Global Oil Markets

 Oil is one of the world’s most significant sources of commercial energy. It met 37% of the
global energy needs of 10,224 million tonnes of oil equivalent (“MTOE”) while its nearest
rivals, coal and natural gas, met 27% and 24% respectively, as shown in the chart below during
the year 2008
Contd…
 According to a Statistical Review of World Energy
the Middle East dominates proven reserves of oil,
with about two-thirds of the estimated 1,189 billion
barrels of the world’s proven reserves.
 Saudi Arabia(263 billion barrels), Iran (133 billion
barrels) and Iraq (115 billion barrels) are the three
largest holders of proven oil reserves in the world.
 The three largest producers of oil, including natural
gas condensates, in the world are:
 Saudi Arabia (10.6 million barrels per day), Russia
(9.3 million barrels per day) and the United
States(7.2 million barrels per day).
 PRODUCTS
 LPGs: Liquefied petroleum gases, consisting primarily of
propane and butane, are produced for use as a premium fuel
and as an intermediate material in the manufacturing of
petrochemicals.
 Naphtha: Principally used as a feedstock by the
petrochemicals industry for producing basic building blocks
such as ethylene, propylene, butadiene, benzene, toluene and
xylenes, which in turn are used for the production of plastics,
synthetic fibres, synthetic rubbers and other products.
 Gasoline: Various gasoline blendstocks are blended to achieve
specifications for regular and premium grades in both summer
and winter gasoline formulations, wherever applicable.
Additives are often used to enhance performance and provide
protection against oxidation and corrosion.
 Middle distillates: Middle distillates are kerosene, aviation
fuel, diesel fuel and heating oil.
 Fuel oils: Many marine vessels, power plants, commercial
buildings and industrial facilities use fuel oils orcombinations of
fuel oils and distillate fuels for heating and processing.
 Petcoke: Petroleum coke is a solid residual byproduct of
delayed coking process. Over 75% of petcoke produced is fuel
grade and has about 15-25% higher heating value than coal.
 Bitumen: Residual product of crude oil vacuum distillation,
which is used primarily for asphalt coating of roads and roofing
materials.
 Niche, high value-added refined petroleum products:
Demand for Petroleum
Products
Major Players in the Oil
Industry
The following are the 10 major players in the Oil Refining
Industry
 Basell
 Sinopec
 Innovane/BP
 Total PC
 ExxonMobil Chemical Co
 SABIC
 Borealis
 Reliance Industries / IPCL
 Formosa Plastics Corp.
 PetroChina
MAJOR PLAYERS IN INDIA
Currently there are about 17 refineries of which
seven are owned by Indian Oil Corporation
(IOC),
 two each by Hindustan Petroleum
Corporation Ltd. (HPCL) and Madras
Refineries Ltd (MRL)
 One each by Bharat Petroleum Corporation
Ltd (BPCL), Cochin Refineries Ltd (CRL),
Bongaigoan Refinery & Petrochemicals Ltd
(BRPL), Numaligarh Refineries Ltd (NRL),
Mangalore Refinery & Petrochemicals Ltd
(MRPL) and Reliance Petroleum Ltd (RPL).
OVERVIEW OF RELIANCE
REFINERY
 The company, formed to set up a greenfield petroleum
refinery and polypropylene plant (the“Project”) to be
located in a Special Economic Zone in Jamnagar in the state
of Gujarat in western India.

 The refinery has a total atmospheric distillation capacity of

approximately 580 kilo barrels per stream day (“KBPSD”).
The polypropylene plant has a capacity to produce 0.9
million metric tonnes per annum (“MMTPA”).

 The capital cost of the Project is estimated at Rs. 270 billion

(approximately US$ 6 billion). We propose to fund the
Project through debt of Rs. 157.5 billion (approximately US$
3.5 billion) and equity of Rs. 112.5 billion (approximately
US$ 2.5 billion), including proceeds from the Issue. Any
additional equity raised in excess of Rs. 112.5 billion will be
used as additional contingency for the Project.
OPERATIONAL SUPPORT
SERVICES BY RIL’S
AFFILIATES
 Land and associated infrastructure in SEZ: Reliance
Infrastructure Limited (“RFL”), a wholly owned subsidiary of RIL
and the developer of the SEZ, has acquired and leased the
required land of approximately 1,700 acres of land for our
proposed refinery and polypropylene plant in the SEZ.

