The Indian Petroleum industry is one of the oldest in the world, with oil being struck in Assam in 1867. The industry has come a long way since then. For nearly fifty years after independence, the oil sector in India has seen the growth of giant national oil companies in fairly protected environment. A process of reforming the sector begun in the mid nineties, in phased manner focused on changing them from a state control to face open competition. The move paved the way for India to attract funds and technology from abroad into our petroleum sector.
There have been significant additions to its refining capacity since India’s independence. In fifties, three coastal refineries were established by multinational oil companies operating in India at that time. These included refineries by Burma Shell, and Esso Stanvac at Mumbai, and by Caltex at Visakhapatnam. Today, there are a total of 18 refineries in the country comprising 17 in the Public Sector, two in the private sector. The 17 Public sector refineries are located at Guwahati, Barauni, Koyali, Haldia, Mathura, Digboi, Panipat, Vishakapatnam, Chennai, Nagapatinam, Kochi, Bongaigaon, Numaligarh, Mangalore, Tatipaka, and two refineries in Mumbai. The private sector refineries built by Reliance Petroleum Ltd and Essar Oil are in Jamnagar. Reliance reforms the biggest oil refinery in Asia.
The foundation of the Oil & Gas Industry in India was laid by the Industrial Policy Resolution, 1954, when the government announced that petroleum would be the core sector industry. In pursuance of the Industrial Policy Resolution, 1954, Government-owned National Oil Companies ONGC (Oil & Natural Gas Commission), IOC (Indian Oil Corporation), and OIL (Oil India Ltd.) were formed. ONGC was formed as a Directorate in 1955, and became a Commission in 1956. In 1958, Indian Refineries Ltd, a government company was set up. In 1959, for marketing of petroleum products, the government set up another company called Indian Oil Company Ltd. In 1964, Indian Refineries Ltd was merged with Indian Oil Company Ltd. to form Indian Oil Corporation Ltd.
During 1960s, a number of oil and gas-bearing structures were discovered by ONGC in Gujarat and Assam. Discovery of oil in significant quantities in Bombay High in February, 1974 opened up new avenues of oil exploration in offshore areas. During 1970s and till mid 1980s exploratory efforts by ONGC and OIL India yielded discoveries of oil and gas in a number of structures in Bassein, Tapti, Krishna-Godavari-Cauvery basins, Cachar (Assam), Nagaland, and Tripura. In 1984-85, India achieved a self-sufficiency level of 70% in petroleum products. The Refineries and marketing companies under control by foreign oil companies were taken over by Government of India during the Seventies
In 1984, Gas Authority of India Ltd. (GAIL) was set up to look after transportation, processing and marketing of natural gas and natural gas liquids. GAIL has been instrumental in the laying of a 1700 km-long gas pipeline (HBJ pipeline) from Hazira in Gujarat to Jagdishpur in Uttar Pradesh, passing through Rajasthan and Madhya Pradesh.
By the end of 1980s, the indigenous oil production had begun to decline whereas there was a steady increase in consumption and reduced domestic oil production was able to meet only about 35% of the domestic requirement. The situation was further compounded by the resource crunch in early 1990s followed by balance of payment crisis. The development of some of the then newly discovered fields (Gandhar, Heera Phase-II and III, Neelam, Ravva, Panna, Mukta, Tapti, Lakwa Phase-II, Geleki, Bombay High Final Development schemes etc. In line with the economic reform process, the Government decided to go for the petroleum sector reforms with a view to attract funds and technology from abroad into the petroleum sector.
The sector in recent years has been characterized by rising consumption of oil products, declining crude production and low reserve accretion. India remains one of the least-explored countries in the world, with a well density among the lowest in the world. With the annual demand crossing above 100 million tonne, India is the fourth largest oil consumption zone in Asia, even though on a per capita basis the consumption around 0.1 tonne, the lowest in the region- This makes the prospects of the Indian Oil industry even more exciting.
Historically the years since independence have, however, seen the rapid growth of the upstream and downstream oil sectors. There has been optimal use of resources for exploration activities and increasing refining capacity as well as the creation of a vast marketing infrastructure. The growing demand of oil products and opening up of the sector to private sector, immense opportunity created for investment and demand for a pool of highly trained and skilled manpower.
But with the consumption of hydrocarbons said to increase manifold in the coming decades (155mmtpa by the end of the 10th plan) the liberalization, deregulation and reforms in the petroleum sector was considered essential for the health and overall growth of our economy.
'With more than a billion people, a structural demographic shift resulting in exploding consumption expenditure, full deregulation of a 100 m tonne market growing at twice world averages, India represents one of the most exciting oil markets in the world today'
As the Indian Economy breaks the shackles of a hindu rate of growth to grow at a pace of 8% or 80, the single biggest beneficiary should be the oil & energy sector. Oil and energy are most happening sectors of the Indian economy today. PSU Oil Companies were in the limelight over the past many years for a variety of reasons- first, the growth of the oil companies in physical and financial terms, and recently their transformation to face the competition from the private sector players.
