Analysis of Petroleum Industry in India

8/4/2019 Analysis of Petroleum Industry in India

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ANALYSIS OF PETROLEUMINDUSTRY IN INDIA

ALOK BUGDE C009

PRIYANKA GARG C019

HARDIK GOGRI C022

ILHAN KHAN - C033

RAVI RAMCHANDANI C047ANIKET SAMANT C048


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History

Early Phase (1947 to 1969)o Government consolidated its control with Soviets

assistance

Development Phase (1970 to 1989)o US companies played dominant role replacing the

Soviets

The economic liberalization phase ( post 1990 )o Exploration and Production

o Refining and Marketing

History


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Brief Overview

Development on slow pace

Industrial Policy Resolution, 1956

Liberalization and Privatization, 1991

Ever-Increasing Demand

Favorable Foreign Investment

Brief Overview


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Micro-Ec

onomicAnalysisofPetrol

eumIndustry

Cyclical demand

Changes in climate

Market speculation

a c to rs A ffe c tin g D e m a n d

a c to rs A ffe c tin g S u p p ly Profit motive

Spare capacity

External shocks

Reserves

Exploration

Technology


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ark et St ructu re

Oligopoly

Cartel Theory

Role of OPEC


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MAJOR PLAYERS


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Usingthe

Pitchbook

Templ

ate

MAJOR DOWNSTREAMPLAYERSCompany Division Refining (mb/d)Retail outlets

IOCL 1.2 18140

BPCL 0.6 8389HPCL 0.25 8539

RIL 1.24 800

Essar 0.22 1200

Mlore 0.2 0

Chennai 0.19 0

etail MarketShare efining MarketShare


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Business

Summary

MAJOR UPSTREAMPLAYERS

Company Division Market Capitalization

ONGC , .37 7 9 9 85GAIL , .52 166 13

Cairn India , .48 021 90

Oil India , .31 416 57

Petronet LNG , .12 671 25

IndraprasthaGas , .5 833 11

Guj Gas , .5 639 15

Guj State Petro , .5 246 79

Aban Offshore , .1 521 77

Hind Oil Explo , .1 492 84


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PRODUCTS AND EXPORTPOTENTIAL


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etroleum Products(onsumption Million)onnes -2010 11 -2009 10

LPG .14 4 .13 1

( )Motor Spirit Petrol .14 4 .12 8

Naphtha .11 5 .10 1

Aviation TurbineFuel

.5 1 .4 6

Superior Kerosene .8 9 .9 3

High Speed Diesel .60 4 .56 2

Light Diesel Oil .0 4 .0 5

Lubes .2 6 .2 5/Furnace Oil LSHS .11 4 .11 6

Bitumen .4 7 .4 9

Others .10 7 .11 9

Total .4 4 4 .37 8


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Usingthe

Pitchbook

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ate

- &ndia Exports Imports ofrude OilCrude Oil

Import

ProductExport

Product

Import

US$ Billion

vGross crude and petroleum products

Crude/product Imports : ~ 28% of total imports

Product Exports : ~ 8% of total exports


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Usingthe

Pitchbook

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ate

mport and Exportotential80 per cent of crude oil demand is metthrough imports.

2009-10, Oil import bill stood at US$ 79.55billion

2010-11 Oil import increased to US$ 106billion

Oil import bill accounts for almost one thirdof the total imports

Almost 70 per cent of Indias total crude oil


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ate

lobal factors for exportotentialWorldwide huge demand for the refinedpetroleum products, especiallygasoline, jet fuel, diesel etc.

Developing countries competing withdeveloped West for crude oil.

Today major economies like Japan, SouthKorea, China import petroleum productsfrom the open market to relieve spotshortages.


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Usingthe

Pitchbook

Templ

ate

omestic factors for Export:otentialDomestic demand for refined petroleum in India isaround 145 MTDomestic Petroleum refining capacity in India is 170 MT

Strategically located in the major maritime route fromMiddle East

Geographical advantage to serve western and eastern

markets

Strong domestic demand


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Impor

tPar

ityPr

ic

Free on Board Price (FOB) as quoted in Arab Gulf Market andreported by Platt and Argus

Premium/ discount as published in Platt and Argus

Ocean freight from mid port in the Arab Gulf to Indian Ports,Insurance

Exchange rate

Custom DutyOcean Loss

Wharfage and Port charges.

mport parity pricingechanism of petroleumproducts


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Administe

redPricingmecha

nism(APM)

Prices controlled at production, Refining,

Distribution and Marketing

Ad Hoc Price adjustments required

No Incentives to make profitable investmentdecisions

dministered Pricing( )echanism APM


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Dismantli

ngAPM

Prices of all petroleum products except MS,HSD, ATF, PDS Kerosene, Domestic LPG tobe de-controlled (April 1998)

Market determined tariff based pricing

Oil sector is poised for exciting times ahead

and we are entering a new era

ismantling APM


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: .a l 88 6 mb p d( )4 31 M MTP A

. .d Refining capacity 1 1 2008

-orld oil demand grown faster than refining capacity bettera pa ci ty u ti li za ti on %orld average refy capacity utilization moves around 75( ) % ( )980 to 87 2008

e fi ne ry c ap ac it y&orld Refining capacity thruput- ( )980 2008 mbpd

Sources: BP Stats 2009

.8 6

World Oil Refining


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,Regional product balance 2020l l f ig u r e s i n MM T P A

si a P ac i fi c:ef ici t 4 19:PG 40:aphtha 56:S 107:et kero 6:SD 86:thers 28:ur p lu s 0:et (-) 419

,y 2020 world would be net product deficit 247MMTPA ( : & : )00 MMT su rp lus L PG 49 F uel O il 51

