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S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 Particulars From the Chairman DG's Report CEO Speak by Mr. Anant Maheshwari, MD, Honeywell Automation India Ltd. (HAIL) Petroleum Pricing Muddle Way Forward by Mr. P K Agarwal, Senior Fellow & Director (HR), TERI Why Emerging Markets Really Matter for LNG by Mr. Nikos Tsafos , Senior Manager, PFC Energy Biofuels: The Indian Resource Position by Mr. Chudamani Ratnam, former Chairman, Oil India Ltd. Globalisation and Challenges of India's Development By Prof. Pranab Banerji, Professor of Economics, Indian Institute of Public Administration On the Anvil - India Oil & Gas Upstream Licensing Regime by Ms. Neetu Vinayek and Mr. Manish Baghla India's POL Consumption in 2011-12: The Year of King Diesel by Mr. Vijay K Sethi, Additional Director (Demand & Economic Studies), Petroleum Planning & Analysis Cell Is Petroleum Refining a Sunset Industry In India? by Dr. Aradhna Aggarwal, Senior Fellow, National Council of Applied Economic Research LPG Transparency Portal by Mr. Jayadevan P, Chief Manager(LPG-Sales), Indian Oil Corporation Limited No liability for Service Tax But Still Pay Income-Tax On It! by Mr. Shailesh Monani, Executive Director & Mr. Bhavin Sheth, Manager, PricewaterhouseCoopers Pvt. Ltd. Realignment of Petroleum Refineries Survival of the Fittest by Mr. A. K. Roy, Executive Director (Corporate Planning & Economic Studies) and Mr. Pramod Narang, Dy. General Manager (Corporate Planning & Economic Studies), Indian Oil Corporation Limited The Business of Innovation by Mr. Mohinish Sinha, Leadership & Talent Practice Leader, Hay Group South & South East Asia, Pacific & Africa HPNA Management in High Conversion Hydrocrackers by Mr. Richard K Hoehn, Senior Engineering Fellow and Mr. Soumendra Banerjee, Senior Manger-Process & Product Development, UOP LLC, A Honeywell Company. Strategic Options For Upstream Companies by Mr. Sudipta Das, Advisory Partner & Climate Change & Sustainability Leader (India), Ernst & Young Remote Collaboration: Poised to Deliver Transformational Results by Mr. Christophe Romatier, Sr. Strategic Marketing Manager, Honeywell Process Solutions Innovative Strategies to Reduce O & M Cost by Mr. Satyajit Dwivedi, Director - Energy (Asia Pacific) & Strategic Initiatives, SAS Institute Inc. Innovative Technology to Improve FCC Flexibility by Mr. Matthew Lippmann, FCC Technology Group Leader and Ms. Lisa M. Wolschlag, Senior Manager FCC, Treating and Alkylation Research & Development, UOP LLC, a Honeywell Company Members' News in Pictures PetroFed Awards 2011 Events

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Petroleum Federation of India

From the Chairman

plateau at just about 100 million barrels a day around 2030. Asia Pacific today has become the world's dynamo of economic growth and a vast consumer market. It is also a very unequal market. Almost a quarter of the people in the region live in extreme poverty, on PPP of USD 1.25 or less a day. The region is also home to a major share of the world's population lacking electricity and modern fuels for cooking. It has a substantial middle class that aspires to life style changes. Between the decades 1990-99 and 2000-09, global per capita household expenditure increased by 18%, while in a number of Asian countries it increased far more rapidly by 48% in Cambodia, for example, 92% in China and 45% in India. At the same time there has been rise in inequality where the rich are getting richer faster, while the poor are missing out on most of this rising prosperity, according to a UNDP report. At the recent UN Conference on Sustainable Development, the Prime Minister made it clear that for developing countries, inclusive growth and a rapid increase in per capita income levels are development imperatives. He called for an approach to the problem globally which should be guided by equitable burden sharing. India's emissions to GDP intensity, excluding agriculture, has declined nearly 25% over the period 1994 to 2007 as a result of our efforts over the last two decades. A target has been set to further reduce the emissions intensity of GDP by 20 to 25% between 2005 and 2020. Let us all strive and work for achieving this goal and conserve energy and fuels. A rationalisation of fuel pricing, which has been talked about for quite some time, is expected to aid in this effort and also reduce subsidy burden of the Government.

The global economic situation continues to be precariously balanced with some growth but not without attendant risks. The World Bank projects a weak base line forecast expansion of 2.5% of the global economy this year before picking up to 3 and 3.3% in 2013 & 2014. The annual growth in the United States is projected to accelerate from 1.7% in 2011 to 2.10% in 2012. The developing countries GDP is expected to expand by 6% in each of 2013 and 2014 which is slower than the 6.3% average pace during the first seven years of this century. In South Asia, growth is anticipated to remain subdued, as growth in India settles around 7% over the 2012-14 period. The Asia Pacific region is also beginning to emerge as one of the world's largest energy markets. It is endeavouring to move from an agrarian economy to an industrialised economy. Domestic material consumption in the region grew at a compounding annual rate of 4.9% over the three decades from 1975 to 2005. The corresponding growth rate for the rest of the world was around 0.5%. During the same period the share of the region in the total primary energy supply of the world grew from19% to over 35%, and will reach 50% by 2028, according to UNEP. The need for natural gas, which will overtake coal as the second most widely used source of energy by 2025, will be the greatest in regions like the Asia Pacific according to a forecast by ExxonMobil. According to Statoil also global gas demand is projected to increase by 60% by 2040 against a total energy demand increase by 40% during the period. The oil demand is expected to

R. S. Butola Chairman

Petroleum Federation of India


DG's Report
needs to spend 36 trillion US$ between now and 2050 on low carbon technologies, on top of the 100 trillion US$ needed under a business-as-usual scenario. This is the equivalent of USD 130 per person every year, according to IEA. It adds that every additional dollar invested can generate 3 dollars in future fuel savings by 2050. The clean energy technologies we require already exist and we are not using them. According to another UNEP report, the shift to a greener economy can translate into upto 60 million additional jobs across a range of sectors. Greening the economy also offers the opportunity to improve social inclusion by addressing the challenges of energy poverty and of lack of access to energy. It is prudent that we increase investment in clean energy and put in place green policies to switch to a low carbon economy. This was also stressed during rd PetroFed's 3 International Symposium on Biofuels and Bioenergy held at New Delhi during April 2012. It is covered in the events section of the Journal. Another significant event was the presentation by a PetroFed delegation led by Mr. B.C. Tripathi, CMD, GAIL (India) Ltd. to the Parliamentary Standing Committee on Finance who offered us an opportunity to present our views on the 'The Constitution (One Hundred and Fifteenth Amendment) Bill, 2011' pertaining to the Goods & Services Tax. PetroFed also coordinated an Oil Industry Technical Team led by Sh. P. Kalyanasundaram, Director (IC& CA), MoP&NG to Islamabad to discuss trade with Pakistan. A representation has been made to the Ministry of Shipping on their draft policy for award of ports waterfront and associated land on captive user basis. We continue to proactively take up issues of the Industry with concerned authorities and are in the process of preparing a paper for the recently constituted Rangarajan Committee on Production Sharing Contracts in hydrocarbon exploration.

The United Nations Conference on Sustainable Development has re-affirmed 'the principle of common but differentiated responsibilities'. The UN has also designated 2012 as the International Year of Sustainable Energy for All and intends to galvanise actions that catalyse the attainment of this goal. According to UNEP's Global Renewables Status Report 2012 investments in clean energy hit 257 billion US dollars by December 2011. Renewable energy markets and policy frameworks have evolved rapidly in recent years. Renewable energy sources have grown to supply an estimated 16-17% of global energy consumption in 2010. In the power sector, renewables accounted for almost half of the estimated 208 gigawatts (GW) of electric capacity added globally in 2011. Wind energy & solar power accounted for almost 40% & 30% of new renewable capacity respectively. They were followed by hydropower at 25%. India can be justifiably proud of the fact that it is among the top seven countries that have attained threshold in renewable energy transition, namely China, USA, Germany, Spain, Italy, India & Japan. Even the International Energy Agency (IEA), which was created to monitor and manage global oil markets in the wake of the 1973 oil crisis, has stated that on our current investment path, global carbon dioxide emissions are likely to nearly double by 2050. If the world has any hope of keeping the average rise in global temperatures to below 2 degrees centigrade, it needs to double its rate of spending on clean energy infrastructure between now and 2020. It goes on to say that if controlling carbon emissions is truly a priority, the world

A. K. Arora Director General


Petroleum Federation of India

CEO Speak
Enabling the Digital Plant
and production assets, or share valuable information and best practices. Plus, remote facilities often operate independently from one another, making it even harder to share learnings and to achieve optimal productivity levels across the whole network. 3. Lack of skilled resource: Oil and Gas is a specialized domain, as energy demand grows and more and more capacity comes online there will be a shortage of skilled and specialized resources. India is already seeing a shortage and therefore this is one of the key challenges any CEO faces today. these

Anant Maheshwari Managing Director Honeywell Automation India Limited Globalization is presenting industries with myriad challenges to growth, sustainability and profitability. Oil and gas, no less than any other industry, is also confronted daily with these challenges, while competing in an increasingly rigorous environment marked by tighter regulation, growing margin pressures and an aging workforce, among other issues. Three key challenges are affecting players along the oil and gas value chain in a big way: 1. Turning data into meaningful information& faster decision making: A common theme we hear from our customers is that they are struggling under the sheer volume of data their operations generate. As they strive to make better decisions, there is a need to integrate many more systems and applications together, but the complexities of trying to integrate data silos can be extremely overwhelming. Further, leveraging automated decision making systems for the integrated databases is the next level of challenge. Working in remote environments: Oil and gas exploration today is based in some of the most remote places that make them difficult to access. Multiple production facilities are often spread over vast geographical distances and, in some cases, in hazardous environments, making it difficult to ensure the safety of plant personnel

So what is the solution to manage challenges?

The challenges are many and no single solution will encompass them all. However,we believe that companies that have the following will differentiate themselves from their peers and build a sustainable competitive advantage. i) Work process consistency and an integrated view of their operations ii) The ability to communicate and collaborate in real time Work process consistency implies understanding comprehensively how people interact with the object of their work and ensuring this is properly documented. This enables to decouple the operator from the process and move from people driven operations to process driven operations which is critical whether you consider operating oil fields in remote locations and harsh environments or addressing the staffing and competency requirements in downstream. The critical next step is the ability to use an underlying IT platform application that will help implement and enforce those best practices. An illustration of such an application is Honeywell Intuition ExecutiveTM launched in May 2012. Such a solution allows industrial companies to anticipate, collaborate and act with confidence on data. With its sophisticated data processing and analytics capabilities, Intuition Executive anticipates problems and identifies


Petroleum Federation of India

opportunities. It delivers enterprise-wide information management, decision support, and collaboration software to help companies make better sense of the vast amounts of data being collected and achieve operational excellence. The ability to communicate and collaborate has many advantages as well. For example, Honeywell's Remote Collaboration solution helps customers share their expertise across remote facilities, improving safety in hazardous environments, as well as optimizing production and improving recovery. Remote collaboration allows oil and gas companies to monitor and manage operational activities across multiple facilities from anywhere within a network of sites, leading to better collaboration between staff and process optimization across locations. Sites can be connected to each other, either through a central facility

or via a network of interconnected collaboration centers, supporting real-time collaboration, resolving challenges quickly and improving production/yield over the full lifecycle. In conclusion, data integration, visualization and collaboration are integral to the current business environment. The ability to see, understand and act on the relationships within critical data is key to creating competitive advantage, and this can only be achieved when all applications and underlying data are amalgamated. Additionally, the increasingly sophisticated and powerful capability to monitor and manage operational activities in real time, regardless of location and personnel, offers O&G Upstream and Downstream operators the opportunity to create multiple value streams to their organizations while achieving transformational results.

Estimated lifetime consumption expenditure of an Indian born in 2009, in US dollars: 1,84,556 Estimated lifetime consumption expenditure of an Indian born in 1960, in US dollars: 14,645 Percentage of total consumption expenditure spent on food and housing: 31 & 14 Percentage of total consumption expenditure spent on education/leisure and health: 7 & 5

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Number of times printing of `500 and `1,000 denomination notes has gone up since 2000: 17 & 9 Average size of one-time withdrawal from ATMs in India presently, compared to `5, 000 three years ago, in `: 7,000

Courtesy: Business India


Petroleum Federation of India

Abid Hussain

It is difficult to come to terms with the fact that Dr. Abid Hussain is no more. He passed away at London on June 21, 2012 after a massive heart attack. He was 85 years old and is survived by his wife, two sons and a daughter. His ever smiling, zestful and vivacious presence was noticeable at the PetroFed Awards ceremony on June 8, 2012 at New Delhi. Nattily dressed as always, brimming with ideas and spreading hope and good cheer, he was a member of the Jury for the annual PetroFed Awards since their inception in 2007. Dr. Abid Hussain was honoured with the Padma Bhushan in 1988. Born in December 1926, he was a member of the Indian Administrative Service and served in various capacities at the centre including Secretary, Ministry of Heavy Industries, Secretary, Commerce and Chairman, IIFT. He was appointed as Member, Planning Commission in 1985 and was Ambassador to the United States between 19901992. Dr. Abid Hussain has been described as a 'born diplomat' and an excellent communicator. He was a soft-spoken person seeped in the best of Hyderabadi secular and cosmopolitan traditions. He is said to be one of the key persons who set the ball rolling for India's economic liberalisation. He chaired six committees of which the one's on trade and small scale industries are still important reference markers. Dr. Abid Hussain was Chairman of a large number of organizations including the Ghalib Academy, the Lovraj Kumar Memorial Trust and Professor Emeritus at several institutes including Indian Institute of Foreign Trade and Foreign Service Institute of the Ministry of External Affairs. He was the trustee of several educational, cultural and charitable institutions in India and abroad. A liberal in every sense of the term, he would be missed by one and all.

Petroleum Federation of India


Petroleum Pricing Muddle Way Forward

various decisions, though ad-hoc, such as issuing of Oil Bonds, sharing of burden by upstream national oil companies, permitting non commensurate increases in prices. When the situation became increasingly difficult, the Govt. appointed a committee on Pricing and Taxation of Petroleum Products, under the chairmanship of Dr. C Rangarajan. Its report, submitted in February, 2006, urged implementation of sets of recommendations as packages. The Govt. selectively implemented those recommendations which neither adversely impacted Govt. revenues nor resulted in an increase in consumer prices. With ballooning under recoveries the Govt., in June, 2008, again constituted a High Powered Committee on Financial Position of Oil Companies, under the chairmanship of Mr. B K Chaturvedi, which submitted its report in August, 2008. The Govt. did not implement almost any recommendation of the Chaturvedi Committee. In August, 2009, the Govt. yet again appointed an Expert Group on A Viable and Sustainable System of Pricing of Petroleum Products, under the chairmanship of Dr. Kirit S Parikh. It submitted its report in February, 2010. It was only in June, 2010, after vacillating for over four years, that the Govt. announced deregulation of Petrol prices in addition to an increase in prices of diesel, PDS kerosene and domestic LPG. The Govt. also announced its intention to deregulate prices of diesel from which it later retracted. With mounting pressure of increasing under recoveries, the Govt., in June, 2011, took the bold decision of reducing customs duties on petrol and diesel from 7.5% to 2.5%. In addition, reduction in excise duty and increase in retail selling price of diesel was announced. This had a salutary impact on bringing down under-recoveries on diesel sales which account for about 45% of the total sale of petroleum products in the country. The relief was, however, short lived with international product prices going north. During 2011-12, the total under recoveries are placed at about `. 1,38,000 crore, an all time high for any one year. While the Govt. deregulated prices of Petrol in June, 2010 it did not permit public sector oil companies to raise prices in line with international prices. Thus, oil
Petroleum Federation of India

P K Agarwal Senior Fellow & Director (HR), TERI After independence, for over 25 years the prices of petroleum products were based on import parity. This was followed by the Administered Pricing Mechanism (APM), essentially cost plus, for over 25 years. And now for nearly a decade we have an era of ad-hocism. If the past is any indication, this may continue for more time. Ad-hocism began no sooner the dismantling of APM was over by the end of 2001-02. While prices of Petrol and Diesel were de-regulated effective April 1, 2002 and oil marketing companies started revising them on fortnightly basis, domestic LPG and PDS Kerosene carried specific subsidies to be phased out over three years in an equated manner. As per the scheme announced by the government, for subsidies to stay specific per cylinder of LPG or per litre of kerosene, the changes in international prices, ocean freight etc. were to be passed on to the consumers on monthly basis. However, in practice, the Govt. did not permit public sector oil marketing companies to pass on any increase in price of domestic LPG and PDS kerosene and compelled them to bear the under-recoveries over and above the specific subsidies. Interestingly, the Govt. did not go back completely on the announced scheme and implemented reduction of specific subsidy by one third after one year and by two thirds after two years, whereafter these have remained unchanged. With increasing international prices of Petrol and Diesel, the Govt. introduced informal control of prices of these products in the later part of 2003. Increasing under-recoveries suffered by oil marketing companies, placed the Govt. under pressure to take

marketing companies could neither raise prices as required nor their under-recoveries were recognized in selling petrol. With mounting pressure from oil companies on the Govt. to either once again declare petrol as a regulated product or deregulate it in the real sense, the Govt. finally permitted them to increase th petrol prices effective 24 May, the steepest so far at any one time. This resulted in widespread dissatisfaction amongst petrol users. Small price changes periodically would have caused lesser dissatisfaction. It is, thus, evident that the Govt. has not followed a well thought out road map to deal with prices of key petroleum products. The myriad ill effects of under-pricing of petroleum products and hence growing subsidies include not only inefficient usage, substitution of low value products, adulteration, and a mounting fiscal deficit but also deteriorating financial health of oil companies. It is appreciated that certain sections of the society need protection against the increasing international prices. Among the solutions suggested from several quarters are deregulation of diesel prices and targeted direct

subsidy to identified persons for domestic LPG and PDS kerosene. All that is required is strong political will. There is no dearth of people in the Govt. who can provide innovative solutions. It is the Govt. that needs to take the bull by the horns and not allow the problem to drift. The Govt. then needs to create an environment of appreciation, understanding and cooperation in the country. Short term and long term measures need to be agreed upon. Some of the short term measures could be ensuring surrender of multiple domestic LPG connections, no subsidized LPG to tax payers and users of PNG, removal of bogus ration cards, limiting subsidy for diesel beyond which it should be passed on to consumers, rationalizing duties for Petrol & Diesel, persuading states to rationalize VAT/ sales tax on petroleum products etc. Among the long term measures, the supply of piped gas should be expanded to replace LPG, PDS kerosene used as illuminant should be substituted by solar lighting, and all subsidies should be directly targeted to individuals who deserve them.
(Views Expressed in this article are personal)

Percentage of students studying at various Indian Institute of Technology (IITs) who were women in 2011: 11 Percentage of students studying at various Indian Institute of Technology who were women five years ago, in 2006: 6

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Average percentage of food served in social gatherings in India that is wasted: 15-20 Rank of marriages, seminars and conferences in terms of food wastage: 1/2/3
Courtesy: Business India

Petroleum Federation of India


Why Emerging Markets Really Matter for LNG

Nikos Tsafos Senior Manager PFC Energy The proliferation of LNG importers marks the most important structural change in the LNG market today. But the importance of having more importers lies beyond merely creating demand. These markets are changing the structure of the LNG market; as a result, grasping the importance of new markets rests not with merely estimating their LNG import needs but with understanding how their participation in the LNG marketplace may alter the structure, composition and value of the LNG market. The Emergence of Emerging Markets The emergence of new LNG importers marks the biggest structural change that has taken place over the past few years and one that will define the market over the coming decade. In 2003, there were as many countries importing LNG as there were exporting LNG (12). By 2011, there were 18 exporters and 27 importers, and by 2020, PFC Energy estimates that 36 countries will be importing LNG and 23 will be exporting it. The gap between the numbers of importers and that of exporters will widen further. Europe has been, and will remain, the region with the most importers. The Americas has seen much growth due to the entry of Mexico, Canada, Chile, Brazil and Argentina and will see little growth out to 2020. The Middle East (from 0 to 5) and SE Asia are among the most rapidly growing regions for LNG. These new markets are having a big impact. One way to assess the relative importance of new markets is to examine LNG imports by vintage: when markets start to import LNG? Classifying LNG imports that way shows that importers who started to buy LNG after 2000 had a 19% market share in 2011. In fact, this market segment was the second largest in 2011 and the one growing the fastest. We classify the United Kingdom as a country that started to import LNG in the 1960s. If this country were marked as a 2000s country, when imports restarted, the market share of this grouping would go from 19% to 27%.


Petroleum Federation of India

Supply Drop. LNG imports can either supplement or replace domestic production. In countries where domestic production is mature, the LNG import wedge is driven not just by growth in demand but also by the decline in domestic production. Argentina, Chile, Israel (short term), Malaysia (Peninsular Malaysia) and Thailand belong in this category. Geography. Larger countries tend to have disconnected sub-markets. In those cases, LNG terminals can serve markets that are disconnected or not sufficiently connected via pipeline. Brazil and Chile, for example, have disparate markets, although Brazil has made more progress in creating a national grid. In Malaysia and Indonesia, LNG is meant to connect demand centers that are not served well because they are far from domestic supply sources. Displace Oil. Countries with insufficient gas supply tend to burn (often imported) oil to meet their needs. LNG in those countries serves as a cheaper power generation source than oil. Argentina, Chile, Israel, Indonesia, Kuwait, Singapore and the United Arab Emirates (Dubai) had or still have significant oil use in the power sector and where LNG imports are geared to displacing oil. These countries may also have a higher ability to pay for LNG given that their alternative is oil. Diversification. Countries often turn to LNG to diversify from a heavy reliance on a few suppliers or to protect from suppliers whose reliability the importer has reasons to question. Brazil's LNG push aims to diversify from Bolivia, Chile from Argentina, Israel from Egypt, Poland from Russia, Singapore from Malaysia and Indonesia and Thailand from Myanmar. In each of these cases, the need for imports goes above and beyond a mere balances question. Resilience. Besides overall diversification, countries are often drawn to LNG to be able to withstand seasonal, cyclical or other shortages. Argentina faces a winter gas shortage as the swing in seasonal demand far exceeds the swing in seasonal supply. Brazil is interested in LNG to compensate for occasional drops in hydro-electric output, while Israel has been keen to ensure that the market can withstand interruptions to Egyptian supply (which now appears permanent). Poland, Singapore and Thailand are similarly interested in creating more resilience in their system

Is this Demand Sustainable? PFC Energy has identified five main structural drivers underpinning this LNG surge (we have focused on new LNG markets but have excluded bigger players such as China, India, Canada, etc):

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networks given their heavy depend on just a few sources of supply. What Do These New Entrants Mean for the Market? More markets mean more demand for LNG. But the importance of emerging markets rests beyond a mere numbers game. These new LNG players are changing the LNG market in at least three deep structural ways. A wider floor beneath LNG prices. More buyers mean more opportunities for sellers. When demand for LNG fell in 2009 after the economic crisis, sellers were looking for markets to place LNG. Turkey, for example, benefited throughout 2010 and 2011 by a push of Qatari LNG. As more countries enter the LNG market, the more opportunities there will be for sellers to push LNG. This means that when demand is sagging, there are more players that can take in LNG at the right price. Perhaps the biggest impact of these new LNG markets is to create a wider floor beneath LNG prices if the price falls, there will be more and more prospective buyers that will be drawn into the market to keep prices from falling too much. Enlarge the market where gas competes directly with oil. In OECD Europe and North America, the competition between oil and gas is almost obsolete, which is one reason that oil indexation is seen as an increasingly archaic pricing system. But in non-OECD markets, oil remains an important fuel for stationary use. When examining the countries that PFC Energy expects will be importing LNG by 2020, the non-OECD countries among them relied on oil for an average 25% of their power generation needs; by contrast, the share for OECD countries is just 5% (2009 data for consistency). The entry of these newer players thus expands the sphere where gas and oil compete directly and thus provides further support for LNG prices to track the price of oil, not just contractually but also substantively. It is no accident that in 2011 Thailand, Brazil, Argentina Chile paid prices comparable to Japan, Korea and Taiwan. Greater demand for flexible services. With few exceptions, these markets are approaching the LNG market from a different angle. Some have no long-term contracts to provide them with a steady supply of LNG. When they do have contracts, these tend to be with portfolio aggregators (chiefly BG, Shell or GDF SUEZ) rather than LNG projects (Poland and Malaysia are

exceptions). Many of these countries are also importing LNG seasonally or using floating regasification vessels. The growth in emerging markets, therefore, is creating demand for an LNG value chain that is more flexible and more adaptive. New markets are therefore altering the way that LNG is traded they can act as a support system to prevent prices from going very low; they are boosting the sphere where gas competes directly with oil; and they are creating demand for a different value chain and different seller strategies. Together, these forces compound the importance of new players not only will these countries import more LNG, but they will import LNG differently than the established markets. Conclusions ? The historical symmetry between the number of countries exporting LNG and those importing has been shaken by 2020, PFC Energy estimates that 36 countries will be importing LNG while only 23 will be exporting it. ? By 2011, countries that imported no LNG before 2000 accounted for a 19% market share. These new LNG markets are also the market's fastest growing segment. ? This import demand is strong and is underpinned by five structural drivers: a drop in indigenous supply, a geographic need to connect remote demand centers to supply, a desire to displace oil use, a quest for diversification and a desire to increase the ability of a market to withstand supply shocks. ? New markets are altering the way that LNG is traded they can act as a support system to prevent prices from going very low; they are boosting the sphere where gas competes directly with oil; and they are creating demand for a different value chain and different seller strategies. ? Together, these forces compound the importance of new players not only will these countries import more LNG, but they will import LNG differently than the established markets.

