Oil sector

OIL SECTOR IN INDIA
PRESENTED BY:
ABHISHEK SHARMA
B.Tech – M.E.
1574840002
(3rd YEAR)
SESSION:2017-18

Oil sector
Oil sector includes the global processes of
exploration,extraction, refining, transporti
ng (often by oil tankers and pipelines), and
marketing of petroleum products.
Oil sector is among the six core industries
in India and plays a major role in
influencing decision making for all the
other important sections of the economy.
Source : Internet : en.wikipedia.com/oil sector, Quora, www.petroleum.nic.in,economicsdiscussion.net,ppac.org.in,ibef.org

MARKET SIZE
 India is expected to be one of the largest
contributors to non-OECD petroleum
consumption growth globally.
 India is the fourth-largest Liquefied Natural Gas
(LNG) importer after Japan, South Korea and
China, and accounts for 5.8 per cent of the total
global trade.
 The demand of Petroleum Oil and Lubricants
grew at a Compound Annual Growth Rate
(CAGR) of 5.6 per cent under the 12th Five Year
Plan (2012-17).

GDP CONTRIBUTION
 The petroleum sector, which is inclusive of
refining, transportation, and marketing of these
products, contributes about 15% to India's
GDP.

INVESTMENTS
 According to data released by the Department
of Industrial Policy and Promotion (DIPP), the
petroleum and natural gas sector attracted FDI
worth US$ 6.86 billion between April 2000 and
March 2017.

Following are some of the major
investments by companies in the oil sector:
 Some companies have signed an agreement to
build integrated refinery-cum-petrochemicals
complexes, which would have a capacity of 60
million metric tonnes per annum and cost
approximately US$ 40 billion are as follows:
 Reliance Industries Ltd (RIL).
 Indian Oil Corp Ltd (IOC)
 Bharat Petroleum Corp Ltd (BPCL)
 Hindustan Petroleum Corp Ltd (HPCL)

Contd.
 Indian Oil Corporation expects to invest Rs
20,000 crore (US$ 3.1 billion) over the next four
years covering 20 projects in order to add a 25
million tonne (MMT) pipeline to its existing
pipeline capacity of 93.7 MMT.

GOVERNMENT INITIATIVE
 The Government of India plans to build a nine million
tonne (MT) refinery in Rajasthan as well as a 60 MT
refinery in Maharashtra, auction oil and gas fields,
increase use of liquefied natural gas (LNG), and is in
discussions with Saudi Arabian Oil Co (Saudi
Aramco) regarding investments in India, as per
Mr.Dharmendra Pradhan, Minister of State for
Petroleum and Natural Gas, Government of India.
 The Government of India plans to unveil a new policy
for renewing and extending the lease of 28 oil and gas
blocks in the country, with a view to attract more
investments into these fields.

REFINING OPERATIONS
 Fractionation (Distillation)
 Conversion Processes:
• Decomposition (by thermal and catalytic cracking)
• Unification ( combining through alkylation and
polymerization)
• Alteration (rearranging with isomerization and
catalytic reforming)
 Treatment processes: It involves removal of
impurities and involves physical or chemical
separations.

PRODUCTION
 India produced 36.95 MTs of crude petroleum in 2015-
16. Production of crude petroleum in India had a CAGR
of 0.84% between 2006-07 and 2015-16. The CAGR for
natural gas production during the same period was
0.16%. India produced 231.92 MTs of petroleum
products in 2015-16, recording a growth of 4.88% over
the previous year. Among petroleum products, high
speed diesel oil accounted for 42.51%, followed by Motor
Gasoline (15.23%).
 India produced 25.46 billion cubic meters of natural gas
in 2015-16, a decline of 5.41% from the previous fiscal.

CONSUMPTION
 The estimated total consumption of crude oil in
India rose from 146.55 MMT in 2006-07 to
232.87 MMT in 2015-16 with a CAGR of 4.74%.
High speed diesel oil accounted for 40.42% of
total consumption of all types of petroleum
products in 2015-16, followed by Petrol (11.83%),
LPG (10.63%), Petroleum Coke (10.45%) and
Naphtha (7.19%).
 India is highly dependent on import of crude oil.
Net imports of crude oil rose from 111.50 MTs
during 2006-07 to 202.85 MTs during 2015-16.
Although more than 70% of its crude oil
requirements and part of the petroleum product
requirement is met from imports, India has
developed sufficient processing capacity over the
years to produce different petroleum products.

