calcium carbonate

coal, iron ore, manganese, mica, bauxite, rare earth elements, titanium ore, chromites, natural gas, diamonds, petroleum, limestone,

fish

petroleum, tin, timber, zinc, antimony, lead, copper, coal, tungsten, marble, limestone, precious stones, natural gas, hydropower

quartz, water, timber, hydropower, small deposits of lignite, copper, cobalt, iron ore

extensive natural gas reserves, limited petroleum, poor quality coal, iron ore, copper, salt, limestone

limestone, graphite, mineral sands, gems, phosphates, clay, hydropower

41

40

111

49

217

95

8

46

39

195

137

165

170

58

143

7

2

5

35

165

210

176

180

50

119

40

24

78

55

204

94

41

102

103

207

36

6

28

123

175

122

57

66

16

146

Country comparison with the world

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South Asia: Trade with India

India has very low trading volumes with its South Asian Neighbors.

Source: www.commerce.nic; Figures for 2011-12

Afganistan Bangladesh Bhutan Maldives Myanmar Nepal Pakistan Sri Lanka Total Region

Exports

Value (Rs Crores) 2429 18387 1104 598 2645 13130 7448 20951

% Share 0.17 1.25 0.08 0.04 0.18 0.9 0.51 1.43 4.56

Imports

Value (Rs Crores) 622 2793 974 92 6352 2639 1918 3436

% Share 0.03 0.12 0.04 0 0.27 0.11 0.08 0.15 0.80

Total Trade

Value (Rs Crores) 3051 21179 2079 690 8997 15770 9366 24387

% Share 0.08 0.56 0.05 0.02 0.24 0.41 0.25 0.64

Rank 83 40 91 120 53 42 52 35 -

Trade Balance 1807 15594 130 506 (3708) 10491 5531 17516 47867

India Total Export – Rs.1465959 CroresIndia Total Import – Rs.2345463 Crores

66692

2.24

18826

85518

Dependency on Fossil Fuels - Global & South Asia

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Global Dependency on Fossil Fuels:

Globally, the share of fossil fuels will only decrease by 6% in the next two decades. The fuel mix changes slowly, due to long gestation periods and asset lifetimes.

Source: BP Outlook 2012

88%

82%

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South Asia - Dependency on Fossil Fuels

Demand of South Asian countries is outstripping the resource availability necessitating imports.

Source: www.eia.com, Oil and Gas estimates for 2011, Coal estimates for 2010

Country

Oil Gas CoalProven

Reserves Production ConsumptionNet

Export / (Import)

Proven Reserves Production Consumption

Net Export / (Import)

Proven Reserves Production Consumption Net Export /

(Import)

billion bbls 000 bbls / day trillion cu.ft billion cu.ft billion tons Million tons

Afganistan 0 0 5 (5) 2 5 5 0 0.4 0.04 0.04 0

Bangladesh 0.03 5.7 110 (104.3) 7 710 710 0 3.3 1.2 2.2 (1.0)

Bhutan 0 0 1 (1) 0 0 0 0 0.0 0.1 0.1 0.02

India 5.7 936.8 3426.0 (2489.3) 38 1682 2261 (579) 118.1 686.5 795.9 (109.3)

Maldives 0 0 7 (7) 0 0 0 0 0 0 0 0

Myanmar 0.05 20.8 45.0 (24.2) 10 421 118 303 0.3 1.6 1.2 0.4

Nepal 0 0 19 (19) 0 0 0 0 0.0 0.02 0.4 (0.4)

Pakistan 0.3 62.1 371 (308.9) 30 1383 1383 0 3.5 4.1 12.8 (8.7)

Sri Lanka 0 0 98 (98) 0 0 0 0 0 0 0.2 (0.2)

Region 6.1 (3056.3) 87 (276) 125.6 (119.1)1025 4082 4201 4477 693.7 812.8

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Dependency on Fossil fuels is here to stay:

Algae Farm

Liquid demand growth is driven by transportation. One has to evolve a model of sustainable mobility that displaces liquid transportation fuels

Source: BP Outlook 2012

Liquid demand by sector Liquid demand by product group Transportation demand by energy type

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South Asia - Dependency on Fossil Fuels:

With rising demand for energy, all South Asian countries will continue to remain big importers of fossil fuels.