Petroleum Federation of India

Biofuels: The Indian Resource Position

India Land Use: Million Hectares Total Net Sown Area Plantation Forest Grassland, Grazing Waste Land/desert Scrub land Water bodies
Chudamani Ratnam Former Chairman, Oil India Ltd. Oil is not only an important source of energy but is the main transportation fuel for the whole world, including India. At present the only available forms of liquid fuels are derived from crude oil which is largely imported and as the Indian economy grows the demand for liquid fuels will grow disproportionately in comparison to other forms of energy. The long term objective must be to meet almost 100% of the demand for liquid fuels permanently from indigenous resources; adding 5% ethanol to diesel and petrol as is being planned now will only be a drop in the ocean. Biofuels are fuels obtained from a variety of biological sources commonly referred to as biomass such as wood, vegetable oils sugarcane juice, aquatic plants including algae, waste plant residues such as bagasse,
It is estimated that about half the area under forest is highly degraded and instead of trying to regenerate the forest, the land could be used for oil seed cultivation.

328.65 138.22 6.77 67.00 8.03 31.54 20.99 8.90 0.26 4.3 2.06 1.99

Shifting cultivation Snow cover, etc. Built up Land Rann of Kutch

Land Availability

The crucial raw materials for production of biofuels are land and water especially the former. It is therefore necessary to examine land availability. The table below gives a break up of India's land usage pattern. Oil Seeds While the total land area of India is large, because of the population size, the amount that can be diverted to growing fuel crops is limited; possibly no more than 30 million hectares. This will yield about 30 mtpa of biodiesel, which in future decades will be only a very small part of India's requirement of liquid fuels. Some radical approaches may be required. For example, It is
estimated that about half the area under forest is highly degraded and instead of trying to regenerate the forest, the land could be used for oil seed cultivation. It should be

straw, etc. Different categories of liquid biofuels are biodiesel, bioethanol and biomethanol and can be used in any internal or external combustion engines, with minor modification. Most of the ongoing national level discussion on this subject revolves around technology and cost, but hardly any thought has been given to the resource base and this is the issue being addressed in this paper. It should also be noted that biofuels are by and large carbon neutral and should India be required to introduce carbon tax, the benefits would be significant.

noted that a large part of the waste land shown above is covered by the Thar desert which is truly barren and cannot support any cultivation. Even the much touted Jatropha requires a minimum of soil fertility and adequate rainfall to give an acceptable yield. The above statistics are official in nature but a more pragmatic assessment could be as follows. In the last 60 years, India has denuded or severely degraded half of the 76 m Ha of forest inherited at Independence. Of this 12.6 m. Ha has been totally denuded and another 25 million Ha. has lost more than 60 per cent of its forest

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cover. India has approximately 50 million hectares of degraded wasteland that lie outside the areas demarcated as national forests, and another 34 million hectares of protected forest area, in much of which tree cover is severely degraded. A massive programme is needed to develop energy plantations consisting of oil seed species for biodiesel production and fast-growing tree crops which can be converted to alcohol. Keeping the above stated approach in view a detailed state/district wise reassessment of land availability is required. Ethanol Ethanol, in India is primarily a byproduct of the sugar industry, but a small quantity is produced from grains for potable purposes. A point to be aware of is that sometimes industry quotes alcohol production figures, which contains only about 8% ethanol, the balance being water. To be used as a fuel it is necessary to extract anhydrous ethanol. At present in India about 5 million hectares of irrigated land are under sugar cane cultivation and about 2300 million litres of ethanol are produced. Roughly 1/3 of this is used industrially, 1/3 is consumed as liquor and the balance is available for miscellaneous uses including blending in transportation fuels. These quantities pale into insignificance in the national scenario. Ethanol can also be produced from non-food plant cellulose (e.g. wood, leaves, bagasse or straw),but the technology has still to be developed and proved economically. Research on this topic, which doesn't call for much capital or revenue expenditure, must be put on a war footing and every laboratory in the country should devote some effort towards this project. Methanol Methanol appears be a silver lining to an otherwise cloudy outlook. Methanol is the simplest form of alcohol and is somewhat underrated as a transportation fuel. It has in the past been used in racing cars. The earlier turboprop aircraft such as the Fokker Friendship which were comparatively low in power used a mixture of methanol and water for take off as this gives greater short term power than conventional aviation turbine fuel. Though the calorific value of anhydrous alcohols

tend to be between half and 2/3 that of petrol and diesel, because of their superior flammability characteristics they are equivalent on a volume basis. The main problem to be overcome is that of corrosion. However methanol fuel cells may eventually provide the solution. Methanol is typically produced from biomass though where natural gas is available, methanol is made from methane, a major component of natural gas Biomass is converted to syn-gas(synthetic gas), by partial oxidation, and the syn-gas is then converted to methanol by a Fischer-Tropsch process. India is expected to generate annually in the years to come nearly 900 million tonnes of agricultural residue such as straw and bagasse, much of which probably just goes waste or is put to insignificant uses. In addition India uses about 50 million tonnes of forest biomass and about 300 million tonnes of fuelwood per annum. Details are given below.
Million tonnes Rice straw Wheat straw Sugar cane tops Sugarcane bagasse Other Total Agri Forest Biomass Fuelwood Total Forest Total Biomass 285 160 118 114 213 890 50 300 350 1240

With present technology one tonne of dry biomass can produce about 700 litres (550 kg) of methanol. It would seem therefore that without any disruption of current land use practices nearly 700 mtpa of methanol can be produced replacing roughly the same amount of petrol and diesel. The main resource that is not available is time. The worlds resources of crude oil are under severe strain and there will be a severe shortfall in supplies in about two or three decades. India must change over to biofuels well within this time frame. India imported about 170 MT( million tonnes) of crude oil in the financial year 2011-2012 and it is anticipated that there will be a demand for 500 MT per annum within a couple of decades. The target for biofuels production must be to restrict future imports of crude to say about 200 MTPA.
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Globalisation and Challenges of India's Development

with these consequences. This is followed by an examination of policy imperatives for India and the lessons that are emerging from the faltering global order. Section I Human history has had many episodes of movement of people, ideas and commodities across national borders. The colonial period, as has been extensively documented, witnessed large movements of persons and capitaland production processes became transnational with increased emphasis on extraction and foreign trade. The current phase of globalisation can be traced to the contemporaneous occurrences of the following events, roughly around the decade of the 1980s. The early 1980s saw a major setback to the autonomous path of development embarked upon by many Latin countries. These countries, after a period of respectable growth and industrialization of two decades, ran into a debt-crisis, which made it virtually impossible to continue with the strategy of self-reliant development. The capital flows that had occurred in the decade of 1970s allowed many developing countries to continue on their path of independent development but also made them more vulnerable to external events. The increase in interest rates in the United States precipitated the Latin American debt crisis. The impact of external financial crisis can be evaluated not only by examining the effects of the crises but also by taking into consideration the effects of the policy response. The international financial institutions principally the IMF and the World Bankprovided credit lines to countries in crisis based on a set of conditionality that went under the broad names of `stabilization' and `structural adjustment'. In the decade of the 1980s, scores of developing countries were provided structural adjustment loans. The effect of these policies were to reduce the economic role of governments, expand the space available to the organized private sector and diminish barriers to entry of foreign private capital and goods. Thus what began as the globalisation of bank loans in the 1970s, crystallized in the 1980s into the globalisation of direct

Pranab Banerji Professor of Economics Indian Institute of Public Administration Globalisation is one of the leading issues that have captured the imagination of thinkers belonging to various academic disciplines. It has been recognized as a process of easier and accelerated trans-national movement of commodities, persons, capital and knowledge, which includes ideas, techniques and culture. With technological advances facilitating transport and communications, the processes of production, consumption and even waste disposal have taken global dimensions. Thus, as in the case of many electronic goods, a technology may be developed in Europe and put to manufacture by an American firm in China and exported to various countries and the waste dumped in Africa! The growth and inevitability of globalisation was commented upon by perceptive thinkers, as diverse as Marx and Vivekananda, even during the previous centuries. But it is also necessary to note that while trans-national interactions are inevitable, and most would agree that it is also desirable, the nature of the transactions critically depend on institutions and on ideas and beliefs, which influence national and global policies. The current phase of globalisation, which may be traced for its origins to the 1980s, is therefore distinct from the previous phases as it is characterized by a distinctive set of features and influences. Section I delineates these characteristics with a reference to India. The consequences of the new global order and ideas are presented in Section II, while Section III examines the responses of leading players in dealing
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and portfolio investment and the consolidation of global commodity markets. The role of the state in economic development was to be further circumscribed, in addition to the effects of the financial crisis, by the ideological formulations that now go under the name of 'neo-liberalism'. Whereas the earlier free-market Economics grudgingly accepted the role of the state in rectifying 'market failures' arising out of externalities etc., the new ideas postulated the idea of 'government failures' following from the self-seeking behavior of politicians and bureaucrats. The spectacular collapse of the Soviet Union seemed to reenforce the impression that governments may not have the necessary virtues to deal with the problems of 'market failure'. The neo-liberals therefore went on to suggest mechanisms which mimicked, or approximated, markets and set limits to the economic role of the state. A major consequence of these influences was the relegation of the idea of economic equality to the background. Efficiency became the central objective of policy and it became `glorious to the rich'. India entered the present phase of globalisation with the financial crisis and subsequent structural adjustment loans in 1991. India's policy adjustments have been slow and partial. But the fundamental premises have been the same: namely, reduced role of the state, de-emphasis on independent or autonomous development and amnesia of the earlier policy goal of relative economic equality. Section II The developed countries may have believed that globalisation would open up markets for goods and services and lead to job-creation. In fact, contrary to expectations, globalisation began to bring greater benefits to the developing countries from the late 1990s. The erstwhile CIS countries, which underwent a painful decade of adjustment and decline in incomes, began to register positive rates of growth in the late nineties. Latin America and much of Africa, which had witnessed a lost decade of growth in the eighties, also started to recover in the late nineties. The East Asian countries however experienced a major financial crisis in 1997, but the growth rates for most of the decade was high.

But the most spectacular success has been witnessed by China and India in the last ten years, after a sustained period of growth of nearly two decades. Between 2007 and 2011, the developing countries accounted for 77 percent of the incremental global GDP (in PPP terms), compared to 23 percent accounted for by the advanced countries. China's share in the incremental GDP was 32 percent and India's 11 percent, which was higher than the contribution of large economies like the USA (8 percent) and the European Union (7.8 percent). Chinese and Indian companies, many of them state owned, have grown in size and are counted amongst the large global players. Both the countries have now a significant number of persons figuring in a list of world's billionaires. A robust indicator of the growing importance of the 'south' is the increase in southsouth trade and the emergence of groupings like the BRIC(S). In contrast, the developed countries have fallen into a deep and prolonged economic mess. The growth rates of most are minimal, unemployment rates are high (estimated 40 percent for the youth in Greece), external indebtedness is high, the size of government debt is at crisis levels and the stability of the financial systems are under threat. The developing countries success story is not based on weak foundations. Both China and India have sustained one of the highest rates of domestic saving and investment over the previous decade. External indebtedness is low and well within manageable levels. Investment in infrastructure and education are rising, though not adequate in India, which shall allow the large working force in these countries to remain competitive. Wage rates are also low by international standards. Finally, the budgetary position is far more comfortable than in most advanced countries. Section III The developments over the previous decade raise the interesting question as to the reasons for the reversal of economic fortunes of developed and developing countries. One anticipated contributory factor, of course, has been the movement of capital to take advantage of cost differentials. The decade of 1990s, as stated earlier, was undoubtedly marked by the flow of foreign direct investment (FDI) to developing countries, sometimes to take advantage of
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privatisations and mergers and acquisitions. These capital flows may have helped the processes of fiscal consolidation, eased the balance of payments difficulties, created jobs and demand and, thereby, contributed to higher growth rates. But this does not explain the reasons for the difficulties faced by the advanced nations and the overall robustness of growth in developing countries marked by high savings rates and good economic fundamentals. It may appear paradoxical that the problem of the developed countries and the success of the developing ones may both be due to the value system dominating policy in the west, which sees progress as increased consumption by individuals, without regard to social goals like equality. In fact, the central theme of the current phase of globalisation has been higher consumption in an era of higher inequalities. Inequalities increased in USA to reach levels equal to levels prevailing just prior to the great depression. Between 1940 and 1970, the USA registered steady and inclusive growth with the median income doubling in the three decades. Since then, the income of the bottom 90 percent increased by a mere 5 percent. On the other hand, the income of the top 1 percent of the population is reported to have increased by 281 percent between 1999 and 2007. It is therefore not surprising that the rallying call of the 'Occupy Wall Street' movement has been 'we are the 99 percent!' One of the effects of rising inequalities, in conjunction with other causes like longevity and rising health costs, has been the political pressure on the state to spend more on social sectors. Social sector spending as proportion of GDP increased, between 1980 and 2007, from 10 to 21 percent in Greece, from 18 to 25 percent in Italy and from 13 to 16 percent in USA. These increases in social sector spending, and other increases in expenditures, were not accompanied by commensurate increases in tax revenues. In fact, if press reports are to be believed, the two wars fought by America, in Iraq and Afghanistan, were not accompanied by increased taxes. As mentioned earlier, neo-liberalism seeks to put a limit to the size of the state, which practically has meant that raising taxes is against the current orthodoxy. Also the nature of politics in most countries has made it extremely difficult to tax the rich who wield enormous power over the

formulation of public policy. The result has been that most developed countries have been forced to run large fiscal deficits. The USA, for example, has an outstanding public debt of over $ 14 trillion. With government spending at 24 percent of GDP and taxes at only 15 percent, the problem is likely to exacerbate. In many cases, the public debt is not only internal but also is significantly financed by capital inflows from abroad. Thus countries like Greece, Italy and Spain face severe external pressures due to their external indebtedness arising principally out of public indebtedness. A large part of the US public debt is financed by China and other East Asian economies. The ability of China and other developing countries to lend to the USA is the also the result of reckless consumption by US citizens. As the majority of the population in the US found its income to be nearly stagnant, consumption was allowed to increase with the help of easy consumer finance, which included housing finance. The case of the sub-prime crisis has been well documented. The crisis only brought to fore the fact that expenditure financed by debt has severe limits. As the American financial system, encouraged by government policy that could not frontally deal with the problem of rising inequalities, provided easy credit to both credit and non-credit worthy Americans, US household debt as a percentage of annual disposable income rose from 77 percent in 1990 to 127 percent in 2007. The average American household possessed seventeen credit cards! The rate of savings became negligible and occasionally even fell into negative territory. The financial system also benefitted from the lending to USA by the export surplus countries. The current phase of globalisation has therefore been marked by a reversal of capital flows to the advanced countries from the developing ones. Section IV The current crisis of globalisation has been sought to be addressed with a mindset that remains rooted in old ideas that are becoming increasingly irrelevant in a globalised world. Problems have grown and taken on international dimensions and they cannot be solved effectively from perspectives of 'national interests'. To take an example, the Greek economic crisis cannot be addressed by imposing greater hardships on the Greek people alone. The beneficiaries of the single European

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currency also need to share the benefits with disadvantaged countries of the Euro zone. The inequalities,which perpetuate due to lack of movement of labour and the absence of cross-national fiscal transfers,do not allow an effective resolution of the crisis faced by a number of Euro zone countries. Similarly, it is not possible to sustain debt-driven high consumption in one part of the world by running export surpluses and capital outflows in other parts of the globe for a substantial period of time. A second lesson that is emerging is that increasing income and wealth inequalities can no longer be brushed under the carpet of growth fundamentalism. The world today produces enough, on a per capita GDP basis, to meet even an extended basic needs list of every global citizen. Yet, in country after country, inequalities are on the rise. Many developing countries, including China and India, have high growth rates and worsening Gini-coefficients. We seem to be repeating the mistakes of the post 1970s western economies. This could be sustained by exporting to the Western economies. But with those economies faltering, the need to address the problem of inequality is not only an

ideal but a practical necessity even to sustain the growth momentum. Finally, the 'invisible hand' has not been able to resolve many of the problems arising out of unbridled pursuit of self-interest. Devising systems of incentives and disincentives does not seem to adequately address the mismatch between personal and social ends. The financial crisis and the subsequent response have only highlighted the problems of free-markets and incentive systems within organizations. There is once again a call for regulation. But in a globalised world, the effectiveness of regulation by individual countries is extremely limited. The problem may be addressed by agreeing to regulatory measures and systems that are adopted and effectively implemented by all countries. But this is extremely difficult to put in place, besides having doubtful utility. Perhaps we need an alternative world-view based on equality, justice and cooperation. Can India contribute towards the building of a new global vision that more effectively deals with the inevitable process of globalization?

Percentage of Chinese millionaires who have considered emigrating or have already emigrated, mainly to USA: 60 Estimated capital flight out of Russian due to stagnation, corruption and political uncertainty, in billion dollars: 80

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Rank of Technicians' and 'Sales Representatives' among top 10 Jobs employers globally had difficulty filling due to lack of available talent: 1 & 2 Rank of 'Production Operators' and 'Secretaries, Personal Assistants and Office Support Staff' on talent shortage index: 9 & 10
Courtesy: Business India


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On the Anvil - India Oil & Gas Upstream Licensing Regime

Neetu Vinayek India is witnessing increasing challenges in meeting its energy requirements. The Oil & Gas sector plays an important role by contributing approx 45% of total energy requirements. Net oil imports have grown from 102 million metric tonnes (MMT) in 2006-07 to approx 130 MMT in 2010-11, whereas the value of imports, over the same period, has grown from US$ 40 bn in 2006-07 to US$ 70 bn in 2010-11. This has led to steep increase in the import burden of the country including infrastructure & pricing challenges for the Oil & Gas industry. To enhance the Energy Security of the country and to appraise the hydrocarbon potential of the sedimentary basin in the shortest possible time, the Government of India (GoI) has been making focused efforts to accelerate and expand exploration of oil and gas in the country. GoI also acknowledges the importance of the role of private sector in development of domestic resources. This has led to opening up of the sector and introduction of an investor friendly policy regime over the years. Until the beginning of 1990's, wherein National Oil Companies used to receive the Petroleum Exploration License (PEL) on nomination basis, GoI started opening up E&P acreage award process to private and joint venture companies through various exploration bidding rounds for exploration and development of discovered fields. The New Exploration Licensing Policy (NELP), formulated with the approval of the cabinet, provided a level playing field to the private investors by giving the same fiscal and contract terms as applicable to National Oil Companies (NOCs) for offered exploration acreages.
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Manish Baghla While approving NELP in February 1997, GoI through the Cabinet Committee of Economic Affairs (CCEA) had authorized Ministry of Petroleum & Natural Gas (MoPNG) to prepare a Model Production Sharing Contract (MPSC) in consultation with relevant Ministries. MoPNG subsequently finalized the MPSC with the approval of the Empowered Committee of Secretaries (ECS) which had also been constituted with the approval of CCEA, comprising Secretaries in MoPNG, Finance and Law. The GoI has awarded more than 200 blocks in nine rounds of bidding under NELP. Before conducting new bidding round, MoPNG & Directorate General of Hydrocarbons (DGH) undertake consultation process to seek industry inputs on the issues faced during bid process and implementation of the PSCs. Based on the recommendations, there have been improvements in bidding framework in terms of parameters, weightage, standardization and transparency in bid award process. On some of the issues which were common to all the players, the need was felt to adopt a streamlined procedure of examination of each proposal before obtaining the approval/decision of MoPNG. Accordingly, DGH had developed and issued policy guidelines. These policies provide a transparent basis for deciding similar issues under various PSCs. Following are the select policies issued by DGH: ? Extension of exploration phases under NELP and pre-NELP PSCs. ? Extension of exploration phases under Coal Bed Methane Policy (CBM).

