Energy & Natural Resources in India

With a billion plus population, India is today one of the fastest growing economies in the world. As India marches on the path of sustained economic growth, achieving levels of 9% -10 % of GDP per annum over the next 25 years, its demand for energy, particularly for oil and gas, continues to soar. The Planning Commission’s Report of the Expert Committee on Integrated Energy Policy August 2006 states that “To deliver a sustained growth rate of 8% through 2031-32 and to meet the lifeline energy needs of all citizens, India needs, at the very least, to increase its primary energy supply by 3 to 4 times and, its electricity generation capacity/supply by 5 to 6 times of their 2003-04 levels. With 2003- 04 as the base, India’s commercial energy supply would need to grow from 5.2% to 6.1% per annum while its total primary energy supply would need to grow at 4.3% to 5.1% annually. By 2031-32 power generation capacity must increase to nearly 8,00,000 MW from the current capacity of around 1,60,000 MW inclusive of all captive plants. Similarly requirement of coal, the dominant fuel in India’s energy mix will need to expand to over 2 billion tonnes/annum based on domestic quality of coal. Meeting the energy challenge is of fundamental importance to India’s economic growth imperatives and its efforts to raise its level of human development.”  India needs new sources of energy - oil, natural gas, and power and exploitation of its vast mineral resources like coal, iron ore and bauxite. India needs to increase Government spending and create the enabling environment and legal mechanisms for private and foreign investment.

OIL AND GAS

Oil accounts for about 34 % of India's total energy consumption, and has been growing gradually as a share of the country’s fuel mix in recent years. India currently imports 70% of its oil needs. Given that transportation fuels for aviation, ships and road transport are likely to depend heavily on petroleum products, and that growth of urbanization would increase LPG and kerosene use significantly, there is only limited flexibility in substitution of petroleum products.
The import of gas in the form of liquefied natural gas (LNG) has already started at the Dahej LNG terminal in 2005. Other avenues for import of natural gas are being explored in the form of LNG and through transnational gas pipelines. With the recent discoveries in the Krishna-Godavari basin, domestic natural gas is expected to become the second most dominant commercial energy source in India.
The majority of India's roughly 5.4 billion barrels in oil reserves are located in the Mumbai High, Upper Assam, Cambay, Krishna- Godavari, and Cauvery basins. However, the demand far outstrips domestic supply.  By 2010, India will emerge as the fourth largest consumer of energy, after the USA, China and Japan.
The Hydrocarbon Vision 2025 document announced in 1999 has set out an elaborate action plan for the acquisition of hydrocarbon resources required by the country to meet its economic requirements. It provides for robust efforts to expand domestic production of oil and gas through the liberalization of the oil sector, encouragement to the entry of private Indian and foreign companies, investments in technology and R&D, and so on.
The economic liberalization process in the oil and gas sector started in 1991, with a view to providing an efficient, competitive and market-friendly economy. Galloping demand, declining production profile and rapid development of newer technologies for deep-water exploration compelled the Government to open up the sector for private participation. To increase domestic production of crude oil and natural gas, the New Exploration Licensing Policy (NELP) was launched in 1997-98. 162 exploration  blocks have been awarded under the six bidding rounds under this policy and another 57 blocks are on offer under the seventh round.
The Government has further liberalized this sector with refining too being opened to the private sector. During the last 10 years or so India's oil and gas sector has undergone significant change. State-owned oil companies like Oil and Natural Gas Corporation (ONGC), IOCL and Oil India Limited (OIL) continues to be behemoths but private sector companies like Reliance and Essar and foreign companies like Shell, British Gas, Cairn Energy, Conoco Philips and so on are also jockeying for space.

The Petroleum and Natural Gas Regulatory Board Act, 2006, provides that the Regulator shall moderate access to gas pipelines as common or contract carriers. The Regulator shall also ensure fair trade and competition amongst entities, specify the pipeline access code, ascertain transportation rates for common or contract carriers and determine access to city or local natural gas distribution networks so as to ensure competition amongst entities as per the pipeline access code. These provisions would pave the way for accelerated development of the gas pipeline network in the country.

The Oil and Gas group at CLG has been representing major public oil and gas companies.   The lawyers in this practice have experience of negotiating, drafting and vetting long term LNG Supply Agreement, Terminaling Agreement, Pipeline Transportation Contracts, Shipping and Bulk Carriage Contracts, Contracts for the Purchase or Leasing of Rigs and other drilling equipments and Natural Gas Gathering and Processing Agreements.

(A). AGREEMENTS/CONTRACTS:-

(B). LEGAL OPINIONS

CLG has given legal opinion to many Hydrocarbon players in India on various issues of law including the following:-