Page 1 of 32

Contents
Introduction ............................................................................................................................................... 5
Global Shift ................................................................................................................................................ 7
Chemical Companies................................................................................................................................ 8
Joint Venture .............................................................................................................................................. 8
SWOT Analysis ......................................................................................................................................... 9
Strengths ................................................................................................................................................... 11
1.

Strength - Low Cost Upstream Operations .............................................................................. 11

2.

Strength - Integrated Business Operations ............................................................................... 11

3.

Strength - Leading North American Refiner ............................................................................ 12

4.

Strength - Capital Efficiency ....................................................................................................... 12

Weaknesses ........................................................................................................................................... 12
1.

Weakness - Net Working Capital Deficit .................................................................................. 12

2.

Weakness - Refinery Availability............................................................................................... 13

Opportunities........................................................................................................................................ 13
1.

Opportunity - Globally Available Natural Gas Reserves ....................................................... 13

2.

Opportunity - Increasing Demand: Oil & Petroleum Products............................................. 13

3.

Opportunity - Upstream & Downstream Growth Initiatives ................................................ 14

4.

Opportunity - Major Projects under Pipeline........................................................................... 14

Threats ................................................................................................................................................... 15
1.

Threat - Variation in Crude Slate Quality................................................................................. 15

2.

Threat - Exploration Production & Development Risks ......................................................... 15

3.

Threat - Lower Oil Price .............................................................................................................. 16

Aims and Objectives of Chemical Industry:...................................................................................... 17

Scope.......................................................................................................................................................... 18
Problem Statement.................................................................................................................................. 18
Proposed Solution................................................................................................................................... 18
Literature Review .................................................................................................................................... 18
Opportunities........................................................................................................................................... 20
1.

Product Portfolio Related:........................................................................................................... 20

a.

Enhance existing portfolio with advantaged products: ................................................... 20

b.

Opportunities for local customization: ............................................................................... 20

c.

Growth in generic products .................................................................................................. 20

2.

Market Access/ Geography Related ......................................................................................... 20

a.

Explore global frontiers: ........................................................................................................ 20

Page 2 of 32

b.
3.

Opportunity to serve a large addressable market: ............................................................ 20

Process/ Infrastructure Related ................................................................................................. 21

a.

Opportunities in Backward and Forward integration ..................................................... 21

b.

Opportunity for setting up reverse SEZs:........................................................................... 21

c.

Improved feedstock supply: ................................................................................................. 21

d.

Opportunities in coal gasification ....................................................................................... 21

4.

Others............................................................................................................................................. 21
a.

Growth in herbicides and fungicides ................................................................................. 21

b.

Opportunity to emerge as a low cost outsourcing option in the global market ......... 22

Issues ......................................................................................................................................................... 22
1.

Raw Material related issues ........................................................................................................ 22

a.

Lack of adequate raw material (feedstock) ........................................................................ 22

b.

High dependence on imports for chemical needs ............................................................ 22

2.

Infrastructural and Logistical issues ......................................................................................... 23

a.

Inadequate infrastructure facilities and power shortage ................................................ 23

b.

Logistical Issues ...................................................................................................................... 23

3.

Competition .................................................................................................................................. 23
a.

The manufacturers in this industry are subject to high level of competition ............. 23

b.

Availability of cheaper Imports ........................................................................................... 23

c.

Large global capacity additions ............................................................................................ 24

4.

High entry barriers ...................................................................................................................... 24

5.

Low capacity utilization: ............................................................................................................. 24

a.

Due to oversupply in global markets .................................................................................. 24

b.

Growing circulation of counterfeit products ..................................................................... 24

6.

Regulatory issues ......................................................................................................................... 24

a.

Inverted duty structure discourages local manufacturing .............................................. 24

b.

Complex regulations licenses ............................................................................................... 25

c. Slow implementation of Petroleum, Chemicals and Petrochemical Investment

Region policy (PCPIRs).................................................................................................................. 25
d.
7.

Long gestation period for new products............................................................................. 25

R&D related issues ....................................................................................................................... 25

a.
8.

Low focus on R&D by domestic manufacturers due to high costs................................ 25

Distribution and awareness related issues ............................................................................... 26

a.

Need for efficient distribution systems .............................................................................. 26

b.

Lack of education and awareness among farmers ............................................................ 26

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9.

Human resource related issues .................................................................................................. 26

a.

10.