Policy for Merger of Exploration Phases of ? offshore Blocks under NELP-III & NELP-IV PSCs. Policy for substitution of Additional Metreage ? Drilled against Total Metreage Commitment as a part of Minimum Work Programme (MWP). Determination of Cost of Unfinished Minimum ? Work Programme (MWP) These policies provide safeguards which are kept in view before amending the terms of the contracts. The ECS has also approved provisions for imposition of liquidated damages (LD) on the contractors where necessary to ensure that such dispensations are sought only by those contractors who are serious about their exploratory commitments. Recently, recommendations related to the Upstream sector were made by the Standing Committee on Petroleum & Natural Gas in December 2011. Select comments/recommendationsare listed below: The Committee is surprised to note that there are ? no specific penalty stipulations in PSC in case of shortfall in achieving the production targets envisaged in either the approved Field Development Plan (FDP) or Annual Work Programme and Budget, thereby giving the operators an escape route. The Committee would like to know how this important aspect was overlooked while framing PSC by the Ministry/DGH. Keeping in view the large scale dependence on natural gas as fuel, the unscheduled cut in its production has adversely affected the plans of various important sectors of economy including the priority sector. The Committee, therefore, desiresthat the Government/DGH review PSC Contracts entered into with various operators and incorporate stringent provisions therein for any breach in approved plan by the operating companies. While expressing displeasure on unsatisfactory ? performance of public/private companies in respect of minimum work programme, the Committee had desired the Government/DGH should take necessary steps to ensure that these upstream companies expedite their exploration

work and make sincere efforts towards at least completing the MWP assigned to them. The Ministry in their Action Taken Reply had stated that the Government/DGH monitor and periodically review the progress of various exploration activities through the Management Committee (MC). If Contractor fails to complete the committed MWP within the stipulated time, they are required to pay the cost of unfinished work programme as per the relevant PSC provisions and the prevailing Policy Guidelines in this regard. The Committee is of the view that the penalty amount that the contractor is required to pay if he/she fails to complete the committed MWP is very less and does not act as a deterrent for not achieving the approved targets. Therefore, the Committee desires that failure to complete MWP should be seriously viewed and higher penalty be imposed in case of shortfall. Moreover, extension of time to the contractor may not be given in normal course, rather it should be granted only in exceptional circumstances. ? Expressing dissatisfaction over the very low CBM production since awarding of blocks in 2001, the Committee had desired the Government to make an indepth analysis to find out reasons for the same. Though the Ministry in their reply have informed that by the end of 12th plan period CBM production is projected at 4 mmscmd in 2016-17 from the present level of about 0.23 mmscmd in October 2011, the reply is, however, silent if any analysis has been done on scanty production of CBM till now and the monitoring of Government/DGH in this regard. In view of the past record the Committee is not convinced that the projected target for 12th Plan can be reached unless effective steps are taken to boost present CBM production including through application and import of new technology. The Committee, therefore, reiterates its recommendation and desires the Government/Oil PSUs to make an indepth analysis of the reasons for scanty production from CBM reservoirs and take concrete and corrective action including application and import of new advanced exploration technologies and technical knowhow, if necessary.


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? After considering the Action Taken Replies of the Ministry on the recommendations of the Committee on development of gas hydrate, shale gas, UGC and hydrogen as alternate sources of oil and gas, the Committee feels that the various programmes are not progressing at the desired pace. Keeping in view the large potential of these resources in meeting the energy security of the country, the Committee desires the Government to make concerted efforts in a time bound manner to develop these resources. Recognising the need for comprehensive review of Upstream Licensing Policy, GoI has constituted a committee under the chairmanship of Dr C. Rangarajan, Chairman, Prime Minister's Economic Advisory Council, to review the existing PSC. The review would be in respect to current profit sharing mechanism with the Pre-Tax Investment Multiple and exploring various contract models. The committee will

also look into a suitable mechanism for managing the contract implementation and governmental mechanisms to monitor and audit the Government's share of profit petroleum. It will also structure the guidelines for determining the formula for the price of domestically produced gas, and for monitoring actual price fixation. The Committee will submit its recommendations by August-end. In the current environment, petroleum licensing is expected to be widely debated and will take place in the full glare of attention from the press and from public opinion. We hope that the GoI will follow adequate consultation process to modernize the licensing regime that will break new grounds in recommending ways in which GoIand the oil companies may devise best practices in licensing to serve the interest of all stakeholders and also an ethical business environment.

Total number of villages in India: 6,38,588 Chances that a village in India is in Uttar Pradesh, Madhya Pradesh and Orissa: 1 in 3

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Average time spent by a CEO in meetings in a 55-hour working week, in hours: 18 Average time spent by a CEO on business meals and telephones in a 55-hour working week, in hours: 5 & 3 Average time spent by a CEO working alone in a 55-hour working week, in hours: 6

Courtesy: Business India

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India's POL Consumptionin 2011-12: The Year of King Diesel

Diesel: The King The variation in estimated figures and actual consumption of HSD is 939 TMT, of which 80% is due to higher consumption of diesel during fiscal 2012. It is diesel, which changed the face of consumption as price of competing fuels remained lopsided during the year putting undue pressure on diesel consumption giving it a dubious distinction of becoming the King of consumption. In the last few years share of diesel in the basket of petroleum products has been increasing. It has grown to 43.7 % in 2011-12 from 35.2% in 2002-03 at the time of deregulation. Figure-1 gives the pattern of diesel consumption in the last 12 years. Figure-1: Share (%) of Diesel in POL Consumption

Vijay K Sethi Additional Director (Demand & Economic Studies) Petroleum Planning & Analysis Cell I can't resist telling you another story as it beautifully explains the POL consumption picture in 2011-12. During my childhood I was very fond of drawing. Around the age of 14 years I grew confident that I could draw an accurate portrait of a person from his photograph. One day I decided to draw a picture of Guru Rabindranath Tagore. I spent three days putting in lot of hard work to finalize the portrait and hid it from all and sundry in the hope of giving a surprise to everyone by showing the final product. On the fourth day my uncle, whom I respected a lot came to our house. I asked him to close his eyes for a surprise. When he opened his eyes he did show surprise, hugged me and said Cuckoo (my childhood nick name) you have done a great job. The portrait looks exactly like Vinobha Bhave. You have a great future to be a famous artist. It took me a little while to realize what my uncle had said but I recovered soon to say 'Of course, it was Vinobha Bhave's picture that I had drawn'. India's petroleum products consumption in fiscal 2012 has a similar surprise as the bottom line consumption figures are perfectly on expected lines. Against the revised demand estimates of 147.05 million metric tonnes (MMT) the actual consumption for 2011-12 as per provisional data is 147.99 MMT indicating that the variation in projections and actual figures is just 0.6%. Any economist could be proud of such accurate projections. However, once we analyze the data one finds that it is not the picture you thought it would be. And the picture was changed mainly by diesel, which became consumer's darling due to price advantage over competing fuels.

The high growth in diesel consumption came mainly from following factors in 2011-12: ? Domestic price of FO remained higher than diesel price almost through out the year. This resulted in substitution of FO by diesel, which is not only cheaper for the consumer but also a superior product with higher calorific value ? Power situation started deteriorating in the second half of fiscal 2012 leading to use of diesel in gensets. Figure-2 brings this out quite clearly: Figure-2: Monthly All India Power Deficits (%) during 2011-12

JAN 12,

JAN 11


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? MS price was deregulated in June 2010, after which preference for diesel cars started increasing Petrol - Under Pressure Ever since the deregulation of petrol in June 2010, its consumption has been under pressure. People have begun looking seriously at alternatives like CNG and HSD. The falling growth in MS with rising selling price comes out clearly in Figure-3, which gives two years' data on MS price (Delhi) and monthly growth. Figure-3: Retail Selling Price (Delhi) & Monthly Growth of MS

The falling growth of car sales did not also help the cause of MS during the year. Car sales growth was low at 1.7% in 2011-12. It was Utility Vehicles (UVs) sales, which brought some cheer as their sales grew at 13.7%. However, UVs are largely diesel driven vehicles. Kerosene Rare Good News Kerosene consumption consists mainly of PDS Kerosene, which is about 98% of the total quantity. Its consumption came down by 7.8% in 2011-12 and the product is receiving the attention from the Government it deserves. The rationalization process which started in a small way a few years ago was not only carried forward in 2011-12 but actually picked up pace. Slowly but surely Kerosene consumption is reducing, which is a good sign given the huge expansion of domestic LPG in the country. Figure-5 shows the declining consumption of SKO since deregulation of the petroleum sector: Figure-5: Annual SKO Consumption & Growth (%)

The inverse relationship between MS price and growth is well established in the last two years. This trend is likely to become sharper as the price gap between MS and HSD further increases. Unprecedented Situation A strange and unprecedented situation has arisen where MS growth has dropped below HSD this year, which is against the historical trends. We have tracked data for 20 years since 1992-93 and Figure-4 makes this unusual trend clear. Figure-4: MS & HSD Annual Growth (%) Trend LPG: Moving into Rural Ares LPG has started making inroads in rural areas with the domestic LPG customer base reaching a figure of 13.71 crores as on 1.4.2012. Over 122 lacs new customers were enrolled during 2011-12, half of which are in rural areas, besides release of 56.6 lacs DBCs. There are 1171 LPG Distributors under Rajiv Gandhi Gramin LPG VitranYojana (RGGLVY) apart from 1665 other rural distributors as of 1.4.2012 indicating expansion of LPG to rural areas. LPG consumption has grown at a robust
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The rationalization process continues in the current year also. What needs to be done is an increase in price of PDS Kerosene, which is ridiculously low. A bottle of mineral water costs more than Kerosene.


CARG of 7.2 during the 11th Five Year Plan. What has been disappointing, however, is poor performance of Auto LPG. Despite addition to the number of Auto LPG Stations (ALDS), there are only 652 ALDS as of 1.4.2012 and consumption has slightly shrunk during 2011-12 compared to the previous year. Despite advantage in price over MS, Auto LPG has really not taken off. One of the reasons for this is logistics issues. ATF: The Happy Days Are Over ATF consumption growth had a dream run in the 10 Five Year Plan growing at CARG of 12%. Even on this th high base the CARG for the 11 Five Year Plan is robust at 6.8% with annual growth in the last two years at 9.7% and 9% respectively. However, with Kingfisher Airlines falling on bad times last year followed by a strike by Air India pilots, ATF outlook is quite pessimistic this year. Since March 2012 monthly growth in ATF is negative. After a high of 19.9% in 2010-11, cargo traffic actually declined by -2.9% in 2011-12. The growth in ATF came mainly from passenger traffic which grew by 13.2% in fiscal 2012. A sharp increase in airfares and reported withdrawal of some carriers from certain non-profitable routes are the reasons for deceleration. FO/LSHS: Sentiments Remained Negative Never has in the last over two decades FO/LSHS consumption recorded such high negative growth. Year 2011-12 ended with negative growth of -14.4%. One of the major reasons was substitution of FO by

HSD, domestic price of which remained cheaper leading to consumers substituting use of FO by HSD. Large scale substitution process led to absolute FO/LSHS consumption volumes dropping below 199495 level. PetCoke: The Growing Weight in Products Basket PetCoke volumes have crossed six million tonnes putting it ahead of products like LDO, Lubes, ATF, Bitumen and Others. Although it is a low value product, its growing volume significantly influenced bottom line growth in 2011-12. PetCoke growth was very high at 23.3% last year, highest among all petroleum products. This was due to Gujarat refinery upgradation as a result of which IOC sold major additional volume of PetCoke during the year. High growth is expected to continue in next year also. General Oil companies commissioned over 3100 retail outlets during fiscal 2012 led entirely by OMCs as private companies' outlets numbers actually shrunk during the year due to decommissioning. Private oil companies were not able to sell auto fuels due to price disadvantage. Their sales volume for diesel declined by 94%, and that of petrol by 10% during 2011-12 over the corresponding period of previous year.
(The views & opinion expressed in this article are personal of the author & do not represent those of PPAC or Government)

Year in which number of deaths exceeded number of births in Japan, for the first time ever: 2005 Year in which Japan's health ministry began turning off its office lights at 4.30 p.m. to encourage employees 'to go home early and make babies': 2011

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Number of American banks that failed in 2011: 92 Number of American banks that had failed in 2009 and 2010: 140 & 157
Courtesy: Business India


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Is Petroleum Refining a Sunset Industry In India?

supply is a prerequisite for accelerating economic growth and human development. For any developing country, therefore, energy security is an integral part of the overall economic strategy. In this context, petroleum refining is one of the most crucial drivers of future growth prospects of an economy. Any mismatch between demand and supply of these products can thus pose serious energy security threats. In India, about 34.5% of the energy generation capacity comes from oil. The demand for petroleum products has increased at an annual average rate of 6.5% over the period since 1970-71. To meet the growing demand, refining capacity has also increased, in particular after 1998. Figure 1 shows that at the current level of demand, refining capacity is in excess of the domestic demand. Figure 1: Consumption and refining capacity in petroleum sector in India ('000 bpd)

Dr. Aradhna Aggarwal Senior Fellow, National Council of Applied Economic Research India, which once struggled to keep up with domestic demand for oil products, currently has a major excess in refining capacity. As of June 2011, there were 21 refineries in India with a capacity of 193.4 million metric tonnes (MMTPA) while domestic consumption was about 148 million tonnes. This implies a fear of lower future values for operators in this industry. Does that mean that petroleum refining is a sunset industry in India? This article addresses this question from four perspectives: ? The national energy security perspective ? The economic perspective ? The technological perspective ? The global perspective The National Energy Security Perspective The petroleum refining industry comprises establishments primarily engaged in refining crude petroleum into finished petroleum products which are used to power the residential, transportation, industrial, commercial and electricity utility sectors. Petroleum fuels have been the world's largest energy sources 1 since 1952 and are expected to continue to remain so. In 1990 its share in total energy consumption was nearly 40% which gradually declined to 33 percent by 2010. By 2035, its share will further decline to 28% but it 2 will still be the largest source of energy (IEA, 2010). Efficient, reliable and competitively priced energy

Sources: Energy Statistics, 2012; Eleventh Plan Working Group Committee, 2006 Planning Commission

Three observations may be made here. First, the emergence of surplus capacity is a relatively recent phenomenon which emerged in the late 1990s. There has been a thin balance between demand and supply which may not be tenable in the long run due to growing demand. According to the demand projections made by the Working Group on Petroleum and Refining Sector for the 12th Plan, the growth in demand for middle distillate fuels will accelerate from 5% during 2011-12 to 2016-17 to over 6% during the next five years. The demand for heavy distillate fuels will also accelerate while that for low distillates, Naptha and Motor Spirit will continue to grow at the same rate of around 6%.

1 Just as coal had displaced fire wood as the chief source of fuel in the US by the mid-1880s, petroleum surpassed coal by 1951. 2 IEA (2010) World Energy Outlook 2010, International Energy Agency.

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Overall, demand is projected to grow at a rate of 5% over the next 5 years which will accelerate to 5.9% during 2017-2022 (Table 1). Table 1: Demand projections by product: 2011-12 to 2021-22 (MMT)

measure of excess capacity. This is because while the public sector companies are directed to first meet the domestic demand before exporting the product to foreign markets, private companies have no such mandate. Their business model is to maximize return on their investment from their sales whether domestic or international. Irrespective of the domestic demand, private investors would sell in the international market if returns on international sales are higher. Thus increase in exports and domestic shortage may go in parallel. From the energy security perspective therefore, there is a need to look at the difference between the public sector capacity and total consumption. Figure 2 shows that the former is still smaller than the latter. Figure 2 : Aggregate Consumption and refining capacity in the public sector (000 tonnes)

Source: Working Group Committee on the 12th Plan, Planning Commission

While the demand will continue to grow at an accelerated rate, refining capacity cannot grow continuously creating mismatch between the two. There may be a long time lag between planning of a refinery and its commissioning. The 11th Plan projected the refining capacity to go up to 240.96 million tonnes per annum in the terminal year of the Eleventh Plan as against 148.97 million tonnes per annum in the beginning of the Plan. However, the actual installation of capacity is 213 million tonnes which fell about 12% short of the Eleventh Plan target. Second, there might be excess capacity in aggregate terms but at the disaggregated level demand for certain important products such as LPG, Kerosene, lubricants, Petroleum Coke and Bitumen still exceeds the capacity (Table 2). Table 2: Consumption and production of petroleum products: 2009-10(MMT)

Source: PPAC

Considering that India is heavily dependent on imports of oil, import dependence for petroleum products also can seriously jeopardize energy security in the long run given the fact that the country has been facing severe foreign exchange constraints. The refining capabilities within the country may counter India's disadvantages in the domestic availability of oil. Further, heavy reliance on imported energy may put upward pressures on prices through supply chains, injecting inflation and putting the indigenous industry at a competitive disadvantage in international markets. Indeed, India has created excess capacity in refining; but this may not ensure energy security. With a growing demand for oil, there is a large scope of further expansion in this sector. There is thus need to push investments into the refining sector. The energy security concerns cannot be overstated. The closure of refineries in developed countries has raised concerns over energy security issues even within these countries despite their ability to import an adequate supply of petroleum products. The argument is that domestic refineries provide a much greater
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Source: Energy Statistics, CSO

Finally and most importantly, the difference between consumption and the total capacity is not a good

degree of flexibility in the product supply chain in the event of an unexpected supply disruption. The Economic Perspective From the economic perspective, at all stages of the operationprocessing, manufacturing and distributionrefineries generate jobs, incomes, new businesses for local firms and communities, and a tax base. The sector also has potential to contribute significantly to the national economy through foreign exchange earnings. The economic impacts of petroleum refining are broader than those of most other sectors of the economy. This is because unlike products from other sectors, alternative petroleum supplies or substitute products are not readily available in the case of an emergency. And, if petroleum prices go up, the effects are felt in the price of food and other essential consumer goods, the costs of commuting, and the cost of moving goods to market for businesses throughout the economy. From the economic perspective therefore, the promotion of the refinery sector needs to be an important component of the industrial promotion policy. Technological Perspective The world crude oil share has been getting both heavier and sour. Most of the older refineries do not have adequate upgrading capacity to increase the higher valued product nor do they have the capacity to process heavier or sourer crude to take advantage of their lower prices. Further, over time new technologies have been introduced in this sector driven by environmental concerns. Old refineries are not expected to be fully benefitted by these technologies. Finally, petroleum product specifications have become increasingly more stringent in terms of emissions putting further pressures on old refineries. The technological perspective suggests that new refineries are in a better position to address all these issues. They are a channel through which the latest technologies can come and meet the demand for cleaner products. The Global Perspective The global consumption of oil has been increasing at the average annual rate of 1.57 percent since 1994.
3. 4.

Figure 3 shows that since the early 1980s, the demand for oil consumption has been growing faster than the capacity. Figure 3 : World consumption of oil and refinery capacity: growth (%)

Note: The actual growth figures have been adjusted using the HodrickPrescott filter.
Source : BP Statistical Review (Online)

This points to the need for continuing investment in refining capacity. Since alternate energy is not ready to replace the fossil energy, dependence on oil energy is expected to continue. According to the 2006 World Energy Investment Outlook of the International Energy Agency, the world needs to invest $774 billion in real terms between 2005 and 2030 in the refining sector to create an addition capacity of 32 million BPD. Asia will attract the largest portion of this investment at $170 billion as traditional producers namely, the US and Europe have been losing competitive advantage in this sector. The most significant expansion of capacity has occurred in China and India which have had the effect of pulling the locus of world refining more toward the AsiaPacific region. India has the fifth largest refinery capacity in the world. Reliance Industries' Jamnagar complex is the largest oil refining complex in the world, with a total capacity of 1.24 million bpd3. The Special Economic Zone at Jamnagar refinery has a Nelson Complexity Index of 14.04 and is one of the world's most complex refineries. India has thus created core competencies in this sector. This perhaps is an opportune moment for the domestic refining industry to leverage these competencies and make India a major refining destination rather than treating it as a sunset industry.

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LPG Transparency Portal

All LPG distribution operations are recorded using robust software provided by OMCs to distributors. The information thus generated is captured and made into meaningful reports providing business insights to OMCs. Hence, the market players use ways and means outside the software realm to manipulate and take advantage of arbitrage available in inherent vulnerability of Subsidised Domestic LPG Marketing. a. Use of Fake Identities to draw subsidies.

Jayadevan P Chief Manager(LPG-Sales) Indian Oil Corporation Limited LPG for household consumption is nearly 89% of the total LPG off-take in India. The total LPG consumption in the country for the year 2011-12 was 16.5 MMT (Million Metric Tonnes) and is expected to grow at 8-9% as envisaged in the Vision 2015 document of Ministry of Petroleum and Natural Gas. OMCs are holding a customer base of more than 135 million households currently. More than 11500 LPG distributors home deliver nearly 3 million domestic LPG cylinders every day to cater to this mammoth customer base constituting more than half of the country's population. LPG for Domestic Cooking is heavily subsidized and hence LPG is dual priced based on its use. LPG subsidy for the year 2011-12 is estimated to be more than 30, 000 crore rupees. To restrict the use of subsidised LPG only for genuine domestic customers, every household is permitted only one registered LPG connection in the name of one of the family members as per the LPG Supply and Distribution Order amended in 2009. However, every registered customer is entitled to receive refills as per their domestic cooking need. Challenges in LPG Distribution LPG is an exceptional fuel. It is considered as a green fuel and has a wide range of applications. The environment friendliness and usability for multiple applications coined with the arbitrage available in its pricing entice the market players to divert the product meant for domestic cooking for other applications.

Over the years, such trends of diversion have been facilitated by obtaining more than one LPG connection per household violating LPG Control Order. This is achieved through duplicate and/or fake connections. Multiple connections in the name of existing customers and/or fake connections in the name and address of non-existent customers provide enough opportunity to draw subsidised cylinders and use them for purposes other than domestic cooking. b. Lack of strong process to verify receipt by genuine beneficiary

LPG cylinders are home delivered. At the time of delivery, the household identity is manually verified and the receipt acknowledged by the resident / family member. Hence, the current process of LPG distribution to customers has a weak form of verification and consent from a residential consumer at the time of acceptance of delivery. Being a manual process, the system does not have a fool proof re-verification mechanism. This leaves an opportunity for diversion of the cylinder by stakeholders in the supply chain to nongenuine customers for non-domestic applications without the knowledge of registered customers. c. Lack of Portability of Identity & Quality of Service The access to subsidized LPG requires sufficient proof for local address and identity, with an increasing migratory population, this becomes a bottle neck. In addition, in the current system an LPG customer has his/her connection mapped to a specific OMC distributor in his/her locality, binding them to the distributor. In the event of below par service by the distributor, the customer does not have the freedom to move to distributor offering better service.
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Transparency As a Solution to Challenges The need for transparency in subsidized domestic LPG supply to the last mile of the supply chain as an effective social audit mechanism to meet the challenges was first conceived in the interim report of the Task Force on Direct Subsidy Transfer set up by the Finance Ministry headed by Chairman, UIDAI in which Secretaries of various departments including P&NG were members. The Task Force detailed a scheme for achieving direct subsidy transfer to customers with a well-integrated subsidy management system. It was felt that the same would ensure to bring about real choice and empowerment for beneficiaries, without distorting markets in unacceptable ways. To achieve this, existing subsidy administration process shall be re-engineered. The path envisaged include targeting, address leakages and diversion through transparency with use of technology, empower beneficiaries with choice in accessing subsidies, provide a quick and convenient method to report grievances, a robust electronic process for identification of beneficiaries, and electronic transfer of funds into their bank accounts. At a macro level the team felt that any effective subsidy regime has to incorporate the following elements: 1. 2. 3. 4. 5. 6. 7. 8. 9. Empowerment and choice for beneficiaries Transparency in subsidy administration and information visibility One price for subsidized goods Efficiency in production Convenient and effective grievance redressal Support all types of direct subsidy transfer models Fully electronic service delivery An incentive-compatible solution across stakeholders Effective MIS Reporting

Transparency in Subsidy Administration And Information Visibility Bridging the information asymmetry is identified as an immediate implementable area to improve the effectiveness of any subsidy program. A large section of the society is often unaware of their rights and the welfare services offered by Governments. They face formidable challenges in accessing these services, understanding their real rights envisaged in the Governmental orders, its implementation/availability to all fellow beneficiaries equitably and exercising them. For example, information about who gets LPG cylinders at what frequency under public distribution system, which acts as a powerful social audit instrument, comes at a great premium. The availability and dissemination of comprehensive information already collected and collated by PSU Oil Marketing companies if available in the public domain can both dramatically empower citizens, stop distortions by the partners in supply chain and increase the effectiveness and transparency of subsidized LPG delivery administration. Despite tremendous increase in awareness and changes brought about by reforms like the Right to Information Act, 2005, in recent years, information asymmetry is still widespread. Even when such information is available, in tits and pieces, it can paint a distorted picture given the leakages and diversion in the distribution chain. Hence information, such as the availability of the domestic LPG, list of beneficiaries, and details of benefits drawn, among other things, provides a powerful reconciliation and social audit mechanism. Performance of appointed LPG distributors who are servicing beneficiaries on behalf of the Government also can be rated by the customers and published in the OMC website. Civil society organizations, activists, researchers, analysts, and local residents themselves can use this information to highlight discrepancies and irregularities in social programs. Oil Marketing companies have been capturing the information for better supply chain management, monitoring performance of their distributors , optimizing resources, planning equitable distribution etc for more

A subsidy framework that conforms to above broad elements is expected to limit incentive distortions and minimize inefficiencies.

