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PetroFed THE JOURNAL OF PETROLEUM FEDERATION OF INDIA 

PETROFED 

JANUARY-MARCH 2009 VOL. 7 ISSUE 1

www.petrofed.org 

Contents 

S. No. Particulars Page No. 

1. From the Chairman 1 

2. DG's Report 2 

3. Refining – The Challenge for Green Technologies 3 

By Mr. M. K. Joshi, Director (Technical), Engineers India Limited 

4. Non-OPEC Decline Rates Accelerate 9 

By Mr. Bob MacKnight, Lead Analyst, PFC Energy 

5. Risk Management in E&P 11 

By Mr. Rajiv Puri, Associate Director, Advisory Services, 

Ernst & Young Pvt. Limited 

6. High Performance Trays in Distillation Operation 13 

By Dr. Siddhartha Mukherjee, Group Leader – 

Process, Lurgi India Company Pvt. Limited 

7. Oil & Gas Deals Update 2008 16 

By Mr. Deepak Mahurkar, Associate Director, 

PricewaterhouseCoopers Pvt. Limited 

8. Project Management Is Not Merely For Project Managers 20 

By Mr. Raj Kalady, Managing Director, PMI India 

9. An Energy Saving Option in Process Industry 22 

By Prof. Hamid Ali, Director of Petroleum Studies, 

Aligarh Muslim University 

10. Strike when the Iron Is Hot… 26 

A Thought Leadership Paper by Petrofed 

11. Events 35 

Journal Coordinators 

Mr. R.P. Natekar BPCL 

Mr. S. Ramasubramanian Chevron Lubricants India Pvt. Ltd. 

Mr. Sayed Ansar Shah CPCL 

Mr. Jignesh Vasavada GAIL (India) Ltd. 

Mr. Ashim Ganguly Indian OilTanking Ltd. 

Mr. M. Kalikrishna IOCL 

Mr. A.K. Maiti NRL 

Mr. Pramode Seth ONGC 

Mr. P.N. Barua Oil India Ltd. 

Dr. Anand Teltumbde Petronet India Ltd. 

Mr. Deepak Mahurkar PricewaterhouseCoopers Pvt. Ltd. 

Editorial Board 

Editor 

Members 

: 

: 

Y. Sahai 

A. K. Arora 

S. L. Das 

O. P. Thukral 

(No part of this journal shall be 

reproduced in whole or in part by any 

means without permission from 

PetroFed. 

The views expressed by various authors 

and information provided by them are 

solely from their sources. The publishers 

and editors are in no way responsible 

for these views and may not necessarily 

subscribe to these views.)

As I sit down to pen this piece, the world awaits 

with bated breath the outcome of the G-20 

meeting of world leaders. And ahead of the G-20 

Summit the World Bank has more than halved its 

GDP growth projections for the developing world 

to 2.1% in 2009 from its earlier projection of 4.4% 

in November, 2008. The growth in 2008 was 

5.8%. 

The new Global Economy Prospects update also 

notes that global growth is expected to contract by 

1.7% this year. This would be the first decline in 

world output since World War II. GDP is projected 

to decline by 3% in OECD countries and by 2% in 

other high income economies. 

The World Trade Organisation while projecting 

that the economic downturn will drive exports 

down by roughly 9% in volume terms in 2009, 

warns that the increasing trade restrictive 

measures could undermine efforts to recover the 

global economy. The risk of Governments ceding 

ground to protectionist pressure is also expected 

to be addressed at the G-20 meeting. According 

to WTO while the contraction in developed 

countries will be particularly severe, with exports 

falling by 10% this year, they are likely to shrink by 

2 to 3% in developing countries, which are more 

dependant on trade for growth. 

From the Chairman 

1 


management policies have helped build a 

protective shield of foreign exchange reserves. 

India is no exception. 

India's economic growth prospects in 2009 have, 

however, been reduced to 4.3% by the 

Organisation for Economic Co-operation & 

Development – the lowest growth in 18 years. The 

ADB and IMF, however, project a growth of 5 and 

5.1% respectively. All these are much lower than 

the internal assessment of over 6% growth. All of 

them also predict that growth will bounce back in 

2010. 

The global economic downturn has also seen 

crude oil prices come down substantially from the 

last year highs. The recent World Bank report 

expects them to remain at more than 50% below 

2008 levels averaging USD 47 per barrel for the 

current year. 

Energy demand between now and 2030 is 

expected to increase by 50% with two third of the 

new demand coming from developing nations. 

The increase in focus on environmental impact 

may, however, modify the energy mix, or atleast 

the fossil fuel energy demand. Petroleum and 

other liquid fuels will no doubt remain the 

important fuels for transportation for some time to 

come but natural gas usage may see a sharper 

increase because of its efficiency and 

environmental impact. 

There in no denying the fact, however, that food 

security through sustainable agriculture and 

energy security through increasing energy 

efficiency and investment in renewable sources 

will be important elements in the growth of 

developing countries. 

According to a UN study the convergence of 

The Asian Development Bank has also called for 

recession in developed countries, food and fuel 

better targeting of food and fertilizer subsidies by 

price volatility and climate change calamities pose 

India and improved cost recovery by oil marketers 

an unprecedented threat to development in the 

and refineries to sustain fiscal deficit. It is, 

Asia Pacific region. Not only did the crude oil 

therefore, imperative that the Government takes 

prices soar to historical levels last year, food and 

advantage of the drop in crude oil prices to target 

commodity prices also increased to the highest 

subsidies only for the needy and deserving in a 

level in over 20 years. There was an increase in 

transparent and efficient manner and moves 

the price of staple food, rice, by a staggering 150% 

towards market determined prices. 

in only four months. The region also suffered 

Such an action shall eliminate several distortions, 

climate change calamities. Developing countries 

strengthen the national economy and prove 

in the Asia Pacific region have shown, according to 

healthy for the industry. 

the study, that they are better prepared for a 

financial crisis. Over the past decade, their 

regulatory reforms in the financial sector, 

combined with cautious macroeconomic S. Behuria


DG's Report 

2 

under international trade law. Argentina, for 

example, has put new licensing requirements on 

several goods to create a new layer of 

bureaucracy for overseas exporters. The 

European Union has announced a new export 

subsidy on some items. China and India have 

increased tax rebates for domestic exporters 

which is being seen by critics as providing a stealth 

subsidy. 

The fear is that actions like these could touch off 

The economic downturn has affected all – 

Governments, Corporates, and individuals. Each 

is trying to find a solution. In an inter-dependent 

world, where the actions of one impact the others 

in different measures, there are no ready 

solutions. One should, however, learn from the 

past and avoid the earlier pit falls. 

The downturn in the 1990s led to weak oil prices 

and a virtual price collapse towards the end of the 

decade. The resulting lack of capital investment, 

downsizing and cost cutting strategies led to lack 

of R&D for new technologies, depleted skilled 

manpower, and insufficient new discoveries. This 

should not be repeated in the current downturn. 

Money may be hard to come by but investments 

should not dry up. A skilled workforce takes time 

to develop. Technologies evolve after persistent 

hard work. And the technological challenge is 

greater than ever before because of 

environmental concerns. I only hope that the oil & 

gas companies will not go into their cocoon but 

shall continue to pursue their growth plans, albeit 

within their manageable resources. 

This would also spur global trade which is 

expected to witness further contraction during the 

current year. There is a 'worrying' trend observed 

toward protectionism as countries rush to shield 

their ailing domestic industries during the global 

economic crisis. According to a mid-March World 

Bank Report atleast 17 of the 20 major nations 

that vowed at a 2008 November Summit to avoid 

protectionist steps that could spark a global trade 

war have violated that promise. Large countries, 

countermeasure that could lead to broader trade 

wars. Protectionist measures may also sharply 

worsen the collapse of global trade, which the 

World Bank said, is facing its steepest decline in 80 

years as global demand dries up. 

PetroFed has consistently advocated and 

recommended creation of a level playing field for 

all players in the industry. The industry 

recommendations to the Government for NELP- 

VIII and CBM-IV sent in early February, 2009 

advocated the same. 

During January, a request was made to the 

Director General of Foreign Trade, Ministry of 

Commerce & Industry and the Ministry of 

Petroleum & Natural Gas for inclusion of 

petroleum products under the 'Market Linked 

Focused Product Scheme' to offset freight 

disadvantage on export of petroleum products, 

and help the nation earn more foreign exchange. 

Request made earlier to CBEC for a resolution of 

the issue pertaining to Classification of Naphtha 

was reiterated. The MoP&NG was also requested 

to resolve the issue of tax holiday under section 80 

IB (9) available for commercial production of 

crude oil which has been denied in some cases. 

The most significant was the release of a Thought 

Leadership Paper during Petrotech-2009 

advocating decontrol of petroleum product 

pricing in the favourable environment of falling 

crude oil prices. Recommendations are being 

forwarded to Government on learnings from 

Japan on auto fuel quality implications. 

from Russia to the United States to China have 

enacted measures aimed at limiting the flow of 

imported goods. 

The events conducted during the quarter are 

incorporated in the journal. So is the Thought 

Leadership Paper recommending market 

According to the World Bank, since last November, determined prices of petroleum products. 

a host of nations have imposed a total of 47 

measures that restrict trade at the expense of the 

other countries. The most obvious trade 

restrictions – raising tariffs or taxes on imports – 

represent only about a third of all measures taken. 

But most are taking more creative steps that fall 

These critical issues warrant prompt action by the 

concerned Government authorities for 

implementation. Support at this critical juncture 

can spur growth in the ensuing fiscal. 

into the grey area of what is considered legal A. K. Arora

India-The Energy Scenario 

Refining - The Challenge For 

Green Technologies 

M. K. Joshi 

Director (Technical), Engineers India Limited 

3 


Drivers behind Refinery Configuration and 

Choice of Technology 

Today grassroots projects of world scale capacities 

are being set up and existing refineries are 

evolving into large, complex units, the growth of 

which has been driven by a combination of the 

following: 

• Freedom of choice in selection of crude oils to 

be processed coupled with availability of 

heavier/opportunity crude oils and favourable 

price differentials between these crude oils 

and lighter crude oils. Increased demand of 

refined products conforming to Euro IV and 

better specifications. 

To meet the requirements of sustained economic 

growth, India needs to ensure sustained energy 

supply and improve the quality and reliability of 

the energy being provided. The following table • Compliance with environmental regulations. 

illustrates the growth (in MMTOE) that is 

anticipated over the next two and a half decades. 

• Changing product demand – a shift to lighter 

distillates and more value added products, 

through residue conversion and product 

Year India World 

treatment 

2006-07 315 

11400 

• Increased value addition to remain 

competitive in the current scenario through 

2030-31 1600 

17700 

integration with downstream operations, e.g. 

production of petrochemicals 

It is clear that the growth rate in India is well above • Capability to process feedstock derived from 

the global rate. If India is to sustain the current fossil and non-fossil sources 

economic growth rate, ensuring quality of energy 

supplies and environmental stipulations will be 

most challenging. The primary energy source over 

the next two decades and beyond will continue to 

be fossil fuel based, with coal contributing 45-50% 

of the total requirements, followed by crude oil. 

• Availability of increasing quantities of 

condensate and natural gas liquids. This 

provides the option to produce cleaner fuels 

and to integrate refinery and petrochemical 

operations. 

The refining sector will, therefore, have a key role 

to play in the supply of clean forms of energy while 

simultaneously ensuring continued viability and 

profitability of operations through a number of 

measures. The likely objectives for future refinery 

operations are presented in the following table. 

It is therefore not surprising to see projects being 

conceived with co processing of crude oil, gas and 

condensate to provide necessary flexibility to 

produce a mix of transportation fuels and 

petrochemicals. 

Objective Issues 

Energy 

security 

Environmental 

compliance 

• Process heavier and sour feeds-extra heavy 

crude oil, tar sands, oil shale. 

• Co process feed from non fossil sources e.g. 

biomass 

• Integrate Gas/coal processing ( GTL/CTL) with 

refining to produce fuels and petrochemicals 

• Produce Clean fuels 

• Cleaner options for hydrogen production Capture 

and sequester CO2 from Hydrogen and Power 

generation facilities 

Product Specifications 

In the last decade product specifications attracted 

close attention of environmentalists as well as 

original equipment manufacturers to ensure 

compliance with environmental stipulations as 

well as optimal equipment performance. Diesel 

and gasoline have been specifically targeted for 

quality improvement with the result that refiners 

are now targeting Euro III/Euro IV specifications of 

these products in conformance with the road map 

laid down in the Auto Fuels Policy of the 

Government of India. Initiatives are also being


taken with a view to making Ultra Low Sulphur • Adequate capacity of secondary conversion 

Gasoline and Diesel to meet even more stringent and residue upgrading facilities to ensure 

quality standards, particularly with an eye on the high overall yields of light and middle 

export market. Lubricating oils are also being distillates 

looked at with a view to meeting API Grade 

II/Grade III specifications to meet the market 

requirements. This has necessitated a close 

examination of refinery configurations and almost 

all the refineries have taken action to implement 

projects, which would enable them to meet the 

• A p p r o p r i a t e u p g r a d i n g f a c i l i t i e s 

(Hydrodesulphurization, CCR Reforming, 

Isomerization, alkylation etc) to meet product 

quality complying with Euro IV or better 

specifications. 

future product specifications while ensuring that 

operations remain profitable. 

Figure 1 Illustrates a refinery configuration in 

which processing facilities are incorporated to 

A standalone refinery configuration in the present produce motor spirit and diesel in line with Euro IV 

context would target a high Nelson Complexity specifications or better, while meeting 

Factor to ensure that it has the following e n v i r o n m e n t a l e m i s s i o n s t i p u l a t i o n s 

capabilities: 

incorporated. Currently refineries in India are 

close to this configuration, which is a far cry from 

• Flexibility to handle heavy and sour crude oils, 

with suitable provisions to process opportunity 

crudes. 

the hydroskimmimng and low conversion 

configurations that were prevalent in the 1980's. 

Figure 1: Current Refinery Configuration 

4

5 


Yield and Product Slate Improvement 

refining and petrochemicals business can be 

realized. 

Residue conversion options are being revisited to 

arrive at techno commercially feasible options to 

increase overall distillate yields beyond 80-82% 

and reduce the production of heavy ends. With 

an increasing thrust towards value addition, 

configuration studies are now looking at higher 

• 

• 

Benefit from the higher demand growth and 

return for petrochemicals versus fuels. 

