“Indian Offshore Opportunities & Contract Management”

1. “Indian Offshore Opportunities & Contract Management” Capt. K. Devadas Sr. Vice President, The Shipping Corporation of India Ltd May 2013

2. Peninsular coastline – 7517 kms Strategically positioned between the east-west trade routes 12 major & 187 non-major ports Indian tonnage (as on 30.04.2013) 1172 vessels – 10.40 mn GT 809 vessels on coastal trade- 1.06 mn GT Government of India targeting to enhance tonnage to keep pace with the trade growth. Concentrated focus on development of Port infrastructure and its connectivity. Indian Shipping

3. Demand drivers in the Offshore sector Shipping relies on derived demands, controlled by various factors • Global markets Oil & gas prices … • Demand & supply equation of Offshore vessels. • Fresh Exploration & Production activities… • Need for modern and advanced technological vessels. • Young fleet of vessels with reliable maneuverability characteristics / dynamical positioning capabilities. • Adequate capacity to carry cargo & passengers.

4. Growth in Indian energy sector Trends in Crude Oil consumption in India

5. E & P activities in India Till date 124 onshore blocks have been awarded compared to a total of 144 blocks at sea (offshore + deepwater). Out of the 144 blocks awarded for exploration at sea, a major chunk (77) blocks are with National Oil Companies (NOC) and State Oil companies. By the end of NELP VIII / IX, 268 blocks have been awarded to various national and international players. The details of the blocks awarded and their types are as tabled below: 5

6. E & P activities in India • NELP rounds I – VIII complete and NELP IX is continuing • DGH proposed OALP rounds which is giving more flexibility for E&P operators in block allocation, size & project financing. • Can scrutinize data pool and bid for any blocks. • Marginal blocks: • - 165 blocks (Onshore + Offshore offered early this year) • - 39 blocks in KG basin and 13 blocks in Western Offshore • Crude oil imports to India: • - Year 2006: US$ 39 billion • - Year 2012: US$ 93 billion • Increase in crude oil imports from 2000~2010 in India – 80% • Increase in crude oil imports from 2010~2012 in India – 8%

7. Changing definition of “Deep water” • New definition • Shallow Water / Conventional depth 200 M to 400 M • Deep Water 200 M-1000 M to 400 M-1500 M • Ultra deep water >1000 M to >1500 M

8. Deepwater basins on East / West Coast of India Bengal Basin Mahanadi Basin Krishna-Godavari Basin Palar Basin Cauvery Basin Kutch-Saurashtra Basin Mumbai Basin Kerala-Konkan Basin Andaman Basin

9. Operational Challenges • Technological & Engineering challenges • Construction & installation of production facilities • Transportation of discovered products • High end vessels with more engine power say 8000 BHP & 120 Ton Bollard Pull • More redundancy (DP- 2 vessels) • More accommodation and deck space • Deep sea drilling and Deepwater anchoring capabilities • Younger and more dependable fleet • Other technological challenges • Met-Ocean conditions • ROV operations • Subsea environment • Economic issues such as indemnity, taxation policies, custom duties …etc • Experienced Manpower for deep water operations

10. Requirement of PSVs and Higher Bollard Pull AHTSVs • PSVs play an important role for providing logistics support to deepwater installations • The power required to position and move oil & gas drilling and production platforms comes from AHTSVs • AHTSVs equipped with powerful engines and winches can • tow rigs from one location to another, • position and lift anchors • For deep water activities, the AHTSV itself needs to be larger with heavier anchor chains and chains requiring adequate stability and more installed power. • In deep water, mostly Semi-submersible and Drill ships are used. High bollard pull offshore vessel is used for shifting and for movement of Semi submersible rigs in oil fields

11. Types of Offshore Contracts • Supply time, 2005 • Towing Contract, 2008 • Tow Hire Contract, 2008 • Specific contracts to E&P Operators • O&M Contracts • Sub-contracts (specialised)

12. Contracts Management • Indemnity Clause (Knock for Knock): Generally E&P operator has several contracts and sub-contracts. • With each contractor, E&P signs indemnity clause. • Hence any damages while working are shared by individual without any liability to other parties. • Cabotage law: • Each country has its own law to safeguard coastal employment for its own flagged vessels. Hence foreign flag vessel entry is restricted. • Custom import duties on foreign flag vessels • Local manning requirements for ships • Right of First Refusal • Price preference for local bidders

13. Contracts Management Safety and security issues during passage and at area of operation MOD/NSC special security passes Mob-demob cost Payment currencies and local regulations regarding foreign exchange Arbitration Clause:- General charters- English Law Base port and logistic support at base for operation of the vessel On-hire surveys- time limit. At times surveying company carries out extensive Marine Warranty Service (MWS)

14. Future thoughts-Tapping Offshore wind energy. Renewable source of energy Clean energy Climate change concerns kept out Almost no environmental objection Opportunities for large industry scale development

15. THANK YOU “OIL & MARITIME” AND “THE ESTEEMED AUDIENCE”