INDIA ‘S ENERGY AND PETRO- RETAIL OUTLOOK SUMITA BOSE ROY General Manager - International Trade

INDIA ‘S ENERGY AND PETRO- RETAIL OUTLOOK

SUMITA BOSE ROY

General Manager - International Trade Bharat Petroleum Corporation Ltd

Defining India’s Energy Outlook

• Universal access and consumption options for all income groups

• Price stability

• Ability to compete across world markets• Meeting local and global environmental

norms

• Develop a globally competitive hydrocarbon sector through technology upgradation and capacity building

• Ensure energy security through indigenous production and equity abroad

• Ensure cleaner greener fuel to enhance quality of life

• Have free market for healthy competition and customer service

India’s Hydrocarbon Vision - 2025

India’s oil scenarios at a glance

• India’s demand for primary energy is growing by 5% p.a. • Oil demand is growing by 3.3% p.a. and is currently 2 million bbl/day

• India’s refining capacity matched its demand in 1998 and has remained positive

•

• Domestic Crude Oil is currently short of demand by 69%

• Net exporter of Naphtha, Gas oil, Gasoline, Fuel oil and importer of LPG

• Oil and gas accounts for 45% of total energy needs

• Bold reforms initiated to boost exploration and production

World oil demand growth

2000 2030 Avg.Ann.Growth

Total demand

(Million bbls/day)

75.0 120 1.6%

China 4.9 12.0 3.0

India 2.1 5.6 3.3

Mid East 4.1 7.7 2.2

South Asia 0.5 1.8 4.0

India’s demand for energy Annual average demand for primary energy

expected to grow by 5%

(Mtoe) 2000 2030 Avg. Ann Growth

Total Primary Energy 300 750 5 (%)

Coal 165 341 3.5

Oil 102 271 5.5

Gas 22 97 11.3

Nuclear 4 16 10.0

Hydro 6 8 1.0

Other Renewable 0 8 0.27

Shift in energy consumption pattern

2000 % 2030 %

Coal 165 55 340 45

Oil 102 34 271 36

Gas 23 8 97 13

Nuclear 4 1 16 2

Hydro 6 2 18 3

Other renewable 0 0 8 1

Total primary energy 300 100 750 100

Demand (Mtoe) vs Share

Oil demand versus refining capacity

MMTPA

Demand Refining

Capacity

Shortfall

/excess

1995 67 54 (7)

2000 97 112 15

2005 127 150 23

2012* 172 260 88

* Projections at the end of Eleventh Five Year Plan

• Demand growth projected at CAGR 5.4%, against actual 2003-04 growth of 9%

• Optimum refining capacity planned to cope with anticipated spurt in demand in 2005/12

Net imports / Exports

MMTPA

1995 2000 2005

28.8 imports

15.4 imports

20.1 exports

-15000

-10000

-5000

0

5000

10000

15000

1995 2000 2005 2010

LPG

Gasoline

Gas Oil

Naphtha

Kero/Jet

Fuel Oil

Net product imports & exports

LNG will impact F.Oil/Naphtha exports

(TMT)

Crude oil production versus demand

Wide Gap Between Production and Demand

Crude Prodn. Demand Gap

2000 32 97 65

2005 35 125 90

2011 42 172 130

* Based on presently known oil basins

MMTPA

Natural gas demand / supply projections

Supply projections based on present reserves

30% increase due to recent discoveries in Pvt./JV. Sector

*

70

151

95

231

95

313

0

50

100

150

200

250

300

350

400

2001-02 2006-07 2011-12 2024-25

Supply

CBM*

MM

SC

MD

---

391

Demand

95

2 10 15

• Emerging fuel of the future

• Demand is 150 mmscmd against availability of 70 mmscmd

• 10 mmscmd contracted from Qatar in 2004

• Several new fields discovered in India. The world’s largest discovery of gas in 2002 was reported by Reliance / Niko Resources in NEC-25, off Orissa State (35/40 mmscmd for next 15/20 years)

• Reliance/Niko Resources have made further major

discoveries this year in the same block

Demand and supply for gas in India

New significant discoveries

RajasthanBasin

LAKSHMI

AMBE

GAURI

PARVATI

GUDA

DISCOVERIES

I N D I A

Delhi

Mumbai

Chennai

SARASWATI

DISCOVERIES

RAVVA

PRODUCING

BAY

OF

BENGAL

NANUWALA

Kolkata

DHIRUBHAI - 1, 2, 3 & 4 K-G Basin

CambayBasin

D-5

D-6

OilGas Km

0 400200

DISCOVERIES

NELP

I PRE-NELP

KANAKDURGA

PADMAVATI

ANNAPURNA

BHIMA

RJ-E-1

Paradigm shift for gaining crude oil/gas security

Oil sector reforms introduced by Indian Government in 1999 to boost exploration activities