Control over petrochemical feedstock costs 

helps to maintain margins in petrochemical 

products 

capacities (low cost expansion) to derive benefits 

of economies of scale and possible integration 

with a petrochemical complex, so that more value 

can be added to the refining operations. Such 

integrations add significantly to the refining 

• Reduced capital and operating costs on 

account of shared infrastructure and reduced 

emissions as compared to standalone 

facilities. 

margins but they come at a price. The approach to 

such integrations would be to phase the 

investments e.g. initially in a refinery and 

aromatics complex and then add the olefins 

production facilities, an approach that has been 

followed by the Panipat refinery of M/s Indian Oil 

corporation Ltd. At times it may make more sense 

to follow the reverse sequence, i.e., set up the 

olefins/aromatics production facilities based on 

feed from other sources and gradually integrate 

backwards with refining. Figure 2 illustrates some 

possible linkages between a refinery and a 

petrochemicals complex. 

It is not surprising that a number of mega projects 

envisaging the setting up of integrated refinery 

cum petrochemical projects are at different stages 

of implementation. The Reliance Refinery at 

Jamnagar and the Panipat Refinery of IOCL are 

two leading examples. The Paradip Refinery 

Project of IOCL is planned on similar lines, but 

with a phasing of expenditure. A number of other 

feasibility reports have been prepared for projects 

that envisage similar refinery/petrochemical 

linkages. It is understood that similar facilities are 

also planned to be set up in China and Saudi 

Arabia. 

Figure 2: Possible Refinery/Petrochemical linkages 

Gasification for residue Upgrading 

The refinery/petrochemicals linkage offers a 

number of other benefits, which include: As discussed earlier, residue upgrading projects 

• 

• 

Flexibility to shift the balance of production 

between fuels and petrochemicals 

Advantage of different economic cycles of the 

are being pursued quite actively, with the objective 

of monetizing heavy residual streams. The 

technology options could involve either Hydrogen


addition or carbon rejection. Currently the latter phased approach to arrive at the above 

option appears to be finding favour as processes configuration. This could possibly proceed on the 

like delayed coking integrate easily with refining following lines. 

operations and also require relatively less 

investment. However the processes do not really 1. Examine the feasibility of integration 

achieve 100% residue conversion and the refiners coke/residue gasification to implement the 

still have to address the problem of coke or fuel oil IGCC technology for power or poly generation 

disposal, though to a smaller extent. The ( steam, power and hydrogen) to meet captive 

development of gasification technology and requirements, with export of any surplus 

improvements in reliability/availability offer an power .High costs still come in the way of 

effective option to convert all heavy residue to ready application of this option and costs of 

value added products This option could merit around $2MM/MW are being typically 

serious thought in future as it would not only reported. The IGCC technology has been 

contribute towards an improved product slate, but successfully integrated by Shell in refinery 

also help to meet the Hydrogen and power operation, using heavy residue as feed. Earlier 

requirements of the refinery from low value feed there were issues with regard to the reliability 

stock. At the same time, it could reduce the and availability of the gasifiers-these appear 

emissions of Sox, NOx and particulate matter. A to have been addressed to a significant extent. 

case study for a refinery has indicated that a However the option of having some fall back 

gasification facility based on 90 t/hr of heavy option for power and Hydrogen supply in case 

residue could meet captive power requirements of of gasifier downtime would have to be 

68MW, Hydrogen requirement of about 66000 examined while carrying out the optimization 

TPA and export 116 MW of power to the grid. The of the refinery configuration. 

economics have been shown to be quite attractive 

for the gasification facility on a stand alone basis, 2. Look into the possibility of integrating FT 

but it would be better to look at the overall refinery synthesis to recover high value distillates from 

with and without gasification to arrive at the syngas produced via gasification or reforming. 

economics. This issue is probably better addressed when it 

is considered with a refinery that has suitable 

There is a need to carry out a systematic and hydroprocessing facilities, so that the FT 

detailed techno economic analysis, looking at a products can be suitably upgraded. It also 

Figure 3: Integration of Refinery with Gas Processing 

6

7 


offers potential advantages to the refinery in 

terms of the Hydrogen and steam balance, 

oil, with fewer secondary processing facilities. 

offering the possibility of releasing some of Refining operations by themselves contribute only 

the refinery streams for further value addition. a small portion of GHG emissions when compared 

with the emissions on account of fuel combustion 

The technologies envisaged in the above by the end users. Almost 80 % of CO2 emissions 

approach are well proven. Liquid fuels derived are on account of fuel combustion, while about 

from the FT process have been produced since 10-12% is contributed by refining. There is little 

before World War II. Sasol have been using low that can be done to lower the CO2 emissions from 

grade coal to produce fuels since the 1950's via fuel combustion, unless we move to a scenario in 

this route and today, a number of projects for which refining operations are altered such that the 

power and Chemicals generation are at different end product from the refinery is Hydrogen. In such 

stages of implementation in China. Majors like a scenario 100% of the carbon contained in the 

Sasol Exxon Mobil, Shell and Conoco have carried crude oil would be released as CO2. On paper, 

out developments in the FT synthesis process- the saving grace of such an alternative is that it 

concentrating on reactor and catalyst related offers the possibility of capturing all the CO2 at a 

issues for improvements in selectivity and plant single location. This is presently a remote 

economics. scenario, but it does help to point out that in our 

pursuit of compliance with clean fuel quality, we 

Variation in Crude Oil price by about $ 20/bbl can are in effect generating increasing quantities of 

seriously impact the return on investment for a Carbon Dioxide and need to intensify efforts to 

CTL project based on the FT route. Given the reduce GHG emissions. These efforts offer the 

nature of investments involved in the GTL /CTL following benefits: 

options, it is imperative to carry out detailed site 

specific studies to establish the viability under 

different scenarios of Crude oil and gas prices. The 

same would apply for processes involving direct 

coal liquefaction through Hydrogen addition. 

Considering the position of coal reserves and the 

• 

• 

Lower Energy Costs – it makes good sense 

environmentally and economically to use 

energy more efficiently and simultaneously 

reduce or eliminate GHG missions. 

Extend the world's energy resources 

need to utilize them to the maximum extent, it may 

not be far fetched to think in terms of a “coal 

“refinery in future. 

• 

• 

Meet and beat the competition to provide 

better product quality 

Meet rising expectations for new products, 

With the availability of Gasification, another 

new technologies. 

potential linkage between refinery and 

gas/petrochemicals offers itself for consideration. 

Figure 3 indicates how this could be done. 

Optimization of CO2 emissions presents refiners 

with a real challenge, particularly where 

emissions trading schemes have been introduced. 

Green house gas emissions and abatement 

Some of the areas in which a charge for CO2 

emissions can drive changes in refinery operations 

While the above are representative of the 

challenges and opportunities that can be met 

through the application of mature technology 

and even in the actual configuration selected for 

the refinery may involve a combination of the 

following: 

options, the flip side presents issues related to • Efficiency Improvement 

higher energy consumption and resulting increase 

in emissions of Carbon Dioxide. Increasingly 

stringent product specifications have addressed 

• 

• 

Crude and fuel substitution 

Residue upgrading 

issues related to SOx, NOx, Volatile Organic 

Compounds and Particulate Matter through a 

combination of modification in the molecular 

• 

• 

Hydrogen production 

Carbon sequestration 

structure of the fuels and an increase in their 

Hydrogen content through the application of a 

• Modeling CO2 in LP 

suite of processes that are well established. The issues that have been discussed in the 

Carbon Dioxide, however remains a major issue. foregoing sections give a pointer to what lies 

It is not simple to track refining green house gas ahead and the future could see a lot of emphasis 

generation, but it can be assumed that processing on some of the following: 

of heavier and sour crude oils is expected to result 

in a major increase of GHG emissions as 

compared to a refinery based on light sweet crude 

• Production of Bio fuels that have higher 

energy densities than ethanol and bio diesel 

and are compatible with petroleum based


products requirements and solutions will have to be site 

• Hydrogenation of fats and vegetable oils in a 

Diesel Hydrotreater to produce green diesel 

specific. However, a number of issues need to be 

addressed. These include the following: 

• Production of Syngas from biomass followed 

by FT synthesis to produce Hydrocarbon 

• Global considerations of supply and demand 

as well as product quality 

liquids • Increasing trend towards cleaner refined 

• Catalytic cracking of fats and oils to produce 

products 

green gasoline • Shift towards increasingly heavier crude mix 

• Pyrolysis or hydrothermal upgrading of 

biomass to provide liquids that are suitable for 

and oil continuing its dominance as a source 

of energy 

co processing with conventional crudes • Greater conversion capacity with emphasis on 

• GTL/CTL integration with refining –with 

accompanying challenges of CO2 capture 

and sequestration 

residue upgrading as natural gas replaces 

residual fuel for power generation in the 

energy sector 

• 

• 

Hydrogen production with CCS options 

Hydrogen and energy pinch 

• Meeting increasingly stringent emission 

norms and addressing issues related to 

Carbon Dioxide capture and sequestration 

• Heavy Oil processing will remain important in 

future but it is quite likely that the refining 

industry would, in addition, be looking at a 

scenario in which clean fuels, petrochemicals 

and chemicals are also produced from Bio- 

feeds provided that reliable supplies and 

facilities for ensuring availability of feed are in 

place. The feeds are not very familiar to the 

refiners and this lack of experience leads to an 

area of risk that needs to be managed 

effectively. A major challenge is to ensure 

that renewable fuel technologies should stand 

on their own economic merit and not rely on 

subsidies etc. 

Conclusion 

There has been a transformation in the face of the 

Indian Refining Industry in the recent past. The 

increasing emphasis on product quality, 

profitability and efficiency has thrown up a 

number of challenges that the refineries have to 

meet There is no generic configuration to meet all 

Snippets 

8 

Forward and backward integration is accordingly 

being given due consideration. The concept of 

refinery super sites needs careful examination. 

Thus two or three refineries, which are physically 

quite far from each other, could look into 

synergizing their operations, so that low value 

streams from one refinery can get upgraded at 

the other site. The accompanying issues of 

transportation costs, environmental stipulations, 

space availability etc will all need to be examined. 

There is a need to educate the customers about 

the quality and efficiency of the energy sources 

they use. Customers must realize that using a litre 

of petrol or a cubic metre of natural gas translates 

into more GHG's than producing these forms of 

energy. Providing customers with the information 

they need to better understand the issue of global 

climate change and how they can play a role in 

managing their energy use wisely would 

contribute meaningfully to addressing the world's 

climate change challenge. 

Average annual growth rate of net Percentage of India's banking Total number of complaints lodged 

profit and salaries/wages bill of 

Indian companies in lean period of 

business accounted for by private by customers against all banks in 

1999-2003, indicating both tend 

to move in tandem, in per cent : 

12&11 

and foreign banks : 30 2007-08, in lakhs : 11.8 

Number out of every 100 Ranks of 'credit card related issues' 

Average annual growth rate of net 

profit and salaries/wages bill of 

complaints lodged by bank among nature of customers' 

Indian companies in boom period customers in India that are against complaints : 1 

of 2003-08, in per cent : 28 & 21 

private and foreign banks : 93 

Courtesy : Business India

Bob MacKnight 

Lead Analyst, PFC Energy 

Non-OPEC Decline Rates 

Accelerate 

9 


declining at a global average rate of 9.4% a year 

(6.58% including the FSU). 

In other words, not only were higher oil prices 

unable to arrest the drop in production, but the 

decline rates actually accelerated in recent years. 

The cumulative impact is that base oil production 

outside OPEC and the FSU (for fields online before 

2000) had declined by 40% between 2000 and 

2008. New supply, therefore, was merely 

offsetting drops in base production with most of 

Decline rates in non-OPEC countries have risen that offset coming from production rises in the FSU 

since 2002, despite the investment imperative of a – and even then, as decline rates kept rising, new 

high price environment. By 2008, non-OPEC source was unable to offset declines leading to 

fields outside the FSU which were producing in negative production growth. 

2000 were declining at an average rate of 9.4% a 

year. The rate would be 6.6% if the FSU were 

Regional trends in decline rates 

included. The decline rate has been increasing 

steadily in the past five years, evidence of the • Europe shows the largest decline rates in the 

industry's inability to arrest decline in mature non-OPEC world, primarily as the result of the 

fields. Regional variations, however, are maturity of North Sea oil production. By 

important. In Europe decline rates for mature 2008, the decline rate for fields producing oil 

fields are in excess of 30%; in Asia Pacific rates are 

as low as 4%. And just as high oil prices were 

unable to reverse decline rates, it is unlikely that 

low oil prices will accelerate them: aggregate 

decline rates are driven by resource depletion. 

in 2000 was over 30%, double the decline rate 

in 2007. In fact, base production from these 

older fields in 2008 was just 32% of what it 

was in 2000 – a loss of approximately 3.5 

million b/d. 

Decline rates accelerate all over the non- 

OPEC world 

Decline rates in non-OPEC and non-FSU supply 

have risen steadily in recent years, despite high oil 

prices: fields that were online in 2000 have been 

declining at an average global rate of 6.2% a year 

in the period from 2000 to 2008. Even that 

number aggregates lower decline rates in 2000- 

2003 with rising decline rates thereafter. By 

2008, fields in non-OPEC countries and outside 

the FSU that were in production in 2000 were 

• Non-OPEC Middle East and North Africa 

(MENA) follows with decline rates for older 

fields in 2008 being 9%. By 2008, non-OPEC 

MENA fields were producing 40% less than in 

2000 reflecting across the board declines in 

Egypt, Syria, Oman, Tunisia, Yemen and 

Bahrain. 

• In non-OPEC West Africa decline rates were 

6.6% in 2008 with drops coming from Gabon, 

Congo and Cameroon. In total, the region's


mature fields produced 47% less in 2008 than industry recovered from the collapse in 

in 2000. 

Russian oil production following the 

disintegration of the Soviet Union. These 

• In Latin America the decline rate for older lower declines rates reflect in part the fact that 

fields was 6.3% with Mexico accounting for the Russian oil production refocused on producing 

majority of that (due to the steep declines at more from existing fields or from sections of 

Cantarell), although declines in Argentina are 

also contributing to the total. In sum, the 

fields previously undeveloped. 

region's pre-2000 fields produced 32% less in 

2008 than in 2000. 

• In the United States and Canada, the average 

decline rate for fields producing in 2000 was 

5.4%. The two countries' mature fields 

produced 33% less in 2008 than in 2000. 