 Power and Steam: Steam and power required for our refinery
and polypropylene plant is supplied supplied by Reliance Utilities
and Power Limited (“RUPL”).

 Port and Terminal Facilities: Reliance Ports and Terminals

Limited (“RPTL”), a proposed co-developer of the SEZ, provides
the port and terminal facilities required for the proposed
refinery’s import of feedstock and export of petroleum products.

 Construction Services: Reliance Engineering Associates Private

Limited (“REAL”) has provided civil construction services during
the construction of the proposed refinery.
Exports
RIL exports its petroleum products to over 30
countries including a large number of
destinations in the United States, Europe, the
Mediterranean, South and East Africa, Brazil and
several Asian markets including Sri Lanka,
Singapore, Indonesia, Korea, Japan, and China,
which are the most quality conscious markets
Some of RIL’s key customers include:
(a) national oil companies and end users such as
CEYPETCO in Sri Lanka and Petrobras in Brazil,
(b) oil majors such as Shell, BP and Chevron
Texaco.
FUNDAMENTAL PRINCIPLES AND
STRATEGIES DRIVING GROWTH
Building world scale, and world class Assets.
Deploying leading edge Global Technologies.
Ensuring a high degree of Vertical Integration.
Being globally competitive in all our operations.
Efficiently implementing multi-billion dollar projects.
Achieving market leadership.
Delivering International quality of products.
Emphasising Capital Efficiency and Productivity.
Adopting Financial Conservatism.
Attracting, and empowering, top quality people
RPL - STRATEGIC
ADVANTAGES
 Global size and scale
– At 27 MTPA, will be amongst Top-10 refineries
globally
– 1.1 MTPA polypropylene capacity
 Superior complexity
– Complexity index of 14.5
– Higher than RIL’s existing refinery at Jamnagar
 Strategic Location
– Proximity to Crude source
– Logistic advantage for exports
 SPV benefits
– 100% export oriented
– short/medium term fiscal advantage
CHEVRON
Chevron has a global marketing and distribution set-up
through its Caltex-branded service stations, Star Mart
convenience stores and Xpress lube outlets, through
which the company markets automobile fuel, lubricants
and vehicle additives.
The finished products coming out of Jamnagar could find
a ready ride on this network. True, Reliance already has
an export network in place, but Chevron is far better as
it has been an international player in Asia for over 70
years.
WHY CHEVRON???
 When the Jamnagar expansion plan is completed in
2008, Reliance will obviously need to tap more
sources of crude, to ensure that its refinery runs at
optimum capacity and gets the cost advantage.
 With global refinery capacity utilisation estimated to
be in the range of 87-94 per cent from 2008-2015,
after taking into account new capacity creation,
operating at full steam should not bother Reliance.
 But as the expanded facility in Jamnagar will be
operational in that period, Reliance needs to be on
par, or above industry standards in capacity
utilisation, to get the edge in refining margins.
 To compete with singapore (gross refinery margin)
CONTD..
It is more to do with the ability to tap into
the technical know-how for both the existing
business and areas where Reliance may not
yet have a presence.
Also, Chevron is adding to its portfolio by
actively exploring in Bangladesh. The
refining destination of a probable oil find
could be Jamnagar. Reliance must be
hoping that Chevron hits a pot of black gold.
BENEFITS - CHEVRON
Nearly 60 per cent of the world's 661
refineries have sub-economic capacities
(less than 150,000 BPD). With an expansion
plan of adding a capacity of 580,000 BPD,
Reliance is four times bigger.
Reliance makes strategic
acquisition in East Africa
Has acquired a majority stake and
management control of East Africa-based
(GAPCO) Gulf African Petroleum Corp in the
downstream sector
The company said the acquisition has been
made through its wholly owned subsidy
Reliance Industries Middle East, Dmcc
(RIME), a company registered in the United
Arab Emirates.
BENEFITS OF ACQUISITION
GAPCO owns and operates large storage
terminalling facilities and a retail distribution
network in several countries including Dar Es
Salaam in Tanzania, Kampala in Uganda and
Mombassa in Kenya as well as depots in East
and Central Africa.
It also 250 outlets
The East African countries, where GAPCO
operates, have demonstrated rapid economic
growth and have progressive government
policies in place,
CONTD..
'The demand for petroleum products in
these countries is rising steadily and has
mirrored the rapid GDP growth. Import of
petroleum products in these countries is
also expected to rise in the near future.
Further, these markets are easily
accessible from India and in that sense
provide a strategic fit for exports from
India.
FINANCIAL PERFORMANCE
In 1999-2000, the company achieved various
milestones.
First Indian Private Sector company to post Sales
of over Rs 20,000 crores (US$ 4.6 bn).
Gross Profits of over 1 bn US$ - Rs. 4746 crores
(US$ 1.01 bn).
Net Profit of over half a billion US$ - Rs. 2,403
crores (US$ 551 mn).
Reliance ranks amongst the top three chemicals
companies in the World in terms of return on Net
Worth (RONW) at 22 %.In Asia, RIL's RONW is the
highest amongst all chemicals companies.
COMPARISON
 CONTD..
EQUITY CAPITAL 2007-08 RS 1454