HISTORY
 The first oil deposits in India were in 1889 near the
town of Digboi in the state of Assam.This discovery
came on the heels of industrial development. The
Assam Railways and Trading Company (ARTC) had
recently opened the area for trade by building a
railway and later finding oil nearby. The first well
was completed in 1890 and the Assam Oil
Company was established in 1899 to oversee
production. At its peak during the Second World
War the Digboi oil fields were producing 7,000
barrels per day.

RESERVES
 As on 31 March 2016, India had estimated
crude oil reserves of 621.10 million tonnes,
declining by 2.28% from the previous year.
The largest reserves are found in the Western
Offshore (39.79%), and Assam (25.89%). The
estimated reserves of natural gas in India as
on 31 March 2016 was 1227.23 billion cubic
meters, declining by 1.97% from the previous
year. The largest reserves of natural gas are
located in the Eastern Offshore (36.79%) and
the Western Offshore (23.95%).

Distribution of reserves by
state/region

Government companies in
Oil Sector of India
• Indian Oil Corporation
• Bharat Petroleum
• Hindustan Petroleum
• Oil India limited

Imports of petroleum products
 India is heavily dependent on crude oil imports,
with petroleum crude accounting for about 34
percent of the total inward shipments.
 Imports of Petroleum Crude & Products in India
decreased to 515.22 INR Billion in February from
554.23 INR Billion in January of 2017. Imports of
Petroleum Crude & Products in India averaged
539.91 INR Billion from 2014 until 2017, reaching
an all time high of 882.38 INR Billion in September
of 2014 and a record low of 321.70 INR Billion in
March of 2016.

Export of petroleum products
 Exports of petroleum products have been
rising over the years. India does not export
crude oil and natural gas.

Source : Internet : en.wikipedia.com/oil sector, Quora,
www.petroleum.nic.in,economicsdiscussion.net,ppac.org.in,ibef.org

TRANSPORTATION
 Transportation and storage in the oil industry pertains to the
movement of crude oil from the oil fields (where oil has been
discovered) to petroleum refineries (where the oil is further
processed) to storage areas, where the petroleum products are
stored for distribution and emergency reserves.
 In its raw state, crude oil is transported by two primary
modes: tankers, which travel interregional water routes, and
pipelines where most of the oil moves through for at least part
of the route.
 Once the oil has been refined and separated from natural gas,
pipelines transport the oil to another carrier or directly to a
refinery. Petroleum products then travel from the refinery to
market by tanker, truck, railroad car, or more pipelines.

Government Acts in Oil sector
 The petroleum act (1934)
 The oil fields regulation and development act
(1948)
 Essential commodities act (1954)
 Petroleum and mineral pipeline act (1962)
 Oil industry development act (1974)
 The petroleum and natural gas regulatory
board act (2006)

The petroleum act (1934)
 An Act to consolidate and amend the law
relating to the import, transport, storage,
production, refining and blending of petroleum.

OIL FIELDS REGULATION AND
DEVELOPMENT ACT
 An Act to provide for the regulation of
oilfields and for the development of [mineral
oil resources].
 “oilfield” means any area where any operation
for the purpose of obtaining natural gas and
petroleum, crude oil, refined oil, partially
refined oil and any of the products of
petroleum in a liquid or solid state, is to be or
is being carried on.

ESSENTIAL COMMODITIES ACT
 The Essential Commodities Act is an act of
Parliament of India which was established to
ensure the delivery of certain commodities or
products, the supply of which if obstructed
owing to hoarding or black marketing would
affect the normal life of the people. This
includes foodstuff, drugs, fuel (petroleum
products) etc.

PETROLEUM AND MINERAL PIPELINE
ACT
 The act to provide the acquisition of right of user
of land for laying pipelines for the transport of
petroleum and minerals.
 This act published in 7th December 1962.

