A

DOCUMENTARY REPORT
ON
“EMERGENCE OF CHINA AND INDIA”

PRESENTED TO

INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (I2IM)

CONSITUENT OF CHAROTAR UNIVSRSITY OF SCINCE AND TECHNOLOGY (CHARUSAT)

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF

“SEMINAR ON CONTEMPORARY ISSUES– 1”

OF

SEMESTER- I
MBA PROGRAMME (2009-11)

PRESENTED BY
HARSH PATEL
1ST SEMESTER, MBA
(09/MBA/29)

DECLARATION

1
I, Harsh V Patel, hereby declare that the report on “EMERGANCE OF INDIA
AND CHINA PETROLEUM INDUSTRY ” is a result of my own work and my
indebtedness to other work publication, if any, have been duly acknowledged.

Place: Changa ( )

Date: 18/12/ 2009. HARSH V. PATEL

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 TABLE OF CONTENTS

Sr. NO. PARTICULAR Page No.

1 Introduction 4
2 Petroleum products 5
3 Economic Profile : India And China Snapshot 8
4 Opportunities and Growth of Indian and 10
China Petrochemical Industry
5 Drive for Growth 11
6 Plan 12
7 Conclusion 13
8 Bibliography 14

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 Introduction
Indian industry is at present progressing at a rapid pace but seen from a
historical perspective it is regaining a position in the world, which it had held in the
eighteenth century when it supplied cotton textiles in abundant measure to many
countries. Under British colonial rule it lost this pride of place and after gaining
independence it made valiant attempts to recover its due position in the world in this
respect. But as will be explained later on, Jawaharlal Nehru’s industrial policy was
very encouraging in the short run but restrictive in the long run. In the 1960s and
1970s India experienced a long period of industrial recession and stagnation before its
development was speeded up once more in the 1980s. The economic reforms of 1991
then added more vigour to India’s industrialization, but it is only in recent years that
India has made a mark in a rapidly growing world economy. Unfortunately, the recent
period of globalization has also led to financial excesses, which have now engulfed
the world in a crisis, which seems to attain the dimensions of the Great Depression of
the 1930s. The impact of this is discussed in this report.

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 Petroleum products
Petroleum products comprise refinery gas, ethane, LPG, aviation gasoline,
motor gasoline, jet fuels, kerosene, gas/diesel oil, heavy fuel oil, naphtha, white spirit,
lubricants, bitumen, paraffin waxes, petroleum coke and other petroleum products.
Petroleum products are any oil-based products which can be obtained by distillation
and are normally used outside the refining industry. The exception to this are those
finished products which are classified as refinery feedstocks above. Production of the
petroleum products shows gross refinery output for each product. Refinery fuel (row
petroleum refineries, under energy sector) represents consumption of petroleum
products, both intermediate and finished, within refineries, e.g. for heating, lighting,
traction, etc

Aviation Gasoline

Aviation gasoline is motor spirit prepared especially for aviation piston

engines, with an octane number suited to the engine, a freezing point of -60 C, and a
distillation range usually within the limits of 30 C and 180 C.
Gas Diesel Oil/(Distillate Fuel Oil)

Gas/diesel oil includes heavy gas oils. Gas oils are obtained from the lowest
fraction from atmospheric distillation of crude oil, while heavy gas oils are obtained
by vacuum redistillation of the residual from atmospheric distillation. Gas/diesel oil
distills between 180 C and 380 C. Several grades are available depending on uses:
diesel oil for diesel compression ignition (cars, trucks, marine, etc.), light heating oil
for industrial and commercial uses, and other gas oil including heavy gas oils which
distil between 380 C and 540 C and which are used as petrochemical feedstocks.
Heavy Fuel Oil Residual

This heading defines oils that make up the distillation residue. It comprises all
residual fuel oils (including those obtained by blending). Its kinematic viscosity is
above 10 cST at 80 C. The flash point is always above 50 C and the density is always
more than 900 kg/l.
Kerosene
Kerosene comprises refined petroleum distillate intermediate in volatility
between gasoline and gas/diesel oil. It is a medium oil distilling between 150 C and
300 C.
Jet Fuel

This category comprises both gasoline and kerosene type jet fuels meeting
specifications for use in aviation turbine power units.
Gasoline type jet fuel - This includes all light hydrocarbon oils for use in aviation
turbine power units. They distill between 100 C and 250 C. It is obtained by blending
kerosenes and gasoline or naphthas in such a way that the aromatic content does not
exceed 25 per cent in volume, and the vapour pressure is between 13.7 kPa and 20.6
kPa. Additives can be included to improve fuel stability and combustibility.
Kerosene type jet fuel- This is medium distillate used for aviation turbine power
units. It has the same distillation characteristics and flash point as kerosene (between
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150 C and 300 C but not generally above 250 C). In addition, it has particular
specifications (such as freezing point) which are established by the International Air
Transport Association (IATA).