Source: EIA

i d dl e E as t:e fic it 31:S 26:thers 5:u r pl us 1 88:PG 85:aphtha 44/ :et kero 19:SD 17:O 23:e t (+) 157

A f r i c a :e fi cit 71:PG 5:S 24:etkero 3:SD 38:thers 1:u rp l us 3 6:aphtha 11:O 25:e t (-) 35

a t in A m er ic a:e fic it 50:aphtha 7:S 10:SD 32:thers 1:u r pl us 3 0:PG 5:O 25:e t (-) 20

or th Am eri ca:ef ici t 4 3:S 24:et kero 9:ur p lu s 68:PG 19:aphtha 15:SD 5:O 14:thers 15:et (+) 25

E u r o p e :e fic it 1 45:PG 17:aphtha 23:et kero 4:SD 49:u r pl u s 13 3:S 126:O 7:e t (-) 12

R u s s i a :e fic it 1 3:S 7:etkero 4:thers 3:u r pl us 7 1:PG 1:aphtha 2:SD 34:O 34:e t (+) 58


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MUMBAI( . )PC 12 0( .PC 5 5+.4)

MATHURA( . )0 GUWAHATI( . )0ARAUNI( . )0

HALDIA( .0+ .5)

KOCHI( .5 + .0)

BARODA( . )3 7

DIGBOI( . )65

ARIMANAM( . )0

MANGLORE( .69 + .31)

PANIPAT( .2 0+ .0)

VISAKH( .5+ .8)

NUMALIGARH( . )0

BONGAIGAON( . )35

HENNAI( .5+ .7)

JAMNAGAR( .IL 33 0 + .9 0).SSAR 10 5+ .5)

TATIPAKA( .08 + .08)

ARADEEP( . )5 0

HATINDA( . )0

O t h e r s/e w A d di ti o ns

IN A( . )0

u bs id ia ri es o fI O Cxi s ti ng IO C

Refineries No MTPA % ofInd

IOC Group 10 60.2 33.8

BPC group 3 22.5 12.6

HPC 2 13.0 7.3

ONGC/MRPL 2 9.8 5.5

RIL (Pvt.) 2 62.0 34.8

ESSAR 1 10.5 5.9

Total Capacity 20 178.0 100

Refineries in India
http://iocl.com/index.asphttp://iocl.com/index.asphttp://iocl.com/index.asphttp://iocl.com/index.asphttp://iocl.com/index.asphttp://iocl.com/index.asphttp://iocl.com/index.asphttp://iocl.com/index.asphttp://iocl.com/index.asp


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: &India Product Demand RefiningCapacity

&a p b e tw e e n R e f i ni n g C a p a c it y Pr o d u c t D e ma n d1 4 0

2 9

India will continue to be product surplus

Source: Draft XI Plan Demand Document/ /

Import Export requirement for crude products to be quite substantial

10 0

Surplus refining capacity is expected to increase further by 2030


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Located in the major maritime route from Middle East

Established refineries on western coast

Geographical advantage to serve western and eastern markets

Strong domestic demand provides an effective edge against fluctuations in exports

Strategic Location


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Cost competitiveness

driven by lower

manufacturing wagesLow capital and cash

operating costs

Access to large,

technically skilled

manufacturing base and

workforce

Refinery Cash OperatingCost ($/ ton)

Premcor 15.4

Sunoco 17.6

S-Oil 17.6

SK Corp 22.7

Zhenhai 9.5

Sinopec 14.7

Indian Ref. 14.6

Cash Operating costs

:Source A T Kearney

Cost Competitiveness


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Aggregate Petrochemical Demand in 000T Major capacity additions post

1991 have significantly reducedimport dependence

Petroleum Chemicals andPetrochemicals Investment

( )Regions PCPIR being set up

Major capacity additions done byIOC and RIL

Demand for polymers alone has the potential toreach 12.5 MMT by the end of the 11 th Five-YearPlan, growing at a CAGR of 18%.

0

5000

10000

15000

20000

25000

30000

2005 2006 2007 2011-12

. - .row in g rapid ly at 1 5 2 5 ti mes th e GDP g ro wth ra te

:Integration Petrochemical Industry


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Worlds 6th largest refiner with 3% of world oil consumption

Over 10,000 KM products pipeline network

Excellent maritime infrastructure:

POL facilities at 14 locations 39 berths

2 barge jetties

8 SPMs

Infrastructure


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( )in ga pore MMTPA:e f i n e r y C a pa c i t y 6 7:e f i n e r y p r od u c t s u r p lu s 40:r o d u c t s u p pl i e d t o A s i aP a c i f i c

( )iddl e Ea st MM TP A:e f i n e r y C ap a c i ty 34 0:e f i n e r y p ro d u c t s u r p l u s 9 2:r o d u c t s u pp l i e d t o A s i a/a ci fi c E ur op e

India

India as a refining hub&competing with Singapore Middle East


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SOLUTIONS


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Usingthe

Pitchbook

Templ

ate

roblems of Petroleum:ndustryExploration and development of new fields

Geographical problemsWastage problemsFluctuation in prices: financial problems

Skilled human resources are aging andgrowing scarce

Environmental problems


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Usingthe

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ate

OpportunitiesDevelopment of unconventional resources

Maturing oil producing basinsDemand for oilfield servicesSignatory to international treaties

Augmentation of refining capacityExpansion of distribution segment


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ate

:olutionsA green field refinery on Gujarat coast.

Strategically located in the major maritime

route from Middle East

Geographical advantage to serve western

and eastern markets

Strong domestic demand

Established refineries on western coast

Documents

Analysis of Petroleum Industry in India