Indian Option

Muzahid Khan (muzahidkhan123@gmail)

PETROLEUM PRODUCTS

IMPORT & EXPORT

A Presentation By

UNIVERSITY OF PETROLEUM & ENERGY STUDIES

Highlights

International Trading of Petroleum Products

The Indian Scenario

India-The Future Refinery Hub for exports

Internationally traded Petroleum Products

Motor Gasoline

Jet Fuel

Kerosene

Distillate Fuel Oil

Residual Fuel Oil

Liquefied Petroleum Gas

Major Refining Hubs

RotterdamRefinery Capacity: 64 MMTPARefinery product surplus: 62 MMTPAProduct Export: Europe hinterland, US

Middle EastRefinery Capacity: 340 MMTPARefinery product surplus: 92 MMTPAProduct Export: Far East, Asia, Europe

US Gulf Coast (USGC)Refinery Capacity: 385 MMTPARefinery product surplus: 106 MMTPAProduct Export: Far East, Asia, Europe

SingaporeRefinery Capacity: 67 MMTPA Refinery product surplus: 40 MMTPAProduct Export: Asia Pacific

North Amer-ica

Central and S. America

Europe Eurasia Middle East Africa Asia & Oceania

0

2000

4000

6000

8000

10000

12000

14000

16000

4286.76 1319.55 7349.02 350.66 867.54 877.55 6032.51

2180.36

2348.52

6414.38

2351.2

3360.69

1158.55

4051.9

Imports Exports

Thou

sand

Bar

rels

per D

ayTotal Exports and Imports of Refined Petroleum Products

WORLD TOTAL

Imports: 21,083.59Exports: 21,856.61

Source: EIA (2008)

USA20%

China9%

Ger-many

3%Russia

6%

Japan5%

India3%

S. Arabia2%

S. Korea3%

Others48%

Total: 88.6 mbpd(4431 MMTPA)

World Refining capacity 1.1.2008

• World oil demand grown faster than refining capacity-better capacity utilization• World average refy capacity utilization moves around 75% (1980) to 87% (2008)• USA: Refining capacity declining, reached peak of 18.6 mbpd in 1980.

505560657075808590

Refinery capacity

World Refining capacity & thruput1980-2008 (mbpd)

Sources: BP Stats 2009

88.6

World Oil Refining

Regional product balance, 2020All figures in MMTPA

Asia Pacific Deficit: 419

LPG: 40Naphtha: 56MS: 107Jet kero: 26 HSD: 86Others: 28

Surplus: 0Net: (-) 419

• By 2020, world would be net product deficit @ 247 MMTPA– 100 MMT surplus (LPG:49 & Fuel Oil:51)– 347 MMT deficit (Naphtha:15, MS:72, Jet/kero:88, HSD:147 & Others:25)

Source: EIA

Middle EastDeficit: 31

MS: 26Others: 5

Surplus: 188LPG: 85Naphtha: 44Jet/kero: 19HSD: 17FO: 23

Net: (+) 157

Africa Deficit: 71

LPG: 5MS: 24Jetkero: 3HSD: 38Others: 1

Surplus: 36Naphtha: 11FO: 25

Net: (-) 35

Latin America Deficit: 50

Naphtha: 7MS: 10HSD: 32Others: 1

Surplus: 30LPG: 5FO: 25

Net: (-) 20

North America Deficit: 43

MS: 24Jet kero: 19

Surplus: 68LPG: 19Naphtha: 15HSD: 5FO: 14Others: 15

Net: (+) 25

Europe Deficit: 145

LPG: 17Naphtha: 23Jet kero: 54 HSD: 49

Surplus: 133MS: 126FO: 7

Net: (-) 12

RussiaDeficit: 13

MS: 7Jetkero: 4Others: 3

Surplus: 71LPG: 1Naphtha: 2HSD: 34FO: 34

Net: (+) 58

Highlights

International Trading of Petroleum Products

The Indian Scenario

India-The Future Refinery Hub for exports

US$ Billion

Source: PNGRB

India:Imports & Exports

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

0

10

20

30

40

50

60

70

80

4 4

9

14 1316

18

26

39

48

68

76

4 3 3

2 1 2 2 36

9

15 14

0.4 0.10.2 2 2 2 4

711

18

28 26

Crude Oil Import

ProductExport

ProductImport

India - A Net Exporter of Products

Gross crude and petroleum products • Crude/product Imports : ~ 28% of total imports• Product Exports : ~ 8% of total

