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GROWTH & FUTURE OF INDIAN OIL SECTOR

`. GROWTH & FUTURE OF INDIAN OIL SECTOR. S.N. MATHUR. NABC BUSINESS FORUM HOUSTON ----- JUNE , 2006. INDIAN PETROLEUM SECTOR.  THE PAST  THE PROSPECTS & POSSIBILITIES. INDIAN PETROLEUM INDUSTRY HIGHLIGHTS. INDIA’S PETROLEUM CONSUMPTION IS THE NINTH HIGHEST IN THE WORLD

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GROWTH & FUTURE OF INDIAN OIL SECTOR

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  1. ` GROWTH & FUTURE OF INDIAN OIL SECTOR S.N. MATHUR NABC BUSINESS FORUM HOUSTON ----- JUNE , 2006

  2. INDIAN PETROLEUM SECTOR  THE PAST  THE PROSPECTS & POSSIBILITIES

  3. INDIAN PETROLEUM INDUSTRY HIGHLIGHTS • INDIA’S PETROLEUM CONSUMPTION IS THE NINTH HIGHEST IN THE WORLD (AFTER USA, JAPAN, CHINA, GERMANY, RUSSIAN FEDERATION, ITALY, FRANCE AND SOUTH KOREA) • GROWTH RATE OF CONSUMPTION IS ONE OF THE HIGHEST IN THE WORLD. • SERIOUS NEED FOR QUANTUM INCREASE IN INDIGENOUS CRUDE PRODUCTION • LARGE INVESTMENTS REQUIRED IN REFINING AND MARKETING ALSO • PROGRESSIVE LIBERALIZATION AND SHIFT FROM APM TO MDPM

  4. THE PAST HISTORICAL PERSPECTIVE

  5. BEGINNING OF OIL IN INDIA OIL WAS DISCOVERED IN INDIA MORE THAN A CENTURY AGO (IN 1889) WITHINA DECADE OF THE FIRST OIL FIND IN USA .  WORLD’S OLDEST (STILL WORKING) REFINERY WAS ESTABLISHED IN ASSAM, IN 1901.

  6. THE EARLY PLAYERS ONLY FIVE MARKETING COMPANIES TILL MID-FIFTIES • THREE MULTINATIONAL COMPANIES MARKETED IMPORTED PETROLEUM PRODUCTS • TWO INDIAN COMPANIES MARKETED INDIGENOUS & IMPORTED PRODUCTS • ESSO • CALTEX • BURMAH-SHELL • INDO BURMA PETROLEUM (now IBP Co. Limited) • ASSAM OIL COMPANY

  7. BEGINNING OF MODERN PETROLEUM INDUSTRY – IN INDIA • ESSO 1954 • BURMAH-SHELL 1955 • CALTEX 1957 • 3COASTAL REFINERIES SET UP BASED ON IMPORTED CRUDE

  8. THE EARLY DAYS - UPSTREAM SECTOR EXPLORATION AND PRODUCTION IN NORTH-EAST BY ASSAM OIL COMPANY  GOVERNMENT OF INDIA SET UP OIL & NATURAL GAS COMMISSION - 1956  FIRST OIL DISCOVERED OUTSIDE ASSAM : IN GUJARAT - 1956  LARGEST OFF-SHORE FIND BOMBAY HIGH - 1974  JOINT VENTURE BETWEEN ASSAM OIL CO. & GOVT. OF INDIA - OIL INDIA - 1959

  9. PUBLIC SECTOR IN DOWNSTREAM INDUSTRY • INDIAN OIL MARKETING SET UP IN 1962 (AND MERGED WITH INDIAN REFINERIES LTD TO FORM IOC IN 1964) • FIRST PUBLIC SECTOR REFINERY BY INDIAN • REFINERIES LTD IN GUWAHATI - 1962 •  FOLLOWED BY IOC REFINERIES: • BARAUNI ---- 1964 • KOYALI ---- 1965 • HALDIA ---- 1974 • MATHURA ---- 1982 •  BRPL, BONGAIGAON ---- 1979

  10. JOINT SECTOR REFINERIES THIS WAS FOLLOWED IN EARLY SIXTIES BY- JOINT VENTURES  CRL - JOINT VENTURE WITHPHILIPS PETROLEUM, USA 1966 (NOW KOCHI REFINERIES LTD - KRL)  MRL - JOINT VENTURE WITH AMOCO & NATIONAL IRANIAN OIL COMPANY 1969 (NOW CHENNAI PETROLEUM CORPORATION - CPCL)

  11. NATIONALIZATION OF OIL SECTOR NATIONALIZATION OF OIL SECTOR STARTED IN 1970 WITH IBP COMPANY LIMITED FOLLOWED BY - ESSO - 1974 - CALTEX - 1976 - BURMAH-SHELL - 1976 - OIL INDIA - 1981 - ASSAM OIL - 1982 HINDUSTAN PETROLEUM BHARAT PETROLEUM AOD OF IOC

