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MBA Marketing Project

MBA Marketing Project

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Published by: hiteshnmodi on Jun 16, 2010
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11/25/2015

Growing energy demand of India and necessity to service that to ensure
economic growth is not compromised, presents business opportunities in the
complete value chain of oil and gas sector. Exploration for domestic
production growth, development of discovered fields, transportation of crude
oil, gas and products, refining to service the petroleum product domestic
demand and exports, retailing infrastructure; prospective blocks to
encourage all these sectors provide business and investment opportunities.

Indian companies are expanding refinery capacity and putting up green-field
refinery projects. Global oil majors are seriously evaluating investments in
India. Recently BP announced understanding for forming a joint venture with
HPCL (Hindustan Petroleum Corporation Ltd.) for a grassroots refinery. RIL
has also announced their interest in increasing refining capacity from 33
MMTPA to 50 MMTPA.

India has ambitions to become the hub for petroleum products exports.
Demand for petroleum products in the Asia Pacific region is estimated to be

42

around 25 to 27 million barrels per day (1.2-1.3 billion tonnes per year) in
the year 2010. However, the refining capacity in the Asia Pacific region is
expected to increase from the current 21.9 million barrels per day (1.09
billion tonnes per year) to a maximum of 25 million barrels per day in the
year 2010 (Source : Industry Sources). The export potential coupled with the
additional capacity additions and new refineries provide a unique opportunity
for potential investors. The opportunity exists in the form of investment in
capacity additions to the existing refineries and forming consortium with
private and NOCs to set up new refineries.

Institutional Arrangements

Upstream :
Exploration & Production

ONGC

Mangalore Refineries &
Petrochemicals (Refining)

ONGC Videsh Ltd.
(Overseas E&P)

Oil India Ltd.

Private E&P Players :
Cairn, RIL, NIKO, etc.

Downstream :
Refining & Marketing

Hindustan Petroleum
(Refining & Marketing)

GGSR (Refining)

Indian Oil
(Refining & Marketing)

IBP (Marketing)

Chennai Petro (Refining)

Bongaigaon Refinery (Refining)

Bharat Petroleum
(Refining & Marketing)

Kochi Refinery (Refining)

Numaligarh Refinery (Refining)

GAIL
Gas Transport & Petrochemicals

Reliance Industries Ltd.
(Refining & Marketing)

Industry Bodies / Others

Petroleum Planning &
Analysis Cell

Centre for High Technology

Petroleum Conservation
Research Association

Petro Fed

Oil Industry Safety Directorate

Petroleum India International

Engineers India Limited

Ministry of Petroleum & Natural
Gas

43

Outlook for the Exploration & Production

Exploration activity, prior to NELP (The New Exploration Licensing Policy),
was dominated by public sector firms such as Oil and Natural Gas
Corporation Ltd. (ONGC) and Oil India Ltd. (OIL). The sector received a
major boost in 1974, when the massive Mumbai High fields were discovered
off India's west coast. Even after three decades, these fields continue to be
the mainstay of India's indigenous production. Realizing that these fields
would gradually deplete over time and no major discoveries were being
brought into production, the Government introduced the NELP, with an aim
of encouraging private sector participation in the oil and gas sector.

Recent rounds of NELP have proved attractive in gaining the interest of
Indian private sector and foreign players, with the private sector giant, RIL,
winning the maximum number of blocks after the state-owned ONGC. A
number of foreign players such as Cairn, BHP Billiton etc have also
participated in the bidding rounds, forming consortiums with domestic and
other foreign players. However, some of the super-majors, such as
ExxonMobil, Shell etc. continued to watch from the sidelines, rather than
mark their presence in the bidding rounds.

44

Unexplored

, 40%

Exploration

Initiated, 27%

Poorly
Explored
,

17%

Moderate to Well

Explored, 16%

Exploration Status 1998-99 (3.14 million sq. km)

Source : DGH

Exploration

Initiated, 44%

Poorly
Explored
,

21%

Moderate to Well

Explored, 20%

Unexplored

, 15%

Exploration Status 2006-07 (3.14 million sq. km)

Source : DGH

45

Outlook for the Refining Sector

India is aiming to emerge as a refining hub even as global refining markets
have tightened with the closure of small refineries in North America and
Europe mainly due to challenges in investing in cleaner fuels and high
compliance costs. In addition, permits for Greenfield refineries are hard to
obtain in these countries due to environmental concerns. Therefore, capacity
addition is primarily coming from emerging economies like India, China and
some Middle Eastern countries.

Installed Capacity of Refineries (As on January 1, 2009)

Sr. No.

Refinery

Location

Capacity (MMT)

1

IOCL

Digboi

0.65

2

Guwahati

1

3

Barauni

6

4

Koyali

13.7

5

Haldia

6

6

Mathura

8

7

Panipat

12

8

CPCL

Chennai

9.5

9

Narimanam

1

10

BRPL

Bongaigaon

2.35

11

HPCL

Mumbai

5.5

12

Visakhapattanam

7.5

13

BPCL

Mumbai

12

14

Kochi

7.5

15

NRL

Numaligarh

3

16

ONGC

Tatipaka

0.078

17

MRPL

Mangalore

9.69

SUB TOTAL (PSU)

105.47

18

RIL

Jamnagar

33

19

RPL

Jamnagar

29

20

EOL

Jamnagar

10.5

SUB TOTAL (PVT)

72.5

TOTAL REFINING
CAPACITY

177.97

MMT : Million Metric Tonnes

Source : MoPNG - Ministry of Petroleum & Natural Gas

46

62.2

114.6127127.4132.5

149

177

235

0

50

100

150

200

250

19982001200420052006200720092012

(Forecast)

Refinery wise Capacity Addition during XI Plan – New Projects
Public Sector

Sr.
No.

Refinery

MMTPA

1

Indian Oil Corporation Ltd., Haldia

1.5

2

Indian Oil Corporation Ltd., Panipat

3

3

Indian Oil Corporation Ltd., Paradip

15

4

Hindustan Petroleum Corporation Ltd., Mumbai

2.4

5

Hindustan Petroleum Corporation Ltd., Vizag

7.5

6

HPCL-Mittal Energy Ltd., Bhatinda

9

7

Bharat Oman Petroleum Ltd., Bina

6

8

Bharat Petroleum Corporation Ltd., Kochi

2

9

Chennai Petroleum Corporation Ltd., Chennai

1.7

10

Mangalore Refinery & Petrochemicals Ltd., Mangalore

5.31

11

Oil & Natural Gas Corporation Ltd., Tatipaka

0.08

SUB TOTAL (PSU)

53.49

Private Sector

12

Essar Oil Ltd., Vadinar

3.5

13

Nagarjuna Oil Corporation Ltd. (NOCL)

6

SUB TOTAL (PVT)

9.5

GRAND TOTAL

62.99

MMTA : Million Metric Tonnes per Annum

Source : MoPNG - Ministry of Petroleum & Natural Gas

India’s Refining Activity has been steadily growing

Refining
Capacity
MMT

Year

47

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