Hindustan Petroleum Corporation LTD

Industry profile The petroleum industry includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest volume products of industry are fuel oil and gasoline (petrol). Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category. Petroleum is vital to many industries, and is of importance to the maintenance of industrial civilization itself, and thus is a critical concern for many nations. Oil accounts for a large percentage of the worlds energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other geographic regions consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world consumes 30 billion barrels (4.8 km3) of oil per year, with developed nations being the largest consumers. The production, distribution, refining, and retailing of petroleum taken as a whole represents the worlds largest industry in terms of dollar value. Governments such as United States government provide a heavy public subsidy to petroleum companies, with major tax breaks at virtually every stage of oil exploration and extraction, including for the costs of oil field leases and drilling equipment.

History Petroleum is a naturally occurring liquid found in rock formations. It consists of a complex mixture of hydrocarbons of various molecular weights, plus other organic compounds. It is generally accepted that oil, formed mostly from the carbon rich remains of ancient plankton after exposure to heat and pressure in the Earths crust over hundreds of millions of years. Over time, the decayed residue was covered by layers of mud and silt, sinking further down into the Earths crust and preserved there between hot and pressured layers, gradually transforming into oil reservoirs. Petroleum in an unrefined state has been utilized by humans for over 5000 years. Oil in general has been used since early human history to keep fire ablaze, and also for warfare. Ancient Persian language tablets indicate the medicinal and lighting uses of petroleum in the upper echelons of their society. Ancient China was also known to burn skimmed oil for light. An early petroleum industry was established in the 18th century, when the streets of Baghdad were paved with tar, derived from petroleum through destructive distillation. In the 9th century, oil fields were exploited in the area around modern Baku, Azerbaijan, to produce naphtha. These fields were described by al-Masudi in the 10th century and by Marco polo in the 13th century, who described the output of those oil wells as hundreds of shiploads. Petroleum was distilled by al-Razi in the 19th century, producing chemicals such as kerosene in the alembic, which he used to invent kerosene lamps for use in the ol lamp industry. Its important in the world economy evolved slowly, with whale oil used for lighting into the 19th century, and wood and coal used for heating and cooking well into the 20th century. A petroleum industry emerged in North America in Canada and the Unites States. The industrial revolution generated an increasing need for energy which was fueled mainly by coal, with other sources including whale oil. However, it was discovered that kerosene could be extracted from crude oil and used as a light and heating fuel. Petroleum was in great demand, and by the 20th century had become the most valuable commodity traded on the world market.

Imperial Russia produced 3,500 tons of oil in 1825 and doubled its output by midcentury. After oil drilling began in what is now Azerbaijan in 1848, two large pipelines were built n the Russian Empire: the 833 km long pipeline to transport oil from the Caspian to the Black Sea port of Batumi (Baku-Batumi pipeline), completed in 1906, and the 162 km long pipeline to carry oil from Chechnya to the Caspian. At the turn of the 20th century, imperial Russias output of oil, almost entirely from the Apsheron Peninsula, accounted for half of the worlds production and dominated international markets. Nearly 200 small refineries operated in the suburbs of Baku by 1884. as a side effect of these early developments, the Apsheron peninsula emerged as the worlds oldest legacy of oil pollution and environmental negligence. In 1878, Ludwig Nobel and his Branobel company revolutionized oil transport by commissioning the first oil tanker and launching it on the Caspian Sea. The first modern oil refineries were built by Ignacy Lukasiewicz near Jaslo (then in the dependent Kingdom of Galicia and Lodomeria in Central European Galicia), Poland from 1854-56. These were initially small as demand for refined fuel was limited. The refined products were used in artificial asphalt, machine oil and lubricants, in addition to Lukasiewiczs kerosene lamp. As kerosene lamps gained popularity, the refining industry grew in the area. The first large oil refinery opened at Ploiesti, Romania in 1856. The first oil drilling in the United States began in 1859, when oil was successfully drilled in Titusville, Pennsylvania. In the first quarter of the 20th century, the United States overtook Russia as the worlds largest oil producer. By the 1920s, oil fields had been established in many countries including Canada, Poland, Sweden, The Ukraine, The United States, and Venezuela. In the early 1930s the Texas Company developed the first mobile steel barges for drilling in the brackish coastal areas of the Persian Gulf. In 1937 Pure Oil Company (now part of Chevron Corporation) and its partner Superior oil Company (now part of Exxon Mobil Corporation) used a fixed

