World Energy Outlook 2007

Our oil-production projections are derived from a bottom-up assessment of the
12 largest producing fields in 2006 and new oilfield developments in the
coming years, as well as from a top-down analysis of longer-term development
prospects. The delay between the date of any discovery and the start of
production is assumed to be eight years, in line with the average delay since the
1990s. Inevitably, these projections are subject to considerable uncertainty,
notably with respect to the rate at which discovered fields can be brought into
production and to decline rates. About 100 small fields discovered in the 1980s
and 1990s, each with proven and probable reserves of less than 10 million
barrels, are assumed to be brought into production before 2012. This
represents a major challenge, as the highest number of new field start-ups in a
single year previously was 28 in 1999. We assume that an average of 25 fields
annually will be brought into production between 2007 and 2013, though it
is not clear that the investment needed will be forthcoming under the existing
fiscal regime. Moreover, the increase in demand for drilling rigs implied by our
projections would be likely to drive up costs. Only about 10% of the 880 wells
agreed under licenses awarded in the first six rounds of the NELP introduced
in 1997 3 have been drilled so far, partly because of a lack of available drilling
rigs. 4 Delays in drilling would result in a smaller contribution of those fields
before 2015, but higher between 2020 and 2030. Indian oil production would
still peak in the near future.
Oil Refining
India has 19 refineries with total installed refining capacity of 2.9 mb/d. The
state-owned Indian Oil Corporation (IOC) owns ten refineries directly and
another one through a subsidiary. Six refineries are owned by other public
companies. The private firms, Reliance and Essar Oil, commissioned two new
refineries at Jamnagar in 2000 and Vadinar in 2006. The refining sector was
opened up to private investment in 1996 with Mangalore Refinery and
Petrochemicals (MRPL) commissioned as a joint-venture refinery with private
actors, although it was later purchased by the Oil and Natural Gas Corporation
(ONGC). Atmospheric distillation capacity doubled to 2 mb/d between 1993
and 2000, with the commissioning of five refineries, including Reliance's
580 kb/d refinery in Jamnagar – the third-largest in the world. Capacity
expansions at existing refineries added almost 700 kb/d to distillation units
between 2000 and 2006. The complexity of the refining sector has increased
markedly since the end of the 1990s thanks to capacity additions and
17
3. See Box 15.2 in Chapter 15 for an overview of the NELP.
4. The Ministry of Petroleum and Natural Gas recently accepted the proposal of the Directorate
General of Hydrocarbons to merge the first two phases of the production-sharing contracts signed
under the NELP-III and IV licensing rounds to at least partly remove the threat of withdrawing
licences because of delays in drilling.
Chapter 17 - Reference Scenario Supply Projections 493