‘New Exploration Licensing Policy’ (NELP) notified, - permitting private/foreign participation. - allowing FDI up to 100% - Awarding acreage on international competitive

bidding - offering fiscal incentives, like royalties, tax

concessions, market driven prices, etc

Thrust on acquisition of equity oil and reserves abroad,development of R&D, deep sea drilling

• Nine LNG terminals proposed for 160 mmscmd, of which, 30 mmscmd are being currently set up by Petronet LNG and Shell

• Future projects are dependent of firm consumer demand and based on price as compared to alternate fuel

• Sources of gas will also depend on domestic gas discoveries

Proposed LNG terminals

Regulations and pricing mechanisms

• Pricing of petroleum products deregulated from 2002 and linked to international price

• Import duties and freight added to import price to arrive at the domestic price

• Prices revisions permitted on fortnightly basis alongside international prices

• Gasoline and gas oil price revisions are permitted within Government norms

• Liquefied Petroleum Gas and Kerosene are subsidised

Indian oil industry

COMPANY Refining capacity

Sales in Domestic

Market share %

Indian Oil 52 51.5 55

Reliance 32 - -

Bharat Petroleum

19 20.8 22

Hindustan Petroleum

14 18.8 21

MRPL/ BRPL 15 1. 5 2

TOTAL 132 92. 6 100

------MMTPA------ 2003-04

PRTRO -RETAIL OUT LOK OF BHARAT PETROLEUM CORPORATION LTD

BPC Group – positioned well

Marketing 22%

Refining 17%

Marketing 22%

Refining 17%

Industry ShareIndustry Share

BPC & KRL fully on SAP system

BPC upgraded to SAP

Enterprise

State of Art Data Center

E-Banking/ E-Business B2B

BPC & KRL fully on SAP system

BPC upgraded to SAP

Enterprise

State of Art Data Center

E-Banking/ E-Business B2B

TechnologyTechnology

Retail outlets 5,530Installations 12 Depots 129Tankage (mn kl) 3.08 Aviation stations 19 LPG Plants 42LPG Distributorships 1922

Retail outlets 5,530Installations 12 Depots 129Tankage (mn kl) 3.08 Aviation stations 19 LPG Plants 42LPG Distributorships 1922

Marketing InfrastructureMarketing Infrastructure

Mumbai-Manmad-Indore 580 km(under extension to Delhi)

Cochin-Karur 292 km

Mumbai-Manmad-Indore 580 km(under extension to Delhi)

Cochin-Karur 292 km

PipelinesPipelines

RefiningRefining

180,000 bbl/dat Mumbai

180,000 bbl/dat Mumbai

150,000 bbl/d54.81% holding150,000 bbl/d

54.81% holding

60,000 bbl/d62.96% holding

60,000 bbl/d62.96% holding

Petronet LNG Limited (PLL) 12.5% (LNG import facility of 5 MMPTA at Dahej)

Indraprastha Gas Limited (IGL) 22.5%(Supply of CNG to households/auto sector in metros; agreement signed)

Petronet LNG Limited (PLL) 12.5% (LNG import facility of 5 MMPTA at Dahej)

Indraprastha Gas Limited (IGL) 22.5%(Supply of CNG to households/auto sector in metros; agreement signed)