platform to develop a field in 14 feet of water, one mile offshore of Calcasieu Parish, Louisiana. In early 1947 Superior Oil erected a drilling/production oil platform in 20 ft of water some 18 miles[vague] off Parish, Louisiana. But it was Kerr-McGee Oil Industries (now Anadarko Petroleum Corporation), as operator for partners Philips Petroleum (ConocoPhilips) and Stanolind Oil & Gas (BP), that completed its historic Ship Shoal block 32 well in October 1947, months before Superior actually drilled a discovery from their vermilion platform father offshore. In any case, that made Kerr-McGees well the first oil discovery drilled out of the sight land. After World War II ended, the countries of the Middle East took the lead in oil production from the United States

Petroleum Industry of India The development of the Indian petroleum industry began on a very slow note. It started mainly in the northeastern part of India especially in the place called Digboi in the state of Assam. Until the 1970s, the production of petroleum and the exploration of new locations for extraction of petroleum were mainly restricted to the northeastern state in India. However, an important advancement in the Indian petroleum industry came with the passing of industrial policy resolution in 1956, which emphasized focus on the growth And promotion of industries in India. Another major incident was the discovery of Bombay High, which changed the scenario of the Indian petroleum industry drastically. The Indian petroleum industry was sponsored completely by the government, and the management control of the petroleum and all its related activity was entirely with the government. The petroleum industry has the most significant role to play in changing the Indian economy from an agrarian economy to an industrial economy. The adoption of liberalization and privatization in July 1991 changed the situation again. The government started allowing the Indian petroleum industry to go into private hands and also entered into government and private joint ventures. The government also eased the stringent regulation process on the petroleum sector. This gave a tremendous boost to this industry. The industry began to grow at a tremendous pace. The production of petroleum and petroleum products also showed a significant rise. Along with liberalization and privatization, the overall economy of India grew. Also, the demand for petroleum products increased at an annual rate of about 5.5%. The demand for petroleum and petroleum products still continues to grow, and there is a great potential for investors to invest to invest in India in the sector and gain valuable returns while meeting the increasing demands for the petroleum products.

The petroleum sector in India is particularly favorable for foreign investment because the industry is one of the fastest growing segments, and it has shown a staggering growth rate of around 13% in the recent past. Apart from the tremendous growth rate in the Indian petroleum industry today, it also boasts technology of international standards, easy availability of infrastructure at very cheap rates, high demands for petroleum products, and increased spending habits of the middle-class people. All these factors make investments in the Indian petroleum sector an attractive proposition for foreign investors. The foreign trade in petroleum and petroleum products in the recent past have registered significant growth. It has thus attracted new foreign investments. Some of the main petroleum products that are manufactured for trade with foreign countries are petroleum gases, gas oil, propane, distilled crude oil, naphtha, and kerosene. The petroleum industry has contributed heavily to the manufacturing industry in the country through foreign trade in petroleum products. Rapid globalization, fastchanging technology, and the changing methods in the way business is conducted have brought significant changes and enormous opportunities for petroleum companies in India to flourish and expand their operation to global markets. Another very important reason why the Indian petroleum industry is a god option for investment is that the future of the petroleum industry in India promises great potential for development. The fast economic growth of India and the various developmental activities taking place presents India with opportunities in the future to be a dominant player globally in the export of petroleum products. The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. India has total reserves (proved & indicated) of 1,201 million metric tones (MMT) of crude oil and 1,437 billion cubic meters (BCM) of natural gas as on April 1, 2010, according to the basic statistics released by the Ministry of Petroleum and Natural Gas. The economy exported 50.974 MMT of petroleum products during 2009-10.