Source: BP Energy 2030

Source: integrated Energy potential of South Asia; Vision 2020

South Asia – Energy Trade Patterns and Potential areas of Co-operation

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South Asia – Energy Trading Potential

Inward looking energy import substitution policies aimed at national self sufficiency have resulted in low energy sharing.

Source: integrated Energy potential of South Asia; Vision 2020

CountryOil & Petroleum Products Gas Coal

Import Export Import Export Import Export

Afghanistan Yes No Yes No No NoBangladesh Yes No Yes No Yes No

Bhutan Yes No Yes No Yes YesIndia Yes Yes Yes No Yes No

Maldives Yes No Yes No No NoMyanmar Yes No No Yes No Yes

Nepal Yes No Yes No Yes NoPakistan Yes No No No Yes NoSri Lanka Yes No Yes No No No

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South Asia : Surplus Energy Availability

South Asian region, through cross border infrastructure linkages can look forward to reducing import dependency on the outside world.

HYDRO POWER

HYDRO POWER & GAS

GAS

GAS

REFINED PRODUCT

TRANSITLINKAGE

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South Asia: Energy Trade Prospects

Afghanistan Bangladesh Bhutan India Maldives Myanmar Nepal Pakistan Sri Lanka

Afghanistan x x x Transit for

Energy trade with East Asia

x x xTransit for

Energy trade with East Asia

x

Bangladesh x x Marginal

hydropower & gas export via

India

Significant hydropower &

gas exportx x

Marginal hydropower & gas export via

India x x

Bhutan xMarginal

hydropower export via India

x Significant

hydropower export

x xUnlikely;

Similarity of resources

x x

India Supply Refined

products via Pakistan

Supply Refined products

Supply Refined products x Supply Refined

products Supply Refined

products Supply Refined

products Supply Refined

products Supply Refined

products

Maldives x x x x x x x x x

Myanmar x Marginal

hydropower export via India

xSignificant

hydropower & gas export

x x x x x

Nepal xMarginal peak hydropower

support x

Marginal peak hydropower

support x x x x x

Pakistan Supply of

electricity and gas

x x Supply of gas x x x x x

Sri Lanka x x xMarginal peak hydropower

support x x x x x

EXPO

RTIN

G C

OU

NTR

Y

IMPORTING COUNTRY

Co-operation of energy across the region will have multiple impact on social & economic conditions of the country.

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India’s – Refined Product Surplus Availability

India’s superior refining capabilities and surplus product availability can cater to demand of whole South Asian region.

Source: www.eia.com; cia world Factbook; Facts Global Fall 2011 Edition

Country

Refined Product Refining Installed Capacity

Production Consumption Net Export / (Import) 2011 2015 2020

000 bbls/day 000 bbls/day

Afganistan 0 4.2 (4.2) 0 0 0

Bangladesh 24.8 89.6 (64.8) 31 31 31

Bhutan 0 1.7 (1.7) 0 0 0

India 4125.0 3292.0 833.0 3967 4746 4906

Maldives 0 6.9 (6.9) 0 0 0

Myanmar 16.7 40.6 (23.9) 57 57 57

Nepal 0 18.4 (18.4) 0 0 0

Pakistan 205.9 426.7 (220.8) 294 436 686

Sri Lanka 38.6 108.9 (70.3) 50 50 50

Region 4411 3989 422 4400 5320 5730

India Surplus = 833 Kbbls/dayOthers Deficit = 411 Kbbls/day

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India and Pakistan – A Case Study Pakistan’s Refined Product Demand (Zonewise):

Zone I (Punjab/NWPF) is geographically and logistically near to India and shares close proximity to the Bhatinda Refinery/Panipat Refinery and Jalandhar pipeline tap-off point.