LPG

These are the light hydrocarbons fraction of the paraffin series, derived from
refinery processes, crude oil stabilisation plants and natural gas processing plants
comprising propane (C3H8) and butane (C4H10) or a combination of the two. They
are normally liquefied under pressure for transportation and storage. Ethane is a
naturally gaseous straight-chain hydrocarbon (C2H6). It is a colourless paraffinic gas
which is extracted from natural gas and refinery gas streams.
Motor Gasoline

This is light hydrocarbon oil for use in internal combustion engines such as
motor vehicles, excluding aircraft. Motor gasoline is distilled between 35 C and 215 C
and is used as a fuel for land based spark ignition engines. Motor gasoline may
include additives (such as ethanol), oxygenates and octane enhancers, including lead
compounds such as TEL (Tetraethyl lead) and TML (tetramethyl lead).
Naphtha

Naphtha is a feedstock destined for the petrochemical industry (e.g. ethylene

manufacture or aromatics production). Naphtha comprises material in the 30oC and
210oC distillation range or part of this range.

Other Petroleum Products

White Spirit and SBP: White spirit and SBP are refined distillate
intermediates with a distillation in the naphtha/kerosene range. They are sub-divided
as:
Industrial Spirit (SBP): Light oils distilling between 30 C and 200 C, with a
temperature difference between 5 per cent volume and 90 per cent volume distillation
points, including losses, of not more than 60 C. In other words, SBP is a light oil of
narrower cut than motor spirit. There are 7 or 8 grades of industrial spirit, depending
on the position of the cut in the distillation range defined above.

White Spirit: Industrial spirit with a flash point above 30 C. The distillation
range of white spirit is 135 C to 200 C.
Lubricants: Lubricants are hydrocarbons produced from distillate or residue;
they are mainly used to reduce friction between bearing surfaces. This category
includes all finished grades of lubricating oil, from spindle oil to cylinder oil, and
those used in greases, including motor oils and all grades of lubricating oil base
stocks.
Bitumen: Solid, semi-solid or viscous hydrocarbon with a colloidal structure,
being brown to black in colour, obtained as a residue in the distillation of crude oil,
vacuum distillation of oil residues from atmospheric distillation. Bitumen is often
referred to as asphalt and is primarily used for surfacing of roads and for roofing
material. This category includes fluidised and cut back bitumen.

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 Paraffin Waxes: Saturated aliphatic hydrocarbons (with the general formula
CnH2n+2). These waxes are residues extracted when dewaxing lubricant oils and they
have a crystalline structure with carbon number greater than 12. Their main
characteristics are as follows: they are colourless, odourless and translucent, with a
melting point above 45 C.
Others: Includes the petroleum products not classified above, for example: tar,
sulphur, and grease. This category also includes aromatics (e.g. BTX or benzene,
toluene and xylene) and olefins (e.g. propylene) produced within refineries.

Petroleum Coke

Petroleum coke is defined as a black solid residue, obtained mainly by cracking

and carbonising of residue feedstocks, tar and pitches in processes such as delayed
coking or fluid coking. It consists mainly of carbon (90 to 95 per cent) and has a low
ash content. It is used as a feedstock in coke ovens for the steel industry, for heating
purposes, for electrode manufacture and for production of chemicals. The two most
important qualities are "green coke" and "calcinated coke". This category also
includes "catalyst coke" deposited on the catalyst during refining processes: this coke
is not recoverable and is usually burned as refinery fuel.

Refinery Gas

Refinery gas is defined as non-condensible gas obtained during distillation of

crude oil or treatment of oil products (e.g. cracking) in refineries. It consists mainly of
hydrogen, methane, ethane and olefins. It also includes gases which are returned from
the petrochemical industry. Refinery gas production refers to gross production. Own
consumption is shown separately under petroleum refineries in the energy sector.

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 Economic Profile : India And China Snapshot
India is currently the world’s 4th largest consumer of energy accounting for
5.9% of World’s annual energy consumption. USA, China and Japan are the top
Three energy consumers. India’s import dependence on crude oil and petroleum
products is more than 70%. In 2008-09, consumption of petroleum products was
about 120 million metric tones (MMT), which is about 7.9% higher than the previous
year’s consumption of 113 MMT.

GDP based on PPP; Source : World Economic Outlook 2008

Economic growth rate of 8% to 10% in the country calls for rapid development
of the energy market. India’s energy needs are growing at a faster rate as income
levels and population are both showing rising trends. Our main focus is to enhance
energy security for the country. Government of India and our Oil Companies have
taken several steps to enhance energy security for the country, which inter-alia
includes :

(a) increasing exploration and production activities in the country

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 (b) acquiring oil and gas assets abroad

(c) development of alternate sources of oil and gas

(d) strategic storage of crude oil

(e) conservation and implementation of environment friendly policies.

