PETROLEUM PRODUCTS

IMPORT & EXPORT

Indian Option

A Presentation By
Muzahid Khan (muzahidkhan123@gmail)

UNIVERSITY OF PETROLEUM & ENERGY STUDIES

Highlights

 International Trading of Petroleum Products

 The Indian Scenario

 India-The Future Refinery Hub for exports

Internationally traded Petroleum
Products

 Motor Gasoline
 Jet Fuel
 Kerosene
 Distillate Fuel Oil
 Residual Fuel Oil
 Liquefied Petroleum Gas
 Major Refining Hubs

Rotterdam
Refinery Capacity: 64 MMTPA
Refinery product surplus: 62 MMTPA
Product Export: Europe hinterland, US

US Gulf Coast (USGC)

Refinery Capacity: 385 MMTPA
Refinery product surplus: 106 MMTPA
Product Export: Far East, Asia, Europe

Middle East
Refinery Capacity: 340 MMTPA
Refinery product surplus: 92 MMTPA
Product Export: Far East, Asia, Europe
Singapore
Refinery Capacity: 67 MMTPA
Refinery product surplus: 40 MMTPA
Product Export: Asia Pacific
 Total Exports and Imports of
Refined Petroleum Products
16000

14000
6414.38
WORLD TOTAL
12000
Imports: 21,083.59
Exports: 21,856.61
Thousand Barrels per Day

10000
4051.9

8000

6000 2180.36

4000 3360.69
2348.52
7349.02
6032.51
2000 2351.2
1158.55

0
4286.76 1319.55
350.66 867.54 877.55
North Central and Europe Eurasia Middle East Africa Asia &
America S. America Oceania
Source: EIA (2008)
Imports Exports
 World Oil Refining
World Refining capacity 1.1.2008 World Refining capacity & thruput
1980-2008 (mbpd)
88.6
90
Refinery capacity
USA 85
20% 80
75
70
Others China
48% 9% 65
Germany
60
Russia 55
3%
6% 50
Japan
S. S.
India
5%
Arabia
Korea
Total: 88.6 mbpd 3%2%3%
(4431 MMTPA) Sources: BP Stats 2009

• World oil demand grown faster than refining capacity-better capacity utilization
• World average refy capacity utilization moves around 75% (1980) to 87% (2008)
• USA: Refining capacity declining, reached peak of 18.6 mbpd in 1980.
 Regional product balance, 2020
Russia All figures in MMTPA
North America Deficit: 13
Deficit: 43 Europe MS: 7
MS: 24 Jetkero: 4
Jet kero: 19
Deficit: 145 Others: 3
LPG: 17
Surplus: 68 Naphtha: 23 Surplus: 71
LPG: 19 Jet kero: 54 LPG: 1
Naphtha: 15 HSD: 49 Naphtha: 2
HSD: 5 Surplus: 133 HSD: 34
FO: 14 FO: 34
MS: 126
Others: 15 Net: (+) 58
FO: 7
Net: (+) 25 Net: (-) 12
Middle East Asia Pacific
Latin America Africa Deficit: 31
Deficit: 50 Deficit: 71 Deficit: 419
MS: 26 LPG: 40
Naphtha: 7 LPG: 5 Others: 5 Naphtha: 56
MS: 10 MS: 24
HSD: 32 Jetkero: 3
Surplus: 188 MS: 107
LPG: 85 Jet kero: 26
Others: 1 HSD: 38
Naphtha: 44 HSD: 86
Surplus: 30 Others: 1 Others: 28
Jet/kero: 19
LPG: 5 Surplus: 36 HSD: 17 Surplus: 0
FO: 25 Naphtha: 11 FO: 23
Net: (-) 20 FO: 25 Net: (-) 419
Net: (+) 157
Net: (-) 35

Source: EIA
• By 2020, world would be net product deficit @ 247 MMTPA
– 100 MMT surplus (LPG:49 & Fuel Oil:51)
– 347 MMT deficit (Naphtha:15, MS:72, Jet/kero:88, HSD:147 & Others:25)
Highlights

 International Trading of Petroleum Products

 The Indian Scenario

 India-The Future Refinery Hub for exports

 India:Imports & Exports
US$ Billion Crude Oil
80
Import
76
70
 Gross crude and petroleum products 68
• Crude/product Imports : ~ 28% of total imports
60 • Product Exports : ~ 8% of total exports
48
50 Product
39 Export
40

30 26
28 26
18 18
20
14 13
16 15 14
11
9 9
10
44 7 6 Product
0.4 34 3 2 21 2 24 3
0.1 0.2 Import
0
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Source: PNGRB