Refinery production in context of crude oil escalated from 156.11 MT in FY 200708 to 160.67 MT in FY 2008-09. Indian Oil Corporation Ltd is looking forward to elevate the capacity of its Haldia refinery and Panipat refinery plants to 7.5 million tones and 15 million tones respectively in 2010. The latest figure released by the Petroleum Planning and Analysis Cell (PPAC) show The demand for petroleum products rose by 4.4% (year-on-year) to 144.35 million tones during the financial year 2010-11. Currently, India has a petroleum refining capacity of 144.35 million tonnes per annum. This is expected to rise to 240 million tonnes by September 2012. Indias total demand for the petroleum products are pegged at around 140 MTPA. This creates a spare capacity of 48 million tonnes per annum at the refineries. While domestic demand for petroleum products is rising at a heavy pace, sale of essential petroleum products at government determined prices which are way below market prices, results in under-recoveries for the public sector petroleum companies. These essential products include diesel, kerosene (under PDS), and LPG (for domestic use). Expansion of Indian petroleum retail market is triggered by the growth in automobile sales that resulted in major foreign investments. The growth is estimated to sustain and the market is likely to expand further by 20 million every year till 2030, placing India at the world map in terms of being the biggest automobile market. As per the latest CII-KPMG analysis, the energy industry of India will help in the expansion of the petroleum sector by bringing in investments worth US$ 120 billion-US$ 150 billion in the next 3-5 years. In 2012, the prospects in India Petroleum Industry are estimated to accomplish US$ 35 billion to US$ 40.

COMPANY PROFILE Hindustan Petroleum Corporation LTD (HPCL), is a Government of India

Enterprise with a Navratna Status, and a Fortune 500 and Forbes 2000 company, with an annual turnover of Rs. 1,32,670 Crores and sales/income from operations of Rs 1,43,396 Crores (US$ 31,546 Millions) during FY 2010-11, having about 20% Marketing share in India among PSUs and a strong market infrastructure. HPCL's Crude Thru put and Market Sales (including exports) are 14.75 Million Metric Tonnes (MMT) and 27.03 MMT respectively in the same period. HPCL operates 2 major refineries producing a wide variety of petroleum fuels & specialties, one in Mumbai (West Coast) of 6.5 Million Metric Tonnes Per Annum (MMTPA) capacity and the other in Vishakapatnam, (East Coast) with a capacity of 8.3 MMTPA. HPCL holds an equity stake of 16.95% in Mangalore Refinery & Petrochemicals Limited, a state-of-the-art refinery at Mangalore with a capacity of 9 MMTPA. HPCL also owns and operates the largest Lube Refinery in the India producing Lube Base Oils of international standards, with a capacity of 335 TMT. This Lube Refinery accounts for over 40% of the India's total Lube Base Oil production. HPCL's vast marketing network consists of 13 Zonal offices in major cities and 101 Regional Offices facilitated by a Supply & Distribution infrastructure comprising Terminals, Pipeline networks, Aviation Service Stations, LPG Bottling Plants, Inland Relay Depots & Retail Outlets, Lube and LPG Distributorships. HPCL, over the years, has moved from strength to strength on all fronts. The refining capacity steadily increased from 5.5 MMTPA in 1984/85 to 14.8 MMTPA presently. On the financial front, the turnover has grown from Rs. 2687 Crores in 1984-85 to an impressive Rs 1, 32,670 Crores in FY 2010-11. HPCL continually invests in innovative technologies to enhance the effectiveness of employees and bring qualitative changes in service. Business Process ReEngineering exercise, creation of Strategic Business Units, ERP implementation,

