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FACULTY OF MANAGEMENT STUDIES

6301 – BUSINESS ETHICS AND SUSTAINABILITY

CHENNAI PETROLEUM CORPORATION


LIMITED
OIL AND GAS INDUSTRY

GROUP: ABS4

RAGHAV SINGLA SUMIT LAMA KATIKI REVANTH KUMAR


FT-20-195 FT-20-189 FT-20-209
SECTION A SECTION A SECTION A
raghav.s22@fms.edu sumit.l22@fms.edu katiki.r22@fms.edu
+91 9255429006 +91 7407430690 +91 7358630507
Introduction
Chennai Petroleum Corporation Limited (CPCL) processes crude oil to produce and provide several
petroleum products, along with manufacturing and selling lubricating oil additives. Incorporated on
18th November 1965, CPCL is a wholly-owned subsidiary of Indian Oil Corporation Ltd. (IOCL) and is
headquartered in Chennai, a coastal city and the capital of the Indian state Tamil Nadu (Business
Standard, 2021).

CPCL started as a 2.5 million metric tonnes per annum (MMTPA) refinery and for the past five
decades, it has seen an eventful and growth-oriented phase as the CPCL family built the organisation
to its present stature of 10.5 MMTPA capacity. CPCL is one of the leaders among India's public-sector
refining businesses, operating one of the most sophisticated refineries in the country, generating a
wide range of value-added petroleum products. It also pioneered significant projects in a variety of
sectors, including process optimization, technology adoption, energy-saving, wasteland reclamation,
and environmental management (CPCL, 2020) (Wikipedia, 2021).

Formerly known as Madras Refineries Limited (MRL), it was founded as a joint venture between the
Government of India (GOI), AMOCO 1, and the National Iranian Oil Company (NIOC), with an
ownership of 74%, 13%, and 13%, respectively. AMOCO was disinvested in favour of GOI in 1985,
and the ownership percentages of GOI and NIOC were amended to 84.62% and 15.38%, respectively.
On May 19, 1992, the GOI disinvested 16.92% of the paid-up capital in favour of Unit Trust of India
Mutual Funds Insurance Companies and Banks, lowering its stake to 67.7. With effect from April 6,
2000, the company's name was changed to Chennai Petroleum Corporation Ltd (CPCL). In 2000-01,
as part of the Government of India's restructuring efforts, Indian Oil gained stock from the GOI.
Currently, the IOC owns 51.88% of the company, while the NIOC owns 15.40% (Business Standard,
2021).

VISION:
To be the most admired Indian energy company through world-class performance, creating value for
stakeholder.

MISSION:
 To manufacture and supply Petro products at competitive prices, meeting the quality
expectations of the customer.
 To pro-actively fulfil social commitments, including environment and safety.
 To constantly innovate new products and alternate fuels.
 To recognize Human Resources as the most valuable asset and foster a culture of
participation for mutual growth.
 To ensure high standards of business ethics and corporate governance.
 To maximize growth, achieve national pre-eminence and maximize stakeholder’s wealth.

CORE VALUES:

1
Officially known as Standard Oil of Indiana, AMOCO is owned by British Company BP since 1998

2
Businesses
Chennai Petroleum Corporation Limited operates two refineries with a total refining capacity of 11.5
million tonnes per year. The Manali Refinery near Chennai has a capacity of 10.5 million tonnes per
year and is one of India's most complicated refineries, producing gasoline, lubricant, wax, and
petrochemical feedstocks. Nagapattinam Refinery is CPCL's second refinery, located in Panagudi's
Cauvery basin in Nagapattinam.

MANALI REFINERY
With a capacity of 11.1 MMTPA, it is one of the most complex and integrated refineries in India with
three Crude Distillation Units (CDU/VDUs), Hydrogen Generation Units (HGUs), Hydro-Cracker unit
(HCU), Fluid Catalytic Cracking Unit (FCCU), Continuous Catalytic Reforming Unit (CCRU),
Isomerisation unit, Delayed Coker Unit (DCU), Visbreaker unit (VBU), Diesel Hydro Desulphurisation
unit (DHDS), Diesel Hydro-treating unit (DHDT), Lube Hydro-finishing unit, NMP Extraction unit,
Propylene unit and Petrochemical Feedstock unit, with fuel, lube, wax & petrochemical feedstocks
production facilities (CPCL, 2020).