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than a decade. With the basic understanding that if deployed effectively, information technology has the potential to serve as a powerful tool to bring about transparency and accountability of Government services, efforts commenced immediately after the first meeting of Task force in March 2011 to channelize and publish the information. As such, the systems in place of OMCs have reporting and analytics, data warehousing and business Intelligence modules. While all possible metrics cannot be fully conceptualized when the power of information in LPG was envisaged, casting the net wide enough and provided in an easy to consume manner for end-users, was expected to ensure that the data is relevant and meaningful. As an immediate step, the OMCs have taken up the task of setting up a transparency portal that would show the details of all the customers of LPG who are receiving subsidized cylinders, distributor wise. This transparency portal would be accessible to the public and details of the consumption of subsidized cylinders of consumers across the country would be viewable. The information is hosted in by IOCL, by BPCL and by HPCL. The website of Petroleum Ministry has a direct link to all the three portals of OMCs. The consumption of subsidized LPG, for more than 13 crore customers across the country is now published in Transparency portal and is regularly updated. The details such as customer number, name, address, the number of cylinders consumed and subsidy amount

availed with facility to sort and search are available for all domestic LPG customers in the portal. As the information is expected to act as a powerful reconciliation and social audit mechanism and Civil society organizations, activists, researchers, analysts, and local residents themselves could use this information to highlight discrepancies and irregularities, this is currently making LPG distributors more vigilant about their deliveries to genuine customers and thereby acting as a self-correcting mechanism against diversion. The portal also has facility to sort and search the information, get refill wise booking and delivery details, submit feedback/complaint for all visitors, and rating the distributor and surrender connection facilities for all registered customers. The rating of the distributor is on five parameters including right price, correct weight, courteous behavior and timely deliveries. Besides the utilities to check, the portal today is helping customers to compare their consumption with others and conserve their cooking and eating habits, besides adapting to the control order provisions which they were unaware earlier. The portal is a true mirror of the subsidy disbursement to the rich and the poor, the elite and underprivileged, the urban and rural households of customers and is fast emerging as a tool for introspection for the customers and true reflection of activities undertaken by all interested channel partners and rule makers in the country.

Number of world's top 10 fastest growing economies between 1980 and 2000 that were in Africa and Asia: 1 & 9 Number of world's top 10 fastest growing economies between 2001 and 2010 that were in Africa and Asia: 6 & 4 Number of world's top 10 fastest growing economies between 2011 and 2015 that are projected to be in Africa and Asia: 7 & 3
Courtesy: Business India


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No Liability for Service Tax But Still Pay Income-Tax On It!

Shailesh Monani Executive Director PricewaterhouseCoopers Pvt. Ltd. The oil and gas sector is one of the key catalysts in fuelling the growth of Indian economy. Most of the Indian companies, who want to carry out exploration and drilling activities, require the services of various foreign service providers. The upstream segment substantially depends on imported services, and in the days of peak activities in 2008 and 2009, the services were in dire shortage and work programs had to be deferred owing to non availability. Hence it is imperative that we improve business environment for service providers and make it attractive enough for them to prefer India over other countries. Foreign Service Providers for Drilling and Exploration Activities In India, upstream drilling and exploration work is mostly undertaken by state-owned oil companies. The leader in the upstream segment, ONGC, as well as other oil companies, enter into contracts with various offshore oil and gas service providers for the purpose of drilling wells and providing various services in connection with the exploration and extraction of mineral oil from offshore locations in India. In this article, we propose to cover the recent challenges being faced by the foreign offshore oil and gas service providers (who offer their income under the presumptive regime provided under the income-tax law in India)with respect to the service tax amount.

Bhavin Sheth Manager PricewaterhouseCoopers Pvt. Ltd. Provisions Under Income-tax Laws for Taxation of Foreign Oil and Gas Companies Under the income-tax law in India, there is a special regime of taxability for offshore oil and gas service providers. Under this special regime, 10% of the gross receipts for services rendered in connection with extraction or production of mineral oil, is deemed to be their income chargeable to tax. For this purpose, the gross receipts would mean any amount paid or payable to the foreign company for the provision of facilities / services or plant and machinery on hire. The question that arises is whether the amount of service tax collected by the foreign companies would be considered as a part of gross receipts for computing their deemed income under the presumptive scheme. Further, what would be the position for foreign companies not having any office in India, hence not liable to service tax. Accordingly, such foreign companies do not levy or collect any service tax from the service recipient and the service recipient is liable for service tax. For ease of understanding, we propose to briefly discuss the provisions of service tax laws in India. Finance Act, 1994 The levy of service tax in India is governed by the provisions of Finance Act, 1994. Under this law, service tax is levied on the service provider in cases where they render the specified services. The Finance Bill, 2012

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has introduced a negative list of services, which means that all services rendered other than those covered under the negative list would be liable to service tax.It is the responsibility of the service provider to collect the service tax from the service recipient by including the same in the invoice raised by them for rendering the services and deposit the service tax so collected with the Government treasury. However, there is an exception to the above rule provided in cases where the service provider is a foreign company which does not have a permanent office or place of business in India and the services provided by such foreign company, are received in India. In such cases, the Indian service recipient is deemed to be the service provider and accordingly, is liable to service tax. This is popularly known as the reverse charge mechanism. Hence, the foreign service provider is not statutorily required to levy any service tax in respect of the invoices raised by them for services rendered. The above position under the Finance Act, 1994 is also supported by judicial precedents under the service tax 1 laws. Position Being Adopted by Tax Officers When Computing Income Under Special Regime of Income-tax Law The presumptive tax scheme under the income-tax law has been on the statute since April 1, 1983. At the time when the presumptive scheme of tax was introduced, it was never envisaged that service tax would be a part of the gross receipts for computing tax under the presumptive scheme of taxation. The service tax laws were introduced in the statute subsequently in 1994. Since then, there has been no clarity on the treatment of service tax for computing the income under presumptive scheme. In the past, the tax officers have been making an attempt to consider the amount of service tax collected by foreign companies as a part of their gross receipts for computing the presumptive income, without

appreciating the fact that service tax is a statutory liability and there is no income element. However, of late, the tax officers have gone one step ahead and have started including the amount of service tax in the gross receipts of foreign companies who are not liable to service tax under the reverse charge mechanism of the service tax law.In these cases, the amount of service tax to be added to the gross receipts is either notionally computed based on the value of the invoices raised by the foreign companies or is deemed to be equal to the actual amount paid by the service recipient ascertained after calling for the details from the recipient. Position Under the Income-tax Law Scenario 1: Where service tax is collected by the service provider There have been conflicting judicial precedents with regard to the treatment of service tax for computing income under the special regime in cases where service tax is collected by the service provider. In one of 2 the decisions , it was held that the service tax amount collected by the service provider should be considered as a part of gross receipts for computing the presumptive income under special regime. However, subsequently, there was another decision, rendered in the context of computing presumptive income for shipping companies (where the provisions are similar to that of computing presumptive income for oil and gas companies) wherein it was held that there is no element of profit in the service tax collected by the service provider and hence the same cannot be considered as a part of gross receipts when computing the presumptive income. In a recent ruling of the Authority for Advance Ruling (AAR),4 it was held that service tax collected by the service provider should be considered as a part of gross receipts for computing the presumptive income under special regime.

1. Indian National Shipowners Association v. Union of India (Bombay High Court). The SLP filed against this decision was dismissed by the Supreme Court 2. Techip Offshore Contracting BV (Delhi Tribunal) 3. Islamic Republic of Iran Shipping Lines (Mumbai Tribunal) 4. Siem Offshore Inc.


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The above position of inclusion of service tax in computing income under presumptive scheme is contrary to the clarification given by the Central Board of Direct Taxes (CBDT) in the context of deduction of tax at source from the payment of rent. As per this CBDT 5 circular, it is stated that since the service tax paid by the tenant on the rent paid by them does not partake the character of income, no tax should be deducted at source on such service tax element included in the rent. Though this circular is in the context of tax deduction at source, the intention of the CBDT is clear that service tax does not partake the character of income. This rationale should be applicable even to computation of income under the presumptive scheme. Scenario 2: Where service tax is not collected by the service provider and is liability of service recipient under reverse charge mechanism The judicial decisions discussed under Scenario 1, though conflicting, have been rendered in the context where service tax was atleast collected by the service provider and included in the invoices raised by them on the service recipient. While this view by itself is highly debatable, the tax officers are going even a step further and making additions for notional service tax amount under the reverse charge mechanism, which is never charged or collected by the service providers. This may lead to absurdity and is contrary to the law. Under the income-tax provisions, the tax officers are trying to include service tax in the income of the service provider where there is none levied under service tax law. By doing this, the tax officers are attempting to introduce new principle of taxation under the incometax laws tax non existent receipt in the form of service tax paid by service recipient under reverse charge mechanism. CONCLUSION In cases where service tax is collected by the service provider, while there are judicial precedents which are available, the same are either of the Authority of Advance Ruling or Tribunal. Hence, there would be an on-going litigation in this regard until the matter is settled by the Apex Court. Alternatively, the CBDT should come out with a clarification on the position to be adopted regarding service tax for computing the
5. Circular No. 4/2008 dated April 28, 2008

income under presumptive scheme. As regards the second scenario where service tax is never collected by the service provider, it may be stated that the reverse charge mechanism under the service tax laws was introduced to avoid hardship for the foreign companies which did not have any place of business in India from compliance requirements of service tax. Consequently the service recipient is deemed to be the service provider and hence liable to service tax.The tax officers are causing undue hardship and litigation by considering the service tax, for the purpose of computing income under presumptive scheme. As such, the service tax amount cannot be considered as income in any case, since it is a statutory liability, where the service provider merely acts as a collection agent of service tax on behalf of the government. However, in cases where the service provider is not at all liable to collect or to pay any service tax, it is grossly unfair to include such amount when computing their income for the purposes of income-tax. It is high time for the CBDT to come out with a clarification on its position. At the time of making an estimation of liabilities to bid for contracts in India, the offshore service providers consider only the contractual receipts as a part of their income for determining their tax liability in India. Even in cases where service tax is collected by them, it is not considered as income since it is a pass through, where they merely collect the service tax on behalf of the Government. In cases where service tax is paid by the service recipient under reverse charge mechanism, the question of estimating tax liability on such service tax never arises. In view of the tax officers treating the service tax amount as income of the offshore service providers, their estimation made at the time of bidding for contracts in India goes haywire and results into substantial reduction in their margins or possibly even into losses. It also has an impact on their cash flow. Considering that Indian oil and gas industry requires the services of the offshore service providers, it would be advisable for CBDT to clarify its position by issuing an appropriate circular. This would give better clarity to the offshore service providers and enable them to make better and accurate estimation of their tax liability in India.

Petroleum Federation of India


Realignment of Petroleum Refineries Survival of the Fittest

A. K. Roy Executive Director (Corporate Planning & Economic Studies) Indian Oil Corporation Limited The last decade (2000 to 2010) has seen a spate of petroleum refinery closures, especially in Japan, EU and the US. Following the golden age of petroleum refining (prior to 2008), which resulted into a wave of new projects in various regions, the global crisis of 2008-2009 and a sluggish and uncertain recovery thereafter, put many refiners out of business. A number of projects have either been cancelled or put on hold, prominently in EU, Japan, and Atlantic basin. A glance at BP Statistics, 2012 will reveal a broad relation between the demand and the refining capacity in a region. Globally, in the past 10 years, while the oil demand has grown at a CAGR of 1.32%, the refining capacity has registered a growth of 1.10%. This has resulted in narrowing the gap between oil demand and refining capacity (Table I). However, Europe and Eurasia continue to have surplus refining capacity as against capacity shortfall in US. Similarly, China & India became surplus in refining capacity during the last decade.
Table -1 (kbd)

Pramod Narang Dy. General Manager (Corporate Planning & Economic Studies) Indian Oil Corporation Limited Reasons for Capacity Outage For the global oil market, a key consequence of the recent downturn was the loss of several million barrels a day of future oil products demand. Besides, there are a variety of other reasons for outage of huge refining capacities. Some of these reasons are general in nature and others are specific to a country or a region, as broadly classified hereunder: ? The market condition in the local or regional area (e. g. suppression of oil demand in Japan) ? Economies of scale ? High operating costs (EU) ? Lesser ability to process low-cost raw materials like heavy crudes ? Lesser flexibility and ability to add value as compared to a modern refinery ? Environmental concerns/ statutory norms (US, EU, Japan) The following paragraphs carry out an in-depth, regionwise analysis of the factors resulting into refining closures in various regions. JAPAN One country where closures have been happening and are set to occur on a significant scale is Japan. Its demand for oil has declined to 4.4 m bbl/d in 2011 from 5.5 m bbl/d in 2000. There is little growth in population


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and an increasing number of people have opted for electric, hybrid and more efficient cars. Reportedly, refining capacity of the order of 1425 kbd at 33 sites have either been closed or mothballed in the country since 2009, prominently by the JX Group, Cosmo Oil, Idemitsu Kosan and Toa oil (Showa shell), as briefed below (Table 2):
Table -2 (kbd)

Table -3


National Development and Reforms Commission (NDRC), China is also renewing is efforts to close some of its local refineries. It has recently announced new policies to increase the fuel oil consumption tax to $ 18.6/ bbl from $ 2.3/ bbl and also the fuel oil import tariff to 3% from 1%. It is intended to hasten the closure of refineries that use fuel oil as the feed stock. In July 2009, Japan's Ministry of Economy, Trade and Industry (METI) issued an ordinance that requires meeting a cracking to crude distillation ratio of 13% by March 2014. (Cracking under this ordinance is defined as resid FCC plus coking, plus resid hydro-cracking, which means it excludes vacuum gasoil FCC and hydro-cracking). To meet this requirement, refiners are left with a limited choice of either closing down the distillation capacity and/ or increase resid upgrading. Considering Japan's outlook for a continued decline in the petroleum demand and, subsequent to the disastrous earthquake of March 2011, refiners are generally opting for closures over investments. CHINA China has been one of the main drivers of oil demand. Its oil demand has registered a sharp growth at a CAGR of 6.6% since the turn of this century. The refining capacity has also grown in tandem at an almost similar rate. While China is planning to increase its overall distillation capacity, legislation is expected to have an overall impact on the capacity build-up. The Chinese government has raised the minimum capacity limit for the refineries to around 40,000 bbl/ day (~2 MMTPA). The targets are small, but have affected numerous independent refineries. Year-wise details of refineries with lower capacities, either moth balled or closed at various locations in China since 1999 is tabulated in (Table 3):
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Closures in other Asia Pacific Countries Other noteworthy closures in Asia Pacific have been ExxonMobil's 70000 bbl/ day Port Stanvac refinery in Australia, PT Humpuss's 63000 bbl/ day refinery in Indonesia and Chevern Caltex 76000 bbl/ day refinery in Philippines (Table 4).
Table -4 (kbd)

Shell's Clyde refinery in Australia could be another possible candidate for outage. According to Shell, the refinery's output of 79,000 barrels a day is too small to compete with the large new Asian refineries that produce more than one million barrels of refined products on a daily basis. Shell's 110,000 bbl/ day Tabangao refinery in Philippines and CPC Corp's 205,000 bbl/ day refinery in Taiwan also face uncertain futures. Despite such a huge outage since the last couple of decades, the overall refining capacity in Asia Pacific has grown at a CAGR of 2.83%, which is in line with the demand growth in the region. However, the difference between Asian capacity and oil products demand,

which had ballooned to a peak surplus of 1.7 m bbl/ day in 2009, from a deficit of nearly 1 million bbl / day in 2004, is expected to erode in view of the likely refinery closures in Japan and China. This is also expected to result in better refining margins in the next 4-5 years, before start up of the export refineries in the ME. Closures in Europe European refineries face the combined effect of overcapacity and falling demand in the region aggravated by an economic downturn and increasing competition from more modern refineries in Asia and the Middle East.

A majority of European refineries are old and do not have enough flexibility to accommodate these rapid changes. Road transportation fuel, and in particular gasoline for which Europe has a significant capacity, is being replaced by Diesel (Chart I& II). Additionally, heavy oils, bitumen, waxes and petroleum coke are no longer in high demand as they used to be a decade earlier. Rising biofuels supply and a requirement to pay for a rising share of CO2 emissions have also been instrumental in stressing the refining margins. The misalignment between demand and supply capabilities calls forhuge investments in hydrocracking capacities, which is an extremely difficult choice for European refiners at this juncture. Asian and ME refineries on account of being younger, with big highly complex plants, lower labour costs and less severe environmental regulations make the competion tougher for European refineries. Therefore, European refiners continue to struggle to balance their output with demand. As a result, capacity utilization of European refineries' consistently decreased from an average of 90% in 2005 to less than 83% in 2010 (Chart III).Therefore, optimization and rationalization of the EU refining system appears to be the best choice for the refiners. Eight refineries with a combined capacity of 864 kbd (over 43 MMTPA) have already been closed since 2009 (Table 5).
Table -5 (kbd)

Chart I; Source: ENI

Chart II; Source: ENI

European refineries - capacity, throughput and utilization








2005 2006
Refining Capacity

60% 2007 2008 2009 2010

Refining throughout % Refinery utilisation rates

Many other refineries (more than 600,000 bbl/ day) are at risk of closure. LyondellBasell has already announced its intention to close the 105,000 bbl/day refinery at Berre (France). Petroplus has also announced the possible closure of three of its five refineries Petit Couronne refinery, France (162,000 bbl/ day), Cressier Refinery (68,000 bbl/ day) in Switzerland, the Antwerp refinery, Belgium (107, 500 bbl/ day).

Chart III; Source: ENI


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While the refiners usually look for a prospective buyer as the first option, nine refineries (45 MMTPA capacity), have recently been sold. The details of recent deals and the probable motive of the buyers is listed below (Table 6)
Table -6

US refineries no longer bank on crude oil entirely for meeting their fuel requirements. This development has come as an added advantage, as they have been increasingly exporting finished products to regions such as Latin America and Europe. As can be seen from the following table (Table 7), the US has gradually transformed itself into a net exporter of the petroleum products.
Table -7 (MMT)

Closures in the US/North America In the US, the scenario is slightly different from that of Europe. The US refineries are also adversely affected by various factors such as decreased demand for oil, higher crude oil prices, increasingly strict environmental legislation and the competition offered by new world scale refineries in ME and India. Increased blending targets for ethanol and Corporate Average Fuel Economy (CAFE) norms also affect the demand for refined petroleum products. Ethanol that accounted for about 7.2% of gasoline blends in 2009 is likely to reach 20% in the next decade. Similarly, the stringent sulphur limits of 15 ppm (since 2012) in the heating oil from the earlier limit of 10,000 ppm have added to the operating cost of refineries. Despite the above developments, only a few US refineries have been closed, mainly the smaller ones, besides a few others put up for sale. Unlike European refineries, many US refineries are well depreciated, highly complex and flexible that can produce products o f a d v a n c e d s p e c i f i c a t i o n s . Te c h n o l o g i c a l breakthroughs achieved in the production of shale gas were successfully deployed to shale oil plays. Consequently, rising production of domestic unconventional oil along with steadily growing oil sands shipments to US refineries, and the capabilities of refineries to process these crudes provide the US economy with the potential for a sustained resistance towards any downturn. Increased availability of shale gas has also come to the aid of refiners as a lower cost alternative to the crude oil.

Data compiled from various sources indicate that a total of 1,440 kbd refining capacity has closed down in the US/ Canada since 2009 (Table 8). Some of the other major US refineries that have announced their intention of either being sold or closing down include Sunoco's refineries at Marcus Hook (175,000 bbl/ day) and Philadelphia (330,000 bbl/ day), and BP's 451,000 bbl/ day refinery at Texas City and 251,000 bbl/ day refinery at Carson City, California.
Table -8 (kbd)

However, the American downstream renaissance is not guaranteed. A range of existing and proposed environmental regulations pose the largest threat to the competitiveness of the US refining industry. Among the more important regulatory developments are proposed gasoline specifications, growing biofuels mandate, proposed controls on GHG emissions, low carbon fuel standard and changes in tax treatment of product inventories.

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Recent Trends Overall, the general outlook for refineries is for severe competition and is a perfect case for the survival of the fittest. Small refineries with lesser flexibility have either been sold or have been closed down. Larger, more complex and flexible refineries have the best chances to survive. Therefore, though the global refining capacity has increased in the previous decade, the number of operating refineries has come down (Chart IV). According to the Oil and Gas Journal, the number of refineries as on 1stJanuary 2012 stood at 655 with a combined capacity of over 88,000 kbd.

Summary The closure of refineries in various regions has been happening, albeit in a limited manner till now. While in Japan, there are robust chances for further closures, the threat continues for Europe too. With a strong imbalance in gasoline and distillate supply-demand, stringent fuel-quality requirements, and demanding climate policies; European refiners are facing the most difficult situation. The phenomenon is likely to be less severe for the U.S. due to reasons such as local availability of shale gas and shale oil, availability of the Canadian oil sands and high complexity of the refineries. In the Asia Pacific, Russia, Latin America and the ME, refiners have the opportunity to benefit from their domestic resources, which is why the closures in other parts of the globe have been more than offset by construction boom in these regions. Another development that is happening is the sale of refineries due to which, the industry is also witnessing significant changes in the downstream ownership. A summary of the refinery closures (or moth-balled), as deliberated above due to various reasons, in various countries/ regions is placed below (Table 10)
Table -10 (kbd)

Database of Thomson Reuters(Table 9) reveals another set of interesting information. According to the agency, the total number of operating refineries stood at 648 as on April 2012 with a gross refining capacity of 94860 kbd (~4743 MMTPA). While the maximum number of refineries fall in the range of 3 to 6 MMTPA (167 numbers), they are closely followed by refineries of size 9 to 15 MMTPA (136 numbers) and 6 to 9 MMTPa (118 numbers). It can be taken as a coincidence that the number of small refineries (below 1 MMTPA) and mega refineries (above 15 MMTPA), is almost identical, transforming the data into an almost bell-shaped curve.
Table -9 (MMTPA)

Acknowledgments: BP Statistical Review of World Energy; Oil & Gas Journal; FACT Global Energy; ENI The future of refining in Europe; World Oil Outlook, 2011/ 2010 OPEC; Deloitte Changing times; Thomson Reuters; In-house support from Technical Services Group of Refineries Division and International Trade Department of Corporate Office, IOCL Disclaimer The data and other information contained in this article is for general information and is not intended as a substitute for advice to any business, investment or any other professional and commercial use. The article contains references to materials from third parties, whose copyright must be acknowledged while reproducing the same or utilizing it in any form.