  12. PERCENTAGE MARKET SHARE OF OIL COMPANIES IN INDIA

  13. JOINT SECTOR / PRIVATE REFINERIES  MRPL -FIRST JOINT VENTURE BETWEEN INDIAN PARTNERS - 1996  RPL - FIRST PRIVATE REFINERY (BIGGEST GRASS-ROOT REFINERY IN THE WORLD - 27 MILLION TONNES PER ANNUM) - 1999

  14. DOWNSTREAM OIL INDUSTRY REGULATION & DEREGULATION REFINING REFINERY INVESTMENT DE-LICENSED INCREASING GOVERNMENT PARTICIPATION NATIONALIZATION OF OIL SECTOR FREE INVESTMENT LOW PRODUCTION CAPACITY TOWARDS DECONTROL FORMATION OF OIL REFINING COMPANIES MARKETING OPEN MARKETING OF MANY PRODUCTS MOSTLY IMPORTED PRODUCTS CO-EXISTENCE OF PSUs & PVT. COs. REGULATORY MONITORING BY GOVT. PRIVATE PARTICIPATION ALLOWED SELECTIVELY 1962 1970 1990 1947

  15. DOMINANCE OF PETROLEUM AS ENERGEY SOURCE

  16. CHANGE IN ENERGY CONSUMPTION PATTERN COMMERCIAL FUELSNON-COMMERCIAL FUELS

  17. SHARE OF ENERGY SUPPLY IN INDIA (%) YEARCOALOILGAS HYDEL NUCLEAR 1973-74 62 32 2 4 ~ 0 1983-84 60 33 2 4 1 1993-94 58 31 7 3 1 1997-98 55 35 7 2 1 2001-02 50 32 15 2 1 2006-07 50 32 15 2 1 2010-11 53 30 14 2 1 2024-25 50 25 20 2 1

  18. DEMAND GROWTH

  19. GROWTH OF OIL CONSUMPTION

  20. OIL CONSUMPTION (SINCE 1950) COMPOUNDED ANNUAL RATE OF GROWTH (%)

  21. INDIGENOUS CRUDE PRODUCTION

  22. REFINERY THRUPUT HISTORICALS MILLION TONNES

  23. THE PROSPECTS FUTURE SHAPE OF OIL INDUSTRY

  24. PETROLEUM SECTOR GROWTH : 2000 - 2007 DEMAND GROWTH FROM 90 MMT TO 148 MMT INCREASE 64 % REFINING CAPACITY GROWTH FROM 111 MMT TO 156 MMT INCREASE 41 % CRUDE IMPORT INCREASE FROM 87 MMT TO 125 MMT INCREASE 44 %

  25. THE POSSIBILITIES T MAJOR FUTURE ISSUES

  26. PRODUCT QUALITY CHANGES

  27. PRODUCT SPECIFICATION INDIA IS MOVING TOWARDS INTERNATIONALSTANDARDS

  28.  APRIL,1993  OCTOBER 1993  FEBRUARY, 1997  NOVEMBER, 1997  APRIL, 1998  JUNE, 1998 PARALLEL MARKETING OF SKO, LPG, LSHS LUBRICANT DEREGULATED DIRECT IMPORT OF NAPHTHA, FO, LSHS, LSWR, BITUMEN BY CONSUMERS LEVEL PLAYING FIELD FOR EXPLORATION ‘R’ GROUP ALL PRODUCTS FREED EXCEPT MS, ATF, HSD, LPG & SKO TARIFF ADJUSTED IMPORT PARITY PRICES TO ALL REFINERIES (FOR CONTROLLED PRODUCTS) REFINING FREED FROM LICENSING HISTORY OF DEREGULATION

  29.  1999  2000  ????  ???? --- --- TOTAL DEREGULATION HISTORY OF DEREGULATION (contd.)

  30. FUTURE SCENARIO CHALLENGES & OPPORTUNITIES

  31. FUTURE SCENARIO  ASSURED GROWTH  COMPETITIVE MARKET  HIGH LEVEL OF CONSUMER FOCUS  SURVIVAL & ACCELERATED GROWTH FOR THE EFFICIENT

  32. CHALLENGES & OPPORTUNITIES  CRUDE AVAILABILITY --- E&P WITHIN INDIA & ABROAD  UPGRADATION OF BOTTOM OF THE BARREL ( RESID CRACKING)  BETTER CAPITAL PRODUCTIVITY  BETTER SHARING OF FACILITIES THAN DURING APM PERIOD  PRODUCT SWAP ARRANGEMENTS TO MINIMISE COSTS

  33. THANK YOU

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