India - A Net Exporter of Products

 Total Exports and Imports of Refined
Petroleum Products in India
250

Net Imports: 220.45

200
Net Exports: 450.70
Thousand Barrels per Day

127.07
150

100 172.99
1.68
50

53.12 60.42 32.86

2.56
18.66 14.96 14.4 75.77 96.62
0 0.04
Motor Jet Fuel Kerosene Distillate Fuel Residual Fuel LPG Others
Gasoline Oil Oil
Source: EIA (2008)
Imports Exports
 Refineries in India
BHATINDA
PANIPAT
(9.0)
(12.0+3.0) BONGAIGAON DIGBOI
(2.35) (0.65)
MATHURA
(8.0) NUMALIGARH
GUWAHATI
BARAUNI (1.0) (3.0)
(6.0)
BINA
(6.0)
BARODA
JAMNAGAR
(13.7) HALDIA
(RIL 33.0 + 29.0)
(6.0+1.5)
ESSAR 10.5+ 3.5) PARADEEP
MUMBAI (15.0)
(BPC 12.0) VISAKH
(HPC 5.5+ 2.4) (7.5+0.8) % of
Refineries No MTPA
Ind
TATIPAKA
IOC Group 10 60.2 33.8
MANGLORE (0.08 + 0.08)
Existing IOC (9.69 +5.31) BPC group 3 22.5 12.6
CHENNAI HPC 2 13.0 7.3
Subsidiaries of IOC (9.5+ 1.7)
KOCHI ONGC/MRPL 2 9.8 5.5
Others (7.5 + 2.0) NARIMANAM RIL (Pvt.) 2 62.0 34.8
New / Additions (1.0)
ESSAR 1 10.5 5.9

Total Capacity 20 178.0 100

 India : Product Demand & Refining
Capacity
350
302
300 Gap between Refining Capacity & Product Demand

250 235
140
200
100 162
149
150 135
120 29
100

50

0
2006-07 2011-12 2016-17

Refining Cap Product Demand

Surplus refining capacity is expected to increase further by 2030

India will continue to be product surplus

Import/Export requirement for crude/products to be quite substantial
Source: Draft XI Plan Demand Document
 Govt. of India Policies
• Administered Pricing Mechanism (APM) dismantling effective 1.4.2002
• Gas Pricing
• NELP
• Policy on Refining
• Auto Fuel Policy
• Policy on Marketing of Petroleum Products
• Gas Pipeline Policy
• Petroleum Product Pipeline Policy
• FDI Policy
Highlights

 International Trading of Petroleum Products

 The Indian Scenario

 India-The Future Refinery Hub for exports

 Strategic Location

• Located in the major maritime route from

Middle East
• Established refineries on western coast
• Geographical advantage to serve western and
eastern markets
• Strong domestic demand provides an effective
edge against fluctuations in exports
 Cost Competitiveness

Cash Operating costs

• Cost competitiveness driven Refinery Cash Operating
Cost ($/ ton)
by lower manufacturing
Premcor 15.4
wages Sunoco 17.6
• Low capital and cash S-Oil 17.6

operating costs SK Corp 22.7

Zhenhai 9.5
• Access to large, technically
Sinopec 14.7
skilled manufacturing base Indian Ref. 14.6
and workforce
Source: A T Kearney
 Refinery Configuration

• For Indian companies, the surplus capacity

comes at a time when the international
refining industry witnesses capacity crunch
• New capacity creation to address the current
refining challenges
• Above measures contribute in improving the
refining margins
 Integration: Petrochemical Industry

• Major capacity additions post 1991

Aggregate Petrochemical Demand in ‘000T have significantly reduced import
30000 dependence
25000 • Petroleum Chemicals and
20000
Petrochemicals Investment Regions
(PCPIR) being set up
15000
• Major capacity additions done by IOC
10000
and RIL
5000

0
2005 2006 2007 2011-12

Demand for polymers alone has the potential to reach

12.5 MMT by the end of the 11th Five-Year Plan,
growing at a CAGR of 18%.

Growing rapidly at 1.5 - 2.5 times the GDP growth rate

 Infrastructure

• World’s 6th largest refiner with 3% of world oil

consumption
• Over 10,000 KM products pipeline network
• Excellent maritime infrastructure:
– POL facilities at 14 locations – 39 berths
– 2 barge jetties
– 8 SPMs
India as a refining hub
competing with Singapore & Middle East
Singapore (MMTPA)
Refinery Capacity: 67
Refinery product surplus: 40
Product supplied to: Asia Pacific

India
Middle East (MMTPA)
Refinery Capacity: 340
Refinery product surplus: 92
Product supplied to: Asia Pacific/Europe
 Way Forward
• Leverage strategic advantage of
coastal locations
– Consolidate with current/proposed
location
– Proposed PCPIRs / SEZs
• Cost competitiveness to position
the product in target markets
• Integration with petrochemicals,
derivative and utility units, for
maximizing value addition
• Environmental norms and
product quality specs to meet
the export markets

Opportunity for India to emerge as a refining hub appears to be real and attractive
 References

• PNGRB India
• MOPNG
• EIA