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The Business of Innovation

Leading companies in the BCL survey have recognized that meaningful innovation requires a strong and lasting commitment. These are frontrunners that have taken a disciplined approach to a notoriously fickle process, and focused their efforts on creating an environment throughout their organizations that invites and supports innovation and allows new ideas to flourish. This year, Asia's five Best Companies for Leadership Samsung Group, Toyota Motors, Unilever, Nestle and Tata Group have proved that there is plenty to learn and benchmark about the business of innovation. These companies are clearly driven by future-oriented innovation. Furthermore, our research finds that employees and not just the managers are constantly involved in addressing customers' future needs, a key criterion in enabling future innovation. This ability to translate future trends into new product offerings has kept Asia's best ahead of their competition. Our experience suggests that certain business practices can help establish and sustain a climate conducive to meaningful innovation. Take for instance, the Global top 20 organizations emerging from our BCL study which includes General Electric, Procter & Gamble, IBM Corp, Microsoft, and the Coca-Cola Company rounding off the top five are all structured towards 'organizational agility'. This gives them the unique advantage of being able to respond to challenges with speed and flexibility, the primary criteria for innovation. Further, smart innovations require a fundamental understanding of customer needs, and a willingness to risk rethinking them. The most innovative companies ensure that employees understand customer needs, and support new approaches to address them. They are willing to support unprofitable projects, hence postponing short-term profits in order to continue investing in long-term innovation. Let us consider the Tata Nano, which despite its glitches, remains an achievement for the Tata Group. It fulfils the need for safer transportation as Indians travel through the streets, sometimes with four family members piled atop a wobbly motorcycle. By all measures, the one-lakh car has been regarded a breakthrough innovation,

Mohinish Sinha Leadership & Talent Practice Leader Hay Group South & South East Asia, Pacific & Africa With increasing globalization as a given, one would hardly need to point out that international competition is likely to grow fiercer while markets will look to get even more diversified. The rise of India and China, coupled with the global economic power shift towards Asia, is reshaping the world before our very eyes. The hunger to capture Asia's abundant business opportunities is challenged by higher expectations, greater business risks, and stronger market competition. Meanwhile, the growing scarcity of strategic resources such as water, minerals, metals and fossil fuels looks likely to cause price hikes and lead to social instability. In this uncertain business environment of rapid and irrevocable change, innovation is no longer a luxury. It is a necessity. We believe that the only way for companies to succeed in the new 'normal' is to innovate. Not just in new products and services for customers, but also in the way they treat and motivate employees, groom leaders and conduct business. Perhaps, some of this innovation can even be easy but commercializing it and building organizational discipline around it is much more challenging. Hay Group has conducted a lot of research around the dynamics of leadership required for disciplined innovation, especially for companies operating in Asia. And our landmark study on this, the Best Companies for Leadership (BCL) Asia, has found that while there is no silver bullet for success, there certainly are specific organizational practices that companies can adopt to enable and encourage innovation.
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making a functional vehicle available to India's masses at an extremely low cost. Furthermore, no good deed goes unnoticed. Leaders in Tata Group regularly recognize and publicly celebrate innovation. This simple but vital act is a critical part of maintaining discipline around innovation. The next precursor to innovation is around 'diversity' new and different points of view are essential to innovation! Even though talent will continue to be at a premium and retaining employees with key skills will be a challenge, it is important to accommodate and motivate the generation that forms our next band of leaders. Organizations have to encourage and embrace different cultural and generational perspectives, and work to broaden the viewpoints of their employees. Global electronics giant Samsung has come a long way from being manufacturer to innovator. In making Samsung a responsive market player, CEO Choi Gee-Sung said his job was to reorientate the organization for the next generation so that it is constantly ready to evolve. Not surprisingly, its culture of top-down management and obedient employees were among the first to go[1]. Today, Samsung is responding to Chairman Lee Kun Hee's call by encouraging creativity over obedience. Finally, our research shows that 'rewarding collaboration' is a key enabler to innovation. If innovation is the product of different perspectives, collaboration is the process that brings them together! We find that the Best Companies do not merely preach collaboration; they require and reward it. Clearly, to succeed in the new normal, Asian leaders must be game-changing innovators. They will need to be adept at conceptual and strategic thinking, have deep integrity and intellectual openness, find new ways to create loyalty, and relinquish their own power in favour of collaboration. Going forward, the ball is in the court of Asian leaders to set the direction and discipline for innovation, in order to

be able to run globalized companies. Insights on individual leadership styles, ensuring strong leadership pipelines etc., have been useful preludes, but they are no longer enough for sustainable success in the new economy. Lessons for innovating leadership, in our experience, bring out the following action points: ? Developing an organizational structure that enables quick communication is fundamental to organizational agility, its decision-making frameworks and responsiveness to market changes. ? The Asian tradition of directive leadership will not work. Everyone is expected to lead, even if they have no formal position of authority, and Asian bosses must learn to delegate their authority and decision-making power. This, we find, will lead to higher employee engagement and motivation [2]. ? Creating personally meaningful work is key. Having an innovation strategy is no guarantee of success, and the most innovative companies are interested in discretionary effort. Therefore, strategies must be decoded vertically and horizontally so that personal interests are aligned with corporate and interdepartmental goals. Analogically speaking, innovation can help organizations do more than just plant new trees it will enable them to weather the seasons and persist through bad harvests. They must not just grab at lowhanging fruits, which competitors also do. Instead, the need of the hour is to balance current prospects with long-term investment returns, resulting in a willingness to explore new paths to success.
[1] Source: Samsung aims to become a global innovation power, Bloomberg News, 5th September 2010.

Source: 2009 Hay Group study of 1,249 high-profile organizations in India, cited in Leading Asia: It's time to change the Rules



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HPNA Management in High Conversion Hydrocrackers

Richard K Hoehn Senior Engineering Fellow UOP LLC, A Honeywell Company In today's refining environment, where refining margins are getting tighter, processing opportunity crudes becomes ever more desirable. These crudes, however, tend to have increased levels of contaminants and usually contain increased amounts of VGO and residue. Refiners in India see incentives in processing such heavy feeds in order to maximize profitability from conversion units. Over the last several years Indian refiners have seen an increased demand for high quality distillate fuels and this is expected to continue over the next decade. Thus hydrocracking becomes the technology of choice to address this market need. Processing heavier feed stocks poses many challenges to the hydrocracker. It is critical to have detailed characterization of the feed at the molecular leve lwith a detailed contaminant analysis. Also, as feeds become heavier and more difficult to process, it is important to consider various other aspects of the hydrocracker design to maximize catalyst utilization. Proper catalyst loading and high performance reactor internals are always critical but with heavier feeds these aspects become even more important to fully utilize the catalyst. As feeds become heavier, feed filtering, particulate and metal trapping are important considerations and must be included within the design of the unit. In a unit designed for high conversion and processing a heavy, high-endpoint feedstock, attention must be paid to the fact that a significant amount of heavy polynuclear aromatics (HPNA) can be produced and the design of the unit has to account for this so that cycle limiting catalyst deactivation does not occur. This becomes important in high conversion maximum
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Soumendra Banerjee Senior Manager - Process & Product Development UOP LLC, A Honeywell Company distillate yield units where it is desirable to limit the conversion per pass resulting in unit designs with recycle streams of unconverted oil. High endpoint feeds contain a higher proportion of high molecular weight multi-ring aromatics which are not easily converted. A natural consequence of the cracking reactions is to produce a small amount of HPNA material from these multi-ring aromatics. They are essentially byproducts of the cracking reactions and when the unit is operating at high conversion, tend to build up in the recycle liquid (Figure 1), unless some means is put in place to limit their concentration. Left unchecked, these HPNAs will eventually become coke on the catalyst; with the result that the cycle length will be shortened beyond what it would be in the absence of HPNA compounds. Therefore processing heavy feeds requires good HPNA management. UOP has been active working since the 1980's in the development of methods to reject HPNAs from the recycle oil so these compounds do not have a chance to build up to levels that would lead to catalyst deactivation. Figure 1. Typical Polynuclear Aromatics Found in Recycle Oil


The first technology developed by UOP takes advantage of the fact that HPNA material is relatively easily absorbed in a bed of activated carbon. Recycle oil is passed through a bed of activated carbon before being routed to the reactor section and this has been shown to be highly effective in reducing catalyst deactivation and extending cycle lengths in units employing this technology. The first application of this technique was in 1989 and since then at least 6 units have been upgraded with carbon bed technology, called the UOP HPNARMTM technology (Figure 2A and Figure 2B). Activated carbon bed adsorption has not gained wider acceptance throughout the refining industry mainly because of carbon handling and disposal issues. Where refiners have been able to find a convenient destination for the spent carbon, such as at a nearby cement plant or coal fired power station, the HPNARM technology has proven to very beneficial to those refiners who practice it. Figure 2A.Process Sketch with the HPNA RM Technology

wall technology, although unlike divided wall designs, one end of the inner partition contacts the bottom head. When that occurs, the name split shell is applied. Essentially this technique allows a column to produce more than one bottoms product. The normal recycle oil stream that is routed to the reactor section in recycle operation is withdrawn from the bottom of the Product Fractionator and this corresponds to the left-hand stream at the bottom of the Product Fractionator in Figure 3. A small slip stream is withdrawn from this recycle oil stream and is routed to the HPNA Stripper, corresponding to the section at the bottom right-hand side of the Product Fractionator. An appropriate amount of stripping steam is applied to the HPNA Stripper section so that the lighter hydrocarbons are vaporized and they eventually leave with the normal recycle stream. The material exiting the bottom of the HPNA Stripper is the heavier fraction of the recycle oil and contains the non-volatile HPNA material. According to the properties of the feed, this HPNA Stripper bottoms stream can be as small as 0.5 vol-% of fresh feed and still be effective such that catalyst deactivation due to coke buildup from the presence of HPNA material in recycle oil is not seen. UOP currently has two units running with the patented HPNA Stripper technology and a number of units in design and construction. Figure 3.HPNA Management via Fractionation Process Sketch

Figure 2B.Process Sketch of the HPNA RM Technology

Largely due to the problems associated with carbon handling and disposal, UOP embarked on a program in the late 1990's to develop a method for rejecting HPNAs which does not require carbon handling. The result of that effort is shown in Figure 3. It is a variation of divided

In summary, UOP has been involved in the development of a number of techniques for rejecting HPNA material from hydrocrackers in order to maximize catalyst activity and prolong cycle lengths and has many years of successful experience in applying this technology to various units processing different feed stock.
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Strategic Options For Upstream Companies

disturbances all over the country and increasing cost of input materials for industries. However, in the long run the economy would re-adjust itself in the new normal situation leading to relatively less fossil fuel demand for transportation. Moreover, reduction in subsidies for carbon intensive fuel would also compel other sectors to re-innovate their processes for improved energy efficiency and technologies which run on low carbon fuels and lead to low carbon emissions. For instance, in the transport sector (highest consumer of petroleum products in India~51%) the auto manufacturers would have to re-design the car engines such that they become compatible for running on low carbon fuels. This would in a way bring down Greenhouse Gas (GHG) emission intensity of one of the highest GHG emitting sectors in India i.e. transport sector which contributes to around 7% of India's total GHG emissions.7 The upstream oil and gas sector is a major player in the energy value chain, ensuring energy security for the country. These companies have a major role to play in order to secure sustainable sources of energy. Upstream companies need to follow a strategic approach to ensure secured supply of energy as well as maintain revenue growth. Some of the options that could be explored by them include: (I) Building a balanced and diversified portfolio of oil and gas assets: Diversification of oil import options would mean importing oil from oil rich yet undiscovered destinations in Africa besides conventional crude exporting countries like Saudi Arabia, Venezuela, Nigeria, Qatar, Iran and other Gulf countries. In fact, since these African countries are in the nascent stage of oil and gas exploration and production, Indian upstream companies can also pick up stakes in their oil/gas fields. This would be a win-win situation since technology and knowledge transfer would immensely benefit the African oil exporter while the Indian upstream companies can ensure security of oil/gas supply. The recent gas discoveries in Mozambique and Tanzania are indicators of the unexplored energy prospects in Africa.

Sudipta Das Advisory Partner & Climate Change & Sustainability Leader (India), Ernst & Young The oil & gas sector is of prime importance to the Indian economy as it constitutes around 15% of India's GDP.1 However, crude also represents the key commodity imported to India and the oil import bill increased by 2 40% to USD 140 billion in FY 12. This is contributing to high fiscal deficit which stands at around 5.9% in 20123 and balance of payments deficit at USD 12.8 billion in 4 the last quarter of FY12. Annual fuel subsidies amount to around ` 110,000 crore annually which come from the Government's budgetary support and some contribution by upstream oil and gas companies.5 The country has seen fossil fuel price hikes in recent past at successive and quick intervals, which is one of the factors leading to a high Wholesale Price Index inflation level of 8-9%. India's increased dependency on crude oil is thus a matter of great concern. If India has to maintain its growth story and given the likely oil constrained future, this trend needs to be reversed and a paradigm shift is needed to switch over to more sustainable sources of energy. Although there has been a significant decrease in the oil intensity of Indian GDP from ~0.5% to~ 0.42% million tonnes oil (eq) per real GDP (in INR billion) between 1995 and 2008, yet a lot needs to be done to reduce the high dependency on imported oil and ensure energy security for the country.6 In the first place it is important to reduce the subsidies for fossil fuel so that demand is at least partly responsive to price signals. This will create an impact of rising inflation triggering political

1. 2. 3. 4. 5. 6. 7.

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Cost effective import of LNG (combined stake with national/international partner): Probably the best example would be the Joint Venture formed by Reliance Power, Shell and Kakinada Ports to set up a LNG import terminal of annual capacity 5 million tonnes by 2014 on the eastern coast. Upstream companies can form similar consortiums with the relevant port authority and International oil & gas company, who have core competency in building and operating LNG terminals. Monetization of gas/associated gas produced in remote locations: In many remote parts of India, gas monetization has been dormant due to absence of commercial markets, infrastructure and inter-state and intra-state conflicts. However, an innovative and flexible approach is to be adopted which could include technologies for insitu gas-to-liquids conversion processes and bringing the liquefied gas to market through cost effective mobile infrastructure. Value addition to the gas currently flared by converting them into petrochemicals/fertilizers or power: In many oil and gas fields, huge volumes of gas is flared daily. The 'Zero Flare' technology could be adopted and the recovered gas can be sold as raw material for petrochemical/fertilizer plants or transported to be used to generate power using combined cycle gas turbines. Venturing into unconventional resource exploration such as Coal Bed Methane (CBM) or shale gas: While potential of shale gas is highly debated and range from 6.1 to 2,000 trillion cubic 8 feet, however the reserve of CBM in India is well established at 160 trillion cubic foot.9 Conversely development of both CBM and shale gas assets would require a phased and structured approach, encouraging policy environment and technology partners Development of gas infrastructure: This would entail de-bottlenecking key projects to enable building up India's natural gas resources as well as setting up extensive pipeline network. An

extensive pipeline system would also facilitate transmission and distribution of other forms of gaseous fuel like shale gas and CBM. (vii) Increasing productivity by drilling with improved technology combined with Enhanced Oil/Gas Recovery (EOR/EGR): Typically about 10-20% additional stock tank oil initially in place can be 10 extracted using conventional EOR methods. The Microbial EOR technology, which is yet to be commercialized, is estimated to increase this percentage to 30%. Upstream oil companies should invest more in such R&D activities to commercialize new and innovative technologies. Strategic alliances and partnerships with foreign firms to aid technology and knowledge transfer would enable access to state-of-the-art equipments and other intellectual property. In strategic investment areas like projects on biofuels, LNG terminals, petrochemicals or power, upstream companies can participate as equity partners and bring separate operating partners who have operating capability and technical competency in these areas. Typically the oil and gas exploration and production companies are cash rich and have high market capitalization. Significant earnings which these companies make during high oil price regime should be re-invested in such low carbon strategic portfolio to secure a sustainable energy future, The upstream oil and gas industry is a key stakeholder in the energy security and climate change debate, and would play a significant role in promoting clean and sustainable energy use all along the entire oil and gas value chain and even in other sectors like transport and industry. The dynamic state of business environment and regulatory/policyenablers would force Indian oil &gas upstream companies to develop new business models, adopt strategic approaches and embrace latest technologies which in a way would facilitate the transition of the economy to a low carbon sustainable path.
(Amrita Ganguly, senior professional member with Advisory services of Ernst & Young also contributed to the article. Views expressed are their personal)





8. 9. 10.


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Remote Collaboration: Poised to Deliver Transformational Results

Remote Collaboration Remote Collaboration is the ability to manage operational activities in real-time, independent of their location. The ability to communicate and collaborate in real time delivers several pivotal advantages for problemsolving, problem-avoidance and productivity improvement: Christophe Romatier Sr. Strategic Marketing Manager Honeywell Process Solutions During the last century and a half the oil and gas (O&G) business has produced over one trillion barrels of oil. It is estimated today that slightly more than one trillion barrels could still be extracted from known fields, and some estimate that another three trillion barrels could be produced with the use of production techniques, future discoveries and so-called unconventional oil. However, the era of 'easy oil' is behind us. Current production rates satisfy existing demand, but with demand growing by an average of 1 to 1.5 % per year, producing oil in environments that would have been almost unthinkable only a few years ago must now be considered. In addition there is a growing need for qualified personnel; the industry has a rapidly aging work force, resulting in the loss of its most experienced resources at a rapid rate. The increased geographic spread and complexity of operations makes it ever more necessary to incorporate and share best practices and lessons learned across assets as rapidly as possible. A key driver of value in this new operating paradigm is how quickly and efficiently can an organization leverage expertise and skills spread across organization and geographies. Over the past decade, operating companies in O & G have sought to use nextgeneration technology to help overcome this challenge. One such technology that is highly relevant for operating companies and is witnessing increasing adoption is Remote Collaboration. ? Seamless communication enables staff to work more efficiently across multiple locations ? With the right resources focused on a problem, challenges or problems can be identified and resolved faster ? Decision - making is accelerated ? Staff can share expertise and best practices immediately between individual locations or across the entire network ? Faster access and sharing of more information helps reduce operational risks and improve safety ? Faster, wider knowledge sharing helps better maximize resource use and return and improve production and yield. A Broader Context Honeywell has a long history of working with the innovators in this space and has seen exciting new developments in other industries. It believes similar developments in O&G can broaden the industry's implementation of remote operations, to great benefit. Improving Work Process Consistency Consistency in work processes is a necessary step with in a remote collaboration implementation for O&G especially when assets have been run independently of one another to a large extent as a result of being widely dispersed both physically and organizationally. Here's

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a case study where a major producer of primary and fabricated aluminum was able to implement work process consistency and draw significant benefits. Alumina Refining Case Study Customer : International producer of primary and fabricated aluminum Opportunity: In alumina refining, the business case for optimal production control is its potential for increasing production rates and improving process efficiencies by reducing variability and operating closer to practical limits. For the refiner in question, reducing variability alone meant potential savings of US $ 40 million per year, with process control as a key enabler. There was also a sense of the opportunity for intangible savings associated with making real-time process information available for process improvement and business decisions throughout the network. Although this is difficult to qualify and quantify, it is in many cases the largest benefit that can be derived from such an initiative. Solution: Prior to the program, developed through Honeywell collaboration with the customer, the refiner's ability to improve process control had been constrained by a lack of skilled resources and availability of funds required to implement a common infrastructure and a common application portfolio. The solution was a program that standardized process control infrastructure and extended control solutions across multiple refineries in six countries. The program generated a variety of key benefits: ? Each refinery operates with process controls for each unit operation ? Variability is minimized ? Operation is close to the practical limit, with minimum operator intervention or nuisance alarms

Production control applications are developed ? once, and implemented at many sites The customer has gained competitive advantage ? by capturing critical real-time business data to optimize unit operations and enterprise resources Value Delivered: The organization has accrued more than $100 million in benefits through the institution and enforcement of global standards. Learning: The key enabler for this global success was the recognition early on that automation, process control and instrumentation were key business drivers to achieve a competitive advantage. This vision led to a strong corporate investment in consistent infrastructure across the network that in turn enabled the global consistency and economy of scale that was achieved. Although this effort was only focused in a specific discipline of production control, it may seem daunting and cost prohibitive for O&G given the complexity of infrastructure. However, innovations such as semantic technology found in Honeywell's Intuition Executive software for enterprise-wide information integration and real-time visualization may alleviate this by inserting a new layer of interoperability to achieve global scale. Maximizing Benefits of Remote Collaboration Through a Supplier Integration Model Because remote collaboration programs are still fairly new, they therefore incorporate an element of risk in their implementation. Such programs are still highly customized to the particular needs of an operating company, and a well-defined, shared representation of the outcome is usually absent until fairly late in the program. A large part of the supplier selection process relies on trust and proven (and implicitly duplicable) experience. Once the relationship is established, traditional supplier / operator interaction models may lead to obvious pitfalls, despite both parties' best efforts. However there


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are motivations for shared positive outcomes and these motivations can be further enhanced. Here is an example of how this has been done. Metals & Mining Case Study Problem/Opportunity : One of the largest copper producers in the world was facing a challenge because of it's aging infrastructure in sites spread over several thousands of miles through out Chile. Some of these sites are at altitudes of over 12,000 feet, and staffing these sites with experts to support their operation as well as any new infrastructure was also a challenge. Solution : In this particular case, in order to create a step change in their operations, the company decided to upgrade the infrastructure at their different sites, then implement connectivity to Chile's capital, Santiago. This would allow them to create a collaboration center there and staff it with experts that could be leveraged across their multiple sites. They quickly realized that they lacked a core competency regarding many of the activities surrounding the management and support of infrastructure and the use of advanced tools to provide on - going optimization of their operations. To alleviate the burden on their organization while still ensuring

optimal results, the company entered into a joint venture with Honeywell, creating an entity that would take ownership of the optimal operation of the infrastructure. Value Delivered: This bold step created the right incentives for both supplier and operator to act in both companies' best interests, ensuring optimal operations and effective collaboration throughout the life cycle of the operation. Learning: The critical benefit of creating this interdependency was to better ensure the sustainability of still-exploratory programs such as remote collaboration. With some thought and planning, good incentive mechanisms can be put together to foster the right behavior to maximize continued success for these ventures. Conclusion Remote collaboration programs provide a framework with tremendous promise for far - reaching solutions. However, as the different experiences outlined in this paper demonstrate, there is high potential for tremendous value and return for those operators willing to push the envelope.