Zone 2 (Balochistan/Sindh) can be logistically fed by Indian Refineries from Gulf of Kutch via karachi and will replace product imports from Middle East.

Zones ProvinceDemand Concentration (in KT)

Demand (%)

Diesel Gasoline Jet/Kero FODemand Deficit Demand Deficit Demand Deficit Demand Deficit

Zone 1 Punjab/ NWPF 63% 4425 2266 1532 702 683 120 5792 4285Zone II Balochistan / Sindh 37% 2599 1331 900 413 401 70 3401 2516

Total 100% 7024 3597 2431 1115 1085 190 9193 6801Source: Fact Global Fall 2011

Destination To Road distances From (in Kms)Closest Supply PointZones Province Main City Location Karachi Jalandhar Bhatinda Panipat

Zone I

NWFP Islamabad North 1460 503 561 792 JalandharNWFP Peshawar North 1364 639 697 927 JalandharPunjab Lahore North 1282 133 205 415 JalandharPunjab Multan Central 936 488 495 706 Jalandhar

Zone II

Balochistan Quetta Central 692 1113 1084 1332 KarachiSindh Sukkur South 476 955 962 1173 KarachiSindh Hyderabad South 164 1262 1233 1150 KarachiSindh Karachi South 0 1415 1385 1613 KarachiSource: one way distances from www.googleearth.com

Indian refineries are better positioned to bridge product deficits of Pakistan, if there are no disincentives (prices, payment security and level playing field) for doing trade.

Trade Inhibiting Factors

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South Asia – Present Trade Inhibiting Factors Political/Security Considerations

Prolonged political tension between India and Pakistan. National Policy & Political Mindset

Reluctance to make efficient policy decisions due to the threat of possible supply disruptions due to political uncertainty.

Infrastructure Constraints.Lack of cross-border infrastructure to address mismatch between resource distribution and demand growth distribution.

Regulations and Sector ownershipPervasive state ownership of the energy companies and regulation of the retail prices with no effective independent regulatory body for resolution of disputes.

Mindset of policy makers should be more positive towards improving mutual relationships and reducing trust deficits.

Way forward

INDIAMYANMAR

AFGHANISTAN

BHUTAN

PAKISTAN

NEPAL

SRI LANKA

MALDIVES

We can have friendship pipelines, ferries and trains convert South Asia into a seamless region for a common market and an economic union on the lines of the European Union.

At present, South Asia is following independent inclusive policies for self sufficiency.

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Energy Trade Flow Boosters Friendship Product Pipelines:

– Jalandhar (India) – Lahore (Pakistan) – Kabul (Afghanistan)

– Haldia (India) – Dhaka (Bangladesh) Friendship Product Ferries:

– Jamnagar (India) – Karachi (Pakistan)– Vizag / Paradeep / Haldia (India) –

Chittagong (Bangladesh)– Vizag / Paradeep / Haldia (India) – Yangon

(Myanmar) Friendship Product

Transnational Freight corridor:– Lahore (Pakistan) - Delhi (India) – Kolkata

(India) - Dhaka (Bangladesh) – Agartala (India) [2453 km]

– Thimpu (Bhutan) - Haldia (India) [760 km]– Thimpu (Bhutan) – Chittagong

(Bangladesh) [880km]– Kathmandu (Nepal) - Phulbari (India) –

Chittagong (Bangladesh) [1442 km] – Kathmandu (Nepal) - Haldia (India) [1323

km] A quantum leap in connectivity will have Schumann Plan like transformational impact

Refined Products

………can then harness well endowed tradeable energy resources of Iran, Turkmenistan, Tajikistan, Kyrgyzstan, Uzbekistan and Kazakhstan……

An united South Asian Region……..

May this be the Delhi declaration of this conference for economic upliftment of people in the region.

Thank You