Crude Oil (MMT)	Gas (BCM)
ONGC	582.07	508.37
Oil India Ltd.	73.42	96.16
Private/JVC’S	58.59	130.32
Total	734.08	734.85

INTRODUCTION

The expectations of boon in the supply of petroleum products in the Ninth Plan could be overshadowed by slackening demand.

The Union Ministry of Petroleum and Natural Gas is expecting India's refining capacity to peak at 122 million tonnes (mt) for petroleum products. The excess supply situation, however, hinges on just how fast 19 new projects get off the ground. This situation is likely to continue will into the Tenth Plan as the refining capacity is set to increase further to around 170 mt against a revised demand of 156 mt.

The supply could outstrip demand inspite of the fact that the capacity remained unchanged during 1997-98, I now likely to stabilize and start commercial production only during current year.

The total refining capacity of 14 refineries stood at 61.55mt per annum. Of this, a whopping 57.40mt capacity belongs to the public sector. The six refineries of IOC, the largest refinery company in India, accounts for total crude refining capacity of 25.7mt per annum, thus controlling around 42 percent of the total capacity.

The extent of growth projected for the refining capacity over the next four years is evident from the capacity prevailing a decade ago; the capacity was stagnant at 51.58mt between 1988-89 and 1992-93, while only 1.5mt capacity was added during the next two years. In 1993-94, Madras Refineries completed its expansion and raised its total capacity to seven mt.

India's first joint venture refinery, Manglore Refinery & Petrochemicals commissioned the first phase of it's three mt refining capacity in 1995-96. Cochin Refineries and Bongaigaon Refineries also completed their respective expansion plans during the year. As a result, the total refining capacity shot up to 60.4 million tonnes.

According to data base, there are presently 19 proposals for setting up new refineries and five projects for expanding. These projects would together install an additional capacity of 62mt per annum at total investment of Rs. 78,376 crores.

If these projects are implemented on schedule, by 2002 the country will have, as envisaged by the petroleum Ministry, a total refining capacity of 122mt per annum. That, however seems unlikely as of the proposed 19 refineries only eight are currently under implementation, and even their progress is very slow.

On the other hand, many of the proposed refineries, both public and private, did not move from the proposal stage. Delay in finalization of partners, land acquisition and inability to mobilize funds are some of the reasons for the slow progress.

Expected Refining Capacity (million tonnes)

Public Sector Refineries

Business Group	1997-98	1998-99	1999-00	2000-01	2001-02	by 2007
IOC	25.70	31.70	32.60	35.60	35.60	37.40
HPCL	10.00	10.00	10.00	13.00	13.00	13.00
BPCL	6.00	6.00	6.00	6.00	6.00	6.00
Cochin Refineries	7.50	7.50	7.50	10.50	10.50	10.50
Madras Refineries	7.00	7.00	7.00	7.00	7.00	10.00
Bongaigaon Refinery	2.35	2.35	2.35	2.35	2.35	2.35
Numaligarh Refinery			3.00	3.00	3.00	3.00

Joint Sector Refineries

Business Group	1997-98	1998-99	1999-00	2000-01	2001-02	by 2007
Manglore Refinery	3.00	3.00	9.00	9.00	9.00	9.00
IOC-Kuwait Petrol JV				6.00	6.00	6.00
Paradip Refinery				9.00	9.00	9.00
Bharat Oman JV				6.00	6.00	6.00
HPCL-Bhatinda					9.00	9.00
CRL-Kuwait Petrol JV					10.00	10.00

Private Sector Refineries

Business Group	1997-98	1998-99	1999-00	2000-01	2001-02	by 2007
Reliance Petroleum			6.00	12.00	18.00	18.00
Essar Oil				6.00	10.50	18.00
Pennar Refineries				6.00	6.00	6.00
Petro Energy				4.80	4.80	4.80
Hinduja Group				2.00	2.00	2.00
Soros				6.00	6.00	6.00
Tamilnadu Petroprod.				6.00	6.00	6.00

1999-2000 would witness the commencement of India's first private sector refinery, Reliance Petroleum, at Jamnagar. The long delayed Numaligarh refinery is also expected to commission its three mt refinery by March 2000. Besides, Manglore Refinery would enhance its refining capacity to nine mt per annum by November 1999.

In all the total refining capacity in the country would rise to 83.45 million tonnes by March 2000.

With Reliance Refineries attaining full capacity of 18 mt and the two other private refineries, Essar Oil and Pennar Refineries, commissioning theirs, the total refining capacity would rise to 122 mt per annum by end of the ninth Plan.