Number of feet eastward that Japan's main island was moved by March 2011 earthquake and tsunami which impacted the country's nuclear installations: 8 Ratio of amount of energy generated by this earthquake to amount of energy consumed by USA each year: 1:1

Courtesy: Business India

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Innovative Strategies to Reduce O&M Cost

the root causes of poor performance and unplanned downtime and provision of early warnings. Three areas that large oil and gas companies are using analytics to ensure ongoing improvements for facility reliability and integrity: 1. Improving product quality. 2. Resolving tricky situations. 3. Preventing product loss. Satyajit Dwivedi Director - Energy(Asia Pacific) & Strategic Initiatives SAS Institute Inc Energy is one of the most important building blocks in human development, and acts as a key factor in determining the economic development of countries. In an effort to meet the demands of a developing nation, the Indian energy sector has witnessed rapid growth. Resource exploration and exploitation, capacity additions in refineries, and energy sector reforms have been revolutionized. However, increased energy demand in India due to high population growth, rapid urbanization and progressing economy makes it imperative that oil & gas producing plants and downstream refineries in India need minimize disruption of production which would enable maximization of the use of maintenance resources to meet operational goals for profitability, safety and environmental compliance. Improving Product Quality As part of comprehensive efforts to maintain its reputation as a trusted gas feedstock provider, one of the world's largest integrated, export-oriented oil and gas producers wanted to improve quality control in its production process. Leaks, evaporation and mixture composition involving the key enabling additive glycol were affecting performance and quality. But where in the process were these gas corruptions occurring?

To pinpoint and correct the glycol consumption, the company turned to SAS Predictive Asset Maintenance for facility integrity and reliability. The effort prevented production deferment, generated cost savings, created new business strategies and improved health, safety and environmental performance. Glycol is an additive that keeps gas from liquefying during the production process for gas feed stocks, but special care must be taken with its use. In the drying process, too much glycol may penetrate the gas and decrease quality. Too little adds Whether attempting to maximize production from humidity and other impurities. Either sends customers existing, aging assets or navigating the complexities of elsewhere in search of higher-quality gas feedstock. finding and tapping into new reserves in more difficult environments, exploration and production operators The challenge for oil and gas producers is to identify and refiners experience daily production challenges. process malfunctions and detect leaks. Glycol cannot be Maintenance issues abound as companies strive to measured during the drying process, but in theory the increase production while guaranteeing safety, flow amount of glycol added should approximate the amount assurance and equipment reliability. extracted. When less glycol than expected is present, producers must find where the loss occurred by spotting Optimized, sustainable maintenance strategiesand problems among the valves, vacuum seals, gauges, improved performance and availability of production pipes and tanks that make up the production process. equipment depend on the detection and diagnosis of


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That's a difficult, time-consuming chore for consultants and engineers. And the results are often mixed and disappointing. SAS takes a different approach. Chemical theory what goes in must come out in similar quantity is used in conjunction with the limited number of data collection points spread along the production process. SAS Predictive Asset Maintenance revealed that the feedstock quality might require adjustments to glycol levels during the drying process. The solution predicted where in the process glycol needed adjustment, depending on other factors. The glycol adjustment predictions have several direct benefits to the gas producer. Glycol replacement costs are reduced. Leaks along the process are quickly identified using data inputs and in-process measurements. Meanwhile, by avoiding negative effects on the environment, the company saves the cost of penalties and fines. And it maintains its reputation for higher quality, consistent feedstock production, which drives demand and, in turn, increases margins. With SAS, the company learned it can control production processes using predictive sciences that integrate data points with chemical theory. Realizing the value of applied predictive analytics, the company uses SAS Predictive Asset Maintenance in other processes and streamlines its energy consumption rates, finding additional savings along the way. Resolving Tricky Situations One of the world's largest integrated, export-oriented, oil-and-gas-producing companies needed to remedy a failed steam turbine/air blower complex used to remove and transform sulfuric acid from hydrocarbons into hydrogen and sulfur. Failure to separate the sulfur and transform it into blocks could violate environmental regulations and increase the likelihood of fines and penalties. It also prevents opportunities to sell gas and sulfur.

As the cause remained a mystery, managers worried about health, safety and environmental (HSE) risks. They knew that the problem could pose the risk of leaks or even explosions. Meanwhile, the temporary fix using an electric motor to blow air into the process was a costly and inefficient remedy. As expected when a piece of equipment fails, everyone's attention is focused on that machine. Was it installed correctly? Was there a malfunctioning part? Was there a material flaw? Different groups in the company process and reliability engineers, operators and maintenance crews each had their opinions. Yet they could not coordinate their assessments to find the root cause and mitigate the problem. Their siloed structure prevented them from taking a holistic view. Using the SAS Predictive Asset Maintenance solution and the facility integrity and reliability methodology, it was quickly determined that the process itself was flawed. Oxygen was being pulled into the recovery unit, creating water. While the variations in the acid feedstock were requiring the oxygen variations, the turbine itself was not designed to match them. This process flaw was causing the turbine to trip and shut down. The ability to gather data from historians and reports, correlate parameters and capture occurrence signatures helped to identify potential problem areas within the process itself. By fixing the process, the company has improved production uptime rates and gained better insight into preventive maintenance or replacement needs. The company learned that equipment failures might be the effect of process anomalies occurring separately from the impact observation. SAS proved that the high volume of mostly unused historic data could help diagnose problems holistically, implement predictive surveillance and improve process automation. Now realizing the value of applied predictive analytics to such production processes, the company uses SAS Predictive Asset Maintenance in other processes at larger refineries and gas plant locations.

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Preventing Production Loss One of the world's largest integrated, export-oriented, oil-and-gas producing companies needed to ensure that the active magnetic bearings that drive compressors during production function properly. The bearings rely on sensors that detect signals up to 15,000 times per second to measure distances and thereby keep the shaft and motor in position. Failures in the sensors, and then the bearings, lead to production losses or, sometimes, extreme equipment damage. Any degradation in the sensors or the bearings themselves can cause the compressor to trip, thereby stalling production and initiating repair work. Or, sensor degradation can wrongly inform plant operators, causing errant process decisions, false alarms and other delays. Various catastrophic situations can arise. Replacement is costly and time-consuming. On the other hand, any planned increase in production requires additional compressors and sensors that produce volumes of new data. Manual administration is not an option, yet failure to appropriately integrate the new data might trigger alarms or misinform operational processes. In view of these challenges, the company applied the SAS methodology for facility integrity and reliability, along with the SAS Predictive Asset Maintenance solution to develop data-driven models that can predict sensor and magnetic bearing degradation. The models point maintenance teams to equipment that may fail given the signals they produce, before any significant problem or loss of efficiency occurs. Such heightened understanding of overall facility integrity and reliability helps oil and gas producers prevent production process deviations. As a result, they may reduce operating costs, develop new business strategies for maintenance and improve health, safety and environmental performance.

With SAS, the company can assemble data from many platforms and systems to create a picture of what has happened and to predict what's going to happen. Such foresight increases production uptime by informing smart, timely maintenance decisions. The company uses SAS to monitor potential weak points and proactively maintain smooth production processes by applying predictive sciences that intersect analytics, physics and mechanical theory. That's possible because all systems and equipment have a metering, monitoring or surveillance system that produces staggering volumes of data. a comprehensive view across all systems and equipment, taking into account interdependencies to accurately monitor overall performance. Seeing the value of applied predictive analytics to such production processes, the company plans to implement SAS Predictive Asset Maintenance in other processes and replicate the success at other locations.

Predictive Asset Maintenance Predictive Asset Maintenance solution providing early warning and rapid root cause analysis with data driven models has played a vital role in helping global innovative oil & gas companies achieve higher asset utilization and reliability and ultimately greater competitiveness. Improving product quality, resolving tricky situations and preventing production loss are only a few of the many benefits that these global companies have realized. They have also success fully predicted equipment failures, prevented unplanned shutdowns, improved asset availability and reduced maintenance costs.


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Innovative Technology to Improve FCC Flexibility

Matthew Lippmann FCC Technology Group Leader UOP LLC, a Honeywell Company Lisa M. Wolschlag Senior Manager FCC, Treating and Alkylation Research & Development UOP LLC, a Honeywell Company Figure 1: FCC RxCat Layout

The current refining scenario in India is highly dynamic and appears to change on a daily basis. India currently imports approximately 80% of its crude oil while India's refining capacity is expected to grow by nearly 50% by the year 2020. Diesel demand is also projected to grow by 40% over current value. Competitive and affordable energy prices help drive strong economic growth and are an important factor in shaping the Government of India's (GoI) fiscal policies. The rise in international crude oil prices in recent years has created major challenges for the GoI, given the high reliance on imports, and has resulted in a need to maximize the utilization and conversion of crude oil processed in the country. UOP's RxCat technology allows the refiner to optimize the catalyst circulation rate in the riser, independent of the unit heat balance. This capability enables improved conversion, product selectivity, and emissions control while simultaneously reducing operating costs. This paper will demonstrate how RxCat technology increases the flexibility of the FCC to shift between different processing objectives while lowering costs and maximizing product values to meet the challenges faced by today's refiner. UOP RXCat Technology The basic concept of UOP's RxCat technology is to recycle catalyst from the FCC reactor stripper back to the inlet of the riser. Modern catalyst systems are inherently more coke tolerant than their older counterparts and can accrue appreciable quantities of coke and still retain a substantial fraction of base activity. Hence the recycle of catalyst from the reactor stripper in modern units represents an additional activity component being added to the riser. UOP has adopted the term carbonized to describe this catalyst. To date UOP has six RxCat units in operation with an additional four units in design. Figure 1 shows the layout of an FCC RxCat unit.

RXCat Process and the FCC Heat Balance In the traditional FCC process the catalyst circulation rate is fixed by the heat balance. This means that catalyst circulation only increases in response to an increased heat demand by the reactor. Therefore, in a conventional FCC system, the extent that regenerator catalyst to oil ratio (cat/oil) increases can be expressed by the following equation:

Cat/Oil Regen

Coke Yield H Regeneration CpCatalyst (T Regen T Reactor )

Examples of process changes that increase regenerator catalyst circulation rate and raise the amount of coke required to satisfy the altered heat balance are: ? Increasing riser temperature ? Decreasing feed preheat ? Increasing regenerator catalyst cooler duty ? Injecting a heat load into the riser (steam, water, LCO)

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In contrast, carbonized catalyst recycle from the reactor stripper via the RxCat standpipe is not constrained by the heat balance as it does not significantly alter the total coke yield. Because catalyst is circulated from the riser outlet, down to the riser inlet, and back up to the riser outlet starting and ending at the same temperature, little enthalpy change occurs in the loop, and there is practically no impact upon the coke yield. Thus the riser cat/oil can now be expressed as:
Cat/Oil Riser

provides an alternative solution to traditional methods of maintaining high regenerator temperatures and simultaneously enhances unit performance through increased total riser cat/oil ratio. Table 2 shows an economic comparison between utilizing the direct fired air heater (DFAH) and RxCat technology to increase regenerator temperature by an equivalent amount. Table 2: Evaluation of DFAH vs.RxCat Technology for Regenerator Temperature Control
Case 1 Base Feed Rate (BPD) RxCat C/O Riser C/O Fuel Gas to Air Heater (Wt-% feed) Regenerator Temp (F) Conversion (Wt-%) Gross Margin ($/BBL) Gross Margin (MM$/Year) 30,000 0.0 8.2 0.0 1260 Base Base Base Case 2 DFAH 30,000 0.0 6.2 1.1 1340 (3.0) (1.35) (14.4) Case 3 RxCat 30,000 6.2 12.0 0.0 1350 2.1 0.86 8.6

Coke Yield H Regeneration + Cat/Oil RxCat CpCatalyst (T Regen T Reactor )

The RxCat process impacts the heat balance by increasing delta coke on the catalyst circulating to the regenerator. Delta coke is defined as the difference in coke content between the regenerated catalyst and spent catalyst. As the RxCat circulation rate is increased, the delta coke increases due to RxCat catalyst particles completing additional passes through the riser prior to regeneration. Because regenerator temperature is a strong function of delta coke, the increase in delta coke from RxCat increases the regenerator temperature and decreases the regenerator cat/oil ratio as shown in Table 1. Table 1: Reactor/Regenerator Response to Change in RxCat Cat/oil
RxCat Regen Riser Cat/oil Cat/oil Cat/oil 0.0 8.2 8.2 0.0 0. 6 12 60 5.0 7.0 12.0 0.7 0. 7 1300 7.5 6.5 14.0 1.2 0. 8 1320

Product Pricing Source: Global Petroleum Market Outlook 2011, Purvin and Gertz

RxCat Ratio Delta Coke Regen Temp

While both approaches will achieve a higher regenerator temperature, firing the DFAH will result in a lower riser cat/oil ratio and consequently a loss of conversion and margin. On the other hand, RxCat technology increases the riser cat/oil, resulting in a conversion increase and ultimately a gain in margin, all without the need to consume additional fuel gas.In addition the higher regenerator temperatures improve burn kinetics and allow the FCC operator to lower the excess oxygen in the regenerator while simultaneously reducing CO and NOx emissions. RXCat and Dry Gas Yields RxCat technology can also improve product yields. The catalyst recirculating through the RxCat standpipe TM enters the MxR Chamber at the base of the riser at temperatures several hundred degrees Fahrenheit below the regenerated catalyst temperature. When these two catalyst streams are properly blended, the resultant catalyst stream contacting the feed in the injection zone of the riser is at a significantly lower

Despite the decrease in regenerated cat/oil, RxCat technology enables a refiner to increase the overall riser cat/oil to levels considerably higher than a traditional FCC unit while simultaneously increasing the regenerator temperature. Reducing feed contaminants through severe hydrotreating reduces the delta coke in the unit, which cools the regenerator and presents a significant challenge for refiners to keep the regenerator hot enough to control CO and NOx emissions below acceptable levels. RxCat technology


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temperature, reducing thermal reactions that produce unwanted dry gas and coke. Figure 3 shows how the reactor feed injection zone temperature decreases as a function of RxCat cat/oil ratio while Figure 4 shows how dry gas decreases in response to lowering the feedinjection zone temperature, as measured in the UOP circulating riser pilot plant. Figure 3: RxCat Cat/Oil vs. Feed Contact Zone Temp

testing on several commercial equilibrium catalysts (ECATs). The physical properties of three catalysts are described in Table 3. Table 3: ECAT Physical Properties
Ace Micro Activity Test (MAT) UCS (A) Total Surface Area ( m2/g) Zeolite Surface Area (m 2/g)

ECAT B 66 24.292 115 40 75 0.019 6620 4160 Yes

ECAT C 64 24.270 149 93 56 0.043 610 970 Yes

74 24.267 150 61 89 0.028 500 520 No

Feed Contactzone Temp (OF)

Matrix Surface Area (m 2/g) Micropore Volume (cc/g) V, ppm Ni,ppm ZSM- 5

ACE Pilot Plant runs were then conducted for the three catalysts to determine activity retention as a function of carbon content on the catalyst surface. Results are shown in Figure 5. These data highlight a similar activity decline for catalysts A and B and a more pronounced decline for catalyst C. Figure 5: Relative Activity vs Coke for Three ECATs

Figure 4: Pilot Plant Feed Contact Zone Temperature vs. Dry Gas Yield

Dry GasYleld (Wt.%)

Catalyst Activity Retention as a Function of Coke While RxCat technology increases riser cat/oil ratio, the impact of coke deposition on catalyst activity must be understood to predict the benefits of the higher catalyst circulation rate. To determine the relationship between coke deposition and catalyst activity, UOP conducted

Significant differences in activity retention as a function of coke are not always obvious from the catalyst physical properties. For instance, while ECAT B and C have similar MAT activities, they do not have similar activity retention properties. Therefore, it is important to conduct activity retention tests when optimizing a catalyst for RxCat technology. This testing enables the determination of the effective cat/oil response in the RxCat system which can be defined as:

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Cat/Oil Effective Cat/Oil Regen + Cat/Oil RxCat [1-( Coke |ARc|) ]

Table 4: Impact of RxCat on Product Yields for ECAT A

RxCat Cat/oil 0.0 8.2 8.2 8.2 Base Base Base Base Base Base Base 5.0 7.0 12.0 9.5 (0.4) 1.6 0.9 (0.8) (1.3) 0.1 2.1 7.5 6.5 14.0 10.2 (0.5) 2.2 1.1 (1.3) (1.8) 0.2 3.1

where ARc is the slope of the catalyst activity retention as a function of coke determined in the ACE unit and K is a constant. To determine constant K, the three example catalysts were tested in the UOP circulating riser pilot plant by increasing RxCat cat/oil and maintaining a stable regenerator cat/oil. The results are shown in Figure 6. These data illustrate that the conversion response to an increase in RxCat cat/oil is best achieved by ECATs A and B which have better ARc properties relative to ECATC. Figure 6: CRU Conversion Response to RxCat Ratio for Three ECATS

Regen Riser

Cat/oil Cat/oil C/O


Dry Gas Yield (Wt - %) LPG Yield (Wt - %) Gasoline Yield (Wt - %) LCO Yield (Wt - %) CSO Yield (Wt - %) Coke Yield (Wt - %) Conversion (Wt - %)

To confirm the theoretical pilot plant data, it is important to observe the conversion shifts in commercial RxCat units who have optimized the catalyst formulation to take advantage of RxCat technology. Figure 7 shows the conversion response for an increase in RxCat for three separate commercial units. These data were filtered for constant feed quality and riser outlet temperature in order to isolate the impact of RxCat ratio on conversion. The commercial results are consistent with the pilot plant yields, demonstrating an approximate 2.0 to 3.5 lv% yield improvement over the range of RxCat ratio. RXCat Yield Benefits Once the activity retention properties of the catalyst and operating severity of the unit are understood for the RxCat application, the remainder of the product yields can be estimated from the calculated increase in effective cat/oil ratio. For ECAT A the full product yield shift in response to a change in RxCat cat/oil is represented in Table 4. This table highlights the fact that while riser cat/oil increases purely as a function of the RxCat valve output and the unit heat balance, the effective cat/oil is the primary driver of yield shifts on the RxCat equippedFCC unit. Figure 7: Commercial Unit Conversion Response to RxCat Cat/Oil


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The UOP Double Wye Mixing Riser Design for Revamps In the traditional RxCat design, regenerated catalyst from the regenerator is combined with the carbonized catalyst from the reactor stripper at the base of the riser in the MxR Chamber, shown in Figure 8. Figure 8: MxR Chamber

without major structural changes or modifying the feed injector elevations. Figure 9: Revamp Comparison of MxR Chamber vs. Double Wye Mixing Riser Design

Summary For new units, the MxR Chamber can easily be incorporated into the FCC design. However, incorporating the MxR Chamber in a revamp can prove challenging due to the difficulty of physically fitting the chamber within the existing configuration without major structural modifications due to the chamber's size. To enable the RxCat technology to be widely available for revamp scenarios, UOP redesigned the MxR chamber configuration and created the Double Wye Mixing Riser design shown in Figure 9. While the MxR Chamber would extend below grade, the Double Wye Mixing Riser design fits within the existing configuration
UOP's RxCat technology has demonstrated in both pilot plant and commercial testing a unique ability to manipulate overall riser cat/oil ratio in order to increase the effective riser catalyst activity gain outside the traditional limitations of the unit heat balance. This added flexibility enables today's FCC operator to gain a competitive advantage by offering improved yield selectivities, enhanced operational controls, and reduced operating costs. While this technology has thus far only been primarily available to new grass roots units, the development of the UOP Double Wye Mixing Riser design allows Refiners to revamp their existing units to gain the full benefits that UOP's RxCat technology has to offer.

Number of cases pending in Supreme Court as of 15 march 2012: 59, 368 Number of cases pending in high courts and subordinate courts as of December 2010: 3,735,204 & 22,120,882 Number of cases on trial pending with Central Bureau of Investigation (CBI) since last 20 years: 384
Courtesy: Business India

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Members' News in Pictures

The Guru Gobind Singh Refinery was 'Dedicated to the Nation' by the Hon'ble Prime Minister of India, Dr. Manmohan Singh in the presence of Hon'ble Union Minister of P&NG, Shri S. Jaipal Reddy; Hon'ble Chief Minister of Punjab, Sardar Prakash Singh Badal; Hon'ble Union Minister of State - P&NG, Shri R. P. N. Singh; His Excellency Governor of Punjab Shri Shivraj V. Patil and other distinguished guests.

Engineers India Limited has been conferred the prestigious commendation certificate of SCOPE Meritorious Award in Specialized Fields 2010-11", under the category of Best Practices in Human Resource Management. The Award was received by Shri A.K. Purwaha, C&MD, EIL from H.E. Smt. Pratibha Devisingh Patil, Hon'ble President of India at a ceremony held on April 13, 2012 at New Delhi.

Mr. R.K. Singh, C&MD BPCL and Mr. G.C. Chaturvedi, Secretary, MoP&NG exchange documents of the MOU signed by BPCL and MoP&NG for 2012-13.

ONGC received two of the top awards - Best Maharatna PSU & Leading PSU in the Oil & Gas sector - at the Dun & Bradstreet PSU Awards 2012 held at New Delhi. Mr. Sudhir Vasudeva, CMD, ONGC and Mr. K S Jamestin, Director-HR, ONGC with Dr. Veerapa Moily, Hon'ble Minister of Corporate Affairs, Government of India.


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Sh. Lakshmi N Mittal, Chairman and CEO, Arcelor Mittal addressing the gathering on the occasion of the dedication of the Guru Gobind Singh Refinery, to the Nation at Bathinda on April 28, 2012

BPCL has been conferred with the AajTak Care Award for its CSR project 'Economic Empowerment and Income Generation' under the Livelihood Category. The award was presented by Shri Pranab Mukherjee, Union Finance Minister, GOI and Mr. Aroon Purie, Editor in Chief, India Today to Mr. S. P. Gathoo, Director (HR), BPCL, at an Award Ceremony held on 6th June, 2012 at Delhi.

A panoramic view of the Guru Gobind Singh Refinery at Bathinda

A landmark MoU for hydrocarbon cooperation was signed between ONGC and CNPC (China National Petroleum Corporation), the global energy giants with strong international presence, by Mr. Sudhir Vasudeva, CMD, ONGC and Mr. Jiang Jiemin, Chairman, CNPC, at New Delhi.

Hon'ble Minister, MoPNG, Mr. Jaipal Reddy launching the LPG Transparency portal, in the presence of Mr. GC Chaturvedi, Secretary (Petroleum), Mr. SudhirBhargava, Additional Secretary, Mr. Neeraj Mittal, Jt. Secretary (Marketing), Mr. LN Gupta, Jt. Secretary (Refineries), MOP&NG, Mr. R S Butola, Chairman, IndianOil, and CMDs of BPCL and HPCL along with all senior officials of the Mministry as well as the oil companies

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Deepwater Drilling & Services Pvt. Ltd made its foray into the mid water drilling segment with the commencement of Noble Duchess's operations on the East coast of India on 18 th May, 2012 for a three year contract for ONGC. The 1000 ft Drillship is deployed in KG Basin G-1 Block for exploratory drilling.

BPCL's Mumbai Refinery has achieved a unique record of getting the Performance Excellence Award under the Ramkrishna Bajaj National Quality Awards (RBNQA) consecutively for 5 times in a row. Dr. Shashi Tharoor, MP & Former Minister of State for External Affairs presented the award to Mr. P.S. Bhargava, ED I/C, Mumbai Refinery, BPCL.