The government of India in order to increase exploration activity, approved the New Exploration Licensing Policy (NELP) in March 1997 which would level the playing field in the upstream sector between private and public sector companies in all fiscal, financial and contractual matters. The following features of NELP have attributed private sector investment industry from MNC’s:-
The government through Ministry of Petroleum and Natural Gas has conducted regular rounds of bidding to attract private investment in the upstream sector.
The total installed refining capacity of the refineries in the country at the end of march 2008 was 69.140 million tonnes per annum and the total is expected to go up to 131 mtpa by the year 20011-12. The expected increase in refining capacity should be sufficient to meet the growth in petroleum product demand (112 mtpa by the end of the ninth plan) with minimum level of imports.
Guwahati Refinery, the first in public sector, was set up in collaboration with Rumania. and commissioned on 1st January, 1962 with a design capacity of 0.75 MMTPA. The present capacity of this Refinery is 1.00 MMTPA. Hydrotreater Unit for improving the Quality of diesel has been installed and was commissioned in 2002. The refinery has also installed in 2003 Indmax Unit, a novel technology developed by its R&D Centre for upgrading heavy ends LPG, motor spirit and diesel oil.
Barauni Refinery in Eastern India was built in collaboration with the Soviet Union and went on stream in July, 1964. By November, 1967, the initial capacity of 2 MMTPA was expanded to 3 MMTPA by 1969. The present capacity of this refineries is 6.00 MMTPA. A Catalytic Reformer Unit (CRU) was also added to the refinery in 1997 for production of unleaded motor spirit. Projects are also planned for meeting future fuel quality requirements.
The Gujarat Refinery was built with Soviet assistance and went on stream in October, 1965. The Refinery had an initial installed capacity of 2 MMTPA and was designed to process crude from Ankleshwar, Kalol and Nawagam oilfields of Oil & Natural Gas Commission in Gujarat. In September, 1967, the capacity of the Refinery was expanded to 3 MMTPA. The capacity of the Refinery was further increased to 4.3 MMTPA through debottlenecking measures and to 7.3 MMTPA in October, 1978 by implementing an expansion project of Rs.56.07 crores. With the implementation of additional processing facilities the Refinery could achieve capacity of 9.5 MMTPA in 1989. The refining capacity was further expanded to 12.5 MMTPA with commissioning of 3.0 MMTPA CDU in September, 1999. The present refining capacity of this refinery is 13.70 MMTPA.
The Haldia Refinery for processing 2.5 MMTPA of Middle East crude was commissioned in January, 1975 with two sectors - one for producing fuel products and the other for Lube base stocks. The fuel sector was built with French collaboration and the Lube sector with Romanian collaboration. The refining capacity of the Refinery was increased to 2.75 MMTPA in 1989 through debottlenecking measures. The refining capacity was further expanded to 3.75 MMTPA with the commissioning of new crude distillation unit of 1.0 MMTPA in March, 1997. The present refining capacity of this Refinery is 6.00 MMTPA.
The Mathura Refinery with a capacity of 6.00 MMTPA was commissioned in January, 1982 excluding FCCU and Sulphur Recovery Units which were commissioned in Jan, 1983. The refining capacity of this refinery was expanded to 7.5 MMTPA in 1989 by debottlenecking and revamping. A DHDS Unit was commissioned in 1989 for production of HSD with low sulphur content of 0.25% wt. ( max.). The present refining capacity of this Refinery is 8.00 MMTPA.
The Refinery was set up at Digboi in 1901 by Assam Oil Company Limited. The Indian Oil Corporation Ltd. took over the Refinery and marketing management of Assam Oil Company Ltd. with effect from 14.10.1981 and created a separate division. This division has both Refinery and marketing operations. The Refinery at Digboi had an installed capacity 0.50 MMTPA. The refining capacity of the Refinery was increased to 0.65 MMTPA by modernization of Refinery in July, 1996. A new delayed Coking Unit of 1,70,000 TPA capacity was commissioned in 1999. A new Solvent Dewaxing Unit for maximizing production of micro-crystalline wax was installed and commissioned in 2003. The refinery has also installed Hydrotreater to to improve the quality of diesel.
The refinery was set up in 1998 at Baholi Village in Distt. Panipat, Haryana with a capacity of 6.00 MMTPA. The expansion of refining capacity from 6 MMTPA to 12 MMTPA has been recently completed.
The Refinery at Mumbai came into stream in 1954 under the ownership of ESSO. In March, 1974, Govt. of India acquired it. Hindustan Petroleum Corporation Ltd. was formed on 15.7.1974 after the merger of these companies. The capacity of the Mumbai Refinery of HPCL was 3.5 MMTPA which was increased to 5.5 MMTPA during 1986 after implementation of expansion programme.