exports

Motor Gasol-ine

Jet Fuel Kerosene Distillate Fuel Oil

Residual Fuel Oil

LPG Others0

50

100

150

200

250

53.12 60.42 2.56

172.99

32.86

1.68

127.07

0.04 18.66 14.96 14.4 75.77 96.62

Imports Exports

Thou

sand

Bar

rels

per

Day

Total Exports and Imports of Refined Petroleum Products in India

Net Imports: 220.45Net Exports: 450.70

Source: EIA (2008)

MUMBAI(BPC 12.0)(HPC 5.5+ 2.4)

MATHURA(8.0)

GUWAHATI (1.0)BARAUNI

(6.0)

HALDIA(6.0+1.5)

KOCHI(7.5 + 2.0)

BARODA(13.7)

DIGBOI(0.65)

NARIMANAM (1.0)

MANGLORE(9.69 +5.31)

PANIPAT(12.0+3.0)

VISAKH(7.5+0.8)

NUMALIGARH(3.0)

BONGAIGAON(2.35)

CHENNAI (9.5+ 1.7)

JAMNAGAR(RIL 33.0 + 29.0)ESSAR 10.5+ 3.5)

TATIPAKA(0.08 + 0.08)

PARADEEP (15.0)

BHATINDA (9.0)

OthersNew / Additions

BINA (6.0)

Subsidiaries of IOC

Existing IOC

Refineries No MTPA % of Ind

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

India : Product Demand & Refining Capacity

2006-07 2011-12 2016-170

50

100

150

200

250

300

350

149

235

302

120135

162

Refining Cap Product Demand

Gap between Refining Capacity & Product Demand

140

29

India will continue to be product surplus

Source: Draft XI Plan Demand Document

Import/Export requirement for crude/products to be quite substantial

100

Surplus refining capacity is expected to increase further by 2030

• Administered Pricing Mechanism (APM) dismantling effective 1.4.2002

• Gas Pricing

• NELP

• Policy on Refining

• Auto Fuel Policy

• Policy on Marketing of Petroleum Products

• Gas Pipeline Policy

• Petroleum Product Pipeline Policy

• FDI Policy

Govt. of India Policies

Highlights

International Trading of Petroleum Products

The Indian Scenario

India-The Future Refinery Hub for exports

• 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

• Cost competitiveness driven by lower manufacturing wages

• Low capital and cash operating costs

• Access to large, technically skilled manufacturing base and workforce

Refinery Cash Operating Cost ($/ 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

• For Indian companies, the surplus capacity

comes at a time when the international

refining industry witnesses capacity crunch

• New capacity creation to address the current

refining challenges

• Above measures contribute in improving the

refining margins

Refinery Configuration

Aggregate Petrochemical Demand in ‘000T• Major capacity additions post 1991

have significantly reduced import dependence

• Petroleum Chemicals and Petrochemicals Investment Regions (PCPIR) being set up

• Major capacity additions done by IOC and RIL

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

0

5000

10000

15000

20000

25000

30000

2005 2006 2007 2011-12

Growing rapidly at 1.5 - 2.5 times the GDP growth rate

Integration: Petrochemical Industry

• World’s 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

Singapore (MMTPA)Refinery Capacity: 67 Refinery product surplus: 40Product supplied to: Asia Pacific

Middle East (MMTPA)Refinery Capacity: 340 Refinery product surplus: 92Product supplied to: Asia Pacific/Europe

India

India as a refining hub competing with Singapore & Middle East

• Leverage strategic advantage of coastal locations– Consolidate with current/proposed

location– Proposed PCPIRs / SEZs

• Cost competitiveness to position the product in target markets

• Integration with petrochemicals, derivative and utility units, for maximizing value addition

• Environmental norms and product quality specs to meet the export markets

Opportunity for India to emerge as a refining hub appears to be real and attractive

Way Forward

References

• PNGRB India

• MOPNG

• EIA