RESERVES AND 2007-08 RS 78313

SURPLUS
EPS 2007-08 133.9

BOOK VALUE PER 2007-08 560.3

SHARE
SHARE PRICE

DEBT EQUITY RATIO 2007-2008 0.45:1

NET PROFIT MARGIN 2007-2008 14%

DIVIDEND PAYOUT 2007-08 RS 1631 CR

CONTD..
 RIL's compounded Annual Growth rates for the past 10 years.
 Sales Growth - 27 % p.a. from Rs. 1,841 crores (US$ 422 million) to Rs.
20,301 crores (US$ 4,654 million).
 Total Assets Growth - 28 % p.a. from Rs. 2,553 crores (US$ 585 million) to
Rs. 29,369 crores (US$ 6,733 million).
 Net Worth Growth - 29 % p.a. from Rs. 1,153 crores (US$ 264 million) to Rs.
13,983 crores (US$ 3,210 million).
 Net Profits Growth - 39 % p.a. from Rs. 91 crores (US $ 21 million) to Rs.
2,403 crores (US $ 551 million).
 Market Capitalisation Growth - 43 % p.a. from Rs. 997 crores (US $ 223
million) to Rs. 35,880 crores(US $ 8 billion).
JAMNAGAR LOCATION
ADVANTAGE
RPL - REFINERIES
 RIL has a 33 mmtpa refinery at Jamnagar, which is the third
largest at a single location in the world. The refinery's
capacity is 22.6 % of India's total refining capacity.

 The company is also setting up a second refinery near the

existing one with a capacity of 29 mmtpa.

 Reliance Industries Ltd (RIL) is evaluating a plan to set up

its third refinery at Jamnagar in an ambitious project to
reach a total capacity of 100 million metric tonne per
annum, the largest at a single location in the world.
CONTD..
 RPL said the refinery would be "one of most
complex in the world", implying it would be able to
process almost all varieties of crude. To put it
simply, the plant can process cheap, low-grade
crude into petrol and diesel.