• In the Asia-Pacific region, declines in 2008 

were 4.1% with drops coming from Indonesia, 

Australia, Vietnam, and Brunei. In total, the 

region's old fields produced 35% less in 2008 

than in 2000. 

• In the FSU and Eastern Europe, declines for 

older fields were lower, with the region 

producing more in 2008 than in 2000 as the 

Snippets 

Percentage of world's wind Average number of children Slowdown experienced in average 

turbines that are located in worldwide who are killed due to reaction time by persons making 

Germany and USA : 24 & 18 accidental injuries every day:2,000 hands-free mobile calls while 

10 

driving than those who were not, in 

Percentage of world's wind Percentage of global child-injury milliseconds : 212 

turbines that are located in India deaths caused by 'Fall' : 4.2 

Implications for future decline rates 

The inability to arrest decline rates over the last 

few years demonstrates that higher oil prices, 

whatever the positive economic impact on new 

projects or to the attractiveness of reworking older 

projects, were unable to reverse or even arrest 

growing decline rates around the world. In fact, 

decline rates seem to be uncorrelated with oil 

prices or technology at least on an aggregate 

level. Hence, the good news is that the drop in oil 

prices does not fundamentally alter the decline 

rate in existing production; but the bad news is 

that the decline is already very high, especially in 

certain basins, making the task of replacing that 

oil increasingly more burdensome. 

and China : 8 & 6 Percentage increased in error rate 

Percentage of global child-injury by those using hands-free mobile 

deaths caused by 'War' : 2.3 kit than those who were not : 83 


Rajiv Puri 

Associate Director, Advisory Services, 

Ernst & Young Pvt. Ltd 

The world economies are witnessing turbulent 

times with global economic slowdown and 

recessionary trends. Virtually all geographies and 

industries are getting impacted due to lack of 

credit, declining asset valuations, defaults and 

volatility in commodity and currency markets. 

Globally, the oil & gas (O&G) industry is facing 

significant challenges & risks. A recent study done 

by Ernst & Young showed that key business drivers 

influencing risks faced by companies are macro 

threats emerging from general geopolitical and 

macro-economic environment; sector threats 

which emerge from trends that are reshaping the 

industry and operational threats which have 

become so intense that they may impact the 

strategic performance of leading firms. 

After spiraling over the last few years, 

international crude oil prices have declined from 

USD 147 per barrel to USD 40 per barrel. Pricing 

weakness and tightening of access to credit and 

capital are difficulties faced by many energy 

companies in the current economic situation. This 

has necessitated companies to revisit their 

investment decisions so that they could either 

scale back the investment or delay or shelve the 

planned investment in exploration projects. 

Additionally, the surge in the exploration cost for a 

project has put stress on investment and capital 

needs thus, impacting the return on investment. 

Although upstream spend by national oil 

companies (NOCs) and private players is not 

expected to decline drastically, for the smaller 

industry players – who are not well-capitalized 

and/or were previously relying on private equity 

firms and hedge funds for finances – the current 

scenario has become very risky. Indian upstream 

companies continue to cite high raw material, 

high service cost and tight rig market as key 

contributors to inflationary pressures and project 

delays. 

Risk Management in 

E&P 

11 


Bearing in mind the existing scenario, it is 

important for O&G companies to have a good 

understanding of the ways in which these 

challenges can be responded to. This would 

enable companies to efficiently manage risks, 

optimize performance and increase operational 

effectiveness. It is pertinent for O&G companies to 

have a robust and effective project risk 

management framework including policy, 

structure, process & monitoring procedures. 

Risk management is a process that identifies 

potential events, that may refrain an entity from 

achieving project objectives and prioritizes risk 

events based on its severity. Further it develops 

mitigation plans to manage identified projects 

risks within defined risk appetite and monitor 

these risks on periodic intervals to provide 

reasonable assurance regarding achievement of 

project objectives. 

It has to be understood that risk management is 

not just about avoiding risk. But, it is a process to 

identify risks inherent to a project and pro-actively 

address these to minimize loss and enhance 

stakeholder value. Effective risk management 

helps in avoiding surprises, ensuring better 

governance, facilitating effective decision making 

and enables operational efficiencies. 

Exploration and production (E&P) companies 

should proactively identify emerging project 

execution risks, mitigation strategies for 

managing risks and oversight systems in order to 

assess the current environment and accordingly 

adapt/modify the project execution plan. E&P 

projects are inherently dependant on local and 

global uncertainties; long gestation period and 

high capital cost with long payback period require 

assessment of downside risk of non-discoveries 

and variance in the envisaged product portfolio. 

The key to success of an exploration project is to 

have robust budgeting, forecasting, risk analysis 

and monitoring systems. 

E&P companies are exposed to project risks 

relating to identification of right geographical 

location & assets, identifying right exploration 

portfolio, selection of partner & alliances, realistic 

reserve analysis and access to capital & cost. The 

key to asset selection success is the “ability to 

predict” while conducting a comprehensive 

portfolio risk assessment exercise. For each


exploration project, a company should have a impairment and review fair value and hedge 

process to evaluate investment risks as part of its 

screening process – taking into account petroleum 

accounting guidance. 

potential, operating risks, operators' capability, 

clarity of profit sharing, contract adherence, 

political stability, geographical conditions and 

project types and sizes. These risk factors are 

The other risks that are inherent to the exploration 

projects are political risks of other countries, 

safety, security, health, environmental and 

taken into account in profitability analyses. 

12 

litigation risks. Key to effective risk management is 

to raise the efficiency of the project management 

processes including procurement, subsurface 

Exploration projects deal with petroleum reserves evaluation, investment decision-making and 

potentially lying kilometers beneath the surface of knowledge management. 

the earth, making it difficult to visualize and 

understand the petroleum geology at such depths. 

The board of directors should be involved at the 

Absolute geological confidence is therefore rare, 

appropriate time in evaluating risk and reward 

and considerable geological uncertainty prevails. 

trade-offs to have appropriate tone at the top and 

Still, the availability of sufficient data and detailed 

embed a risk management culture within the 

geological analyses could reduce this uncertainty 

organization. 

and exploration risks to acceptable levels. The key 

factors to be considered are likelihood of finding 

The guiding principles in implementing a risk 

traps and reservoirs and volume of petroleum 

management framework is to understand project 

generated, assessment of the sizes of resources or 

objectives and deliverables, focus on significant 

reserves in each target area, to control finding 

risks (risks that matter), evaluate current 

costs, (geophysical surveys and drilling) and raise 

drilling and exploration efficiency. 

competency to manage identified risks, enhance 

risk management competency by developing 

mitigation plans, define roles, responsibilities and 

At an operating level, exploration projects have accountability to manage risks and implement 

regulatory, technical, geological and geophysical monitoring and oversight structure. 

(G&G), engineering, environmental, health & 

safety (EHS), financial, production & marketing 

risks. 

Key components of any risk management process 

are: risk assessment to identify and prioritize risks; 

risk competence Scan to evaluate the 

The credit risks faced by exploration projects organization's current capability to manage its 

relates to key counterparties, lenders, vendors, risks; risk management enhancement for 

suppliers and partners. Adequacy of credit risk improvement in the overall level of risk 

management and reporting process has to be management competency by identifying the 

assessed along with credit and collection policies, initiatives to improve the risk mitigation 

approved counterparties, master netting capabilities, institutionalize policies and 

agreements and collateral requirements to procedures to establish risk governance 

manage credit risk and exposure. Impact of framework in the organization and monitoring 

current counterparty credit risk and related process to review the implementation status of 

concentrations of risk to derivative valuations and specific plans to address significant risks and 

disclosures should also be adequately assessed. finally risk remediation to implement the 

initiatives identified to enhance the risk mitigation 

capabilities. 

From a financial risk perspective, companies 

should evaluate liquidity by stress testing cash 

flows, working capital needs and assess cash and In the present environment, robust and proactive 

cash equivalents for risk of loss and devaluation. project risk management procedures can assist 

Companies also have to manage exchange & E&P companies in managing their projects in a 

interest rate fluctuation risks and evaluate assets more effective manner in order to deliver on its 

such as investments, receivables and goodwill for operational and financial parameters.

Dr. Siddhartha Mukherjee 

Group Leader – Process 

Lurgi India Company Pvt. Ltd. 

High Performance Trays in 

Distillation Operation 

13 

A conventional tray has three functional zones: 

1. Active area for mixing vapour and liquid 

2. Vapour space above the active area 

3. Downcomer between trays 


A proper tray design involves balancing these 

three zones to achieve the desired objectives. The 

skill involved is in striking the best balance 

between the active and downcomer areas. 

For a greenfields plant, a well designed High performance trays function by improving 

conventional tray generally provides the best performance in one or more of the three 

solution for vapour-liquid contacting. However, functional zones. 

with the passage of time, increasing demand for 

throughput, has compelled operators to operate 

the column to a limit where conventional trays 

become a bottleneck. 

Limits of a Conventional Tray 

High Capacity Choices 

C r o s s - F l o w Tr a y s w i t h Tr u n c a t e d 

Downcomers 

The introduction of high performance trays have 

been one of the highlights of distillation processes Increasing the active bubbling area: A normal tray 

in the 1990s. They offer practical solutions for has an area under the entering downcomer and 

revamping processes to achieve higher capacities. over the exiting downcomer where liquid and 

High performance trays can increase throughput vapour cannot come into contact. Typically, the 

by 10 – 25% over a good conventional tray design. downcomer top area accounts for 15 – 25% of the 

column cross-section area, leaving as little as 50% 

for active bubbling area. This reduces the tray's 

Active Area 

Conventional Trays 

Smaller Active Area 

Active Area 

High Performance Trays 

Larger Active Area 

Figure 1 : Conventional Trays vs. High Performance Trays


vapour handling capacity significantly. The liquid flowrate. A swept-back weir (Figure 2) 

inactive area of a conventional tray is precisely achieves this on a conventional tray. Multi 

what such high performance trays attempt to downcomer tray also uses this approach. 

address. The downcomers are sloped from top However. its downcomer length is far longer than 

and truncated above the tray deck and the area 

under it can be as “true active area” for 

that of a conventional tray. 

fractionation. The capacity increase as a result, is In multidowncomer trays the flow path from inlet 

of the same order as the percentage gain in the to outlet is short. This reduces the tray efficiency. 

active area (refer Figure 1). The Superfrac trays by However, recent developments claim higher 

Koch-Glitsch and VG Plus trays by Sulzer 

Chemtech work on this principle. 

efficiencies for such trays. Multi downcomers have 

large total weir length. This, alongwith large 

downcomer areas provide high liquid handling 

In addition, such trays also combine the following 

facilities to achieve the best possible results. 

capability. Such trays can handle large liquid 

loads, particularly when the volumetric ratio 

Decreasing weir load : Increasing the length of 

the outlet weir cuts the weir load and weir crest, 

and consequently lowers tray pressure drop (refer 

Figure 2). This raises the tray capacity. The crest 

height over the weir is expressed by the following 

equation : 

between vapour and liquid rates is low. 

Multidowncomer trays can have tray spacings as 

low as 300 mm. This facilitates larger number of 

trays for a given column height. The MDTM trays 

offered by UOP and the Hi-Fi trays offered by 

Shell/Sulzer Chemtech work on this principle. 

0.67 

C H = 0.4 (L / W L) 

Downcomers, including truncated ones, reduce 

CH Crest height, inches of liquid 

the active area available. On alternative is to use 

L Liquid flow rate, gpm 

a tray without downcomers, i.e., the dual flow tray. 

WL Outlet weir length, inches 

Low Pressure Drop Valves : Low pressure drop 

Without downcomer, the liquid must go down 

valves lowers the liquid height in the downcomer. 

through the same hole through which the vapour 

So, more liquid can be fed into the downcomer, 

rises. 

increasing the liquid handling capacity. 

Such trays have the added advantage of higher 

efficiencies compared to conventional trays on 

account on a better tray deck design. 

Multi Downcomer Trays 

Standard Downcomer with Swept 

Back Weir 

Increasing the weir length through which a liquid 

flows decreases the pressure drop for a given 

Figure 2 : Types of Downcomers 

14 

Trays Without Downcomers 

Arc Downcomer 

In dual flow trays, the liquid and vapour should 

pass through the same hole at the same time. 

However, this is unlikely. Either vapour and liquid 

pass through separate holes at the same time, or 

the liquid and vapour flows in pulses at different 

times. In the latter case, most of the holes pass 

vapour while the liquid level builds up. Then, 

when the liquid reaches sufficient static height to 

overcome the vapour flow, most of the holes will

15 


pass liquid. performance trays. This eliminated a liquid load 

Dual flow trays tend to have open areas as high as bottleneck in the top section of the column. 

25%. High hole areas reduce stable operating 

range of the tray. Dual flow trays have another Installing high performance trays allowed the top 

drawback – lower efficiencies. The path length of section of the column to handle 50% additional 

dual trays is essentially zero. This reduces liquid load compared to the previous maximum 

efficiencies by 30 – 40%. On the other load without deterioration of the column 

hand, dual flow trays have higher capacities than performance. With the new trays the columns 

conventional trays. have also shown improved separation efficiency, 

resulting in a 3 – 4% increase in NGL production. 

Various modifications have been made to improve 

the dual flow design. Prime among them are The combination of these two effects produced a 

Stone and Webster Ripple tray and Shell Turbogrid payback period, on the cost of the revamp, of less 

tray. These designs provide greater operating than 1 month. The new trays were installed on 

flexibility than the standard dual flow design. existing tray supports without additional internal 

High Performance Tray Applications 

High performance trays have been successfully 

used in many applications including ethylene 

plants. Notable among them are the Primary 

welding. Removal of the old trays and installation 

of 18 high performance trays for one column took 

10 days during a scheduled shutdown. 

Conclusion 

Fractionator, the Caustic Scrubber, Demathaniser, High performance trays can greatly increase 

HP Depropaniser, LP Depropaniser, Deethaniser, distillation tower capacity. However, they should 

C2 Splitter, C3 Splitter. be used with caution. While many plants have had 

successes, others have had repeated failures. 

At Saudi Aramco's Shedgum and Uthmaniyah gas Often, the difference between success and failure 

plants, six demethanizer columns were revamped is understanding the performance limits and 

by replacing conventional valve trays with high- compromises in advance. 