1969 – Commissioned with a capacity of 2.5 MMTPA

1984 – Capacity doubled to 5.6 MMTPA by setting up of additional CDU (CDU-2)

1994 – Capacity of CDU-2 increased from 2.8 to 3.7 MMTPA making the total to 6.5 MMTPA

2004 – 3 MMTPA expansion project (Refinery-III) with additional CDU (CDU-III) increasing capacity to
9.5 MMTPA

2010 – Refinery-III revamp increasing the capacity to 10.5 MMTPA

CAUVERY BASIN REFINERY


The second refinery of CPCL is located in Nagapattinam, near the Cauvery Basin. The first unit was
built in 1993 with a capacity of 0.5 MMTPA and was later upgraded to 1.0 MMTPA (CPCL, 2020)

Following the decommissioning of the current refinery, the company plans to establish a grassroots
refinery with a capacity of 9 MMTPA on a joint venture basis at the same location. The new refinery
project's Detailed Feasibility Report (DFR) has been completed. The refinery will generate LPG, BS-VI 2
gasoline and diesel, as well as aviation turbine fuel (ATF). The project also contains a Polypropylene
plant as part of the petrochemical integration, with the possibility to enhance petrochemical output
in the future. For crude import and refinery water requirements, a single point mooring (SPM) and a
desalination facility are planned (The Hindu, 2021).

The IOCL board of directors has approved the project's execution at CBR Nagapattinam through a
Joint Venture, with IOCL and CPCL each owning a 50% share and the remaining 50% held by
financial/strategic/public investors. The Ministry of Environment. Forest & Climate Change has given
the project environmental approval along with the Tamil Nadu Pollution Control Board also granting
consent to establish the refinery (CPCL, 2020).

RESEARCH AND DEVELOPMENT


CPCL established an in-house R&D Centre in 1986, the first of its kind in India:

 Providing technological inputs to meet the corporate objective of technical excellence in all
aspects of refinery operations

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Fourth iteration Bharat Stage Emission Standards (BSES), introduced in 2017

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 Promoting indigenous technologies for refinery processes in association with laboratories
 Developing new products and upgrade the quality of the existing petroleum products

The R&D centre has the recognition of “Department of Scientific and Industrial Research (DSIR)”
under the Ministry of Science and Technology, since its inception. The research programmes of R&D
are monitored in-house by the Research Project Advisory Committee (RPAC) (CPCL, 2020).

CPCL has invested immensely to establish pilot plants and analytical facilities in the last two decades
and has been recognized as a leading research facility in the area of Petroleum Refining in India.

Oil and gas industry in India


The oil and gas industry is one of India’s eight key industries, and it has a significant impact on all
other vital sectors of the economy and because India’s economic growth is strongly connected to its
energy needs, the demand for oil and gas is expected to rise further, making the industry attractive
for investment. India is anticipated to be a major contributor to non-OECD petroleum consumption
increase worldwide. Crude oil imports increased dramatically in 2019-20, from US$ 70.72 billion in
2016-17 to US$ 101.4 billion in 2019-20. The sector’s total installed provisional refining capacity was
at 249.9 MMT as of May 1, 2021, with Indian Oil Corporation Limited (IOCL) emerging as the largest
domestic refiner, with a capacity of 69.7 MMT 3 (IBEF, 2021).

In FY20, India’s consumption of petroleum products increased by 4.5% to 213.69 MMT, up from
213.22 MMT in FY19. The overall value of petroleum products exported from the country grew to
US$ 35.8 billion in fiscal year 20 from US$ 34.9 billion in fiscal year 19. India’s petroleum product
exports grew from 60.54 MMT in FY16 to 65.7 MMT in FY20. India’s petroleum product exports
increased to 55.9 MMT in FY21 from 60.5 MMT in FY16. As of 2020, coal, oil, and solid biomass meet
the majority of India’s energy needs. However, there is growth in the renewable energy industry as a
result of current energy advances toward inexpensive and clean energy (IBEF, 2021).

Primary energy demand distribution in India by type


FY 2020
Coal

Oil

Natural Gas

Traditional Biomass

Modern Renewables

Others

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Demand Share

Figure 1: Primary energy demand distribution in India by type

In the fiscal year 2019, India's consumption of petroleum products was projected to be over 211
million metric tonnes. The country was rated third in the world in terms of primary energy
3
Million metric tonnes

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consumption. With the sector quickly expanding, inland production of petroleum products is no
longer sufficient. The import volume of petroleum products approached 33 million metric tonnes
(Statista, 2021)

Consumption Volume of petroleum products in million metric


tonnes, FY 2012 -FY 2020
250

200

150

100

50

0
2012 2013 2014 2015 2016 2017 2018 2019 2020*

Consumption Volume in million metric tonnes

Figure 2: Consumption volume of petroleum products in India from FY 2012 -2020

With the support of solid economic growth and a thriving automotive sector, demand for petroleum
products was expected to rise, as evidenced by an annual growth rate of more than 3% in the fiscal
year 2019. Although the country's auctioned renewable capacity was close to 70% in 2017, the
market in the renewable sector had not been that receptive (Statista, 2021).