Engineers India Limited (EIL) has been conferred with the BT Star PSU Excellence Award 2012 by Bureaucracy Today magazine for excellence in Human Resource Management. Shri A K Purwaha, C&MD, EIL and Shri P K Rastogi, Director (HR), EIL received the award from Shri Oscar Fernandes, Hon'ble Member, Rajya Sabha at a ceremony held in New Delhi. The eminent jury was led by Shri TKA Nair, Advisor to the Hon'ble Prime Minister (2nd from left). Shri Nishikant Sinha, former Chairman, PESB (extreme left) was also one of the jury members. The Hon'ble Minister of Industries, Govt. of Goa, Mr. Mahadev Naik(L) visits Chemtrols Industries' manufacturing facility at Kundaim Industrial Estate, Goa on June 13, 2012. Mr. Faizi Hashmi, MD, IDC, Goa who accompanied the Hon'ble Minister commented that Automation processes at Chemtrols are impressive.


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Director (R&D), IndianOil (R), Dr. R.K. Malhotra, was honoured by the International Association for Hydrogen Energy (IAHE) with the prestigious Rudolf A. Erren Award, in recognition of his Leadership for Introduction of Hydrogen Economy in India through Strong Support of Hydrogen Technologies and Extensive Information Dissemination.

Mr. Sutirtha Bhattacharya, Principal Secretary, Infrastructure and Investment, Government of Andhra Pradesh and Mr. Philip Olivier, President & CEO, GDF Suez LNG UK exchanging documents after signing of Project Framework Agreement in presence of Shri S. Jaipal Reddy, Hon'ble Minister of Petroleum and Natural Gas, Government of India, Shri N. Kiran Kumar Reddy, Hon'ble Chief Minister of Andhra Pradesh and Mr. B C Tripathi, Chairman & Managing Director, GAIL (India) Limited.

Mr. S. Sunil Head, Goa Operations, Chemtrols (extreme left), Mr. Mahadev Naik, Hon'ble Minister of Industries, Govt. of Goa (Centre) and Mr. Gopal Steam Solutions, explaining the various processes to the visiting team. Dr. Manmohan Singh, Hon'ble Prime Minister of India dedicating the 2200 km Dahej - Vijaipur - Dadri - Bawana - Nangal / Bathinda Pipeline Network to the nation during the inaugural session of the 7th Asia Gas Partnership Summit 2012. Also seen are Shri S. Jaipal Reddy, Hon'ble Minister for Petroleum and Natural Gas, India (right), Shri R P N Singh, Hon'ble Minister of State for Petroleum and Natural Gas, India (left) and Mr. B C Tripathi, CMD, GAIL (2nd from left).

Shiv-vani now 'Jacked' with offshore operations.

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PetroFed Awards 2011


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PetroFed Awards 2011

The PetroFed Oil & Gas Industry Awards 2011 for excellence in performance in various categories were presented by the Hon'ble Union Cabinet Minister for Petroleum & Natural Gas, Shri S. Jaipal Reddy at a well attended function at New Delhi on June 8, 2012. Congratulating the Award winners the Hon'ble Minister termed PetroFed as 'a unique organisation' which represents both, the public sector and the private sector. 'This institution needs to be strengthened and its process and presentation of awards needs to be encouraged. I shall do everything in my power to strengthen PetroFed and the sector as a whole', stated the Hon'ble Minister while addressing the gathering. In view of the paucity of time available with the Hon'ble Minister the formal welcome by Chairman, PetroFed & Chairman, IndianOil, Shri R. S. Butola and presentation about the Awards by Director General, PetroFed, Shri A. K. Arora were dispensed with. The Vice Chairman, PetroFed and President (Refinery Business), RIL, Shri P. Raghavendra thanked the Hon'ble Minister for encouraging the industry and sought an enabling environment & framework to promote self sufficiency in oil & gas for the country. The scheme of Awards is open to all companies operating in India in the oil & gas sector. The evaluation is undertaken in line with pre-determined weightages assigned to various parameters fixed after due validation. Each award category must receive a prescribed minimum number of applications for giving away an award. Each award carries a trophy and a citation. The Woman Executive of the Year award also carries a cash prize of ` one lakh. The Innovator of the Year individual award has a cash component of ` two lakh while the team award has a prize of ` five lakh with each member of the team getting at least ` 50,000/-. The lessons learnt during awards evaluation every year are incorporated. The application form for each award has been carefully designed and validated to minimize subjectivity while giving benefit of additional initiatives taken. A significant contribution has been made by PetroFed knowledge partner and member company, PricewaterhouseCoopers in conceptualizing the Awards scheme and the preliminary evaluation of applications. The Awards Committee is headed by Dr. Prodipto Ghosh, Distinguished Fellow, TERI and former Secretary to the Government of India. The members of the Awards Committee are Shri B. C. Bora, former CMD, ONGC; Shri P. P. Bagchi, former Executive Director, Oil Coordination Committee, and Managing Director, United Carbon (India) Ltd.; Shri P. K. Agarwal, Director, Human Resources Division & Senior Fellow, TERI & former Director (Marketing) & Director (HR), IndianOil; Shri U. K. Dikshit, Director (Programmes), SCOPE & former ED (HR), IndianOil. The Jury is headed by Hon'ble Mr. Justice J.S. Verma, former Chief Justice of India. The other members of the Jury are Dr. Abid Hussain, former Ambassador to the United States of America and Shri Naresh Narad, former Chairman, Public Enterprises Selection Board.

Winners of PetroFed Awards 2011 for performance during 2010-11 Leading Oil & Gas Corporate of the Year ? Awarded to Indian Oil Corporation Limited Exploration & Production - Company of the Year ? Awarded to Oil India Limited Refinery of the Year ? Awarded to Essar Oil Limited Oil & Gas Pipeline Transportation - Company of the ? Year Awarded to Cairn India Limited Special Commendation Awarded to ? GAIL (India) Limited Oil & Gas Marketing - Company of the Year ? Awarded to Indian Oil Corporation Limited Project Management (` 500-2000 crore)- Company ? of the Year Awarded to Hindustan Petroleum Corporation Limited

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Project Management (above ` 2000 crore) ? Company of the Year Awarded to Indian Oil Corporation Limited (Gujarat Refinery) Human Resources Management - Company of the ? Year Awarded to Oil & Natural Gas Corporation Limited Drilling Services - Company of the Year ? Awarded to Jindal Drilling & Industries Limited Environmental Sustainability : Company of the Year ? Awarded to Oil & Natural Gas Corporation Limited Innovator of the Year - Individual ? Special Commendation Awarded to ArunJayendran, Officer Trainee, Palghat LPG Plant, Hindustan Petroleum Corporation Limited Innovator of the Year - Team ? Awarded to Oil & Natural Gas Corporation Limited - Institute of Oil & Gas Production Technology Team led by Mr. Y. R. L. Rao Team Members: P. K. Bhargava, Deputy General Manager (Production); B. Mandal, Deputy General Manager (Production); Sharmila Roy, Deputy General Manager (Production); Dilip Kumar Sarma, Chief Engineer (Production) Woman Executive of the Year in the Oil & Gas ? Industry Awarded to Arpana Anand , Senior Project Manager, Indian Oil Corporation Limited

PetroFed Awards 2011 Event Partners ? Bharat Petroleum Corporation Limited ? Chennai Petroleum Corporation Limited ? GAIL (India) Limited ? Hindustan Petroleum Corporation Limited ? Indian Oil Corporation Limited ? Numaligarh Refinery Limited ? Oil India Limited ? Oil & Natural Gas Corporation Limited Reliance Industries Limited ?

Jury (L-R): Shri Naresh Narad, Hon'ble Mr. Justice J. S. Verma, Dr. Abid Hussain.

Awards Committee (L-R): Shri P. K. Agarwal, Shri U. K. Dikshit, Dr. Prodipto Ghosh, Shri B. C. Bora.


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Hon'ble Union Cabinet Minister for Petroleum & Natural Gas, Shri S. Jaipal Reddy being honoured by Shri R. S. Butola, Chairman, PetroFed & Chairman, IndianOil by presenting the uttaraya.

Shri R. S. Butola, Chairman, IndianOil (3rd from left) receiving the 2011 Leading Oil & Gas Corporate of the Year Award along with his team of Directors (L-R): Shri V. S. Okhde, Director (Pipelines); Shri M. Nene, Director (Marketing), Shri R. K. Ghosh, Director (Refineries).

Seated (L-R): Shri A. K. Arora, Director General, PetroFed; Hon'ble Union Cabinet Minister for Petroleum & Natural Gas, Shri S. Jaipal Reddy; Shri R. S. Butola, Chairman, PetroFed & Chairman, IndianOil; Shri P. Raghavendran, Vice Chairman, PetroFed & President (Refinery Business), RIL.

Ms. Arpana Anand, Senior Project Manager, IndianOil (Pipelines Division) receiving the 2011 Woman Executive of the Year Award. On the left is Shri V. S. Okhde, Director (Pipelines), IndianOil.

Seated in first row (L-R): Shri P. K. Agarwal, Director, Human Resources Division & Senior Fellow, TERI & former Director (Marketing) & Director (HR), IndianOil; Dr. C. R. Prasad, former CMD, GAIL (India) Limited; Dr. Abid Hussain, former Ambassador to the United States of America, Shri B. C. Bora, former CMD, ONGC; Shri P. P. Bagchi, former Executive Director, Oil Coordination Committee, and Managing Director, United Carbon (India) Limited; Shri U. K. Dikshit, Director (Programmes), SCOPE & former ED (HR), IndianOil.
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A section of the invitees. In front row (L-R): Shri K. K. Gupta, Director (Mktg.), BPCL; Shri S. P. Gathoo, Driector (HR), BPCL & Member, PetroFed Governing Council; Shri S. Roy Choudhury, CMD, HPCL; Ms. Nishi Vasudeva, Director (Mktg.), HPCL & Member, PetroFed Governing Council; Shri R. S. Sharma, former CMD, ONGC; Shri R. D. Goyal, Director (Projects), GAIL (india) Limited; Shri P. K. Jain, Director (Finance), GAIL (India) Limited.


Shri Sudhir Vasudeva, CMD, ONGC (4th from left) receiving the 2011 Innovator of the Year (Team) Award along Shri Ajit Kumar, Executive Director, Institute of Oil & Gas Production Technology (3rd from left) with the award winning team members.

Shri H. K. Khanna, Advisor, Jindal Drilling & Industries Limited receiving the 2011 Drilling Services Company of the Year Award.

Shri S. Roy Choudhury, CMD, HPCL receiving the 2011 Project Management Award for projects between ` 500-2000 crore along with Shri Anil Pande, ED (Pipeline & Projects) and Shri Anuj Jain, DGM (Projects). Also seen is Ms. Nishi Vasudeva, Director (Marketing), HPCL & Member, PetroFed Governing Council (2nd from right).

Shri U. L. Dohare, Executive Director (Projects) IndianOil (4th from left) receiving the 2011 Project Management Award for projects above ` 2000 crore won by the Gujarat Refinery. Also seen are Shri R. S. Butola, Chairman, IndianOil (5th from left) and Shri R. K. Ghosh, Director (Refineries), IndianOil (4th from right).

ShriArunJayendran, Officer Trainee, Palghat LPG Plant, Hindustan Petroleum Corporation Limited receiving Special Commendation for 2011 Innovator of the Year, Individual Award.

Shri Sudhir Vasudva, CMD, ONGC receiving the 2011 Environmental Sustainability-Company of the Year Award along with his team of Directors (L-R): Shri A. K. Hazarika, Director (Onshore); Shri S. V. Rao, Director (Exploration); Shri K. S. Jamestin, Director (HR); Shri Aloke Kumar Banerjee, Director (Finance).
Petroleum Federation of India


Shri Sudhir Vasudva, CMD, ONGC (3rd from left) receiving the 2011 Human Resources Management Company of the Year Award along with his team of Directors (L-R): Shri S. V. Rao, Director (Exploration); Shri K. S. Jamestin, Director (HR); Shri A. K. Hazarika, Director (Onshore); Shri Aloke Kumar Banerjee, Director (Finance).

Shri M. Nene, Director (Marketing), IndianOil receiving the 2011 Award trophy for Oil & Gas Marketing Company of the Year along with Shri R. S. Butola, Chairman, IndianOil (L).

Shri Rahul Dhir, MD & CEO, Cairn India Limited (L) receiving the 2011 Award for Oil & Gas Pipeline Transportation Company of the Year along with Shri Jagdeep Chhaya, Head Pipelines, Cairn

Shri R. D. Goyal, Director (Projects), GAIL (India) Limited (2nd from left) receiving the Special Commendation for Oil & Gas Pipeline Transportation Company of the Year. Also seen in the picture is Shri P. K. Jain, Director (Finance), GAIL India Limited (2nd from right).

Shri S. K. Srivastava, CMD, OIL (3rd from left) receiving the 2011 Award for Exploration & Production Company of the Year along with his team of Directors (L-R): Shri T. K. Ananth Kumar, Director (Finance); Shri S. Rath, Director (Operations). On extreme left & right are Shri A. K. Arora, Director General, PetroFed and Shri R. S. Butola, Chairman, PetroFed and Chairman, IndianOil.
Petroleum Federation of India

Shri C. Manoharan, Director (Refinery), Essar Oil Limited (L) receiving the 2011 Refinery of the Year Award.


Hon'ble Union Cabinet Minister for Petroleum & Natural Gas, Shri S. Jaipal Reddy addressing the gathering.

The awardees with the Chief Guest.

Shri P. Raghavendran, Vice Chairman, PetroFed & President (Refinery Business), RIL proposing a vote of thanks

A group photo of the winners of PetroFed Awards 2011 with the Hon'ble Union Minister.


Petroleum Federation of India

Refining Challenges & Way Forward
'India's refining capacity will exceed 310 million tonnes per annum by the end of March 2017'. Stating this while inaugurating a two-day international conference on 'Refining Challenges & Way Forward' organised by the Petroleum Federation of India in association with the World Petroleum Council and with the support of Ministry of Petroleum & Natural Gas on April 16, 2012 at New Delhi, Shri G. C. Chaturvedi, Secretary, MoP&NG emphasized the need for continuous technology improvement and energy efficiency to meet the growing demands of the country. Complimenting PetroFed for the initiative taken he pointed out that India has emerged as a net exporter of petroleum products since 2001-02. Delivering the keynote address Shri Prabh Das, Managing Director & CEO, HPCL-Mittal Energy Limited called for a favourbale policy regime to encourage the petroleum refining industry in the country. Dr. Pierce Riemer, Director General, World Petroleum Council during his address drew attention to the fact that over 95% of the growth in energy consumption is expected in non-OECD countries during the next two decades and that China and India will lead the growth in energy consumption. Shri Dependra Pathak, Member-Congress Programme Committee, WPC stated that this was the second event organised by PetroFed in association with the WPC and expressed the hope that more events would be organised in India since the region will lead energy consumption in the world. Earlier Shri A. K. Arora, Director General, PetroFed while welcoming delegates called for upgrading the bottom of the barrel and executing projects to establish global benchmarks. The conference witnessed 35 presentations in eight technical sessions with nearly a fifth of the presentations by international experts from abroad. Of the nearly 140 participants about 10% were international delegates. Besides Industry members there were representatives from technology providers, engineering firms, consultancy, academia and R&D and the Government.
Petroleum Federation of India

The sessions focused on challenges in opportunity crude processing, upgradation of bottoms, advances in catalysts & FCC, product quality and reliability improvement as well as environment protection. The session chairpersons included CEOs and MDs of leading organisations, besides functional directors.

Mr. A. K. Arora welcoming participants.

Mr. G. C. Chaturvedi delivering inaugural address.

Dr. Pierce Riemer delivering opening address.


Mr. Prabh Das delivering keynote address.

Mr. Anand Kumar, Director, Perotech Society & former Director (R&D), IndianOil (centre) delivering opening remarks while chairing Session-1 on 'Challenges in Opportunity Crude Processing'. Others (L-R): Mr. S. K. Handa, General Manager (Process), EIL; Mr. Thomas Ting King Lu, Industry Development Manager (Refinery), Nalco; Mr. J. Rajaraman, Sr. Vice President, RIL; Dr. Purandar Chakravarty, General Manager (Technical), Essar Oil Limited.

Mr. Dependra Pathak, Member-Congress Programme Committee, WPC and Director (E-I), MoP&NG proposing a vote of thanks during inaugural session.

Mr. B. K. Datta, Director (Refineries), BPCL delivering opening remarks while chairing Session-2 on 'Technology Options for Bottom Upgradation'. Others (L-R): Mr. Jean Paul Margotin, Managing Director, Axens India; Mr. Soumendra Banerjee, Sr. Manager (Process & Product Development), UOP; Dr. Girish Chitnis, Licensing Manager, ExxonMobil Research & Engineering; Mr. D. Bhattacharya, CRM, IndianOil (R&D).

A section of the participants.

Dr. R. K. Malhotra, Director (R&D), IndianOil delivering opening remarks while chairing Session-3 on 'Advances in Catalysts'. Others (L-R): Dr. Girish Chitnis, Licensing Manager, ExxonMobil Research & Engineering; Mr. Laxmi Narasimhan, General Manager, Shell; Mr. Vikas Sankalia, Process Specialist, Technology Services, UOP; Mr. Mohan Lal, Executive Director (Technical), Axens India; Dr. Ujjwal Manna, Conversion Technologies Lead (East), Shell; Mr. Alex Pulikottil, Research Manager, IndianOil (R&D).
Petroleum Federation of India


Mr. Anand Kumar, Director, Petrotech Society and former Director (R&D), IndianOil (2nd from right) delivering opening remarks while chairing Session-4 on 'Developments in FCC'. Others (L-R): Mr. Martin Evans, Vice President of Engineering Technical Services, INTERCAT; Mr. Vipan Goel, Director of Sales, Grace Davison Refining Technology; Dr. Asha Masohan, Chief Scientist, IIP, Dehradun.

Mr. Dipak Chakravarty, Managing Director, NRL (centre) delivering opening remarks while chairing Session-7 on 'Experience Sharing' along with the Co-Chariman, Mr. P. Sur, Executive Director, Gujarat Refinery, IndianOil (4th from left). Others (L-R): Mr. Rabinder Nath Patel, SPSE, IndianOil; Mr. Jayanti Vagdoda, Jt. General Manager (Mech.), Essar Oil Limited; Mr. Dhananjoy Gosh, General Manager (Ops.), NRL; Mr. B. V. N. Prasad, Vice President (Business Consulting & Sales Ops.), AspenTech; Mr. S. K. Goel, GM (Tech.), BPCL Mumbai Refinery; Mr. Ruchir Kacker, Dy. Manager (Process), IndianOil Mathura Refinery; Mr. Jaikishen C. Nath, Sr. Manager (Electrical), BPCL Kochi Refinery.

Dr. M. O. Garg, Director, IIP, Dehradun (centre) delivering opening remarks while chairing Session-5 on 'Technologies for Improved Product Quality'. Others (L-R): Dr. Bettina Sander-Thomsen, Catalyst Specialist-Technical Support, Haldor Topsoe International A/S; Mr. Ravi Srinivas, Technology & Business Development Manager, Clean Technologies, DuPont; Mr. Michel Dorbon, Global Market Manager (Naphtha & Distillates Hydroprocessing), Axens; Mr. Sarvesh Kumar, SRM, IndianOil (R&D).

Mr. P. Mahajan, Director (Technical), EIL delivering opening remarks while chairing Session-8 on 'Novel Approaches' along with session Co-Chairman, Mr. S. Ventakaramana, Managing Director (I/C), CPCL (3rd from left). Others (L-R): Mr. Tapash Pramanik, Vice President (Technical Services), HMEL; Mr. Prashat Dube, Sr. Process Engineer, IndianOil; Mr. T. Sudhakar, DMPS, IndianOil Mathura Refinery; Mr. A. S. Sahney, SPNM, IndianOil

Biofuels & Bioenergy International Symposium

A growing economy like India aiming at double digit growth in GDP would need increasing amounts of energy. Biofuels and alternative sources of energy have, therefore, to be appropriately encouraged, said Mr. B. K. Chaturvedi, Member (Energy), Planning Commission while inaugurating the 3rd international symposium organised by PetroFed on 'Biofuels & Bioenergy' at New Delhi on April 19, 2012. Delving into its genesis Mr. Chaturvedi, complimented PetroFed for its perseverance on this important subject.

Mr. K. Govindarajan, CEO (Projects), Essar Oil Limited (2nd from right) delivering opening remarks while chairing Session-6 on 'Reliability Improvement & Environment Protection'. Others (L-R): Dr. Anshu Nanoti, Sr. Principal Scientist, IIP, Dehradun; Mr. J. K. Joshi, Head (Environment), EIL; Mr. Keshav Kishore, DGM (Applied Metallurgy), IndianOil (R&D).
Petroleum Federation of India


Delivering the keynote address at the 1 day conference Dr. James Rekoske, Vice President (Renewable Energy & Chemicals), UOP LLC, Chicago sharply brought out the imperative need to focus on biofuels and bioenergy for global energy security. In his address at the inaugural session Dr. R. K. Malhotra, Director (R&D), IndianOil dwelt on the developments taking place on the subject in India and abroad and the R&D initiatives being taken in this regard. Welcoming participants earlier Mr. A. K. Arora, Director General, PetroFed drew attention to the fact that the growing Indian economy is likely to account for about 15% of the global increase in energy demand by 2035. A WWF report, he added, presents the technical feasibility of meeting 95% of the planet's energy requirements from renewable sources in 2050. A section of the participants. The symposium witnessed 17 presentations during five sessions spread over 1 days. There were seven international speakers sharing not only technologies but also country experiences in their progression towards biofuels & bioenergy. Four expert panelists and an eminent moderator at the concluding session gave their perspective on the way forward. Almost 10% of the 125 participants were international delegates. Besides participation by members of the oil & gas industry there were substantial number of technology providers, NGOs, policy makers, R&D, academia and foreign diplomats.

Dr. R. K. Malhotra delivering his address.

Mr. A. K. Arora welcoming participants.

Inaugural Session in progress. Dr. James Rekoske delivering keynote address.


Petroleum Federation of India

Mr. B. K. Chaturvedi delivering inaugural address.

Dr. James Rekoske, Vice President (Renewable Energy & Chemicals), UOP LLC, Chicago (centre) delivering opening remarks while chairing Session-III on 'Feedstock: Options for Scale and Viability'. Others (LR): Mr. Prabhakar Nair, Vice President (Business Development), Lanzatech, Chicago, USA; Mr. Prayas Goel, Director, Concord Blue Technology; Dr. D. K. Tuli, Executive Director, IndianOil (R&D); Dr. V. Sivasubramanian, Associate Professor (Plant Biotechnology) & Director, Vivekananda Institute of Algal Technology.

Mr. A. M. K. Sinha, Director (P&BD), IndianOil (centre) delivering opening remarks while chairing Session-I on 'Biofuels in India Achievements and Learnings'. Others (L-R): Mr. Sandeep Chaturvedi, President, Bio Diesel Association of India; Mr. Anil Dhussa, Director, Ministry of New & Renewable Energy, Govt. of India; Mr. Abhay Chaudhari, Executive Vice President, Praj Industries; Mr. Rahul Pruthi, Asstt. Manager (Business Development), Tata Power Limited

Dr. R. K. Malhotra, Director (R&D), IndianOil (centre) delivering opening remarks while chairing Session-IV on 'Conversion Technologies for Novel Fuels'. Others (L-R): Mr. Partik Lowertz, Vice President (Markets), ChemRec AB, Stockholm; Mr. David Cepla, Managing Director, Envergent Technologies, Chicago, USA; Dr. Arvind Lali, Professor & Head DBT-ICT Centre for Energy Biosciences, Mumbai; Dr. Sanjukta Subudhi, Fellow, TERI.