Among the Joint Ventures proposed by IOC, BPCL and HPCL, except for the Bina refinery of Bharat Oman, no other refineries are expected to be completed during the current Plan.

Of the 46mt refining capacity proposed to installed by public sector companies only six mt will be set up by them. The remaining 40 mt will be installed in the joint venture, with foreign oil majors like Kuwait Petroleum, Oman Oil Corporation, Shell International, Exxon and Aramco.

· PUBLIC SECTOR REFINERIES

Panipat Refinery

IOC completed its six million tonnes refinery in March 1998, after nearly a none-year delay. The Rs. 4,200 crore refinery was to cost Rs. 1,044 crores when it was approved by the Central Government in Oct., 1992. But in the last six years the project cost has been revised thrice. The refinery is expected to stablise and commence commercial production during 1998-99. UOP Inter-America of the US is the technical collaborator.

Numaligarh Refinery

Numaligarh Refinery is being jointly setup by the Assam industrial Development Corporation, IBP Co. and BPCL. The delay is acquisition of land and the contractor's failure to complete the job in time have delayed the completion of the project by almost one-and-a-half years. The original cost of the present Rs. 2,682 crore project was Rs. 1,275 crore in 1992, when it was cleared by PIB; it is now expected to be completed by March 1999.

· JOINT SECTOR REFINERIES

Manglore Refinery & Petrochemicals

The Rs. 2,274 croes, three mt refinery in Manglore, setup jointly by Adity Burl group and HPCL, started commercial production on 25 March 1996, three months ahead of schedule. ABB Lumus Crest, Kinetics Technology Inc. and UOP Inter American Inc. of the US and Shell and Netherlands are the technical collaborators.

The PIB, on 8th March 1996, had cleared the expansion plan of the refinery from the present three million tonne per annum to nine mt per annum. The contract to implement the Rs. 3,690 crore expansion has been awarded to consortium of Japanese companies comprising Toyo Engineering, Mitsui and Mitstubishi Corporation. According to MRPL's annual report, the project is progressing as per schedule.

Bharat Oman Refinery

Of the five Joint Sector refineries planned in the public sector, Bharat Oman is the only refinery under implementation. BPCL has taken in Oman Oil Co. as an equal partner to setup the Rs 7,513 crore six million tonne refinery. Apart from Oman Oil, which would hold 26 percent of the equity, ONGC is also expected to pickup 15 %. The project coming up at Bina in Sagar district of Madhya Pradesh, is expected to be completed by December 1999. The project cost also includes the cost of laying a crude pipeline from Vadinar in Jamnagar district of Gujrat to Bina.

HPCL Bhatinda Refinery

The nine mt HPCL Bhatinda Refinery was to be set up in a joint venture with Aramoo of Saudi Arabia. However, when Aramco decided to opt out, HPCL started negotiating with Exxon from equity participation. HPCL plans to implement the Rs. 9,645 crore refinery by 2002. However, the initial delay in finalising the co-promoters will see the refinery humming only during the Tenth Plan period.

IOC-Kuwait Petroleum (Paradip) Refinery

In June 1995, the Cabinet Committee on Economic Affairs (CCEA) approved IOC's proposal to take on Kuwait Petroleum Corporation as its private partner for six mt refinery at Paradip in Orissa. Later, the proposed capacity was raised to nine mt per annum. According to latest reports, the two partners would hold 50 % each of the entire project equity. The Rs. 8,117 crores project is expected to be completed by March 2002.

CRL - Kuwait Petroleum Refinery

Cochin Refinery proposes to set up a 10 mt, 100 % export oriented refinery at Ambalamugal in Kerala. The Rs. 6,000 crore refinery would be set up in financial collaboration with Kuwait Petroleum Corporation. The project proposal was pending with the Petroleum Ministry for over a year. It was only recently that the Ministry reportedly asked the company to submit a revised MoU for its refinery.

· PRIVATE REFINERIES

Reliance Petroleum

Reliance Petroleum, promoted by Reliance industries, is setting up India's largest refinery of 19 mt per annum capacity at Jamnagar in Gujrat. The company received a license to set a nine mt refinery in December 1992. However, the capacity of the upcoming refinery was raised to 15mt in September in 1994 and later 18mt per annum.

UOP Inter-America Inc. is the technology collaborator and Bechtel is the main contractor. BPCL, HPCL and IOC would market the end products. As of the March 1998, the company has spent Rs. 7,687 crore on the project and despite the severe cyclone which hit the project site in June, RPL is confident of completing it by December 1999.