Lew Watts 

President & CEO, PFC Energy 

In the October-December, 2008 issue (Vol. 6, Issue 4) of the PetroFed journal the article on page 

12 on the subject 'Where to Cut in the Upstream? The Answers are not Obvious – the 

Implications are Major', carried the photograph of Mr. Lew Watts, President & CEO, PFC Energy 

who had contributed the article. Unfortunately, beneath the photograph the name mentioned 

was Evonne Tan, Associate Analyst, Upstream Competition Service, PFC Energy – Kuala 

Lumpur. 

Correction 

It may kindly be noted that the article had been contributed by Mr. Lew Watts and that the 

photograph published was of Mr. Lew Watts. The error is deeply regretted. 

- Editor


Deepak Mahurkar 

Associate Director, 

PricewaterhouseCoopers Pvt. Ltd. 

16 

but dried up, with several potential deals being 

cancelled and no new major deals announced. 

The increase in deal numbers was wholly 

attributable to upstream activity and smaller deals 

below US$0.5bn. In contrast, there were 

significant falls in the number of larger value deals 

and a big falling-off of very large deals. There 

were only two deals that topped the US$5bn mark 

in 2008 compared with ten such deals in 2007. 

Reserves acquisition, rather than acreage, 

“Indian companies, public and private, accounted for 94% of total 2008 upstream deal 

bought assets overseas more than they sold value. Companies continued to seek growth 

during the year, although the value and primarily through acquisition as opposed to 

number of deals failed to reflect the energy exploration as the oil price soared in the first half 

independence agenda. Within the domestic of the year. Purchases in relatively stable locations 

basins, some reserves changed hands during such as Australia and Canada featured strongly as 

the high oil price period early in the year companies looked to safe havens to secure 

2008, with the later part of the year going reserves to meet future energy demand. 

near dry.” 

Like the oil price, 2008 was a tale of ups and 

2008 was the "Tale of Two Halves," starting with a downs in deal numbers across different parts of 

fairly robust number of transactions for the first the world. Year on year deal numbers were up in 

half of the year, until commodity prices began a all territories with the exception of the dominant 

steep decline and deal activity slid alongside North American market and the Russian 

them. By the fourth quarter, deal activity had all Federation. The pace of deal-making everywhere, 

though, slowed during the year as financial and 

market conditions deteriorated. 

Figure 1 : Total Oil & Gas Deals by value and 

number of deals 2005-2008 

Oil & Gas 

Deals Update 2008 

Deals follow the oil price over a cliff 

A slowing in O&G deal momentum, as measured 

by deal value, was evident from the start of 2008 

compared with 2007. Deal value reduced 

progressively throughout 2008 before following 

the oil price over a cliff in the final quarter as the 

financial crisis intensified and economic 

conditions deteriorated. Companies slammed on 

the brakes in the final quarter with total O&G deal 

value down 59% on 2007 levels and 72% 

compared with the final quarter high of 2006. 

Figure 2 : Size of deals, 2008 (year on year % change in parenthesis)

Big deals in retreat 

Gas grabs top spot 

17 

Deal target pencils sharpen 


Indeed, the rush to develop Australian coal bed 

methane gas assets for LNG export helped 

Even before the worsening of the economic catapult Australia's share of worldwide O&G deal 

climate and the oil price plunge, big deals were in value up tenfold. Upstream deal value in Australia 

retreat. There were only two deals that topped the multiplied, from US$1.7bn in 2007 to US$16.6bn 

US$5bn mark in 2008 compared with ten such in 2008. 

deals in 2007. The hiatus in big deals was 

especially marked in the oilfield services sector. 

The sector had been particularly dynamic in 2007 

with three US$5bn plus deals worth a total of The immediate outlook for O&G deal-making in 

US$31.4bn. In 2008, the number of deals the early part of 2009 is bleak. However, while 

remained high, but the complete disappearance deal activity in the first half of the year looks set to 

of US$5bn plus deals meant total deal value in the remain subdued, it is difficult to see stronger 

sector nearly halved. players remaining on the sidelines for the whole of 

2009 given the opportunities for acquisitions at 

low valuations. Many of the majors and national 

oil companies are in a strong position following a 

Six of the top ten 2008 O&G deals were purchases period of high oil prices. For companies from 

of gas assets. Five of the six were for countries such as China the current market offers 

'unconventional' resources that require unrivalled opportunities to gain access which, in 

considerable technological investment. All of other circumstances, would be denied to them. 

them were in Australia and North America Similarly, sovereign wealth funds and many 

reflecting the attraction of targets in stable private equity investors will be watching the sector 

locations close to end markets as companies closely. 

responded to security of supply constraints. 

Key Regional Markets 

North America 

The fall in North America O&G deal volume from number of big deals that really hit total value. 

its 2006 US$164.7bn high accelerated sharply in There were just 15 deals in 2008 worth US$1bn or 

2008. Total deal value fell 43%, from US$129.7bn above, for example, compared to 31 in 2007. This 

in 2007 to US$73.6bn in 2008. Deal numbers alone accounted for US$49.4bn of the total 

were down by 8% but it was a halving of the US$56bn year on year fall in total deal value. 

Figure 3 : North America oil and gas deals by sector 2007-08 

South America 

South America followed the trend elsewhere of share it did not own in Peregrino, a heavy oil field 

declining O&G deal value. Deal-making in 2008 in Brazil, and 25% of the deep water Kaskida 

tended to be concentrated in countries such as discovery in the Gulf of Mexico, from US company 

Brazil, Columbia and Chile which, unlike Anadarko Petroleum. The deal reflected intense 

countries such as Venezuela, are more open to interest in the growth of the upstream industry in 

modernisation and internationalisation. The Brazil but, also, stood out in a year when there was 

largest deal was Norwegian company less international activity in the region. 

StatoilHydro's US$2.1bn purchase of the half-


Figure 4 : South America oil and gas deals by sector 2007-08 

Europe 

Oil and gas deal activity in Europe was relatively upstream and midstream value was up on the 

resilient compared to the big fall in volume back of a series of deals for North Sea assets and 

elsewhere. Deal numbers rose 64% from 77 to Enbridge's US$1.6bn sale of a 25% stake in its 

126 and total deal value was down 15% Spanish pipeline business, Compania Logistica de 

compared to a 38% drop worldwide. Indeed, Hidrocarburos. 

Figure 5 : Europe oil and gas deals by sector 2007-08 

Russia & CIS 

Deal activity was far more subdued in the Russian the region's O&G deal value was in the upstream 

Federation in 2008 with deal numbers down to 33 sector. This was significantly higher than the 62% 

from 41 the previous year. It was deal values, upstream share worldwide outside the region. The 

though, that saw the bigger drop, falling by remainder of Russian and CIS deal activity was 

around two thirds across all the main deal activity split evenly between the midstream and 

sectors. Not surprisingly, the vast majority, 82%, of downstream with only one service sector deal. 

Figure 6 : Russian Federation oil and gas deals by sector 2007-08 

18

Australia & Asia-Pacific 

19 


2008 deal value in the Asia Pacific region shot up Asia Pacific O&G deal value rose from just 20% in 

by 73%, from US$13.2bn in 2007 to US$22.7bn in 2007 to 75% in 2008. The three largest deals, 

2008. The dramatic rise in deal volume was ConocoPhillips /Origin, BG Group/Queensland 

almost wholly driven by deals to acquire Gas Company and Petronas/Santos – together 

Australian gas assets. Australia's share of total accounted for US$10.8bn of deal value. 

Figure 7 : Asia Pacific (excluding Australia) oil and gas deals by sector 2007-08 

Figure 8 : Australia oil and gas deals by sector 2007-08 

International & Africa 

International activity, involving either apace ahead of the oil price drop. There was an 

international groups of investors or assets that are increase in African deal value headed by 

spread across territories, remained lively in 2008. GEPetrol's US$2.2bn purchase of Devon Energy's 

Deal numbers edged up from 71 in 2007 to 79 in oil and gas business in Equatorial Guinea. Italian 

2008 although, as elsewhere, none of the deals oil and gas company Eni added to its already 

compared with the largest 2007 deals. Forty nine substantial oil and gas operations in Africa, 

of the 71 international deals were in the oilfield expanding its operations in Algeria in a US$995 

services sector where consolidation continued million purchase of First Calgary. 

Figure 9 : International oil and gas deals by sector 2007-08


Project Management is not Merely 

for Project Managers 

Raj Kalady 

Managing Director, PMI India 

20 

structured approach to doing things combined 

with sensitization to risk, improved risk 

management, communication and time 

management. I would like to illustrate this by 

referring to the Project Management Body of 

Knowledge (PMBOK® Guide), a project 

management guide from the Project Management 

Institute, and an internationally recognized 

standard, that provides the fundamentals of 

project management as they apply to a wide 

range of projects. 

The role of a Project Manager, especially in 

large/traditional industries like oil/petroleum is The PMBOK® Guide recognizes 42 processes that 

often a tenured role with job rotation ensuring fall into five basic process groups and nine 

that employees move on to different roles. In such knowledge areas that are typical of almost all 

cases how does the organization justify the projects. It is to these knowledge areas that I 

investments in training and certification of project would like to draw attention. The nine knowledge 

managers? areas are: Project Time Management, Project Cost 

Management, Project Quality Management, 

The answer is straightforward – the tenets, Project Human Resource Management, Project 

principles and practices of PM are easily Communications Management, Project 

extendable and applicable to other fields of Integration Management, Project Scope 

general management. For instance, if you Management, Project Risk Management, and 

examine some of the knowledge areas espoused Project Procurement Management. 

by PM – like HR, communication, time 

management etc you would see that they have Of the nine knowledge areas it is apparent that 

universal impact and would hold good for any the first five focusing on time, cost, quality, HR and 

function/initiative/ programme or project that the communication have a universal impact on all 

organization is running. facets of general management. Skills in these 

areas contribute to the success of a manager 

In fact, I would go a step further to vouch for the across any function in an organization. At the 

relevance and importance of PM in all facets of life same time the remaining four knowledge areas, 

– both personal and professional. The moment while not having a direct impact on management 

you have time, people, money and resources to efficiency, do contribute indirectly to effective 

juggle you have a project on hand – and good management. A clear case for the relevance and 

project management techniques can ensure the need for PM in any business that needs to run and 

success of the project. In fact an acquaintance of monitor multiple projects. 

mine recently created a work breakdown structure 

to successfully plan, manage and execute his Let's delve a little further – and look at the 

daughter's wedding! knowledge areas to gain perspective on how they 

can impact general management functions in an 

Getting back to the business context, let's look at it organization. 

from another perspective. Project managers 

appreciate and understand the importance of • Project Integration Management spans the 

leadership – a trait that has become even more processes and activities needed to identify, 

critical in the business environment of the day. define, combine, unify, and coordinate the 

Leadership at all levels has become a crucial various processes and project management 

business need to differentiate the leaders from the activities within the Project Management 

followers, the winners from the followers – and PM process groups. It entails many choices about 

delivers on this. resource allocation, making trade-offs among 

completing objectives and alternatives, and 

The all-pervasive impact of PM stems from the managing the interdependencies among the 

basic pedestal that it is built on – namely a project management knowledge areas.

21 


• Project Scope Management shows the distribution, storage, retrieval, and ultimate 

processes involved in ensuring the project disposition of project information. Effective 

includes all the work required, and only the communication creates a bridge between 

work required, for completing the project diverse stakeholders, connecting various 

successfully. Managing the project scope is cultural and organizational backgrounds, 

primarily concerned with defining and different levels of expertise, and various 

controlling what is and what is not included in perspectives and interests in the project 

the project. Here the focus is on the goal or execution or outcome. Here the manager 

target and the motivation to achieve the same learns to communicate effectively and 

is high – a skill that is extremely critical across efficiently and to leverage tools and processes 

functions and businesses today. to accomplish the same. 

• Project Time Management focuses on the • Project Risk Management covers the processes 

processes that are used to help ensure the related to identifying, analyzing, and 

timely completion of the project. In essence controlling risks for the project. Effective 

this helps build effective time management – Project Risk Management increases the 

again a crucial trait in the repertoire of probability and impact of positive events, and 

managerial skills. decreases the probability and impact of 

negative events. The process of identifying, 

• Project Cost Management covers the analyzing and mitigating risks becomes a 

processes involved in planning, estimating, habit – a surefire formula for success for any 

budgeting, and controlling costs so that the manager – often times it is the lack of such 

project can be completed within the approved foresight that leads to the failure of initiatives, 

budget. In the current economic and business 

environment the ability to understand, • Pr o j e c t Pr o c u r e m e n t M a n a g e m e n t 

evaluate and manage costs is an important encompasses the processes necessary to 

quality – that will stand the test of time. purchase or acquire products, services, or 

results needed from outside the project team. 

• Project Quality Management spans the It covers contract management and change 

processes and activities that determine quality control processes required to develop and 

policies, objectives, and responsibilities so administer contracts or purchase orders 

that the project meets its goals. It implements issued by authorized project team members. It 

the quality management system through also includes administering any contract 

policy and procedures with continuous issued by an outside organization (the buyer) 

process improvement activities conducted that is acquiring the project from the 

throughout, as appropriate. This instills an performing organization (the seller), and 

understanding of quality (which is a base administering contractual obligations placed 

criterion to do business in today's global on the project team by the contract. 

marketplace) in your managerial cadre. 

It is clear that training in project management and 

• Project Human Resource Management a certified assessment of PM capabilities stands 

describes the processes involved in the both the organization and the employee in good 

planning, acquisition, development, and stead. It arms the employee with the project 

management of the project team. An management skills and best practices required to 

important management skill that hones team handle any task/project across functions in an 

management including identifying team organization. For the employer a PM certified 

players, assigning and managing their roles professional is an asset – given the structured 

to meet common goals – irrespective of approach and 360 degree view that the 

project, business or function. professional brings to the table. Rather than 

becoming an investment that needs justification 

• Project Communications Management PM certification becomes a necessity in the current 

includes processes required to ensure timely business environment where resources and 

and appropriate generation, collection, money are scarce.


Prof. Hamid Ali 

Director of Petroleum Studies, 

Aligarh Muslim University 

An Energy Saving Option in 

Process Industry 

Energy resources will continue to play an 

important role in India's future, being a major 

growing economy and having large boundaries. 

However it is heavily dependent upon imported 

crude oil for its energy requirements affecting its 

balance of payment adversely. The majority of 

India's population is still living in rural areas and 

has no access to modern forms of energy which is 

central to economic development. Thus there is a 

need to examine other alternatives. 