Organizational Transformation, Balanced Score Card, Competency Mapping, benchmarking of refineries and terminals for product specifications, ISO certification of Refineries and Supply Chain Management are some of the initiatives that broke new grounds. HPCL has successfully integrated Information Technology in its activities at different levels. The Enterprise Resource Planning (ERP) system is now operational on J.D.Edwards, an Oracle product, across the Corporation. Hindustan Petroleum Corporation Limited today is the second largest integrated oil company in India playing a significant role in the nations economic development and growth. Against the background of economic liberalization, HPCL is diversifying upstream and downstream into exploration & production and power & petrochemicals while at the same time strengthening infrastructural facilities. The area of care competence being energy management. VISION OF HPCL To be a World Class Energy Company known for caring and delighting the customers with high quality products and innovative services across domestic and international markets with aggressive growth and delivering superior financial performance. The Company will be a model of excellence in meeting social commitment, environment, health and safety norms and in employee welfare and relations. MISSION OF HPCL "HPCL, along with its joint ventures, will be a fully integrated company in the hydrocarbons sector of exploration and production, refining and marketing; focusing on enhancement of productivity, quality and profitability; caring for customers and employees; caring for environment protection and cultural heritage. It will also attain scale dimensions by diversifying into other energy related fields and by taking up transnational operations."

HISTORY OF THE COMPANY 1952: The company was incorporated in the name of Standard Vacuum Refining Company of India Limited on July 5, 1952. 1962: On 31st march 1962 the name was changed to ESSO Standard Refining Company of India Limited. 1974: Hindustan Petroleum Corporation comes into being after the takeover and merger of erstwhile Esso Standard and Lube India Limited. 1976: Caltex Oil Refining (India) LTD. CORIL is taken over by the government of India with an Ordinance in 1976, subsequently ratified by an Act in 1977 and merged with HPCL in 1978. 1979: Kosan Gas Company, the concessionaries of HPCL in the domestic LPG market, are taken over and merged with HPCL. 1983: The capacity of the lube plant was increased by an additional 74,000 tonnes per annum of high viscosity index lube base stocks. 1985: The crude units and the related off-sites were commissioned in January. 1988: Mangalore refineries & Petrochemicals Ltd., is the first join sector refinery being set up in the country. 1994: On March 4, Hindustan Oman Petroleum Company (HPOCL) was incorporated. 1995: during February, the company issued 173, 50,000 equity shares of rs.10 each with detachable warrants of Rs.380. 1997: the ministry of petroleum and natural gas has setup an expert committee on 15th September.

1998: HPCL has signed a commercial agreement with Kondapalli Power Corporation Ltd (KPCL) for the supply of naphtha for the latters 355-Mw combined cycle power generation unit at Kondapalli in Krishna district of Andhra Pradesh. 2000: Mangalore refinery and petrochemicals, the joint venture between HPCL and the AV Birla Group of companies has set up. : There was a fire blast in the refinery at Malkapuram near Vishakhapatnam, on 17th August : A subsidiary company: Guru Gobind Singh Refineries has been incorporated on December 2000 2001: HPCL has introduced its smart card in Bangalore for the first time in the country. 2002: MB Lai appointed as chairman & MD of HPCL. 2004: HPCL launches unique smart card. 2005: HPCL signs MOU with Gail on November 16, 2005. 2007: HPCL has selected shri. Arun Balakrishnan as chairman & MD of the company. 2008: HPCL joins hand with CREDA 2009: HPCL has appointed V. Sanker Aiyer & co: Joint statutory auditors Om Agarwal & Co: joint statutory auditors Gandhi & co: Branch auditors for Vishak refinery as statutory branch for its financial year 2009-10. 2010: HPCL has appointed DR. Gitesh k. Shah as part-time non-official director on the board of HPCL. 2011: HPCL is set up a Greenfield Oil Terminal at Ennore, located in northern outskirts of Chennai City. The total project cost is about Rs 299 Cr.

ORGANISATION STRUCTURE HPCL has a hierarchical structure. There are a total of 9 salary grades below the Director level.