The national endeavor to bridge the ever-increasing gap between demand and
supply of petroleum products in India by intensifying exploratory efforts for oil and
gas in the Indian sedimentary basins and abroad need to be supported by other
alternate sources of energy like Coal Bed Methane, Gas Hyderates, Coal Liquefaction,
Ethanol and bio-diesel etc. It is inform that first CBM gas production from Raniganj
CBM block in West Bengal has started in July 2007.

GDP based on PPP; Source : World Economic Outlook 2008

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Opportunities and Growth of Indian and China Petrochemical
Industry

Per capita consumption in India is much lower than world average

– Ample potential for growth

Task Force Report on Petrochemicals, April 2008

30
Kg / Person

✔ Growth Potential for India and China

 Polymer consumption in developed countries are reaching a stagnation :
growth areas in Asia.

20
 Amongst fastest growing world economies.
 Opening up of petrochemical sector for investment.
 Large and growing domestic consumer market.
 Investments in Infrastructure

4
 Large working age population

10
 Growing middle class households.

✔ Emerging opportunities – Fibres

 Global restructuring of textile and clothing trade post MFA.
 International competitiveness in Quality, Service

0
 India and China are best placed in entire clothing value chain- cost
competitiveness

India
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 ✔ Petrochemicals Imperatives
 Indian And China petrochemical industry has:
 Large & growing domestic market
 Low per capita consumption
 Growing GDP growth
 Expertise in specialized products
 Large availability of trained manpower
 Ability to adapt & assimilate new technology
 Competent managerial & technical manpower
 Emergence of petrochemical hubs

✔ Drive for Growth

 Indian and chiness companies are willing for collaboration with
international majors to add new capacities in India to explore the growing
demand of products.
 Both countries Government are also advocating and promoting new
investments in the country.
The global petroleum market has been significantly affected since the summer of
2008 by the impact of earlier high prices, an economic slowdown and the credit crisis.
As per the IEA, global petroleum product demand for 2008 declined by 0.2 MBPD.
This was earlier projected to grow by approximately 2.0 MBPD.

The year 2008 witnessed unprecedented crude price volatility with prices peaking in
the second quarter of FY 2008-09. The spurt in crude prices was due to a sudden
surge in demand from China (pre-Olympics), Middle East (power generation),
Australia and Latin America (gas outages) and combination of geopolitical events. In
the third quarter of FY 2008-09, crude prices plunged to lower levels with WTI, Brent
and Dubai averaging $ 59.1, $ 55.5 and $ 52.8 /bbl respectively, almost half of that of
the previous quarter prices of $ 118.1, $ 115.1 and $ 113.6 / bbl respectively. The
depressed price outlook for crude continued in Q4 FY 2008-09 with WTI, Brent and
Dubai averaging further down to $ 43.2, $ 44.5 and $ 44.3 /bbl respectively.

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 Plan
Indian companies have planned capacity addition of 86 MMTPA during the
Eleventh Plan period (2007-12). Most of this capacity addition would be for export
markets. Thus, the refining capacity at the end of the Eleventh Plan in March 2012 is
anticipated at 235 MMTPA as against present capacity of 148.97 MMTPA.

The development of E&P sector has been significantly boosted through NELP
Policy of Government of India, which brought major liberalization in the sector and
opened it up to for private and foreign investment, where 100% Foreign Direct
Investment (FDI) is allowed. With Exploration and development efforts made under
NELP, Natural Gas production in the country is likely to double by the end of 11 th
Five Year Plan (2007-12) from the present level of gas production of about 87 million
standard cubic metres per day (MMSCMD).

The appeal to the global scientific community gathered here to spare no effort to
find solutions which should be environment-sensitive and socially acceptable. We
should not forget the fact that the environment we are enjoying today belongs to
future generations and we are merely custodians of these environs.The geo-scientific
community present here to innovate ways and means of finding every last economic
barrel yet to be discovered.

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 Conclusion

 World has become a single global market – Manufacturers to be highly

competitive to survive

 Opportunities are available for growth in Petrochemicals – to cater to India ,

china and global markets

 India and china needs significant investment for addition of new capacities on
petrochemicals

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 BIBLIOGRAPHY

www.fas.usda.gov/gainfiles

http://www.reportlinker.com/p0149626/China-and-india-Report-
Q4-2009.html

www.ril.com/html/business/refining_marketing.html

www.indian-oil.com

www.indiaprline.com/.../china’s-transition-to-a-clean-energy-
economy-will-fortify-its-lng-industry-growth

www.indiachem.in/.../SessiononGrowthStrategies&IssuesAffectingI
ndia'sCompetitiveAdvantageinChemical.../

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