Essar Oil Refinery

The 10.5mt refinery is being promoted by Essar oil along with the Comcraft group, controlled by the NRI, Mr. Chandaria, ABB Lumus Crest Maurtius, a wholly-owned subsidiary of ABB Lumus Crest Inc., US, has been appointed as the project management consultants. Engineers India and Tata Consulting Engineers have been appointed as project engineering consultants.

The company entered the primary market in February 1995 and raised Rs. 1,650 crore to the pat-finance the project. An MoU has been signed with IOC for distribution of the refinery products. Recently, the company complained to the state government that the project might miss the revised completion date of December 2999 due to paucity of funds and the cyclone that hit Jamnagar in June.

Petro Energy Product Refinery

Petro Energy Product Co. India, a subsidiary company of Petrodune Inc. of the US, proposes to set up a 100 % export oriented, 4.8mt per annum refinery at Karaikal in Pondicherry. The government clearance for Rs. 1925 crore refinery was received in June 1994. The company has entered into agreement with Petro Cananda for outright purchase of its existing Port Moody Refinery at Vancouver. The project was to be completed by March 1997, however, not much progress has been made in its implementation; neither has the company announced as revised completion date.

Soros Fund Management

The US-based Soros group proposes to set up a six mt refinery near to its upcoming petrochemical complex at Haldia in Medinapur district of West Bengal. The Rs. 2,971 crore refinery was cleared by FIPB in January 1995. However, it is awaiting clearance from the Petroleum Ministry. The group might take up the project on the completion of its ongoing petrochemicals complex at haldia.

Hinduja Refinery

After parting with IOC, the Hinduja group decided to set up a two mt lube oil refinery at a cost of Rs. 1,700 crore. The Orissa government has allotted about 700 acres of land near Haridaspur in Cuttack district. Further, the company would be also be provided with 150 acres of land near Paradip port for stocking the imported oil and refined products. The Company hopes to complete its project by 2002.

· MAJOR EXPANSION PLANS

Three public sector refineries have undertaken the expansion of their existing capacities by whooping 10.8mt per annum at a cost of Rs. 5,460 crore.

Hindustan Petroleum Corporation

HPCL proposes to expand the capacity of its Visakhapatnam refinery from the existing 4.5mt to 7.5mt per annum at a cost of Rs. 1,138 crore. The proposal was cleared in August 1995. The project cost has shot up by Rs. 268 crore since the receipt of the license in June 1996. After missing the first completion date of September 1998, the expansion is now expected to be over by December 1999.

Cochin Refineries

The Union government's approval for the proposed expansion of Cochin refineries came in September 1997, nearly two years after the initial proposal was submitted. The company has invited bids for carrying out the expansion from 7.5mt to 10.5mt at a cost of Rs. 1,470 crore.

Indian Oil Corporation

IOC is expanding the capacity of its Koyali refinery in Gujrat from the present 9.5 mt per annum to 12.5 mt per annum. The Rs. 1,053 crore expansion, when approved by PIB in May 1990, was expected to cost Rs. 635 crore. The project has already missed twice its schedule commissioning dates of May 1992 and December 1997. According to latest reports, the expansion is now expected to be completed by December 1999.

IOC also plan to expand its Barauni refinery capacity by 1.8 mt per annum from the existing 4.20 mt per annum. The company is awaiting a final clearance from the Petroleum Ministry for implementing the RS. 1,800 crore project.

· REFINERY NEWS

- The Union Ministry of Industry has approved four proposals to setup mini refineries on one million tonne each. Of the four refineries, three will be set up in Andhra Pradesh by Pennar Cements, Pearl Petrochemicals and the US based United Technologies. The fourth mini refinery of US based MT prospect & Pelorus Inc. would be located at Tuticorin in Tamil Nadu.

- IOC has reportedly revised its earlier plan to set up a 10 million tonne refinery at Nagapattinam in Tamil Nadu. The Company has earmarked a Rs. 25,000 crore investment plan for Ninth Plan Period.

- The Punjab government has decided to take an equity stake of 26 % in the nine million tonnes Bhatinda refinery of HPCL. An MoU to this effect was signed between HPCL and PSIDC on 14 September 1998

- On 14 July 1998, the Cabinet Committee on Economic Affairs (CCEA) cleared the BPCL's Rs. 7,513 crore, six million tones per annum refinery project proposed to be set up in the joint venture with Oman Oil Company. The project, located at Bina in Sagar district of Madhya Pradesh, is expected to commence commercial production by July 2001.