One option is to conserve energy by replacing and 

installing energy efficient equipments which 

should be cheap and require little or no 

maintenance as energy saved is, energy 

Table - 1 Process Reboiler 

name/column 

Alkylation Sulfuric Depropanizer 

Desiobutanizer 

Alkylation (HY) Acid Rerum 

Depropanizer 

Acid Stripper 

Deisobutanizer 

Debutanizer 

Catalytic Reformer Stabilizer 

Aromatic Recovery Stripper 

Pre-extractor 

Gas Plant Stabilizer 

Stripper 

De-ethanizer/ 

Absorber Stripper 

Debutanizer 

Rerun (naptha splitter) 

Depropanizer 

Depentanizer 

Stabilizer 

Sulfur 

Sour water stripper 

Recovery 

Amine regeneration 

Miscellaneous Vaporizer 

Splitter 

22 

generated. In view of these aspects, Vertical Tube 

Thermosiphon Reboilers have proven to be highly 

effective and efficient equipment in heating as 

well as cooling circuits for multiple applications of 

all the reboiler types. Vertical tube thermosiphon 

reboilers are most widely used in petroleum 

refining, natural gas, petrochemical and chemical 

processing industries where significant capital 

investment is represented by vaporizers, 

evaporators and reboilers due to a number of 

advantages over the other types. In these 

industries about 60% of their total operating costs 

are represented by these systems. 

What is a Thermosiphon? 

Thermosiphon reboiler is essentially a closed loop 

circulation system where movement of fluid takes 

place due to the density difference of liquid and 

two-phase mixture in cold and hot legs 

respectively. Thermosiphon boiling of liquids in 

vertical tubes also play a decisive role in power 

plants and nuclear reactors and offers a potential 

means of storage and transportation of solar 

energy. The vertical tube thermosiphon reboilers 

(recirculating type) when designed and operated 

properly provide an efficient and economical 

Purpose 

Remove and collect from alkylate system 

Recycle acid stream to remove contaminants 

Remove and collect propane from alkylate stream 

Remove acid from propane stream 

Produce low vapor pressure alkylate gasoline 

Remove and collect butane from deisobutanizer stream 

Remove butane and lighter hydrocarbons from reformer stream 

Remove and collect aromatics from solvent hydrocarbon stream 

Remove butane and lighter hydrocarbons from reformate charge 

Remove water from solvent 

Remove and collect benzene from aromatics stream 

Remove and collect toluene from aromatics stream 

Remove and collect xylene from aromatics stream 

Remove butanes and lighter hydrocarbons from gasoline product 

Remove very light hydrocarbons such as methane and ethane 

Produce low -vapor pressure alkylate gasoline Stabilize gasoline 

component 

Recycle to polish lean oil (solvent) of lighter gasoline fraction 

Remove and collect propane 

Remove butane and lighter hydrocarbons from gasoline stream 

Remove butane and lighter hydrocarbons from gasoline stream 

Remove and collect H2S and NH3 from water stream 

Regenerate amine for recycle 

Normally found in fuel system to remove butanes 

Separation of two or more hydrocarbon fractions by distillation

23 


means of excellent heat transfer rates, short receives the heat from the heat flux supplied and 

residence times of liquids in the reboiler tube its temperature rises as it moves upward. When 

which minimizes the risk of thermal degradation, vaporization takes place in the tubes, the specific 

most compact dimensions, simple in construction, volume of the fluid is increased resulting in its 

low manufacturing cost, easy to support, ease of upward movement while the liquid is siphoned 

cleaning and maintenance and since the reboiler from the adjoining cold leg. Depending upon the 

can be set close to the column, the frictional losses heat flux applied the flow regimes which may 

in the inlet and outlet piping and cost of vapor occur in boiling two-phase flow is out lined in 

lines are minimized. Thus this reboiler type is very Figure 2. Thus the heat transfer to the liquid 

reliable, has far lower operating costs than other reboiler tube generates a changing two-phase 

reboiler and can be used in a wide range of flow with various flow regimes spread along the 

operating pressures and temperatures. However tube length depending upon wall heat flux, inlet 

in the design of thermosiphon reboilers, special liquid temperature, liquid level in the column and 

care for low pressure drop has to be taken as the physical properties of the fluids. The heat transfer 

circulation is due to the density difference of liquid and hydrodynamics interact with each other in the 

& two-phase mixture. Some important thermosiphon reboiler under the influence of 

applications of reboilers found in a typical various governing operating parameters. The 

petroleum processing units have been point at which two-phase flow begins is known as 

summarized by Huchler as given in Table – 1. incipient point of boiling (IPB). The IPB divides the 

tubes into two distinct regions with significantly 

In a process industry, the equipment is generally a different modes and heat transfer coefficients. 

1 – 1 exchanger placed vertically, with upper tube Non-boiling single phase (convection dominated 

sheet close to the liquid of the bottoms in the sub-cooled boiling with low heat transfer 

column as shown in Figure 1. The process fluid coefficient) and boiling (fully developed saturated 

entering the vertical tubes of heat exchanger boiling with very high value of heat transfer


coefficient). Therefore prediction of boiling nuclear boiling diminishes resulting in its 

incipience heat transfer and circulation rates are decreasing the overall of heat transfer 

the primary requirements for the design and coefficient as the film coefficient is greater in 

efficient operation of the thermosiphon reboiler. 

Vertical tube thermosiphon reboiler is generally 

the nucleate boiling. 

operated either as heat transfer equipment or as a (v) The lower tower pressure results in a lower 

separation system. When the thermosiphon percent vaporization, therefore, for pressure 

reboiler is operated as the heat transfer unit, it less than 5.0 psig, 15% may be the highest 

generates the vapour phase for counter current 

two-phase vapour-liquid flow required for 

vaporization for a thermosiphon reboiler. 

components separation in a rectification or (vi) The vertical tube length is usually 2.5 to 5.0 m 

stripping column. Performance specification for (8 to 16 ft), although lengths upto 6.0 meter 

the reboiler is given by a heat duty and (20 ft is quite common). Longer tubes are 

optimization aims to increase the overall heat possible, but the whole distillation column 

transfer coefficient and/or reduce the driving would have to be raised to accommodate 

temperature difference. However when them. Tube length less than about 1.8 meter 

thermosiphon reboiler is operated as separation (6 ft.) leads to uneconomical designs. 

unit, it will be specified through a concentration of 

volatile product in the concentrate. Typical (vii) The outlet nozzle of the reboiler and the return 

applications are: water– ethylene glycol, acetone- pipe to the distillation column may be 

water, ethanol-water etc. 

designed in a number of ways, however, the 

side – outlet type is the simplest and the most 

While considering a vertical tube thermosiphon commonly used. Generally the flow area in 

reboiler for a duty, following guidelines must be the outlet nozzle is equal to that in the tubes to 

strictly observed: 

avoid instability. The inlet nozzle may enter 

the lower header at the bottom or side, 

(i) Most commonly the thermosiphon reboiler is whichever is most convenient depending 

operated/designed in the region of slug flow. upon the header type and ground clearance. 

As the two-phase move in the upward The diameter of the inlet nozzle and pipe work 

direction the percent vapor flow increases and is less than that of the outlet nozzle, as it is only 

the flow type becomes an annular or mist flow. required to carry single phase liquid and a 

The mist flow pattern decreases the value of high pressure drop here will usually improve 

heat transfer coefficient considerably. The 

percent vaporization therefore should not be 

the stability of the unit. 

more than about 30% by weight. 

(viii)For low pressure operation (less than 0.2 bar) 

the problem is of achieving steady nucleate 

(ii) The viscosity of the feed should be less than boiling because of the relatively large volume 

approximately 0.50 cp otherwise the flow of vapour produced by a small amount of 

difficulty may occur. 

vaporization. At low pressure the sensible 

heat duty is large and this can lead to a low 

(iii) The tower level for the thermosiphon reboiler average heat transfer coefficient. High 

(natural circulation) should be great enough pressure operation is made difficult because it 

to overcome the pressure drop to inlet flow is easy to exceed the critical heat flux and 

line, exchanger and return line. Hence the phase density differences that drives the 

unit should be designed considering a large 

liquid level for safety. For natural circulation, 

circulation is small. 

vertical exchanger is to set the top of the tube (ix) Vertical tube thermosiphon reboiler performs 

at the lowest design liquid level as too high a more efficiently at the liquid submergence 

level may be detrimental to the exchanger level of 50 to 75%. Though the value of heat 

operation. 

transfer coefficient was very high for some 

systems whose viscosities were less, when the 

(iv) The IPB has clearly indicated the two distinct submergence level was maintained at 30%. 

regions which depend strongly on the liquid The performance of reboiler got adversely 

head. When the level head increases for affected for system having high viscosity like 

vertical exchangers, the liquid head forces ethylene glycol as the flow became very low 

liquid to higher levels in the tubes. Thus and intermittent. Thus it is recommended that 

convective transfer is predominant and while considering vertical tube thermosiphon 

24

25 


reboiler for any operation the viscosity of the entering into the reboiler. 

feed should be less then approximately 0.5 cp. 

Note: The article contains information from the open literature 

and the work carried out by the author on a number of organic 

(x) The development of oscillations is higher at 

liquids and their binary mixtures. 

low liquid submergence and more with 

organic liquids than water therefore a valve 

must be incorporated in the pipeline before 

Obituary 

He was an independent consultant for the past 

15 years rendering service to institutes, 

corporates and Government in India and 

aborad. He also found time in between to 

deliver lectures. He prepared a policy paper 

on India's Road to Hydrogen Economy for the 

Indian National Academy of Engineering along 

with Dr. T. K. Roy in 2006 and delivered the 

Dr. P. K. Mukhopadhyay 

keynote address in use and supply of hydrogen 

in petroleum refining, petrochemicals and 

After over 50 years of dedicated contribution to 

fertilizers at the Lovraj Kumar Memorial Trust 

the oil & gas industry, the brilliant chemical 

workshop. 

engineer Dr. Pranab Kumar Mukhopadhyay, 

74, passed away on March 15, 2009 after a 

brief illness. He is survived by his wife and two He was a recipient of the Lala Shriram National 

daughters. 

Award for Leadership in Chemical Industry by 

the Indian Institute of Chemical Engineers and 

the NRDC Award for Invention of Solvent 

A gold medalist in chemical engineering from 

Extraction Process for production of pure 

Jadavpur University and Ph.D. in Technology 

aromatics. He was a Fellow of the Indian 

from Gubkin Petroleum Institute, Moscow, his 

Institute of Chemical Engineers and the Indian 

five decade professional experience covered 

National Academy of Engineering. 

technical service, teaching, R&D, consultancy 

and working in close association with research 

& academic institutes, operating companies Dr. Mukhopadhyay had been a key speaker at 

and commercialising a number of processes prestigious conferences and seminars. His last 

and products. With 30 publications and 50 lecture, probably, was on the PetroFed platform 

papers presented in various national and to invitees on Energy Saving in Pumps, Fans 

international fora, Dr. Mukhopadhyay was a and Compressors on December 30, 2008. 

recipient of the Petrotech 2005 Life-time 

Achievement Award. Our heartfelt condolences to the bereaved 

family. 

Beginning his career with the Stanvac Refinery 

(now HPCL Refinery) at Mumbai in 1955 he 

later taught chemical engineering at IIT, Delhi 

before heading the R&D of Engineers India 

Limited for 13 years. In 1983 he became the 

first full time Director on the Board for R&D at 

IndianOil. He also served IndianOil as its 

Chairman.


In the long term interest of the Indian economy, the principle rule and allow the prices to be regulated 

Petroleum Federation of India circulated this by competition so that consumers are not 

thought leadership paper on January 15, 2009 burdened unduly. 

during the Petrotech-2009 international oil & gas 

conference & exhibition advocating market The good times have arrived – crude oil prices 

determined prices for petroleum products for have plummeted and reached a four year low. 

healthy growth of the industry. Private oil companies have begun to restart the 

retail operations they had closed down. Most 

- Editor importantly, soon there would be a newly elected 

Executive Summary 

Strike when the Iron Is Hot… 

A Thought Leadership Paper by Petrofed 

26 

government at the centre with a fresh mandate 

from the public. It may not be compelled to take 

populist decisions. Election manifestos will be 

Over the past four years and till few months back, drafted soon; the petroleum sector and the 

high crude prices caused mayhem. Economies stakeholders would like political parties to spell 

were threatened and oil importing countries had out their plans on petroleum product pricing 

serious cause for worry when Big Oil and oil policy. 

exporting countries were rejoicing. At home, 

public oil marketing companies reported losses The Integrated Energy Policy also advocates 

even in the third quarter and some are expected to rationalisation of fuel prices. The policy 

return losses for the fiscal on account of controlled recommends that, as a general rule, all 

transport fuel prices, a paradox of purpose when commercial primary energy sources must be 

world-wide profits of oil majors have jumped priced at trade parity prices at the point of sale, 

several fold. The companies had borne very high namely the Free-on-Board (FOB) price for 

levels of under-recoveries, and now need to products for which the country is a net exporter 

regain their financial strength by avoiding making and Cost, Insurance and Freight (CIF) price for 

any losses during higher crude prices scenario in which it is a net importer. The policy projects that 

future. The future of marketing companies is at the price of a product for which the country is self 

stake. sufficient in a competitive market with many 

suppliers and buyers would fluctuate between the 

At the national level, oil bonds, fertilizer bonds two depending upon the ease of import/ export 

and subsidies in the two sectors weakened the and reliability of supplies. This principle, the 

Government finances. Trade and fiscal balances policy claims, is extremely relevant for the 

have been affected severely with high crude prices petroleum sector wherein bulk of the crude oil is 

in the past four years. imported and India has become a net exporter of 

petroleum products. 

The consumers will continue to be burdened in 

such scenarios if true competition does not set-in The policy goes further to recommend to cushion 

within the Indian retail petroleum sector. domestic prices against short-term volatility of 

prices on the international market (FOB or CIF) 

Steps to reduce transport fuel price on December domestic prices by setting on the basis of median 

6th and the temptation to further reduce them, prices over the previous month or a three month 

although may appear rational in the current low period. In conclusion the policy suggests that 

crude oil price scenario, are devoid of a lasting instead of administering prices, full price 

solution. competition should be introduced. 