 Jamnagar will become the world's largest hub for

petroleum refining. Reliance Petroleum will nearly
double its capacity from the current 0.66 million
barrels of crude oil a day to process 1.24 million
BPD
CONTD..
The US Export-Import Bank - has approved a long-
term loan guarantee of $400 million to Reliance
Industries Ltd to source its equipment and
services from the US for its hydrocarbon
exploration and production service in the Krishna-
Godavari Basin
RIL will use the loan for its purchases of American
engineering services, oilfield equipment, offshore
platform support, and drill and well services.
A share of the loan will also be used for the
ongoing construction work at the Jamnagar
refinery.
KRISHNA GODAVARI BASIN
KRISHNA GODAVARI BASIN
This is the first time an all-Indian team has
built something like this, a project Goldman
Sachs lists as No. 1 in its list of projects
that have changed the world.
RIL applied for licences to pipe KG Basin
gas directly into 57 town and cities, where
about 120 million households could use it
to replace expensive LPG cylinders and
unsafe kerosene stoves.
Chances to enter into power sector
EXPLORATION AND
PRODUCTION
Producing Assets - Panna-Mukta & Tapti
Exploration Blocks - 34 blocks in India and
one each in Yemen and Oman
Exploration Acreage – about 340,000
sq.km. and 580,000 sq.km
Coal Bed Methane - 5 blocks (4,000 sq.km.)
EXPLORATION AND
PRODUCTION
World largest gas discovery in 2002 - Krishna-
Godavari basin (14 TCF OGIP) – further potential
upside under exploration
Discovery in NEC-25- puts Mahanadi offshore to
petroliferous map of India (2.3 TCF OGIP)
Discovered CBM Gas – puts Coal Bed Methane in
the map of India (3.65 TCF OGIP)
2008-09 will be a watershed change with E&P
contributions to overall revenue increasing
significantly
EXPLORATION AND
PRODUCTION
RIL now invests US$ 300 - 500 million
annually on Exploration.
E&P likely to contribute 15-20% of revenue
by 2010
Petroleum products demand in India has
grown at 5-6% annually
over the last decade - per capita
consumption is still amongst the lowest in
the world
RPL- VALUE CREATION
 Will help unlock value for existing RIL shareholders
 Provide an opportunity to new investors to participate in
pure refining opportunity and Reliance’s growth
– Listing to provide valuation benchmark thereby helping
unlock immediate value
– Ring fence new refinery business with differentiated
business model, focused business management and
administration
– Capture the conducive market opportunity for capital
raising
 Enable options of bringing in strategic/ financial partners
going forward
 Allow RIL to conserve cash flows for emerging
opportunities in order to accelerate the process of further
value creation for all classes of shareholders
7 P’S OF MARKETING MIX
Product
Price
Place
Promotion
People
Process
Physical evidence
PRODUCT PLACE
 Liquid petroleum gas
(LPG) •Strategic location
 Gasoline(also known with proximity to
as petrol)
 Naphtha
crude oil sources and
 Kerosene and related target export markets
jet aircraft fuels
 Diesel fuel
 Fuel oils
•Incentives by virtue
 Lubricating oils of being located in a
 Paraffin wax Special Economic
 Asphalt and Tar
 Petroleum coke
Zone

PRICE PROMOTION
•Chevron
HR ISSUE
QUESTIONS ONE GETS WHEN GAZING THE
LOCATION OF THE REFINERIES.
1.How people are recruited and How they
agree to be in such a dry place?
2.Is the safety measures adequate for 80000
employees?
3.What about the split up of engineers
managers and other workers?
 If they had migrated to a big city, they might have ended up
fixing a drainage pipe or welding a broken gate. But
thousands of young, untrained workers from around the
country chose to go to a dry coastal town in Gujarat.
 More than two years later, the decision has proved fruitful.
They are not only making the best money, they have also
learnt skills that will help them get good jobs in future
 Jamnagar, the jewel of Kathiawar, has a rich royal history,
but over the past decade, its name has become
synonymous with a large-scale petroleum refinery that
Reliance Industries runs there.
THE HR BEHIND THE
STRATEGY
RIL president (HR) VV Bhat
Reliance decided to take the risk as a result of which
the Crafts Training Centre (CTC) came into existence.
It tries to convert the raw talent into specific industrial
skills and pumps out thousands of workers who might
find employment whenever projects are implemented.
As per a data from Director General of Employment
and Training, the country has over 4,400 ITIs with over
6.50 lakh seats. States like Tamil Nadu, Maharashtra
and Andhra Pradesh have the largest number of ITIs —
over 500 centres each. ITIs offer craftsman training in
49 engineering and 49 non-engineering trades.
Health and Safety
 At Reliance Petroleum, protecting people and the
environment is a part of everything they do and every
decision they make. They are committed to providing
safe workplaces for their employees, customers and
contractors
 They have a Vision of Zero Harm – zero accidents, zero
harm to people and zero damage to the environment.
They strive to meet or exceed all laws, regulations and
standards applicable to their operations.
 Their goal is to eliminate all injuries, prevent adverse
environmental and health impacts, reduce wastes,
emissions and discharges and promote the efficient
use of energy. 
 They apply the highest standards of quality in their
service and products. Everyone at Reliance Petroleum
is responsible for getting health, safety, security and
environmental issues right.
SAFETY MEASURES
Health is an important component of this
and RIL says it implements comprehensive
healthcare programmes at all its sites.
There is an initiative by the name of
Change Agents for Safety and Health
(CASH) that attempts to introduce a
positive change and a continuous
improvement in the occupational health
practices at the workplace.
Contd..
Safety is a legitimate personal expectation and
both a constant corporate and individual
responsibility. To ensure that Reliance Petroleum
meets this expectation, they have:
 strong leadership and management at all levels of
the organisation
 high quality equipment that is well maintained and
fit for purpose
 policies, procedures and standards in place
 a trained workforce with the right skills, attitudes
and behaviours
 regular assessments of our physical work
environments to ensure safe operations
WORKERS
Engineers+managers=4500
Other workers=80000
AMBANI’S CONCERN ON WORKERS
“Trust is the corner stone of all our initiation.
We believe that trusting our employees
results in superior performance”
INSTITUTES
Maharastra institute of tech.
Dr. Babasaheb Ambedkar Technological Univers
Nagpur University - Bachelor of Technology (BT