- Gontermann - Peipers (India), an Ispat group company, has reportedly decided to relocate it's refinery from paradip in Cuttack district of Orissa to Kakinada in East Godavari district of Andhra Pradesh following the refusal of the Petroleum Ministry to clear the refinery. The FIPB has also rejected the company's proposal to extend the validity period for foreign collaboration on the ground that the progress made by the company was not satisfactory.

Investment Opportunities in Natural Gas Sector, Exploration and Production

While the utilisation of natural gas in India began in the early 1960s, the volume of gas utilised increased significantly only in the early 1980s after gas became available from early the Western Offshore fields. Over the decade of the 1980s, the production of gas increased by 20% annually. The current production potential is around 65 MMSCMD and is likely to increase to around 75 MMSCMD by 1997-98, and go up further to 84 MMSCMD by the year 2001-02. The recoverable reserves of natural gas in the country are around 643 BCM

Authority and Approvals
Intoduction

Under the new investment policy for different sectors announced in july 1991 for facilitating the inflow of foreign capital and to encourage entrepreneurs to invest in and to encourage entrepreneurs to invest in India, a number of policy initiatives have been taken by the Government of India, such as:

1. Equity participation in commercial and industrial ventures has been freed from all restrictions and foreign companies can now invest up to 100% of equity in different activities in the petroleum sector.
2. Rupee convertibility on the Current account.
3. Deregulation and delicensing of various petroleum products in the country.
4. Gradual decontrol of pricing and distribution.
5. Freedom to form JVCs for the development of infrastructure and for marketing and refining acitivities.
6. The procedure for obtaining industrial licences has been greatly simplified. For obtaining industrial licence, applications are to be submitted to the Secretariat for Industrial Approvals (SIA), Department of Industrial Policy & Promotion, Ministry of Industry, Udyog Bhavan, New Delhi-110011.
7. Approvals will normally be available within 6 to 8 weeks of filing the application. Empowered committees have been constituted to accord various approvals under a fast time-bound schedule.
8. Under the New Industrial Policy, proposals for foreign investment need not necessarily be accompanied by foreign technology agreements.

All such proposals, including those proposing investments by NRIs or for 100% export oriented units, are considered for approval by the foreign Investment Promotion Board (FIPB). In case of composite proposals, i.e., proposals seeking other industrial approvals like industrial licences, technical collaboration, etc. allongwith approval for foreign investment, the FIPB provides composite clearance.

Engineers India Limited

Engineers India Limited was established in 1965 to provide engineering and related technical services for petroleum refineries, oil and gas pipelines, petrochemical industries, chemical process plants and other industrial projects.

Since its formation, Engineers India Limited has been responsible for implementing a large number of projects. In addition to petroleum refineries, with which EIL started initially, it has diversified into other fields such as pipelines, petrochemicals, oil and gas processing, offshore structures & platforms, fertiliser, metallurgy and power. EIL today provides a complete range of project services in these fields.

ORGANISATION

The Ministry is headed by a Cabinet Minister and a Minister of State. The bureaucracy is headed by a Secretary. Under the Secretary there is one Additional Secretary, four Joint Secretaries, two Advisers, four Directors, four Deputy Secretaries, two Joint. Advisers, one Controller of Account, nine Under Secretaries, two Deputy Directors and one Senior Analyst.

The Ministry comprises of five different wings namely :
1. Administration
2. Exploration
3. Refinery
4. Marketting
5. Finance

Welcome to the world of IndianOil.

Under the administrative control of the Ministry of Petroleum & Natural Gas, Govt. of India.

IndianOil, the largest commercial enterprise of India (by sales turnover), is the only Indian company to find a place in Fortune's "Global 500" of the world's largest industries (Rank 278 in 1998 in terms of turnover). Among Petroleum Refining companies, it has a ranking of 16 by turnover. In terms of profits earned, IndianOil is ranked 15th. On the basis of profits earned as a percentage of assets, IndianOil has been ranked number one.

IndianOil touches every Indian's heart by keeping the vital oil supply line operating relentlessly in every nook and corner of India. With the backing of over 47% of the country's refining capacity (as of 30th June 1999) and 6260 kms of crude/product pipelines across the length and breadth of the country, IndianOil's vast distribution network ensures that essential petroleum products reach the customer at the "right place and right time". IndianOil's refineries and pipelines have been consistently achieving more than 100% capacity utilisation and our marketing share is about 55% in India. IndianOil's activities are backed by its "Research and Development Centre", the first such centre established in India. This centre has over the years grown into a major technological development centre of international repute.