Dr. M. O. Garg, Director, IIP, Dehradun (2nd from right) delivering opening remarks while chairing Session-II on 'Biofuels: Developments in Asia'. Others (L-R): Dr. Dadan Kusdiana, Head for Bioenergy Programme Division, Directorate General of New Renewable Energy and Energy Conservation, Govt. of Indonesia, Jakarta; Prof. Jong Moon Park, Distinguished Professor, Pohang University of Science and Technology, Korea; Dr. Loh Soh Kheang, Head Energy & Environment Unit, Malaysian Palm Oil Board, Kajang, Malaysia.
Petroleum Federation of India

Mr. Anand Kumar, Director, Petrotech Society & former Director (R&D), IndianOil (centre) delivering opening remarks while chairing Session-V on 'Biofuels and Bioenergy: Sustainability and Global Perspectives'. Others (L-R): Mr. Vineet Raswant, Senior Technical Manager, International Fund for Agricultural Development, Rome; Dr. Dheeban C. Kannan, Fellow, TERI.


Both meetings were facilitated and hosted by PetroFed. The presentation and recommendations focused on shifting customers on liquid fuels to natural gas, augmenting and optimizing gas infrastructure, reviewing gas pricing and changing mindset. The ETT is expected to deliberate further and seek additional inputs before finalising recommendations to be put up to the Government.

Moderator, Dr. Renu Swarup, Advisor, Department of Biotechnology, Govt. of India (centre) giving her perspective during Session-VI on 'Panel Discussion'. Others (L-R): Dr. M. O. Garg, Mr. Anil Dhussa, Dr. James Rekoske, Dr. D. K. Tuli.

Chairman, Energy Think Tank & former Secretary, MoP&NG, Shri T. N. R. Rao delivering opening remarks. Others (L-R): Dr. I. B. Gulati, former Director, IIP, Dehradun; Shri M. A. Pathan, former Chairman, IndianOil and Tata Petrodyne; Shri J. S. Oberoi, Convenor, Energy Think Tank; Shri V. S. Jain, former Member, PESB & Chairman, SAIL; Shri Y. Sahai, Director (Comm. & Mktg.), PetroFed. Dr. Anjan Ray, Regional Commercial Director, UOP India Pvt. Limited proposing a vote of thanks.

ETT Meetings
The meeting of the Energy Think Tank at New Delhi on May 1, 2012 deliberated upon and debated a presentation made by Shri Suresh Mathur, Director, GSPC and former MD & CEO, Petronet LNG and Dr. C. R. Prasad, Chairman, Everest Power and former Chairman & Managing Director, GAIL (India) Limited on natural gas. The deliberations of the day were converted into recommendations for submission to Government and discussed at another ETT meeting on June 5, 2012 at New Delhi.

Dr. I. B. Gulati sharing his view point. Others (R-L): Shri A. K. Arora, Shri Suresh Mathur, Dr. C. R. Prasad, Shri B. D. Gupta, Shri S. K. Manglik, Shri G. K. Pandey, Shri J. L. Zutshi, Shri C. Ratnam, former CMD, Oil India; Shri P. Dasgupta, Shri J. S. Oberoi, Shri T. N. R. Rao, Shri M. A. Pathan.


Petroleum Federation of India

Mr. Anil Razdan, former Secretary, Power, Mr. R.S. Sharma and Mr. BC. Bora, former CMDs, ONGC, Dr. C.R. Prasad, former CMD, GAIL and Dr. Avinash Chandra, former DG, DGH. Both meetings were facilitated and hosted by PetroFed.

Shri V. S. Jain (2nd from left) giving his perspective. Others seated (L-R): Shri J. S. Oberoi, Shri Y. Sahai, Shri P. Dasgupta, former MD & CEO, Petronet LNG.

Challenges in Natural Gas

The changing dimensions of natural gas availability as compared to that of oil were brought out by Mr. S.K. Manglik while chairing a session on 'Challenges in Natural Gas' organised by PetroFed in its series of Guest Lectures and Though Leadership Programmes on May 18, 2012 at New Delhi. Delivering the lecture Mr. Suresh Mathur, Director, GSPC and former CEO & MD, Petronet LNG Ltd. pointed out that globally there were 250 years of reserves of natural gas and because of its relative abundance even a 20% conversion in India from oil to gas would result in saving of about 6 billion USD per annum. He called for a change in mindset, augmentation of infrastructure, review of pricing and a few bold initiatives to encourage investment to enable India to take advantage of this situation. In an exhaustive analysis, drawing parallels from developments taking place in China and other South East Asian countries, Mr. Mathur called for an awareness campaign and national consensus on the issue of promoting a gas based economy. The presentation evoked intense debate and several senior industry members voiced their opinion including
A section of the participants. Mr. S.K. Manglik delivering opening remarks.

Mr. Suresh Mathur making his presentation.

Petroleum Federation of India


Oil Industry Technical Team to Islamabad

The visit of Indain oil industry technical team led by Shri P. Kalyanasundaram, Director (IC&CA), MoP&NG to Islamabad for meetings with the Pakistan oil industry officials on May 28-29, 2012 was coordinated by PetroFed. The Indian delegation comprised Shri Rakesh Mehra, Executive Director (International Trade), BPCL; Shri S. Thangapandian, CEO (Mktg.), Essar Oil; Shri Mahesh Advani, Head (Director Sales), Essar Oil; Shri Rajesh Pathak, Manager, Petrochemicals (Exports), IndianOil; Shri Tapas Kumar Bishayi, Sr. Manager (Lube Exports), IndianOil; Shri Rahul Bhardwaj, DGM (Commercial), IndainOil; Shri Ashok Dhar, President (Industrial Mktg.), RIL; Shri C. S. Sanalkumar, DGM (DistributionHPCL; Shri Suprabhat Paul, General Manager (Commercial), HPCL; Shri Y. Sahai, Director (Comm. & Mktg.), PetroFed; Shri S. S. Ramgarhia, Director (Policy & Planning), PetroFed. The Pakistani delegation was led by Shri Shabbir Ahmad, Joint Secretary, Ministry of Petroleum & Natural Resources, Islamabad. The joint meeting on May 28, 2012 was also addressed by the Federal Secretary, Ministry of Petroleum & Natural Resources, Pakistan, Shri Muhammad Ejaz Chaudhry and the Hon'ble Federal Minister for Petroleum & Natural Resources of Pakistan, Dr. Asim Hussain. On the first day after the opening remarks by the leaders of both delegations and introduction of delegation members a short presentation was made by the Director (Comm. & Mktg.), PetroFed, Shri Y. Sahai. The two-day deliberations discussed product specifications and requirements of Pakistan and a record note of discussions was signed by the leaders of the delegations. It was agreed to hold an expert committee meeting at New Delhi in the first fortnight of July 2012. The Indian delegation also met during their visit members of the Islamabad Chamber of Commerce and the Pakistan Chamber of Commerce.
Mr. Suresh Mathur addressing participants.

A section of the participants.

Mr. Anil Razdan, former Secretary, Power sharing his perspective in Q&A Session.


Petroleum Federation of India

The Indian oil industry technical delegation at Islamabad. (L-R): Shri C. S. Sanalkumar, DGM (Distribution), HPCL; Shri S. Nambiar, First Secretary Indian High Commission, Pakistan; Shri Tapas Kumar Bishayi, Sr. Manager (Lube Exports), IndianOil; Shri Rahul Bhardwaj, DGM (Commercial), IndianOil; Shri Suprabhat Paul, GM (Commercial), HPCL; Shri S. S. Ramgarhia, Director (Policy & Planning), PetroFed; Shri Ashok Dhar, President (industrial Mktg.), RIL; Shri Y. Sahai, Director (Comm. & Mktg.), PetroFed; Dr. Asim Hussain, Hon'ble Federal Minister for Petroleum & Natural Resources of Pakistan; Shri Rakesh Mehra, Executive Director (International Trade), BPCL; Shri P. Kalyanasundaram, Director (IC&CA), MoP&NG; Shri Muhammad Ejaz Chaudhry, Federal Secretary, Ministry of Petroleum & Natural Resources, Pakistan; Shri Shabbir Ahmad, Joint Secretary, Ministry of Petroleum & Natural Resources, Pakistan; Shri Mahesh Advani, Head (Direct Sales), Essar Oil; Shri S. Thangapandian, CEO (Mktg.), Essar Oil; Shri Rajesh Pathak, Manager, Petrochemicals (Exports), IndianOil.

Guidance Note on Accounting and the Companies Bill

The importance of the Revised schedule VI to the Companies Act 1956 and the Revised Guidance Note on Accounting for Oil & Gas Producing Activities was sharply brought out by Shri B. Mukherjee, Director (Finance), HPCL while inaugurating a workshop organised by PetroFed on the subject at Mumbai on May 31, 2012 in association with member company KPMG. Delivering the theme address, Shri Arvind Mahajan, Executive Director & ENR Sector Head, KPMG dwelt on the ramifications of the changes proposed in the Exposure Draft and the Companies Act. Welcoming participants earlier, Shri S. S. Ramgarhia, Director (Policy & Planning), PetroFed pointed out that the workshop had been organised pursuant to requests from member companies after a similar workshop last year at New Delhi. It focussed on Revised Schedule VI

to the Companies Act 1956 and Exposure Draft: Guidance Note on Accounting for Oil & Gas Producing Activities (Revised) as well as certain salient features of the Companies Bill, 2011. The first session on the Revision of the Guidance Note on Accounting for Oil & Gas Producing Activities was comprehensively covered in detail by Shri Kaushal Kishore, Chartered Accountant, KPMG. At the end of the day he gave an overview of the salient features of the Companies Bill, 2011 and also touched upon other regulatory developments in the field of corporate governance. The key requirements of the Revised Schedule VI to the Companies Act and the manner of their implementation with specific reference to the oil & gas sector were delineated by Shri Vijay Mathur, Chartered Accountant, KPMG. The workshop witnessed intense floor participation from over 40 industry executives present.

Petroleum Federation of India


Seated (L-R): Shri S. S. Ramgarhia, Session Chairperson Shri B. Mukherjee, Shri Arvind Mahajan.

Shri Kaushal Kishore, Chartered Accountant, KPMG making his presentation.

Session Chairperson Shri B. Mukherjee delivering inaugural address.

Shri Vijay Mathur, Chartered Accountant, KPMG making his presentation.

Shri Arvind Mahajan delivering theme address.

A section of the participants.


Petroleum Federation of India

World Environment Day

In consonance with the theme of the World Environment Day 2012 PetroFed organised a lecture on 'What Each One of Us Can Do To Protect the Environment?' by the eminent Dr. Prodipto Ghosh, Distinguished Fellow, TERI and former Secretary, Ministry of Environment & Forests on June 5, 2012 at New Delhi in its continuing series of Guest Lectures & Thought Leadership Programmes. The theme for the World Environment Day 2012 was 'Green Economy: Does it Include You?' The Green Economy has been defined as one that results in improved human well-being and social equity while significantly reducing environmental risks and ecological scarcities. Most simply put, it can be one which is low carbon, resource efficient and socially inclusive. And all these issues, pointed out Dr. Prodipto Ghosh, can be addressed by citizens in their daily life at home, at work, while commuting , and even by children when at school. Dr. Ghosh, through examples and easy to follow steps, elaborated on the contribution that each one of us can make for a greener earth. The presentation spurred a host of suggestions from over three score participants present. There were suggestions to mandate CFLs or LEDs and keep ACs at 25O C as in Japan. Only energy efficiency labelled appliances should be permitted to be sold and equipments using water should be labelled for water efficiency like the labelling for energy efficiency. Similarly, use of solar heating and rain water harvesting in new constructions should be mandated. Even office timings of an office cluster should be essentially staggered to eliminate fuel wastage due to traffic jams. The suggestions made deserve serious consideration. The Director General, PetroFed, Shri A. K. Arora in his closing remarks expressed the hope that the conservation messages conveyed and discussed during the session would not only be implemented but also promoted by participants.
Dr. Prodipto Ghosh making his presentation.

A section of the participants.

A point being made by Shri Suresh Mathur, Director, GSPC and former MD & CEO, Petronet LNG.

Petroleum Federation of India


Dr. Prodipto Ghosh replying to a query. Also seen in the picture is Shri A. K. Arora.

Shri P. Raghavendran (4th from right) making a point. Others (L-R): Shri S. P. Gathoo, Director (HR), BPCL; Ms. Nishi Vasudeva, Director (Mktg.), HPCL; Shri M. A. Pathan, Honorary Member, PetroFed; Shri R. S. Butola, Shri A. K. Arora, Shri A. K. Hazarika, Director (onshore), ONGC; Shri T. K. Ananth Kumar, Director (Finance), OIL.

28th Governing Council Meeting

The PetroFed Governing Council at its 28th meeting on June 8, 2012 welcomed Shri T. K. Ananth Kumar, Director (Finance), Oil India Limited as a member of the Governing Council and placed on record its appreciation of the services rendered by Shri P. N. Baruah, Group General Manager (T&D), Oil India Limited during his tenure as a member of the Governing Council. It approved and welcomed the induction of M/s Haldor Topsoe India Private Limited as the 67th member of the Society. The Governing Council expressed its appreciation on the events conducted in the recent past by the Secretariat, particularly the international conferences on 'refining challenges' and 'biofuels and bioenergy' and the role played in coordinating the visit of the oil i n d u s t r y t e c h n i c a l t e a m , l e d b y S h r i P. Kalyanasundaram, Director (IC & CA), MoP&NG to Islamabad. It noted the events and activities planned during 2012-13.
Shri A. K. Arora, Director General, PetroFed (R) briefing the Governing Council. Others (L-R): Shri R. S. Butola, Chairman, PetroFed & Chairman, IndianOil; Shri P. Raghavendran, Vice Chairman, PetroFed &President (Refinery Business), RIL.

The US Unconventionals Revolution

The shale gas story has almost turned the United States from a major prospective LNG market to a potential exporter of LNG. Stating this, Shri R. S. Butola, Chairman, PetroFed and Chairman, IndianOil recounted his personal discussions at various levels over the years in the US during this transformation. He was delivering the opening remarks while chairing a CEO/Top Management Interaction with Ms. Antonia Bullard, Senior Director & Head of Corporate Advisory


Petroleum Federation of India

Practice, PFC Energy who elaborated on 'The US Unconventionals Revolution and Implications for India' on June 20, 2012 at New Delhi. Ms. Antonia Bullard, who advises clients on corporate strategy, strategic communications, investor relations and international Government relations recounted the process of proving, optimizing, industrializing and rethinking in the shale gas development strategy. She explained the implications of the unconventionals revolution for the US and how it can lead to crude oil flow shifts in the world besides the prospect for replication in other economies. Her lecture was followed by an intense interaction with more than 90 participants including existing and former senior bureaucrats, CEOs, academicians etc.

A section of the participants.

A query being raised by Dr. Avinash Chandra, former DG of DGH & CMD, Petrobiz Consultants. Session Chairman Mr. R. S. Butola delivering opening remarks. Seated (L-R): Mr. A. K. Arora, Ms. Antonia Bullard.

Ms. Antonia Bullard making her presentation.

Session Chairman Mr. R. S. Butola delivering concluding remarks.

Petroleum Federation of India


Post Recession Outlook

The economic woes of several developed countries is one of the reasons for the economic slowdown in developing countries said Dr. B. Mohanty, Senior Economic Advisor, Ministry of Petroleum & Natural Gas while chairing a guest lecture on 'Post Recession Outlook & Current Scenario' by Prof. Pranab Banerji, Professor of Economics, Indian Institute of Public Administration at New Delhi on June 26, 2012. Organised under the PetroFed series of Guest Lectures & Thought Leadership programmes, the lecture traced major changes in economic thought globally which have landed the world in the current economic quagmire. Prof. Banerji in a lucid manner tracked the current economic downturn of the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) to the genesis of the sub prime crisis in the 1980s which resulted in the global economic slowdown in 2008. Economic inequalities and global financial transactions in trade were highlighted by Prof. Banerji. The lecture witnessed intense floor participation and lively interaction.
Session Chairman Dr. B. Mohanty delivering concluding remarks. Prof. Pranab Banerji making his presentation.

Session Chairman Dr. B. Mohanty (centre) delivering opening remarks. Others (L-R): Prof. Pranab Banerji, Shri A. K. Arora.

A query being raised by Shri Rajan Kapoor, General Manager, Prize Petroleum Company Limited.


Petroleum Federation of India

Governing Council
Name Mr. R. S. Butola Mr. P. Raghavendran Designation Chairman Vice-Chairman Organisation Chairman, Indian Oil Corporation Limited President (Refinery Business), Reliance Industries Limited Mr. S.P. Gathoo Member Director (HR), Bharat Petroleum Corporation Limited Mr. T. S. Ramachandran Member Director (Technical), Chennai Petroleum Corporation Limited Mr. Prabhat Singh Ms. Nishi Vasudeva Member Member Director (Marketing), GAIL (India) Limited Director (Marketing) , Hindustan Petroleum Corporation Limited Mr. Dipak Chakravarty Mr. T. K. Ananth Kumar Mr. A. K. Hazarika Member Member Member Managing Director, Numaligarh Refinery Limited Director (F), Oil India Limited Director (Onshore), Oil & Natural Gas Corporation Limited Mr. M. A. Pathan Mr. Sarthak Behuria Mr. A. K. Arora Honorary Member Honorary Member Member Secretary Group President, Modi Enterprises Director General, PetroFed

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S.No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. Organisation Adani Gas Ltd. Adani Welspun Exploration Ltd. Axens India Pvt. Limited Bharat Petroleum Corp. Ltd. BP India Services Pvt. Ltd. British Gas India Pvt. Ltd. Bharat Heavy Electricals Ltd. Bharat Oman Refineries Limited Cairn India Ltd. Chennai Petroleum Corp. Ltd. Chemtrols Industries Limited Deloitte Touche Tohmatsu India Pvt. Ltd. Deepwater Drilling & Services Pvt. Ltd. Engineers India Ltd. Ernst & Young Pvt. Ltd. Essar Oil Ltd. ExxonMobil Gas (India) Pvt. Ltd. East India Petroleum Pvt. Ltd. GAIL(India) Ltd. Great Eastern Energy Corporation Ltd. Gujarat State Petroleum Corporation Limited Hindustan Petroleum Corp. Ltd. HLS Asia Ltd. Honeywell Automation India Ltd. HPCL Mittal Energy Ltd. Haldor Topsoe India Pvt. Ltd. IMC Ltd. Indian Oil Corp. Ltd. Indraprastha Gas Ltd. Industrial Development Services Pvt. Ltd. IHS CERA IOT Infrastructure & Energy Services Limited Jindal Drilling & Industries Limited Jubilant Oil & Gas Pvt. Ltd. CEO Mr. Rajeev Sharma Mr. Atul Sathe Mr. Jean Paul Margotin Mr. R. K. Singh Mr. Sashi Mukundan Mr. Walter Simpson Mr. B P Rao Dr. B. K. Das Mr. Rahul Dhir Mr. S. Venkataramana Mr. K. Nandakumar Mr. Udayan Sen Mr. S. M. Malhotra Mr. A. K. Purwaha Mr. Rajiv Memani Mr. Lalit Kumar Gupta Mr. K S Kim Mr. K. Sharath Choudary Mr. B.C. Tripathi Mr. Yogendra Kumar Modi Mr. Tapan Ray Mr. S. Roy Choudhury Mr. Rajeev Grover Mr. Anant Maheshwari Mr. Prabh Das Mr. Dilip K. Dutta Mr. A. Mallesh Rao Mr. R. S. Butola Mr. M. Ravindran Mr. R. K. Gupta Mr. James Burkhard Mr. Jayanta Bhuyan Mr. Raghav Jindal Mr. Ajay Khandelwal Contd...2

35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68.

KPMG Kellogg Brown & Root Engineering & Construction India Pvt. Ltd. LanzaTech-NZ Limited Lanco Infratech Ltd. Mangalore Refinery and Petrochemicals Ltd. Mitsui Chemicals India Private Limited Mitco Labuan India Pvt. ltd. Naftogaz India Pvt. Ltd. Nagarjuna Oil Corp. Ltd. Niko Resources Ltd. Numaligarh Refinery Ltd. Oil & Natural Gas Corporation Ltd. Oil India Ltd. Petronet LNG Ltd. PFC Energy PMI Organization Centre Pvt Ltd. PricewaterhouseCoopers Pvt. Ltd. Prize Petroleum Co. Ltd. Punj Lloyd Ltd. Reliance Industries Ltd. Santos International Operations Pty. Ltd. SAP India Pvt. Ltd. SAS Institute (India) Pvt. Ltd. Schlumberger Asia Services Limited Shell India Pvt. Ltd. Sud-Chemie India Pvt. Ltd. Shiv-Vani Oil & Gas Exploration Services Ltd. Tata Petrodyne Ltd. Tecnimont ICB Pvt. Ltd. Total Oil India Pvt. Ltd. Transocean Offshore International Ventures Ltd. University of Petroleum & Energy Studies (UPES) UOP India Pvt. Ltd. World L. P. Gas Association

Mr. Russell Parera Mr. Vinayak Pai Dr. Jennifer Holmgren Mr. L. Madhusudhan Rao Mr. U. K. Basu Mr. Shingo Shibata Mr. Roney Zaidell Mr. Bava Mahdoom Mr. S. Ramasundaram Mr. Larry Fisher Mr. Dipak Chakravarty Mr. Sudhir Vasudeva Mr S. K. Srivastava Dr. A.K. Balyan Mr. J. Robinson West Mr. Raj Kalady Mr. Deepak Kapoor Mr. M.R. Pasrija Mr. Atul Punj Mr. Mukesh Ambani Mr. Mark Shimmield Mr. Peter Gartenberg Mr. Sudipta K. Sen Mr. S. Ramamurthy Mr. Vikram Singh Mehta Ms. Arshia A. Lalljee Mr. Prem Singhee Mr. Prasad Menon Mr G.Sathiamoorthy Mr. B. Vijay Kumar Mr. Sanjaya Sood Dr. S.J. Chopra Mr. Mark S Turowicz Mr. James Rockall

Journal Coordinators
Ms. Marianne Karmarkar Mr. S. Vaidyanathan Mr. Jignesh Vasavada Ms. Radhika Ojha Mr. R.G.Sreeram Mr. H K Nath Mr. Pramode Seth Mr. P.N. Barua Mr. Deepak Mahurkar BPCL CPCL GAIL (India) Ltd. IOT Infrastructure & Energy Services Limited IOCL NRL ONGC Oil India Ltd. PricewaterhouseCoopers Pvt. Ltd.

Editorial Board
Editor Member : : Y. Sahai A. K. Arora S. L. Das S. S. Ramgarhia O. P. Thukral Biren Das No part of this journal shall be reproduced in whole or in part by any means without permission from PetroFed. The views expressed by various authors and the information provided by them are solely from their sources. The publishers and editors are in no way responsible for these views and may not necessarily subscribe to these views.

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