Visvesvaraya National Institute of Technology -

University of Calcutta - Bachelor of Technology
AMIE –institute of engineers
strategy - core
competencies
 One of RIL’s core competencies is to conceptualise
and implement multi-billion dollar projects on time
and in a cost efficient manner.
 RIL has proven track record of successfully
implementing large projects, including its existing
refinery and petrochemicals complex at Jamnagar
in Gujarat, its petrochemicals complex at Hazira in
Gujarat and another petrochemicals complex at
Patalganga in Maharashtra.
 These three facilities together accounted for
approximately 84% of RIL’s gross fixed assets for
the year ended March 31, 2005.
SWOT Analysis
STRENGTHS
WEAKNESSES
 Technological skills
• Failure in forward integration
 Distribution channels
 Production quality
• Unutilized high resource &
 High resource & surplus
surplus

OPPORTUNITIES THREATS
• Increase in demand in • Possibility of 100% FDI
Chinese & Indian market • Windfall taxes
•Gas from KG basin • Government
5 Competitive forces
Code of conduct

Compliance with applicable laws

Conflict of interest
Conduct of business relationship
Protection and proper use of company’s
resources
Intellectual property
Privacy and confidentiality
Corporate opportunity
Interaction with media
Fraudulent and unfair practices in security
markets
Fair dealing
Health safety and environment
Free and fair competition\anti trust
Reporting of unethical practices(whistle
blower mechanism)
Applicability of the code
Amendment modification and waiver
CORPORATE SOCIAL
RESPONSIBILITY

 Reliance group company Reliance Petroleum is setting

up a 29-million-tonne per annum high-complexity
petroleum refinery in the Jamnagar special economic
zone. Moti Khavdi village is adjacent to the plant site.
 RIL has built a market and created a garden for
commercial plants in Moti Khavdi village in Gujarat for
Rs.10 million under its Corporate Social Responsibility
 The market, set up by Reliance as part of a project to
develop the village Moti Khavdi in the state's Jamnagar
district, will accommodate shops for eatables,
vegetables, spices, clothes and cutlery and shoes.
 The shops will provide 46 hawkers a permanent place to
sell their goods.
CLOSURE OF RELIANCE PETROL
BUNKS
Reliance Industries has shut all of its 1,432 petrol
pumps in the country after sales dropped to almost nil
as it could not match the subsidised price offered by
public sector competition.
Reliance sold petrol at a rate of around Rs.4 costlier
than what was available at other petrol pumps,because
these other petrol pumps were government subsidized
and hence their prices were less.Also, even after selling
it Rs.4 costly, Reliance was having a loss of Rs.3 per
liter(approximately) on the petrol.
CLOSURE OF RELIANCE PETROL
BUNKS
 Public sector currently sells petrol at a loss of Rs
13.97 a litre and diesel at a discount of Rs 20.97 per
litre. This revenue loss is made up by the Government
through issue of oil bonds and subsidy share from
upstream firms like ONGC and GAIL.

 The company owned less than three per cent of the

36,936 petrol pumps in the country. Of the total retail
outlets, state run Indian Oil, Bharat Petroleum and
Hindustan Petroleum own 34,304 pumps, while the
remaining belong to private sector Essar Oil and Shell
India.
RIL SURVIVAL SKILLS