In 1957, Visakh Refinery went on stream under the ownership of M/s Caltex India Ltd. In May, 1978, M/s Caltex Oil Refinery (India) was amalgamated with Hindustan Petroleum Corporation Ltd. The installed capacity of 1.5 MMTPA was increased to 4.5 MMTPA in 1985 and 7.5 MMTPA in 1999, through an expansion programme.
The Refinery at Mumbai came into stream in January, 1955 under the ownership of Burmah-Shell Refineries Ltd. Following the Government's acquisition of the Burmah-Shell, name of the Refinery was changed to Bharat Refineries Limited on 11.2.1976. In August, 1977, it became Bharat Petroleum Corporation Ltd along with Burmah-Shell’s marketing operation. The installed capacity of 5.25 MMTPA was increased to 6 MMTPA in 1985. The present refining capacity of the refinery is 12 MMTPA.
CPCL's second refinery is located at Cauvery Basin at Nagapattinam. The initial unit was set up in Nagapattinam with a capacity of 0.5 MMTPA in 1993 and later on its capacity was enhanced to 1.0 MMTPA.
The Kochi Refinery was set up in pursuance of a formation agreement dated 27th April, 1963 between Govt. of India, Phillips Petroleum Co. of USA and Duncan Brothers of Calcutta with an authorised capital of Rs.15 crores. Subsequently, the authorised capital was increased to Rs.75 crores and the paid up capital in March, 1989 stood at Rs.68.47 crores after issue of shares on rights basis. During the year, the Phillips Petroleum Company also completed withdrawal of their equity by disinvesting of shares. With this, in March 1989, Government was holding 61.58 percentage of equity shares of the Company. At present Kochi Refinery stands merged with M/s Bharat Petroleum Corporation Limited (BPCL). The installed capacity of 2.5 MMTPA was increased to 3.3 in September, 1973 and to 4.5 MMTPA in November, 1994. The capacity of the Refinery was further increased to 7.5 MMTPA in December, 95.
On 20th January, 1974, M/s BRPL was incorporated in Assam under the Companies Act, 1956 with an authorised capital of Rs.50 crores. With the objective of installation of the Refinery having a crude processing capacity of 1 MMTPA and a Petrochemicals Complex consisting of Xylene, Di-Methyl Terephthalate (DMT) and Polyester Staple Fibre (PSF) Units. The complex was built and commissioned in phases. The capacity of Crude Distillation Unit was increased to 1.35 MMTPA from April, 1987 by debottlenecking. Now the authorised capital (equity) of the company is Rs.200 crores. The paid-up capital as on date is Rs.199.82 crores. As a part of the restructuring steps taken up by Govt. of India, Indian Oil Corporation Limited acquired Govt's equity in 2000-01. In view of this BRPL became subsididary of IOCL in 2001.The capacity of the Refinery has been increased to 2.35 MMTPA in June, 1995 by installing additional unit.
Numaligarh Refinery, Popularly known as " Assam Accord Refinery" has been set up a grass -root refinery at Numaligarh in the district of Golaghat ( assam) in fulfilment of the commitment made by Government of India in the historic " Assam Accord" , signed on 15-8-1985 at an approved cost of Rs, 2,724 crore.
Numaligarh Refinery Limited ( NRL) was incorporated on 22-4-1993. Presently Bharat Petroleum Corporation Limited holds 51% of the company's equity. The other equity holder are Government of Assam, Oil Industry Development Board and Oil India Limited with equity participation of 10% each. The balance 19% equity is earmarked for a Public Issue. The refining capacity of this refinery is 3.0 MMTPA.
Government approved on 11.4.1991 the setting up a 3.0 MMTPA Oil Refinery at Mangalore at an estimated cost of Rs.1160 crores, including foreign exchange component of Rs.300 crores. The project has been implemented by a Joint Venture Company with Hindustan Petroleum Corporation Limited, Mumbai and Indian Rayon and Industrial Limited, Gujarat as Co-promoters. The Refinery was commissioned in March, 1996. MRPL which was a Joint Sector Company become a PSU subsequent on acquisition of its majority shares by ONGC. The capacity of the refinery was assessed at 3.69 MMTPA and has been further expanded to 9.69 MMTPA in September, 1999.
A mini refinery of ONGC with capacity of about 0.1 MMTPA with an approved cost of Rs.29.9 crore was commissioned in September, 2001 at Tatipaka in East Godavari District of Andhra Pradesh.
The Private Sector Refinery (RPL) was commissioned on 14th July, 1999 with an installed capacity of 27 MMTPA at Jamnagar. The present capacity of this refinery is 33.00 MMTPA.