As the premier National Oil Company, our endeavour is to serve the national economy and the people of India. We also have a "vision beyond tomorrow" - of becoming an integrated and diversified "Global Energy Corporation". We are continuously innovating and strengthening areas of core competence. At the same time, we are exploiting opportunities offered in the new liberalised scenario by globalising and diversifying into related areas.

Profile 1998 - 99 (1st April 1998 to 31st March 1999)

· Record sales turnover of Rs. 69,430 crores (US$ 16.4 billion approx) - a growth of 17% over last year.
· Profit after tax of Rs. 2214 crores registering 30% growth over previous year.
· 130% dividend for the year 1998-99 declared.
· More than 83% of fixed assets from internally generated resources.
· EPS grown by 19% over previous year. Cash EPS Rs. 84.01
· Networth per equity share of Rs. 10 - Rs. 315.12
· Working capital employed - Rs. 1597 crores
· Number of employees - 33,515 (as on 31st March 1999)
· Offices abroad in Kuwait, Malaysia and Dubai. Opening shortly in Mauritius.
(Rs. 1 crore = US$ 0.24 million approx.)
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DIRECT SALES OPPORTUNITIES IN OILFIELD SECTOR IN INDIA

An Overview :

Primarily the main customers in India are the two national oil companies, i.e., Oil & Natural Gas Corporation Ltd. And Oil India Ltd. After the government opened up the oil fields to exploitation by foreign companies, most major international oil majors have been allotted oil fields for development.

Import purchasing is done by ONGC & OIL INDIA through notifying global tenders in major Indian newspapers. The principal feature of direct sales is the transfer of title to the goods to the client outside India, usually at FOB point. Client is responsible for clearance at import port, including all customs duties, taxes and local formalities. Payment is secured through an irrevocable 100 % Letter of Credit established through a nationalized Indian Bank.

Major Clients :

Oil & Natural Gas Corporation Ltd. (ONGC) is head quartered at Dehra Dun from where policy on purchase guidelines is formulated. AT ONGC Dehra Dun tenders are called for products such as Drilling Chemicals, Well Head & X'Mas Trees, Drill Pipe, Heavy Wt. Drill Pipe, Casing Pipes, Logging Units, Seismic Processing Work stations etc.

Most equipment and consumable import is done by the Regional Business Centers of ONGC. These are SRBC : Southern Regional Business Center, Madras; MRBC : Mumbai Regional Business Centre, Bombay; WRBC : Western Regional Business Centre, Baroda and ERBC : Eastern Regional Business Centre, Calcutta. However, due to logistics considerations ERBC are permitted to call for global tenders from Sibsagar and Nazira in Assam. Each Regional Business Centre is headed by an Executive Director.

Operating within each business centre are activity focused business groups, import purchasing is done by their Provisioning Cell. For Exploration it is EBG : Exploration Business Group ; for Drilling DBG ; for Production OBG (Operations Business Group) and TBG : Technical Business Group for a vast range of technical products.

Oil India Ltd., is head quartered in Duliajan, Assam. They have a smaller operation in India as compared to ONGC, Duliajan, Assam is the nerve centre of their activities. Tender opportunities are notified mostly from Duliajan and sometimes from their Brahamputra Valley Project, Guwahati and Ganga Valley Project in Noida. Global tender are notified in major Indian newspapers.

Tendering Procedure :

Global Procedure :
Global tenders for direct import of various equipment and consumables are notified by the import Purchase Section of the concerned business group. Bidders co-participate after purchasing the tender document in US Dollars. All bids MUST be accompanies by demand draft or bank guarantee for prescribed amount of bid bond valid for 150 days. Bids are to be valid for at least 120 days. Most high value tenders are under Two Bid System, i.e. bidders are required to submit bids in two sealed envelopes. One envelop for technical unriced offer and the other for commercial priced offer. Technical bids are evaluated by the Technical provisioning cell and priced offers of only acceptable bidders are opened, L - 1 bidder is awarded the order.

Technical bids are to be supported by printed technical literature in English for the offered product, mandatory API certification if asked for, list of users. For new first time vendors it is desried that they submit supply record of previous three years and performance certificates from three users.

In the event a first time vendor is L - 1, usually a trial order of 10 to 25 % of tender quantity is awarded. For certain critical material tenders are issued directly to pre-qualified and tried sources only.

Bidders are expected to offer products that are in 100 % conformity to tender specifications. However, ONGC reserves the discretion to decline acceptance of any technical exceptions and deviations.

Any exceptions and deviations taken to the clauses of Bid Evaluation Criteria are non-negotiable and can result in the offer being rejected outright.