Commodity markets are cyclic. Petroleum industry To start, decontrolling the prices by linking them to 

is no exception to this. Crude prices may go up in Trade Parity Price for all – PSU as well as Private Oil 

the future and difficult times would start again. Marketing companies – and providing subsidy to 

Political compulsions will never allow the burdens needy at the consumer end, would be in line with 

to be passed on deliberately. The debate over recommendation of the IEP 2006 which was 

how much to pay oil companies to make up for recently approved by the Union Cabinet. 

under-recoveries would never end, and as a result 

oil companies would stand to lose. Why not allow For the fear of consumers getting unduly 

competition to rule? Let the 'consumer pays' burdened disallowing the above actions would be

27 


a script for failure on many accounts; failures we • Decontrol transport fuel prices, and 

were saved just when situation was getting out of 

control. That was owing to global drop in crude oil 

price, not our action. Hence, let the failures not 

• Let deserving domestic consumers receive 

subsidies instead of suppliers. 

wait round the corner. 

In case a similar very high crude price scenario 

Do not wait. Strike while the iron is hot …… 

emerges again, the Government can, as an 

exception and not as a rule, cap the burden on 

Here is an opportunity to take actions which, in all 

probability, find the solution to almost all related 

consumer and share the rest through fiscal or 

subsidy mechanism in future. 

problems – 

Let the opportunity not go waste. 

($/bbl) 

140 

120 

100 

80 

60 

40 

20 

0 

Apri l 

Absorbing Volatility in Crude Oil Prices not Planned 

Crude oil prices have displayed extreme volatility posed by the actual operation of the domestic 

in the last four years with NYMEX crude oil prices pricing policy of petroleum products, besides 

climbing from $37/bbl in April 2004 to $147/bbl making the domestic economy more vulnerable to 

in July 2008 and then tumbling to below $60/bbl oil price shocks due to higher degree of oil import 

mark within a span of three months. The average dependence. Despite the dismantling of the APM 

price of an Indian basket of crude oil has exhibited regime, the Public Sector Oil Marketing 

a whopping increase of 309 percent between April Companies (OMCs) have not yet been granted 

2004 and July 2008. This upward surge in crude freedom to revise the prices of the major 

oil prices reversed with the prices falling to petroleum products such as petrol, diesel, 

$55/bbl in November 2008. kerosene and LPG, which account for more than 

60 per cent of the total consumption of petroleum 

The erratic movement in global crude oil prices products, in tandem with international crude oil 

cannot be explained merely by the dynamics of price movements. 

demand and supply. Other variables such as 

currency movement, speculations, sufficiency and While average price of Indian basket of crude oil 

security, geopolitical tension and even the macro- increased by 309 percent between April 2004 and 

economic situation in countries like USA also July 2008, the retail selling prices of diesel were 

contribute to international crude oil price increased by only 60 percent and that of gasoline 

movement. It is therefore best to plan for volatility by 50 percent for the corresponding period, 

in prices, rather than be reticent about low prices. resulting in a low degree of price pass-through. 

The price pass-through ratios for gasoline and 

As India imports more than 70 percent of its crude diesel for the period between 2004 and July 2008 

oil requirement, these cyclic movements in were 0.16 and 0.19 respectively. This clearly 

international oil prices bring to the fore challenges indicates that decontrolling prices of petroleum 

Figure 1: Trends in Monthly International prices of Indian basket of crude oil 

May 

Trends in Monthly International prices of Indian Basket of crude oil 

June 

July 

August 

September 

October November December Source: PPAC-Oil Prices and Taxes, GoI (2008) 

y 

Januar 

February 

March FY 2009 

FY 2008 

FY2007 

FY 2006 

FY 2005


products, which was the Government intent while share holders would need to continue to share 

dismantling the APM regime in 2002, is not being their windfall profits with downstream companies 

implemented in principle. and consumers of products other than diesel, 

(per cent) 

300 

250 

200 

150 

100 

50 

0 

Figure 2: Percentage change in crude oil price vis-à-vis percentage change in domestic 

retail selling prices of Petrol and Diesel (2004-08) 

Percentage in crude oil price vis-à-vis percentage change in domestic retail selling prices of Petrol and Diesel 

50 

Impact of domestic petroleum product 

pricing policy on various stakeholders 

Not aligning the domestic selling prices of 

petroleum products with the international prices 

has adverse implications for government finances 

60 

Retail Selling Price Petrol Retail Selling Price Diesel Average price Indian basket 

crude oil 

28 

petrol, LPG and kerosene would continue to crosssubsidise 

these products. 

Impact on Private Sector Oil Marketing 

Companies 

and development of the petroleum sector. The As crude oil prices rose sharply in 2008, private 

financial health of the public sector oil marketing companies like Reliance Industries Limited closed 

companies would deteriorate; on one hand the down their retail outlets. They found it difficult to 

subsidy burden of the Government would grow compete with public sector oil marketing 

substantially, while the growth in revenue companies due to the selling price-differentials 

accruing to it from tax collections would slow down between public and private sector retail players. 

with tax rates being moderated. In such a The public sector oil marketing companies - Indian 

scenario, public upstream companies and their Oil Corporation, Bharat Petroleum Corporation, 

309 

Source: PPAC-Oil Prices and Taxes, GoI (2008); Indian Oil 

Thursday, April 24, 2008 

PIB RELEASE 

Closing of petrol pumps by private sector companies 

Lok Sabha 

Percentage increase (April 2004- July 2008) 

Reliance Industries Limited (RIL) has informed that the sales at their retail outlets (ROs) are negligible 

due to selling price differential between private and public sector ROs, leading to the closure of their 

ROs. Essar Oil Limited (EOL) and Shell India Marketing Private Limited (SIMPL) have not yet decided to 

shutdown their ROs. 

The prices of sensitive petroleum products are fixed by the Public Sector Oil Marketing Companies 

(OMCs) in consultation with the Government. Private oil companies are not subject to pricing 

restrictions by the Government and are free to take their pricing decisions on commercial 

considerations. 

The above information given by the Minister of State for Petroleum & Natural Gas Shri Dinsha Patel in 

a written reply in the Lok Sabha today. 

RCJ/l

29 


and Hindustan Petroleum Corporation are selling pricing of petroleum products as a result of which 

fuel below the production cost. While these state- the public sector Oil Marketing Companies end up 

owned oil retailing companies are compensated selling products at prices dictated by the 

by the Government for their revenue losses, a government which are lower than the import 

similar mechanism is not available to private parity price has resulted in huge under-recoveries 

sector players. This ad-hoc price control policy has for the OMCs (Figure 3). The magnitude of undercreated 

a non-level playing field between the recoveries of the Oil Marketing Companies on 

public and private sector. petrol, diesel, kerosene and LPG till November 

Figure 3: Under-recoveries of Oil Marketing Companies 

Some of the private fuel retailers, that had shut 2008 was Rs.1,50,000 crore of which the undertheir 

retail outlets following a sharp increase in recovery on diesel alone was reported to be 

crude oil price, intend restarting their operations approximately Rs.1,00,000 crore. 

with crude oil prices declining by about one-third 

between July-November 2008. The Central Government's share of meeting the 

Impact on Public Sector Oil Marketing 

Companies 

Under-recoveries of Public Sector Oil Marketing Companies 

Source: PPAC-Oil Prices and Taxes, GoI (2008) 

under-recoveries of Oil Marketing Companies 

through provision of budgetary subsidies on PDS 

kerosene and domestic LPG and the issue of oil 

bonds was 45.76 percent in 2007-08. Another 

The Government's influence over the retail selling 33.33 percent came from upstream companies 

(Year) 

(Rs. crores) 

80000 

70000 

60000 

50000 

40000 

30000 

20000 

10000 

0 

20146 

40000 

49387 

77123 

48817 

2004-05 2005-06 2006-07 2007-08 April-June 2008 

(Prov.) 

(Year) 

Figure 4: Profit before tax of Public Sector Oil Marketing Companies 

2008-09 (April-September) 

2007-08 (April-September) 

Source: Company Annual Reports 

Profits of Public Sector Oil Marketing Companies 

2007-08 

2006-07 

2005-06 

2004-05 

-10000 -5000 0 5000 10000 15000 

(Rs. crores) 

Diesel 

PDS Kerosene 

Domestic LPG 

Petrol 

Total 

BPCL 

HPCL 

IOCL


like ONGC, GAIL and OIL. The remaining losses investment sentiment and this could lead to a very 

on account of under-recoveries were borne by the negative situation for a growing economy like 

OMCs themselves 20.9 percent. India. 

The financial performance of the Public Sector When viewed in retrospect, the picture could have 

OMCs is very telling. The three OMCs (IOCL, been really dismal for the OMCs had it not been 

HPCL and BPCL) taken together have posted for the external financial assistance extended to 

aggregate pre-tax losses of Rs.11,870.14 crore them by the Centre and the E&P companies. The 

during the period April-September 2008 for the OMCs would actually have posted huge losses or 

financial year 2008-09 as against profits before record lower profits in last four years as a result of 

tax of Rs.10,624.12 crore for the corresponding single-handedly shouldering the financial burden 

period during the last fiscal (Figure 4). As a result, of unprecedented increase in under-recoveries 

downstream marketing companies will face (Figure 5). 

(Rs. crores) 

severe liquidity crunch and encounter problems in 

meeting their day-to-day expenditure due and 

severely impact the investment plans. A weakened 

petroleum sector would lead to dampening of 

(USD million) 

-5000 

-10000 

-15000 

-20000 

-25000 

50000 

45000 

40000 

35000 

30000 

25000 

20000 

15000 

10000 

5000 

5000 

0 

Figure 5: Cash profits / losses of Public Sector Oil Marketing Companies 

in absence of any external financial assistance 

Cash Profits/Losses of Public Sector Oil Marketing Companies in absence of any external financial assistnace 

2004-05 2005-06 2006-07 2007-08 

(Year) 

Source: BK Chaturvedi Committee Report, 2008 

0 

30 

Macro-economic impacts 

IOCL 

HPCL 

BPCL 

The crude oil price increase over the last four years 

has significantly impacted the country's Balance of 

Figure 6: Net POL imports as a percentage of India's Total Exports 

Net POL imports as a percentage of India's Total exports 

2004-05 2005-06 2006-07 2007-08 (April- 2008-09 (April- 

Sep) Sep) 

(Year) 

Source: Petroleum Planning and Analysis Cell (PPAC) - Oil Prices and Taxes, 

GoI (2008); Ministry of Commerce, GoI (2008) 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

(per cent) 

Net POL Imports 

Net POL Imports as % of India's total exports

31 


Payments situation. For the period April- petroleum products, food and fertilizer, is likely to 

September 2008, the net Petroleum Oil and be in the range of approximately 6 to 7 percent of 

Lubricants (POL) imports were almost half of GDP. Together with State fiscal deficits in the order 

India's total commodity exports, as against 32 of 2 to 3 percent of GDP, the combined true fiscal 

percent for the corresponding period in 2007-08, deficit is clearly going to be in the range of 9 to 10 

thereby implying that a sizeable chunk of export 

earnings is used to finance import of petroleum 

percent of GDP. 

products (Figure 6). 

Burden sharing by stakeholders 

Decontrolling the petroleum product prices will 

attract huge investments in the refineries. The 

high crude oil prices will result in significantly 

higher margins for these refineries. Increased 

earnings from exporting the value added by these 

refineries can compensate for the rising oil import 

bill and make the BoP situation more favourable. 

The government's continued failure to gradually 

adjust domestic oil prices to international realities 

is expected to result in a burgeoning fiscal deficit. 

In the present system the transfer of oil bonds to 

OMCs is off the budget. It does not affect the fiscal 

and revenue deficits of the central government at 

the time of transfer as the issue of oil bonds is not 

accounted for in the Government budget. 

When a distress situation arises, the Government 

takes up evaluation of burden sharing amongst 

stakeholders. The main stakeholder remains the 

Central Government – the exchequer collecting 

taxes, the share-holder of downstream and 

upstream companies collecting dividends and the 

funding source of subsidies through budget 

allocations and oil bonds. Other stakeholders are 

State Governments who collect taxes, consumers 

who pay for fuel, downstream companies who 

have been made to bear under-recoveries, 

upstream oil companies who have been made to 

forego their profits and finally the dealers 

operating retail stations who are remunerated 

through commissions (Figure 8). 

However, the petroleum product subsidies, which 

is the aggregate of subsidies on PDS kerosene and 

Domestic LPG provided from the Government 

budget and the implicit subsidies provided 

The debate over how much to pay the oil 

companies to make up for these under-recoveries 

would never end, and as a result oil companies 

would stand to lose. Various committees 

through issue of oil bonds as a percentage of the appointed by the Government in the past have 

total revenue collected by the Central suggested several mechanisms for sharing the 

Government through excise duties and levies on under-recoveries of the oil companies, but these 

petrol, diesel, PDS kerosene and domestic LPG, 

have increased to 82 percent in 2007-08 from a 

meagre 7 percent in 2004-05 (Figure 7). 

have not been adopted in practice by the 

Government. With market-determined pricing of 

petroleum product prices in place, the oil 

(Rs. crores) 

Figure 7: Petroleum Product Subsidies as percentage of Revenues of Central Government 

from Petrol, Diesel, PDS Kerosene and Domestic LPG 

50000 

45000 

40000 

35000 

30000 

25000 

20000 

15000 

10000 

5000 

0 

Petroleum Product Subsidies as a percenatge of Revenues of Central Government from Petrol, 

Diesel, PDS Kerosene and Domestic LPG 

2004-05 2005-06 2006-07 2007-08 

(Year) 

Source: Petroleum and Natural Gas Statistics 2008, Ministry of Petroleum and Natural Gas, 

GoI; PPAC-Oil Prices and Taxes, GoI (2008) 

According to expert estimates, central fiscal deficit 

after taking into account implicit subsidies on 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

(per cent) 

Revenue accruing to Central Government 

Fiscal Subsidy from Budget on PDS 

Kerosene and LPG and Oil Bonds issued by 

Central government 

Petroleum Product Subsidies as % Revenue 

companies would be spared from the burden of 

reporting their under-recoveries to the


(Rs. crores) 

(Rs. crores) 

50000 

40000 

30000 

20000 

10000 

0 

10000 

20000 

30000 

40000 

0 

Government every fortnight and would petroleum products, consumers have responded 

completely eliminate their dependence on the to high oil price increases by reducing their 

Government and the upstream companies for consumption. In Philippines, allowing full passfinancing 

these under-recoveries. through of world market price to be passed on 

entirely increases to consumers along with a very 

Need of the hour: Decontrol pricing of 

petroleum products 

Figure 8: Burden sharing by various stakeholders 

Burden sharing by various stakeholders 

State Upstream OMCs Dealers Centre 

Source: Petroleum and Natural Gas Statistics 2008, Ministry of Petroleum and Natural Gas, 

GoI; PPAC-Oil Prices and Taxes, GoI (2008) 

32 

2004-05 

2005-06 

2006-07 

2007-08 

active energy conservation campaign by the 

Government of Philippines, helped to reduce fuel 

consumption, achieving an eight percent 

reduction during the first 11 months of 2005 

compared to a year earlier. 