With oil reserves of fewer than a billion metric tonnes in 2017, a drastic shift in the country's
transportation strategy might help the situation. Rapid globalisation and rapidly evolving technology
may be able to save what remains of the reserves. Investments in solar energy and the replacement
of conventional cars with electric vehicles may hold the key to a sustainable future in a bright sunny
nation with plenty of sunshine hours (Statista, 2021).

CIRCULAR ECONOMY IN OIL AND GAS INDUSTRY


In the oil and gas industry, sustainable methods are currently largely limited to scrapping and
recycling. Massive steel buildings, for example, are brought ashore during the decommissioning of
oil and gas infrastructure to be recycled at scrapyards across the world. Furthermore, spare
components for subsea and surface assets, which incur high storage expenses, are considered
superfluous and are scrapped (Kun & Jian, 2011).

The refining sector offers possibilities to handle both water consumption and sophisticated materials
like catalysts and chemicals. Refiners must develop techniques for recovering and reusing wasted
catalysts and chemicals in the future. They can also save energy by generating power from wasted
heat and steam, with the possibility to export excess power to a neighbouring power plant (GEP,
2019).

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SABIC, a prominent worldwide chemical firm located in Saudi Arabia 4, is an excellent illustration of
the petrochemical industry's dedication to sustainability and the circular economy. In Germany,
SABIC established a feedstock recovery pilot project that utilises plastic trash to generate synthetic
feedstock. This recovered feedstock may be converted into any petrochemical product needed. The
business plans to work with partners to establish the first commercial facility in the Netherlands to
purify and improve a valuable feedstock derived from the recycling of low-quality, mixed-plastic
trash that would otherwise be burned or disposed of in a landfill.

When it comes to the problems connected with circularity, arguably the most important aspect that
can make or break the new movement is a lack of policy. Components from the solar industry, such
as lead, are still impossible to recycle, as they are with oil and gas. In an ideal world, such difficult-to-
dispose-of items might be redeemed by the circular economy, in which residual materials could be
recycled.

Recognizing the water-waste-energy nexus, which states that at the end of the day, approximately
18% of energy goes towards water processing and infrastructure, approximately 15% of the water
we use goes into energy production, and approximately 70% of water goes into food and agriculture,
is part of circularity. Then 33% of that food is wasted.  all of these factors must be considered in the
context of a more localised, regionalized system capable of managing and minimising waste and
optimising resource efficiency.

While the energy business has massive supply networks transporting oil from the Middle East to
Southeast Asia or gas from Russia to Europe, these complicated supply chains are likely to be
managed more circularly. One of the problems with circularity for companies is that it may be
perceived as a direct competitor to consumption and market expansion (Cholteeva, 2021).

FUTURE OUTLOOK
On the strength of continued sustained economic expansion, India's energy consumption is expected
to increase faster than the energy demand of all other economies. From 753.7 Mtoe 5 in 2017, India's
energy demand is expected to more than double to 1,516 Mtoe by 2035. Furthermore, the country's
proportion of global primary energy consumption is expected to double by 2035 (IBEF, 2021).

The government is dedicated to increasing the use of clean energy sources, and it is already
implementing several large-scale sustainable power projects and aggressively pushing green energy.
Furthermore, renewable energy has the potential to provide a large number of job possibilities at all
levels, particularly in rural regions. The Ministry of New and Renewable Energy (MNRE) has set an
ambitious aim of 227 GW of renewable energy capacity by 2022, with around 114 GW planned for
solar, 67 GW for wind, and other for hydro and bio, among other things. In the next four years,
India's renewable energy sector is anticipated to receive $80 billion in investment (IBEF, 2021).

It is predicted that by 2040, renewable energy would account for around 49% of total power
generation, as more efficient batteries will be utilised to store electricity, lowering solar energy costs
by 66% compared to present levels.  Renewable energy will save India Rs 54,000 crore (US$ 8.43
billion) per year (IBEF, 2021).

