Introduction: (jadu)

We are going to present on petroleum industry. Let me first differentiate between petroleum and
petrochemical industry. The petroleum industry includes the global processes of exploration,
extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum
products.

The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum is also
the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers,
pesticides, and plastics.

The petrochemical industry includes the products like Polymers, Polyester Intermediates,
Aromatics etc. It is related to production of various chemicals.
History Of world: (Khushbu)
Imperial Russia produced 3,500 tons of oil in 1825 and doubled its output by mid-century.[7]
After oil drilling began in what is now Azerbaijan in 1848, two large pipelines were built in the
Russian Empire.

The first petroleum company was Seneca Oil founded in 1858 in Pennsylvania by George Bissell
and Jonathan Eveleth. Originally it was called the Pennsylvania Rock Oil Company with the
objective of collecting oil from a spring at Titusville, Pennsylvania.

The first large oil refinery opened at Romania in 1859.

The first oil drilling in the United States began in 1859, when oil was successfully drilled in
Pennsylvania.In the first quarter of the 20th century, the United States overtook Russia as the
world's largest oil producer.

By the 1920s, oil fields had been established in many countries including Canada, Poland,
Sweden, the Ukraine, the United States, and Venezuela.

After World War II ended, the countries of the Middle East took the lead in oil production from
the United States.
History in India: (prachu)
The origin of petroleum industry in India can be traced back to 1867 when oil was struck at
Makum near Margherita in Assam.

At the time of Independence in 1947, the Oil & Gas industry was controlled by international
companies. India's domestic oil production was just 250,000 tonnes per annum and the entire
production was from one state – Assam.

After Independence, India also made significant additions to its refining capacity. In the first
decade after independence, 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.

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 Refineries Ltd.

During 1960s, a number of oil and gas-bearing structures were discovered by ONGC in Gujarat
and Assam.

In 1964, Indian Refineries Ltd was merged with Indian Oil Company Ltd. to form Indian Oil
Corporation Ltd.

Discovery of oil in significant quantities in Bombay High in February, 1974 opened up new
avenues of oil exploration in offshore areas.

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.

In 1991, with Hazira plant RIL made a landmark entry into petroleum industry. The private
sector refinery built by Reliance Industry Ltd is in Jamnagar in year 1999. It is the biggest oil
refinery in Asia.
(Nisha)
Public Sector Undertakings:

1. Bharat Petroleum Corporation Ltd.

2. Chennai Petroleum Corporation Limited
3. Cochin Refineries Ltd.
4. Gas Authority of India Ltd.
5. Hindustan Petroleum Corporation Ltd.
6. Indian Oil Corporation Ltd.
7. Oil India Ltd
8. Oil & Natural Gas Corporation Ltd
9. Gujarat State Petroleum corporation ltd.
10. GSPL- Gujarat State petronet Ltd.

Private Enterprises

1. Reliance industries
2. Vedanta Resources – Anil agarwal,
3. Cairn Energy India Ltd – london’s company,
4. Niko Resources –
5. Essar
 ORGANISATION STRUCTURE(SHachi)
Ministry of Petroleum & Natural Gas

Petroleum and Natural Gas Regulatory Board

Directorate of PSUs

Functional Director

- MD
- Directors

Note: Add some details or theory here if possible..

 Growth of the Petroleum Industry(Harsh and Ronak)
By the end of 1980s, the petroleum sector was in the doldrums. Oil production had begun to
decline whereas there was a steady increase in consumption and 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. The Government had no money for the development of
some of the then newly discovered fields. This forced the Government to go for the petroleum
sector reforms which had become inevitable if India had to attract funds and technology from
abroad into the petroleum sector.

The government in order to increase exploration activity approved the New Exploration
Licensing Policy (NELP) in March 1997 to ensure level playing field in the upstream sector
between private and public sector companies in all fiscal, financial and contractual matters.

To meet its growing petroleum demand, India is investing heavily in oil fields abroad. India's
state-owned oil firms already have stakes in oil and gas fields in Russia, Sudan, Iraq, Libya,
Egypt, Qatar, Ivory Coast, Australia, Vietnam and Myanmar. Oil and Gas Industry has a vital
role to play in India's energy security and if India has to sustain its high economic growth rate.