Market pricing will encourage efficiency in the use 

of petroleum products, which will save money for 

the country by reducing oil imports. In India, the Removing the subsidy will considerably reduce the 

capping of prices has also led to diversion and subsidy burden and subsequently the fiscal deficit 

wasteful consumption of certain petroleum of the Government thereby freeing up huge 

products. For instance, a comparison of diesel resources for it to spend on productive ventures 

consumption between the periods April-June and social sectors. 

2008 shows an increase of over 11 percent over 

2007-08 for same period. Due to artificially 

depressed prices for diesel, the demand for Decontrolling the prices will certainly have an 

industrial products such as FO, LSHS, Naphtha, impact on household expenditure directly from 

and LDO has been partially substituted with the higher petroleum prices and indirectly via 

increased consumption of diesel by certain passing on of petroleum prices to other goods and 

industrial consumers in sectors such as cement, services. The impacts of such price increase can be 

coal, steel, mining etc. for captive power mitigated by directly subsidizing the deserving 

generation. strata of society rather than product subsidy. 

International experience of three countries which 

recently raised petroleum product prices, and key 

International experience suggests that in mitigating measures undertaken by them to 

countries with market-determined prices of protect the poor is as follows.

Ghana, Indonesia and Jordan all recently observable household socio-economic 

raised petroleum product price. The key characteristics. Beneficiary cards and 

mitigating measures they took to protect the receipt coupons are printed and 

poor were: delivered by the post office. Eligible 

households with access to a post office 

collect their cash quarterly on designated 

Ghana days. Those in remote areas without such 

access receive cash in their village. 

• Fees for attending primary and juniorsecondary 

school were eliminated. • Some budgetary savings from reducing 

• Extra funds were made available for subsidies were reallocated to existing 

primary health care programs education, health and infrastructure 

concentrated in the poorest areas programs that disproportionately benefit 

through the existing Community Health low and middle income households. 

Compound Scheme. • Initially, the subsidy on kerosene was not 

• Investment in the provision of mass substantially reduced, and its price 

urban transport was expanded and remained at two-thirds of the world price. 

expedited. 

H o w e v e r, s u b s e q u e n t t o t h e 

• Extra funds were made available to 

expand a rural electrification scheme. 

implementation of the transfer program, 

the kerosene subsidy has been 

substantially reduced. 

Indonesia 

Mitigating Measures on account of price rise - 

Country Experience 

33 

Jordan 

Indonesia has an extensive history of 

subsidizing certain oil products. The 

continuation of this policy has vastly 

increased total cost to Government. 

• The minimum wage was increased, as 

were the salaries of low -paid 

government employees. 

Eventually the Government took up the • A one-time bonus was given to lowchallenge 

of large fuel price increase, and income government employees and 

simultaneously addressed potential adverse pensioners. 

impacts on the poor. • An electricity lifeline tariff was 

maintained at current low levels- 

• An unprecedented cash transfer program 

electricity access is almost universal. 

to 16 million poor families was • Cash transfers were provided to other 

implemented. Under the program, each low income households. 

family receives Rp. 300,000 (about 

US$30) every three months. The full 

annual cost of the program is estimated 

at nearly 0.7 percent of GDP. The 

identification of poor households is 

based on an existing approach used by 

the Central Statistics Bureau, which 

calculates a “proxy-means score” for 

• The government announced a plan to 

increase funding to the National Aid 

Fund as part of a program to improve the 

design and implementation of this 

national safety net program with World 

Bank assistance. 

potentially poor households based on Source: IMF Working Paper WP/07/71 

www.petrofed.org


Common Minimum Programme of UPA Government 

Energy Security: 

The UPA government will immediately put in place policies to enhance the 

country's energy security particularly in the area of oil. Overseas investments in 

the hydrocarbon industry will be actively encouraged. An integrated energy 

policy linked with sustainable development will be put in place. 

Election Manifesto of National Democratic Alliance for 2004 

General Elections (Agenda for Oil and Gas Sector):- 

• Enhanced oil production through increased exploitation of own 

resources as well as purchase of ownership in oil fields overseas. 

• Dependence on fossil fuels to be lessened through a concerted 

drive for harnessing non-conventional energy sources. 

• Commercial exploitation of discovered gas fields will begin by 

2005. 

• The Petroleum and Natural Gas Regulatory Board Bill will be 

enacted. in 2007 

It is high time that we get out of this highly complex consumers know what exactly they have to pay for 

and opaque pricing policy of petroleum products petroleum products as they pay for a number of 

once for all. We should take it out from the realm other products in a market economy. 

of politics back to the realm of economics, so that 

34

35 


The PetroFed pavilion at the Petrotech-2009 Shri A. K. Arora was also called upon to chair a 

exhibition at Pragati Maidan was inaugurated by Technical Session during the conference at Vigyan 

Shri S. Sundareshan, Additional Secretary, Bhavan on January 13, 2009 on 'Emerging Energy 

Ministry of Petroleum & Natural Gas on January Options – 2 (CTL/GTL/BTL)'. The keynote speaker 

11, 2009. during the session was Dr. Jennifer Holmgren, 

UOP, LLC, USA who spoke on Advances in Pyrolysis 

PetroFed actively assisted in the organisation of 

Petrotech-2009 international oil & gas conference 

& exhibition at New Delhi. The Director General, 

PetroFed, Shri A. K. Arora was a member of the 

Steering Committee. The Director (Comm. & 

Technology. The other speakers were Shri E. 

Valotti, ENI India Limited on the GTL approach; Dr. 

Girish K. Chitnis, ExxonMobil on production of 

gasoline from coal; and Dr. Sudip Maity, Central 

Institute of Mining & Fuel Research on liquid 

hydrocarbon production from coal, biomass and 

Mktg.), PetroFed, Shri Y. Sahai was on the three 

member panel of judges to select the best 

exhibitors in various categories at the exhibition. 

Shri S. Sundareshan, Additional Secretary, Ministry of 

Petroleum & Natural Gas inaugurating PetroFed 

pavilion at the exhibition. On his right is Shri S. Behuria, 

Chairman, PetroFed and Chairman, IndianOil and on 

his left Shri A. K. Arora, DG, PetroFed. 

Events 

PetroFed in Petrotech-2009 

syngas. 

A view of the PetroFed pavilion. 

Workshop for Academia on SHE 

A workshop on 'Safety, Health & Environmental Inaugurating the workshop Prof. S. C. Saxena, 

Management in Hydrocarbon Industry' was Director, IIT, Roorkee stressed on the need for 

organised by the Petroleum Federation of India in education and training on SHE aspects and their 

association with the Lovraj Kumar Memorial Trust inclusion in the chemical engineering curricula of 

(LKMT) and the Department of Chemical institutions. He expressed the hope that the M- 

Engineering of IIT, Roorkee from January 22-24, Tech programme in Industrial Pollution 

2009. The three-day workshop at IIT, Roorkee Abatement at IIT, Roorkee will help in bridging the 

aimed to provide inputs on latest developments to 

teaching faculty members of technical institutions 

gap in this area. 

in north India on the extremely important subject 

of safety, health & environment in the 

hydrocarbon industry. 

In his presidential address, Shri A. K. Arora, 

Director General, PetroFed and Trustee, LKMT 

emphasised the need for regular updation of


faculty knowledge in SHE management and the Campus, IIT, Roorkee introduced the workshop. A 

need to enhance research capabilities in the area vote of thanks at the inaugural ceremony was 

at institutes. proposed by Shri S. L. Das, Director (BD&C), 

PetroFed. 

Shri J. B. Verma, ED, OISD in his lively and thought 

provoking keynote address underlined, through The workshop was spread over five sessions and 

examples, the importance of loss prevention and speakers were drawn from among experts from 

safe operations in the hydrocarbon industry. He the oil & gas industry including R&D organizations 

offered help in providing industrial insight to the and the Oil Industry Safety Directorate besides 

students of IIT, Roorkee undergoing M-Tech in SHE Controller of Explosives, the Directorate General 

and Hazardous Management. of Mines Safety, Directorate General, Factory 

Advice Service & Labour Institutes and process & 

equipment suppliers. 

The Secretary General of Petrotech Society, Shri J. 

L. Raina lauded the initiative of training for 

teaching faculty. Participants were earlier Faculty members from five states and union 

welcomed by Prof. I. D. Mall, Head of the territories from north India participated in the 

Department, Chemical Engineering, IIT, Roorkee workshop. 

while Prof. I. M. Mishra, Dean, Saharanpur 

Shri A. K. Arora, Director General, PetroFed lighting the 

lamp at the inauguration of the workshop. Others (L-R): 

Prof. S. C. Saxena, Director, IIT, Roorkee; Shri J. L. Raina, 

Secretary General, Petrotech Society; Shri S. L. Das, 

Director (BD&C), PetroFed. 

36 

Workshop inaugural function. Seated (L-R): Prof. I. M. 

Mishra, Shri J. B. Verma, Shri A. K. Arora, Prof. S. C. 

Saxena, Shri J. L. Raina, Shri S. L. Das and Prof. I. D. 

Mall. 

Group photograph of the participants at the workshop. A section of the participants.

"Energy and Climate Summit" 

(L-R): Dr. Jyoti Parikh, Executive Director, IRADe; Shri 

Vilas Muttemwar, Hon'ble Union Minister of State for 

New & Renewable Energy; Shri Sushil Kumar Shinde, 

Hon'ble Union Minister for Power; Shri Montek Singh 

Ahluwalia, Hon'ble Deputy Chairman, Planning 

Commission; Dr. Kirit Parikh, Member, Planning 

Commission. 

37 


PetroFed associated with Integrated Research and Union Minister for Power while the inaugural 

Action for Development (IRADe) in organising the address was delivered by Shri Montek Singh 

Energy and Climate Summit-2009 on February 3- Ahluwalia, Hon'ble Deputy Chairman, Planning 

4, 2009 at New Delhi. Commission. Shri Vilas Muttemwar, Hon'ble 

Union Minister of State for New & Renewable 

On each day there were three sessions besides the Energy delivered the Special Address. Participants 

inaugural on the opening day and the valedictory were welcomed by Dr. Kirit Parikh, Member, 

session on the closing day addressing the theme Planning Commission and a vote of thanks 

of “Meeting New Challenges”. During the proposed by Dr. Jyoti Parikh, Executive Director, 

inauguration the presidential address was IRADe. 

delivered by Shri Sushil Kumar Shinde, Hon'ble 

Shri Sushil Kumar Shinde, Hon'ble Union Minister for 

Power delivering presidential address. 

In its series of Guest Lectures and Thought Dr. Bhasin in his presentation clarified the 

Leadership programmes, PetroFed organised, in distinction between Invention and Innovation and 

association with Lovraj Kumar Memorial Trust, a identified the enablers and barriers between the 

lecture by Dr. Madan M. Bhasin on 'Invention & two through examples like ethylene epoxidation 

Innovation: Some Reflections' on February 6, catalysis, three-way automotive emissions control 

2009 at New Delhi. Dr. Bhasin who and the production of ethylene from methane by 

superannuated as Sr. Scientist from The Dow 

Chemical Company in December 2008 drew on 

selective oxidative coupling of methane. 

his 45 years' experience to delineate the path for 

conversion of an invention to commercialisation 

A Ph. D. in Physical Chemistry from the University 

through innovation. 

"Invention and Innovation" 

of Notre Dame, Dr. Bhasin joined Union Carbide 

Corporation in 1963. He is a recipient of over a 

dozen awards and honours, has 22 U.S. patents, 

Chairing the session, Sh. J.P. Kapur, Trustee, Lovraj besides foreign patents to his credit and has 21 

Kumar Memorial Trust recalled developments in publications in journals besides editing a book. 

invention and innovation in petrochemicals 

during the past 40 years.


Session Chairman Shri J.P. Kapur delivering opening 

remarks and introducing the Speaker Dr Bhasin (R). On 

left (forward) Shri S L Das, Director(BD&C), PetroFed. 

38 

An animated Q&A session in progress. 

Stakeholder Consultation on India-EU Agreement 

The Petroleum Federation of India organised a Dr. Archana S. Mathur, Economic Adviser, Ministry 

'Stakeholder Consultation on Energy Services' of Petroleum & Natural Gas elaborated on the 

under the aegis of the Department of Commerce, potential for growth in Indian oil & gas industry 

Government of India to seek inputs for a Broadbased 

Trade & Investment Agreement between 

and trade with the European Union. 

India and the European Union. The half-day 

consultation on February 27, 2009 at New Delhi 

was in knowledge partnership with the Indian 

Council for Research on International Economic 

Relations (ICRIER) and the Centre for WTO Studies 

of the Department of Commerce. 

Chairing the session, Ms. Bharathi S. Sihag, Joint 

Secretary, Department of Commerce, 

Government of India urged participants to voice 

their opinions freely to enable Government take 

them on board while formulating negotiating 

strategy. 

Welcoming participants Shri A. K. Arora, Director 

General, PetroFed drew attention to PetroFed's 

role as nodal agency for coordinating matters 

pertaining to WTO for the oil & gas sector. He 

considered the present times as the most 

opportune for negotiating favourable trade 

agreements. 

Session Chairperson, Ms. Bharathi S. Sihag, Joint 

Secretary, Department of Commerce, Government of 

India (R) being welcomed by Mr. A. K. Arora, Director 

General, PetroFed. 

Presentations were made on the Broad-based 

Trade & Investment Agreement between India and 

European Union by Mr. Amit Yadav, Director, 

Department of Commernce, Government of India 

and on their studies pertaining to consultation on 

energy services by Prof. Arpita Mukherjee and Ms. 

Smita Miglani of ICRIER. 

Dr. Archana S. Mathur, Economic Adviser, Ministry of 

Petroleum & Natural Gas (R) being greeted by Mr. A. K. 

Arora, Director General, PetroFed.

Mr. Amit Yadav, Director, Department of Commerce, 

Government of India (R) being presented a bouquet by 

Mr. A. . Arora, Director General, PetroFed. 