OIL INDUSTRY ACT
OIL INDUSTRY ACT, 1974.ACT NO. 47
OF 1974.[26th September, 1974.] An Act to
provide for the establishment of a Board for the
development of oil industry and for that purpose
to levy a duty of excise on crude oil and natural
gas and for matters connected there with.

THE PETROLEUM AND GAS
REGULATORY ACT (2006)
An Act to provide for the establishment of
Petroleum and Natural Gas Regulatory Board to
regulate the refining, processing, storage,
transportation, distribution, marketing and sale of
petroleum, petroleum products and natural gas
excluding production of crude oil and natural gas so
as to protect the interests of consumers and entities
engaged in specified activities relating to petroleum,
petroleum products and natural gas and to ensure
uninterrupted and adequate supply of petroleum,
petroleum products and natural gas in all parts of
the country and to promote competitive markets
and for matters connected therewith.

TAXES
 The government can collect revenue from
the oil sector by a variety of tax.

Simplified calculation for price of petrol
and diesel in India
Petrol Price Diesel Price
International Price of
crude oil with Ocean
Freight
$55 per Barrel=Rs3520
per barrel
$55 per Barrel=Rs3520
per barrel
1 Barrel of crude oil 159 litres 159 litres
Crude oil cost per litre Rs 22.14 Rs 22.14
Entry Tax, Refinery
Processing, Landing
Cost & Other
Operational Costs
Rs 6.03 per Litre Rs 5.29 per Litre
OMC Margin,
Transportation, Freight
cost
Basic Cost of Fuel after
Refining Cost
*1 Dollar =Rs 64 as of November 2017

( 2 1 . 1 % )
(30.5%)

(29.8%)
( 1 4 . 8 % )

Problems faced by oil sectors
 Problem 1. Shortage of Petroleum Crude.
 Problem 2. Dependence on Foreign Countries.
 Problem 3. Price Hike.
 Problem 4. Shortage of Oil Refining Capacity.
 Problem 5. Exploration of New Reserves.
 Problem 6. Technical Problems.
 Problem 7. Pollution.
 Problem 8. Lack of Market-Determined Pricing
System.

 The Indian Oil industries is one of the six
core industries in India and has very
significant forward linkages with the entire
economy. Government has taken many steps
to regulate it. The steps are also taken to
increase the indigenous oil and gas reserves.
 Although there are few loop holes which
should be taken care of as soon as possible.

Contd.
So, here some of my suggestion are:
 Taxes should be reduced.
This can be done by imposing the GST on it.
 Currently, consumers pay three major taxes on
petrol. These taxes include Excise Duty (charged
by the centre), VAT or Value Added Tax (charged
by respective states) and the dealer’s
commission.

Contd..
• .
How GST may change the scene?
In case, GST is applied on petro products, it will
stand to include both VAT and excise duty and will
be replaced by one of the four broad tax slabs of the
new tax arrangement. Assuming that fuel is charged
even under the highest tax slab of 28 per cent, the
prices of petroleum products will fall sharply.
For example, if 28 per cent GST is imposed upon the
dealer’s base price of Rs 30.42, the consumer will
have to pay only Rs 39.30 for a litre of petrol, which
is Rs 31 less than the existing price.

Some Hypothetical Solution
 Production of Petroleum Products by the
conversion of plastic waste into the crude oil
by Pyrolysis.
ALTERNATIVE :
 Use of Hydrogen fuel.

 Wikipedia
 www.petroleum.nic.in
 www.economicsdiscussio
n.net
 www.ppac.org.in
 www.ibef.org

Some Private Petroleum Companies
of India are:
COMPANY CEO ADDRESS CONTACT
NO.
EMAIL
ID.
Reliance
Petroleum Ltd.
Mr. Sudhakar
Tiwari
Agricultural College Ln,
Near Company Bagh
Chouraha, Chandra
Shekhar Azad University of
Agriculture, Nawabganj,
Kanpur, Uttar Pradesh
208002
1800 102 7382 custome
rcare.pet
roleum@
ril.com
Tata Petrodyne Ltd Mr . Shyam Vyas
Rao
Tata Petrodyne Limited
5th Floor, West Wing,
Metropolitan Building,
Bandra Kurla Complex,
Bandra (E), Mumbai –
400051
+91-22-6733
8484
tatapetro
dyne@g
mail.com

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