4
On 27 March 2019, Saudi Aramco signed a share purchase agreement to acquire 70% majority stake in SABIC
5
Million or mega tonnes of oil equivalent

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Oil Demand in India, FY 2013 to 2040
(in million barrels per day)
10
9
8
7
6
5
4
3
2
1
0
2013 2014 2015 2016 2017 2025 2030 2035 2040

Oil Demand in India, FY 2013 to 2040

Figure 3: Oil demand in India (in million barrels per day)

CPCL and Circular Economy


Since its establishment, CPCL has been systematically developing and implementing a variety of
environmental protection initiatives. A specialised Environment Management Team is responsible
for planning, implementing, operating, and monitoring all environmental-related operations.

To manage its Environmental System, CPCL employs the multi-pronged strategy outlined below

 Cleaner technology is being used in refinery process operations.


 Pollution control facilities must be kept running at all times.
 Environmental awareness should be instilled in all personnel.

CPCL Manali Refinery has obtained ISO 9001 6, ISO 140017 and OHSAS-180018 certifications (CPCL,
2020).

CORPORATE SUSTAINABLE DEVELOPMENT


Sustainable Development at CPCL envisions the organisation to be most admired Energy Company,
committed to pursue the path of Sustainable Development by integrating the Economic Progress,
Environmental responsibilities and the aspirations of the customers, investors, employees,
communities and the public at large (CPCL, 2020).

CPCL also strives to achieve excellent and innovative Sustainability practices across the organization,
to meet the economic, environmental and societal goals by:

 Ensuring high standards of business ethics and corporate governance.


 Maximising value creation for stakeholders through efficient operations and continual
growth

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International standard that specifies requirements for a quality management system (QMS)
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International standard that specifies requirements for environmental management system
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International Occupational Health and Safety Management Standard

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 Efficient use of Energy, Water, Land, Inputs and all other resources through best practices
and sustainable technologies
 Promotion and enhanced use of Renewable Energy sources
 Adoption of energy-efficient and clean technologies limiting Green House Emission (GHG) in
our operational processes
 Providing and maintaining a Clean, Healthy and Safe Environment for the Employees and the
community around
 Management of Waste - reducing, reusing and recycling, and implementing environmentally
safe disposal practices.
 Generating awareness on Sustainable Development practices among employees and other
stake holders.
 Committing ourselves to the universal declaration of human rights, conventions of labour
standards and ensuring best labour practices.
 Implementing local community development programs to address the needs of people living
around and
 Periodic monitoring and reporting of Sustainable Development activities

USAGE OF RENEWABLE ENERGY


Wind energy
CPCL has been generating Wind energy from its Windmill Power Project of 17.6 MW capacity at
Palghat (Pushpathur) Pass near Coimbatore since 2007. This Windmill generated around 23.6 million
units of clean electricity during 2019-20 and the same is utilized in Desalination Plant of CPCL located
at Chennai through wheeling.

Solar energy
In addition to Wind electricity generation facility, CPCL has also set up rooftop solar system to
generate solar power which is also environmentally friendly energy. CPCL is already having rooftop
solar power generation facilities at its Polytechnic College, Corporate Office and at CBR Refinery. The
total capacity of solar power generation facilities at CPCL is about 196 KW including solar street
lighting facility at its Manali Refinery. CPCL is also implementing 25 KW roof top solar project at
Manali refinery. Additional 100 KW roof top solar units in Manali refinery during 2019-20.
Effluents and Waste management
At CPCL, the effluent from the refinery is treated in Effluent Treatment Plants (ETP) designed to meet
New MINAS9 as per Environment Rules issued by MoEF&CC 10. The treated effluent from ETPs is
further processed in Zero Discharge Plants (ZDP). ZDP will maximise the reuse of treated refinery
waste water and reused in the refinery. A new state-of-art technology Effluent Treatment Plant - was
commissioned in Feb 2019 combined with Ultra filtration (UF) & Reverse osmosis (RO) and DM plant
to ensure total reuse of Effluent water generated from Refinery facilities.

Desalination Plant
To avoid usage of ground water and other natural resources of water for industrial purposes, CPCL
has installed a state of technology desalination plant in 2009 of capacity 5.8 MGD. The water
produced by the Desalination Plant of CPCL is utilized in refinery operations thus reducing the
fresh/ground water intake. Steps are being taken to improve production of water from the existing
Desalination plant to meet the future water requirements (CDMA, 2020).

