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Price Quote with Sales Tax - PowerPoint

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					Investing in Energy      –     Risks,
Rewards & Options


                      Sanjay Gakhar
   Indian Oil & Gas Scenario
Oil : India ranks amongst the top 10 largest oil consuming
     countries.
     Oil accounts for about 30 per cent of India’s total energy
     consumption of 2.4 million barrels per day.
     Imports accounts for about 75 per cent of oil consumption
     India had a total of 2.1 million barrels per day in refining
     capacity.
Natural Gas: Indian consumption of natural gas has risen
   from a 0.6 trillion cubic feet (Tcf) in 1995 to about 0.9 tcf &
   is projected to reach 1.2 Tcf in 2010 and 1.6 Tcf by 2015.
   About 50 per cent of the country’s gas requirement were
   met through imports.
Government Liberalization -
Reforms in Energy Sector
    Oil: Indian govt. officially ended the Administered
    Pricing Mechanism for petroleum product prices
        Disinvestment in Public Sector
        Complete deregulation of the Indian retail
        petroleum products sector is under progress.
    Natural Gas: Govt. has been considering reforms in
    its natural gas pricing mechanism.
    Coal: The government has been planning to greater
    liberalize the coal-sector.
    Electricity: The new guidelines of National Electricity
    Policy (NEP) allow competition
        Open access in distribution
        Foreign equity is permitted up to 100 per cent.
India’s Exposure to Crude Prices

  Imports accounts for about 75 per cent of oil consumption
  Producers, refiners & consumers exposed to international
  price volatility
  Paradigm shift likely from ‘administered pricing’ to ‘free
  market’ pricing
  Price volatility cannot be wished away
Risk Exposures
     Producers
       Sharp decline in oil prices
       Economic viability of profitable wells may turn
       non-profitable
     Refiners
       Change in value of inventories
       Volatile cash flows may lead to liquidity crunch
       Volatility in prices between period of buying
       crude & selling products
     Importers / Exporters of crude oil & products are
     permitted to hedge their exposure to price risk
Close Relationship (All Varieties)
                      54.00                                                Global crude prices
                      49.00

                      44.00
 Dollars per barrel




                      39.00

                      34.00

                      29.00

                      24.00

                      19.00

                      14.00

                       9.00
                              Mar-90


                                       Mar-91


                                                Mar-92


                                                         Mar-93


                                                                  Mar-94


                                                                           Mar-95


                                                                                    Mar-96


                                                                                             Mar-97


                                                                                                      Mar-98


                                                                                                               Mar-99


                                                                                                                        Mar-00


                                                                                                                                  Mar-01


                                                                                                                                           Mar-02


                                                                                                                                                    Mar-03


                                                                                                                                                             Mar-04


                                                                                                                                                                      Mar-05
                                        Dubai Fateh                                 Bonney light                                 WTI Cushing
                                        Dated Brent (BFO)                           Arab Medium                                  Kuw ait
MCX Crude Oil Futures
 Trading successfully since 9th February 2005
 Three varieties
    Light Sweet Crude Oil
    Brent Crude Oil
    Middle East Sour Crude Oil (Dubai & Oman Grades)
 Provides a marketplace for bringing together physical
 industry participants and financial investors
 Ideal mix of day traders & position traders as exhibited by
 high liquidity & open interest respectively
                                                                         MCX Rs/barrel




                                                         2000
                                                                2200
                                                                       2400
                                                                              2600
                                                                                      2800
                                                                                              3000
                                                                                                      3200
                                                                                                                  3400
                                                2/9/05

                                                3/9/05

                                                4/9/05

                                                5/9/05

                                                6/9/05




                                       MCX
                                                7/9/05

                                                8/9/05

                                                9/9/05

                                               10/9/05

                                               11/9/05

                                               12/9/05

                                                1/9/06

                                                2/9/06

                                                3/9/06
                                       NYMEX




                                                4/9/06
MCX-NYMEX Crude Oil Correlation: 98%



                                                5/9/06
                                                         46
                                                                50
                                                                       54
                                                                              58
                                                                                     62
                                                                                             66
                                                                                                     70
                                                                                                             74
                                                                                                                         MCX-NYMEX Crude Oil Correlation




                                                                       NYMEX US$/barrel
MCX Energy Basket

       Light Sweet Crude Oil

       Brent Crude Oil

       Middle East Crude Oil

       Furnace Oil

       Natural Gas*

       Coal*

                         * may be launched soon
Contract Specifications for Crude Oil
Futures (Light Sweet, Brent & MiddleEast)
     Trading Unit:100 barrels

     Quotation/Base Value: Rs. per barrel

     Tick Size: Re. 1

     Price Quote: Ex – Mumbai (excluding all taxes,
     sales tax / VAT as the case may be, levies, freight
     and other expenses)

     Daily Price Limits & Initial Margin: 4% & 5%
MCX & NYMEX Strategic Alliance
 MCX through the recent exclusive Licensing Agreement
 with NYMEX on 05 June 2006, will shortly* launch mini-
 versions of NYMEX energy products as follows & settle
 these contracts based on NYMEX settlement prices

     Gasoline
     Heating Oil
     Natural Gas

                       *subject to regulatory approvals
Thank You

				
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