Over the years India Petroleum Industry has played an influential part in triggering the speedy
expansion of the country's economy by contributing 15% in the total GDP.

ItemNo. 20005-06 2006-07 2007-08 2008-09 2009-10

Reserves
Crude oil (In MMT) 786 756 725 769 775
Natural Gas (In BCM) 1101 1075 1055 1050 1074

Productions
Crude oil (In MMT) 32.19 33.988 34.117 33.59 33.69
Petroleum Products (In MMT) 119.75 135.26 144.93 150.52 149.65
LPG from natural gas (In MMT) 2.19 2.09 2.06 2.16 2.24
The petroleum industry in India is particularly favorable for foreign investment because the
industry is one of the fastest growing segments, and it has shown a staggering growth rate of
around 13% in the recent past.
 (kaju and kairu)
Challenges for the petroleum industry in India
The challenges facing India petrochemical industry provides the industry with better tools
which would in turn help the growth of the economy.

India has stably established itself in the core of the international production of petroleum and
petroleum- related products in the present scenario.

1. With the economic growth cycle slowing down in the United States, the Asian developing
nations, especially India, would ideally fortify its stand in the global petroleum market as a
producer of these products. This is one of the major challenges facing India petroleum
industry.

Solutions: To plan for the long term strategies so that at time of recession also the industry
can sustain.

To cut down imports and increase exports.

To make reserves

2. High cost of energy and the impact on demand

The global economy is a dynamic and ever-growing one in spite of the high cost of
energy. This in turn is forging the demand for petroleums. The strong growth in demand
is not backed by a sufficient supply so the cost is still to come down. Operating rates of
major petroleum product segments are very high presently.

Solution: The long-term energy strategies of India have to emphasize on the methods of
using energy effectively and efficiently, and to enhance energy self-sufficiency. To lift
theIndian economy to enhanced economic standards innovation, diplomacy, creativity,
and vision are the need of the hour.

3. Increase in the cost of project:

The cast of incestment in such industry is very huge. So, government needs to invest
hugely in such industries. Sometimes it becomes very crucial to get funds to stast up the
venture.

Solution: TO make joint venture and To allow FDI

4. Infrastructure Facility:

The main problems with the Petroleum Industry inIndia are related to infrastructural
developments. The lack of proper storage facilities, enhancements in refining capacities,
and fluctuating import prices plays important role in the development of the sector.The
manufacturing units mostly use obsolete format of technology and are not able produce
optimally.

Solution: 1.There is a necessity for the modernization of equipments

2. The industry should have access to the primary amenities of infrastructure.

5. Climate Change:

Exploration and production of petroleum products leads to the pollution of air and water.
It harms the environments and humans and also leads to global warming. The fertility of
nearby land has been decreased.

• Solution: Recycling the waste

• To set up international standards of manufacturing units
• To use modernized equipments

6. Middle East Unrest:

India is basically dependent on the crude oil exported by the Middle East countries. Due
to the unrest going on such middle east countries since last year, cost of importation has
gone up which has lead to increase in the prices of various products and services in the
different sectors.

Solution:

To avail the future contracts

To increase of the stock of the crude oil

 (bhumi)
Privatisation and Method of privatization:
Govt holds 84.11% of shares in petroleum industries.

Why privatization?

• Poor management
• Lack of funds
• Lack of modern technology
• Lack of professional employees
• High imports
• Low Level of efficiency
• Lengthy decision making procedure

As for example, Vedanta wants to acquire Cairn energy from ONGC. But ONGC
does not take this process in its agenda of meeting and taking too long time for
taking decision. If the decision will not be taken in few days then it will become
void and a deal of 9.6 billion dollar will be failed.

Benefits of Privatization:

• Increase in efficiency
• Increase in job opportunities
• Increase in competition of auctioning in petroleum rigs(well)
• Decrease in imports
• Initally, to get the funds for such industry was very difficult. Due to
privatization, 100% foreign investment was allowed in such industries.

Thank you.