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Minimum National Standards
10
Ministry of Environment, Forest and Climate Change

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Tertiary treatment plant
CPCL in the year 1991, was the first industry in Asia to put up a "City Sewage Reclamation Plant" to
meet 40% of its raw water requirements by installing a Tertiary Treatment cum Reverse Osmosis
plant of capacity 2.5 MGD11 (SRP-1) at a cost of Rs. 24 crores (Worldbank, 2020).

CPCL’s also commissioned its second sewage reclamation plant of capacity 2.5 MGD in 2007.

Benefits of Sewage Reclamation:

 Metro water intake is reduced. Enables Chennai Metro Water to meet public demand.
 Avoids pollution and health hazards related to disposal of sewage
 Chemical Front (As TDS of RO permeate is low 25 –30 mg/l compared to metro raw water
TDS of 500 - 900mg/l, run length of DM units increased thus results in lower chemical
Consumption.

ENVIRONMENTAL MANAGEMENT
Measuring to Manage
CPCL has been conducting the Green House Gases (GHG) survey since 2009-10 with the following
protocol.

The purpose of GHG emission inventorisation is to identify the major sources of GHG emissions and
estimate the emission quantities. The survey prepares an inventory of GHG emissions; and
subsequently helps in development of the carbon footprint of Manali refinery at Chennai.

Emissions Management
Regarding NOx, SOx and other significant emissions, CPCL continuously monitors air pollutants as per
the National Ambient Air Quality Standards and MINAS standards. CPCL maintains one Mobile
Continuous Ambient Air Quality Monitoring Station to monitor the above mentioned emissions and
Weather parameters in and around Manali Refinery.

Benchmarking on CO2 Emissions


Benchmarking study is being done on a CO 2 emissions/tonnes of crude oil processed. This is primarily
due to uncertainty in data collection methods, calculation methodology and ambiguity in boundaries
defined.

ENVIRONMENTAL ACTIVITIES
As a part of CPCL’s commitment to environmental protection the following projects were
implemented

1. BS-VI Auto Fuels Quality Project to reduce the so2 emissions from Fossil fuels

As per the directives of the Government of India, the entire production of MS & HSD from
CPCL, along with other refineries in the rest of the country, has to meet BS-VI quality norms
with effect from 1st April 2020.

For complying with the requirement of BS-VI diesel norms, the existing Diesel Hydro-treating
(DHDT) unit was revamped to increase the capacity from 1.8 to 2.4 MMTPA and
commissioned during Nov 2019. Further, to meet the requirement of BS-VI Gasoline norms,
installation of a new FCC Gasoline De-sulphurisation unit with a capacity of 0.6 MMTPA
along with associated facilities was implemented.

2. Re-Gasified Liquefied Natural Gas (R-LNG):


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Million Gallons per Day

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RLNG is a very clean fuel and usage of RLNG reduce the so2 emissions to atmosphere. RLNG
conversion in one of the Hydrogen Generation Unit has been successfully completed. CPCL
has started using RLNG as Fuel in their Captive power to reduce Emission.

CLASSIFICATION OF EMISSIONS
Emissions from the refinery are classified into 3 categories

1. Scope 1
2. Scope 2
3. Scope 3

Scope 1 Emissions
Scope 1 GHG emissions are those directly occurring from sources that are owned or controlled by
CPCL. In case of CPCL that includes:

 Stationery combustion – Fuel used for generation of energy


 Emissions from Fuel Gas/Fuel Oil/Naphtha/LPG
 Fugitive emissions
 Emissions from flare loss
 Refrigeration leakage/refill
 Process emissions
 Emissions from Sulphur Recovery Plant - CPCL has installed new Sulphur recovery units
with latest technologies to reduce the sulphur emissions
 Emissions from naphtha used as feed

Scope 2 Emissions
These are the emissions due to activities that generate electricity, heating, cooling or steam that is
consumed by the facility but do not form part of the facility. For this unit, it is

 Emissions from electricity drawn from the grid

Scope 3 emissions
Scope 3 emissions are all the other indirect emissions that are "a consequence of the activities of the
institution, but occur from sources not owned or controlled by the institution" such as commuting,
air travel for business activities, waste disposal; embodied emissions from extraction, production,
and transportation of purchased goods; outsourced activities; contractor owned- vehicles; and line
loss from electricity transmission and distribution. CPCL encourages car-pooling and usage of public
or mass transports to reduce the carbon emissions from vehicles.

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