Dr. Arpita Mukherjee, Prof., ICRIER making her 

presentation.. 

A section of the participants. In the foreground (R-L): Dr. 

Arpita Mukherjee, Prof., ICEIER and Ms. Smita Miglani, 

ICRIER. 

39 

Ms. Bharathi S. Sihag addressing participants. 

A section of the participants. 


Mr. S. L. Das, Director (BD&C), PetroFed raising his 

query during the Q & A session


To learn from and leverage the Japanese Mr. Shogo Saegusa, Co-chairman Fuels & 

experience on auto fuel quality the Petroleum Lubricants Committee of Japan Automobile 

Federation of India (PetroFed) organised a two- Manufacturers Association (JAMA) in his theme 

day conference on Fuel Quality and Vehicular address brought out the relationship between fuel 

Emissions in association with the Bureau of Indian improvement and vehicle technology and the 

Standards (BIS) on March 17-18, 2009 at New 

Delhi. Technical collaboration for the conference 

transition of emission regulation in Japan. 

was provided by the Japanese Automobile 

Research Institute (JARI) and the Ministry of 

Economy, Trade and Industry (METI) of Japan. 

Several other Japanese organizations like JAMA, 

JASO, JISC offered technical assistance during the 

conference which also associated actively the 

Society of Indian Automobile Manufacturers 

While proposing a vote of thanks at end of the 

inaugural session, Shri A. K. Arora, Director 

General, PetroFed drew attention to the 

recommendations submitted by PetroFed after the 

seminar organised on Auto Fuel Policy in 2006. 

The Review Committee on the Auto Fuel Policy, 

(SIAM). 

Indo-Japanese Conference 

on 

Fuel Quality and Vehicular Emissions 

Mr Rakesh Verma, Addl. Director General, BIS , lighting 

the lamp. Others (L-R) Mr L N Gupta, Jt Secretary 

MoPNG, Mr A K Arora, DG, PetroFed, Ms Supriya 

Dhingra, PetroFed, Mr Shogo Seagusa, Fuels and 

Lubricants Committee Co-Chairman, JAMA, Japan. 

40 

set-up by the MoP&NG, had echoed most of the 

recommendations he added. Particular attention 

was drawn by him to tackling issues of inspection 

The over 140 participants from three score and maintenance of in-use vehicles and research 

organizations were welcomed by Ms. Madhulika studies on fuel efficiency and cost effectiveness of 

Prakash, Dy. Director General (Technical), BIS. different fuels. 

Inaugurating the conference Shri Rakesh Verma, 

Addl. Director General, BIS exhorted participants 

The conference, which attracted quality 

to make the best use of the opportunity offered 

participation from almost all related sectors and 

with the presence of Japanese experts. Shri L. N. 

agencies, was spread into three sessions on each 

Gupta, Joint Secretary, Ministry of Petroleum & 

day besides the inaugural on the first day and a 

Natural Gas (MOP&NG), in his presidential 

panel discussion in conclusion. The subjects 

address complimented PetroFed for holding this 

covered Fuels & Standards, Vehicular Emission & 

second conference on auto fuels and called for 

Environment, Next Generation Vehicle and Fuel 

evaluations of all options in formulating 

appropriate strategies while carrying out midcourse 

correction, if required, in the Auto Fuel 

Policy. 

Initiatives, and Alternative Fuels. 

Seated (L-R) Mr A K Arora, DG, PetroFed, Mr L N Gupta, 

Jt Secretary, MoPNG, Mr Rakesh Verma, Addl. Director 

General, BIS, Mr Shogo Seagusa, Fuels and Lubricants 

Committee Co-Chairman, JAMA, Japan, Mrs. 

Madhulika Prakash, DDG(T), BIS.

Mr L N Gupta, Jt. Secretary, MoPNG delivering 

presidential address. 

Mr Dilip Chenoy, DG, SIAM (Centre) chairing Session II. 

Others (L-R) Mr K. Murali, Director (Refineries) HPCL, Dr 

(Mrs) Vijay Malik, Head (PCD), BIS, Ms Keiko Hirota, 

Researcher, JARI, Mr B. P. Singh, GM (Operations) Retail 

HQs, BPCL . 

Mr Anand Kumar, Director (R&D), Indian Oil (2nd from 

right) chairing Session IV. Others seated in forefront (L- 

R) Dr Atsushi Kameoka, Group Leader of Environment 

and Energy Division, JARI, Japan, Ms Michiko 

Watanabe, METI, Japan, Mr B. Sengupta, Former 

Member Secretary, Central Pollution Control Board. 

41 


Ms Keiko Hirota, Researcher, Public Policy and Economic 

Research Division, JARI (Centre) chairing Session I. 

Others (L-R) Dr A. A. Gupta DGM, IndianOil, R&D, Dr 

Kiyoyuki Minato, Senior Researcher, Public Policy and 

Economic Research Division, JARI, Japan. 

Mr B. Bhanot, Former Director, ARAI (3rd from left) 

chairing Session III. Others (L-R) Dr Kiyoyuki Minato, 

JARI, Japan, Dr Rakesh Kumar, Scientist, NEERI, Mr N. S. 

Murthy, Senior Vice President, Reliance Industries 

Limited. 

Mr Ashok Dhar, Senior Vice President, Reliance 

Industries Ltd. (Centre) chairing Session V. Others (L-R) 

Mr P. D. Bahukhandi, General Manager (QC), IndianOil, 

Ms Michiko Watanabe, METI, Japan, Mr K K Gandhi, 

Executive Director, SIAM, Mr M. K. Chaudhari, Senior 

Dy. Director, The Automotive Research Association of 

India.


Mr M. B. Lal, Chairman, Scientific Advisory Committee, 

MoP&NG and Member Technical (P&NG), Appellate 

Tribunal for Electricity (Centre) chairing Session VI. 

Others (L-R) Mr Shogo Saegusa, JAMA, Japan, Dr. Y. P. 

Rao, Vice President (Technical), Gulf Oil Corporation 

Ltd. 

42 

Mr K Murli, Director (Refineries), HPCL (5th from left) 

Chairing panel discussion. Others (L-R) Mr K K Gandhi, 

SIAM , Mr Shogo Saegusa, JAMA, Japan, Dr R.K. 

Malhotra, Executive Director (R&D), IndianOil, Ms 

Michiko Watanabe, METI, Japan, Mr Ashok Dhar, 

Reliance Industries Ltd, Mr B. Sengupta, Mr N. S. Murthy, 

Reliance Industries Limited, Dr R. K. Bajaj, Director, BIS. 

LNG Handling, Storage & Regasification 

In its series of Guest Lectures and Thought of the LNG chain during his presentation. He 

Leadership Programmes, PetroFed organised a began with the salient characteristics of natural 

lecture on 'LNG Handling, Storage & gas and its utilisation and went on to elaborate on 

Regasification' by Mr. Sham Sunder, Adviser the LNG cycle, its handling, processing and 

(Technical), Essar Oil Limited at the PetroFed regasification as well as various types of storage 

Conference Hall on March 26, 2009. tanks and vaporisation schemes. He also covered 

shipping & transportation of LNG and operating 

limits at port and safety system. 

Chairing the session, Mr. Suresh Mathur, Director 

(Oil & Gas), Essar Oil Limited and former 

Managing Director, Petronet LNG Limited An engineering graduate from Punjab University 

highlighted the significance of natural gas in the and a M.S. from Oklahoma State University, USA, 

21st century and the global challenges presented Mr. Sham Sunder has earlier worked in USA for 

in LNG production and marketing. about 7 years in a large Petro-Chemical Complex 

and put in almost 17 years in Engineers India 

Limited. He has presented numerous papers at 

Mr. Sham Sunder, with his decade long experience various fora and has two U.S. patents to his credit 

in Petronet LNG Limited as Director (Technical) on Liquefaction of Natural Gas and Mechanical 

and a decade earlier in GAIL, covered all aspects energy from geothermal resources.

Session Chairman Mr. Suresh Mathur, Director, Oil & 

Gas, Essar Oil (L) being greeted by Mr. S. L. Das, Director 

(BD&C), PetroFed. 

Mr. Sham Sunder, Adviser (Techncial), Essar Oil Limited 

delivering his lecture. 

Snippets 

43 


Mr. Sham Sunder, Adviser (Techncial), Essar Oil Limited 

(L) being welcomed by Mr. Suresh Mathur. 

A section of the participants. 

Estimated value of India's private Percentage of Indians who say they Average minutes spent on job 

have issues with their weight : 54 

security industry, in billion search every day by unemployed 

dollars:2.3 

Estimated number of persons 

Percentage of Indians who say they 

seek weight loss information from 

workers in the US, France and 

Spain : 41/27/22 

employed by India's Private security 

doctors and Internet : 61 & 47 

Average minutes spent on job 

industry, in million : 5.5 Percentage of people worldwide search every day by unemployed 

Projected number of persons 

employed by India's private 

who say they are struggling with 

their weight : 60 

workers in Italy, Germany and the 

UK : 12/10/8 

security industry by end-2009, Percentage of people worldwide Average minutes spent on job 

making it the country's largest who say they seek weight loss search everyday by unemployed 

employer, in million : 6.5 

information from doctors and 

Internet : 60 & 36 

workers in Sweden and Finland : 

6& 3 



Our Member Organisations 

Adani Energy Ltd. 

Axens India Pvt. Limited 

Bharat Petroleum Corp. Ltd. 

BP India Services Pvt. Ltd. 

British Gas India Pvt. Ltd. 

Cairn India Ltd. 

Cambridge Energy Research Associates (CERA) 

Chennai Petroleum Corp. Ltd. 

Chevron Lubricants India Pvt. Ltd 

Chevron Petroleum India Pvt. Ltd. 

Deloitte Touche Tohmatsu India Pvt. Ltd. 

Engineers India Ltd. 

Ernst & Young Pvt. Ltd. 

Essar Oil Ltd. 

GAIL(India) Ltd. 

Great Eastern Energy Corporation Ltd. 

Gujarat State Petroleum Corporation Limited 

Hindustan Petroleum Corp. Ltd. 

HLS Asia Ltd. 

Honeywell Automation 

HPCL Mittal Energy Ltd. 

IMC Ltd. 

Indian Oil Corp. Ltd. 

Indian OilTanking Ltd. 

Indraprastha Gas Ltd. 

Industrial Development Services 

Jindal Drilling Industries Pvt. Ltd. 

Jubilant Oil & Gas Pvt. Ltd. 

Larsen & Toubro Ltd. 

Mangalore Refinery and Petrochemicals Ltd. 

Mitsui Chemicals India Private Limited 

MMTC Ltd. 

Naftogaz India Pvt. Ltd. 

Nagarjuna Oil Corp. Ltd. 

Niko Resources 

Numaligarh Refinery Ltd. 

Oil & Natural Gas Corporation Ltd. 

Oil India Ltd. 

Petroleum India International 

Petronas India (Holdings) Pte. Ltd. 

Petronet India Ltd. 

Petronet LNG Ltd. 

PFC Energy 

PricewaterhouseCoopers Pvt. Ltd. 

Prize Petroleum Co. Ltd. 

Punj Lloyd Ltd. 

Reliance Industries Ltd. 

Santos International Operations Pty. Ltd. 

SAP 

Schlumberger Asia Services Limited 

Shell India Pvt. Ltd. 

Sud-Chemie India Pvt. Ltd. 

Tata Petrodyne Ltd. 

Tecnimont ICB 

Total SA 

Transocean Limited 

University of Petroleum & Energy Studies (UPES) 

UOP India Pvt. Ltd. 

World L. P. Gas Association 

44 

Mr. Rajeev Sharma 

Mr. H. L. Suresh 

Mr. Ashok Sinha 

Mr. Sashi Mukundan 

Mr. Alan Derek Fisher 

Mr. Rahul Dhir 

Mr. James Burkhard 

Mr. K. K. Acharya 

Dr. Akhil Kumar 

Mr. John Digby 

Mr. James H. Quigley 

Mr. Mukesh Rohatgi 

Mr. Rajiv Memani 

Mr. Naresh Nayyar 

Dr. U.D. Choubey 

Mr. Yogendra Kumar Modi 

Mr. D.J. Pandian 

Mr. Arun Balakrishnan 

Mr. Rajeev Grover 

Mr. Vimal Kapur 

Mr. Prabh Das 

Mr. A. Mallesh Rao 

Mr. S. Behuria 

Mr. Jayanta Bhuyan 

Mr. Rajesh Vedvyas 

Mr. R. K. Gupta 

Mr. Naresh Kumar 

Mr. Atul Sathe 

Mr. A.M. Naik 

Mr. U. K. Basu 

Mr. Shingo Shibata 

Mr. Sanjiv Batra 

Mr. M.N. Khan 

Mr. S. Rammohan 

Mr. Larry Fisher 

Mr. B.K. Das 

Mr. R.S. Sharma 

Mr. N.M. Borah 

Mr. Arjun Hira 

Mr. Mohd. Rauff Nabi Bax 

Dr. Anand Teltumbde 

Mr. P. Das Gupta 

Mr. Robinson West 

Mr. N. Ramesh Rajan 

Mr. Rajan Kapoor 

Mr. Atul Punj 

Mr. Mukesh Ambani 

Ms. Madhu Toshniwal 

Mr. Ranjan Das 

Mr. Rajeev Sonthalia 

Mr. Vikram Singh Mehta 

Ms. Arshia A. Lalljee 

Mr. M.A. Pathan 

Mr. C. M. S. Rao 

Mr. Christian Chammas 

Mr. Steve Myers 

Dr. S.J. Chopra 

Mr. Gary P. Godwin 

Mr. James Rockall

Mr. S. Behuria Chairman 

Chairman, IOCL 

Mr. P. Raghavendran Vice-Chairman 

President (Refinery Business), RIL 

Mr. S. Mohan BPCL 

Director (HR) 

Mr. S. Chandrasekaran CPCL 

Director (Technical) 

Mr. B.C. Tripathi GAIL (India) Ltd. 

Director (Marketing) 

Mr. S. Roy Choudhury, HPCL 

Director (M) 

Mr. Dipak Chakravarty NRL 

Director (Technical) 

Mr. N. Bhalla Oil India Ltd. 

Executive Director (Corporate Affairs) 

Mr. A.K. Hazarika ONGC 

Director (Onshore) 

Governing Council 

Mr. M. A. Pathan Honorary Member 

Mr. A. K. Arora Director General 

45 

www.petrofed.org

PETROFED 

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Petroleum Federation of India 

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