C & MD

Director Marketing

Director Refineries

Director HR

Director Finance

CVO

Head Internal Audit

Head Legal

Company Secretary

Head Info System

Head - JVs

GM - DCO

Head CS&P

PRODUCTS OF HPCL PETROL Petrol is also known as MS (Motor Spirit). The branded version of petrol is known as power. Blended with specially imported additives, power not only removes existing deposits, but also prevents the formation of new ones. This ensures that the vehicles engine remains free from deposits at all times resulting in continuous peak engine performance. DIESEL Diesel is also known as HSD (High Speed Diesel) Branded version known as Turbojet. It is a revolutionary diesel that continuously energizes the vehicle for performance. LPG LPG is colorless gas. LPG is not poisonous. However, at the time of production, mercaptan (a chemical compound) is added to it so as to give the now familiar foul smell for easy detection of gas in the air. Even very small quantities of gas can be detected by this smell. COMMERCIAL LPG It is widely used for various commercial and industrial applications like Hotels, restaurants, bakeries, ceramics, metallurgical, steel & iron, textiles, tez, poultry as well as specialized applications that include food processing and Aerosol Propellants. In the Automotive segment, HP Gas is emerging as a promising alternate fuel. INDUSRTIAL & BULK LPG HPCL supplies LPG bulk quantities for industrial/commercial use through 6MT/12 MT & 18 MT trucks through its loading bases spread across the country. HPCL also arranges for the transportation and supplies the product o the door delivery basis in case the customer opts for the same.

AUTO LPG Liquefied Petroleum Gas (LPG) is identified as one of the alternate fuels to the regular liquid petroleum fuels as it has added environmental benefits. LPG for automobiles (Auto LPG) is used intentionally with proven success as an effective fuel. This has been in extensive use in countries like Italy, Japan, Netherlands, and Korea etc. for a long time. It is approved for use as auto fuel by the government of India and the required orders, amendments and codes have been issued by the respective authorities. CNG Compressed Natural Gas is an eco-friendly and can be used in both petrol and diesel driven vehicles. BITUMEN It is basically used in road construction. The 3 grades of bitumen currently available via, 80/100, 60/70 & 30/40 are replaced by VG10 (Viscosity Grades), VG 30 & VG 40 respectively as per NHAI guidelines. HPCL is also foraying into manufacturing of newer products such as rubberized and polymerized bitumen. FURNACE OIL Furnace oil is used as primary fuel in marine DG sets, furnaces and in boilers for steam generation. The density range from 0.96 to 0.98 g/cc. LIGHT DIESEL OIL (LGO) Used as marine bunkering fuel and for power generation. It is basically a higher gross calorific value fuel, with lesser density as compared to FO (Density 0.9 to 0.92 g/cc). LOW SULPHER HEAVY STOCK It is used for firing boilers and primarily used as marine fuel. It finds its application mostly where pollution is stringent as it is considered to be cleaner and environment friendly fuel.

NAPTHA It is used in power generation, commercially as well as in subsidized rates in gas power plants. There are two types of naphtha they are Low Aromatic Naphtha & Heavy Aromatic Naphtha. MARINE BUNKER FUELS a) Heavy oil 180 CST (fuel oil: FO) b) Marine diesel oil (light diesel oil: LDO) c) Marine gas (high flash diesel): HFHSD SKO (Superior Kerosene Oil) Used for domestic cooking SKO (Non-PDS) It is basically used as heating fuel for industrial purpose (while kerosene). It finds its application in kinds and as smelter. It is made available for public distribution to parallel marketers. SPECIAL PRODUCTS a) Hexane b) Propylene c) Jute batch oil d) Solvent 1425 e) Turpentine Oil (MTO 2445) f) Carbon Black Feed Stock (CBFS) e) Molten Sulphur

HP FINIT HP FINIT is a household insecticide. Lubes Automotive Grades Engine Oil, Gear Oil, Transmission Oil, Auto Specialties industrial Grades, Defense Grades, Industrial Specialties Greases, Automotive Greases, Industrial Greases, Defense Greases. ATF (Aviation Turbine Fuel) also known as Jet fuel.