Significant Joint VenturesSignificant Joint Ventures

Forbesganj

Jammu & Kashmir

HimachalPradesh

Punjab

Haryana

Rajasthan

WestBengal

Orissa

Maharashtra

Karnataka AndhraPradeshGoa

TamilNadu

Kerala

Gujarat

Assam

Jallandar

Shakurbasti

Panipat

Mathura

AmbalaBathinda Sangrur

Rewari

Jaipur

Jodhpur

Sidhpur

Kandla

SikkaRajkot

Koyali

Ratlam

Indore

Manmad

MumbaiVashi

Loni

Rourkela

Paradeep

Ranchi

Cherlapalli

Vijaywada

Rajahmundry

Vizag

Mangalore HassanDevangonthi

Kochi

Irugur

Karur

Madurai

Trichy

Chennai

Kota Gwalior/Rayaru

Bina

Vadinar

Kanpur

Jhansi/ Karari Mughalsarai

Patna

Barauni

Haldia

Budgebudge

Rajbandh

Siliguri Bongaigon

Gauhati Jorhat DigboiAgra

Existing Product Pipeline

Ahmedabad

Chaksu

ViramgamSalaya

Itarsi

BPC existing facilities

•

•

•

Amousi

Meerut

•

Map not to scale

•

•

Akola/Gaigaon

Badnera

Tadali

ChandrapurAurangabad

Jalgaon

Dhule/Shirud

Akolner

Miraz/Hazarwadi

Valsad/Vapi

Sholapur/Pakni

Bijapur

Gulbarga

Raichur

Desur

Hubli/Navalur

Shimoga

Karwar

Cannanore

Calicut

Quilon

Trivandrum Tirunelveli

Salem Neyveli

Nizamabad

Warangal

Guntakal

Renigunta

Cuddappah

Tada

Jagdalpur

Berhampur

Sambalpur

Balasore

Dhanbad

Tatanagar

Bokaro

Bhagalpur

Katihar

Raxaul Baitalpur

Gorakhpur

Gonda

Basti Banthra

Bareilly/ Aonla

Najibabad

Kathgodam

Bharatpur

Hanumangarh

Amritsar

Patiala Parwanoo

Shimla

Dhamatal

Jammu

Kotkapura

Hoshiarpur

Pathankot

Srinagar

Bikaner

Sagar/Nairoli

Satna

Jabalpur/Bhitoni Singrauli/Jayant

Bilaspur

Raipur

BhilaiGondia

Dehri Khandwa

Agartala

Vairangte

Dharmanagar Imphal Silchar

Dimapur

Lumding

Barapani

Nagaon Khot koti

Tinsukia

Missamari

Biswanath charali

N. LakhimpurDoimukh

Gangtok

Rangpo

Dalgaon

Udaipur

Surat/ Hazira

Bhavnagar

Essar

Narimanam

Bisrampur

BPC depot locationsExisting Refinery

Malda

Betkuchi

Cuttack/Jatni

Nishatpura/Bakania

Ajmer

Sabarmati

Kulu

Leh

Hissar

Borkhedi

Palghat

Ongole

Bijwasan

Mysore

BPC Installations

Tondiarpet

Shankari

NRL

Industry locations

Uttar Pradesh

Madhya Pradesh

Bihar

Uttaranchal

Chattis

garh

Jharkhand

Refining – growth in margins

Sharp recovery in regional margins – margin up trend expected to continue in medium term coinciding with Group capacity enhancement

Sharp recovery in regional margins – margin up trend expected to continue in medium term coinciding with Group capacity enhancement

Gross Margins

Rs14.34 bn

(Rs11.75 bn)

Gross Margins

Rs14.34 bn

(Rs11.75 bn)

Crude Throughput

8.76 MMT

(8.71)

Crude Throughput

8.76 MMT

(8.71)

Flexibility

60 plus

crude types

Flexibility

60 plus

crude types

Safety

ISRS Level – 8

Safety

ISRS Level – 8

Refinery Capex

Rs7.9 billion

in FY04

Refinery Capex

Rs7.9 billion

in FY04

BPCL Group Refinery GRMsBPCL Group Refinery GRMsSingapore Dubai Refinery MarginsSingapore Dubai Refinery Margins

Domestic margins are higher by US$1.5-2/bbl than regional marginsDomestic margins are higher by US$1.5-2/bbl than regional margins

BPC financials

Delivering shareholder value over the yearsReturn on net worth at 20%+ throughout last decade

Delivering shareholder value over the yearsReturn on net worth at 20%+ throughout last decade

Earnings per Share (EPS)

Return on Net Worth (RONW)Sales Turnover

Book Value per Share

Leveraging on retail

Speed: Branded Fuel

First branded Fuel in India Launched in July 02 Represents 9.8% of total petrol volumes in FY04 Available at 1100 outlets across country 49% market share of premium fuel Launch of SPEED 93, 93 Octane petrol in Aug. 03 Launch of Hi-Speed Diesel in July 04

In & Out Stores: Discover Convenience

235 convenience stores at retail outlets Available in more than 80 cities Total turnover Rs.300 mn/ Income Rs.37 mn Enhance fuel sales proposition Classic convenience Range of products and service offerings

Pure for Sure (PFS) – pioneering program guaranteeing fuel Quality and Quantity 48% of retail network under PFS

contributing 68% of Petrol and 62% Diesel sales

Pure for Sure (PFS) – pioneering program guaranteeing fuel Quality and Quantity 48% of retail network under PFS

contributing 68% of Petrol and 62% Diesel sales

PFS helped in building a strong retail foundationOther initiatives followed : it paid to be always the first

PFS helped in building a strong retail foundationOther initiatives followed : it paid to be always the first