Shortage of skilled man power .............................................................................................. 26

Environment protection related issues ................................................................................. 26

a. Environment risk protection and pollution control measures entail significant

expenditure....................................................................................................................................... 26
Challenges ................................................................................................................................................ 27
i.

Increased competition requires agility ............................................................................... 27

ii.

Customerseven B2B customerswant more intimacy ................................................ 27

iii.

Chemical companies strive to keep pace with rapid regulatory changes ................ 28

iv.

Business is happening in real time .................................................................................. 28

v.

Preparing for distribution channel changes ...................................................................... 28

Essential skills ......................................................................................................................................... 29

Operations ................................................................................................................................................ 30
References................................................................................................................................................. 31

Page 4 of 32

Introduction
The chemical industry creates an immense variety of products which impinge on virtually
every aspect of our lives. While many of the products from the industry, such as detergents, soaps
and perfumes, are purchased directly by the consumer, 70% of chemicals manufactured are used
to make products by other industries including other branches of the chemical industry itself. The
industry uses a wide range of raw materials, from air and minerals to oil.more details are
available at http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemicalindustry.html#section_1
With increasing competition worldwide, innovation remains crucial in finding new ways
for the industry to satisfy its increasingly sophisticated, demanding and environmentallyconscious consumers.
Chemical industry drives a significant part of the economy across the World. Over 1.2
million workers are employed in the industry, manufacturing products, supporting research and
providing

supplies

in

many

regions

more

detail

available

at

https://www.selectusa.gov/chemical-industry-united-states
The products of the chemical industry can be divided into following categories

Basic Chemicals: These include organic and inorganic chemicals, plastic resins, dyes and
pigments. Plastic resins, in particular, have experienced significant growth as a
replacement for traditional materials in the automotive, construction, and packaging enduse markets.

Specialty Chemicals: These include adhesives and sealants, water treatment chemicals,
plastic additives, catalysts and coatings. These chemicals are performance-oriented and
typically include customer/technical servicing as an aspect of their sales.

Agricultural Chemicals: These play a crucial role in the farm economy and the food
processing sector. Thanks to modern agriculture, farmers have doubled the production of
world food supplies since 1960, tripled the output of foods like cooking oils and meats,
and increased per capita food supplies in the developing world by 25 percent.

Pharmaceuticals: These include diagnostics, prescription drugs, vaccines, vitamins, and

over-the-counter drugs for human and veterinary applications. This subsector also
Page 5 of 32

includes biotechnology products. Strategic investment in companies, facilities, and

research and development is especially important for this subsector.

Consumer Products: These include soaps, detergents, and cleaners, as well as toiletries
and cosmetics. While consumer products are an established segment of the industry,
technological innovation and product development are important due to short product
life cycles.

Industrial customers represent 25.1

percent of chemical consumption in this industry.

This category includes metals, mechanical and electrical industries, textiles and clothing, the
automotive industry and paper and printing products.
The remaining areas of chemical consumption can be divided into the following:
30.3 percent for end users in private households, government and non-profit organizations

16.4

percent for services

6.4

percent for agriculture

5.4

percent for construction

6.1

percent for manufacturing not listed above

10.3

percent for other industries

Page 6 of 32

Global Shift

Chemical Demand (excluding Pharma)

Page 7 of 32

Chemical Companies

Joint Venture
If we take the example of Exxon Mobil which establishing a joint venture with Mall
Pakistan Pvt Ltd to start the operation in this field in Pakistan.
ExxonMobil has the ability to invest in projects with the highest returns. And given the
universal need for energy, we are well positioned to
continue

to

deliver

long-term

value

for

our

shareholders through the cycle. ExxonMobil Fuels &

Lubricants (F&L) is a leading marketer of finished lubricants, asphalts, and specialties products,
as well as one of the worlds largest suppliers of base stocks. Our global brands identify
ExxonMobil products that are sold around the world. Mobil 1, Mobil Delvac, and Mobil
SHC lubricants are at the forefront of these brands. Major vehicle and industrial equipment
manufacturers trust us to deliver technologically advanced products that protect their customers
engines and machinery while enabling peak performance. They are a global organization with a
strong distribution network. They focus on delivering a reliable supply of high-quality lubricants
and providing technical application expertise to customers around the world. We offer our
product through direct sales and distributor channels

Page 8 of 32

SWOT Analysis
SWOT Analysis of Exxon Mobil with USP, Competition, STP (Segmentation, Targeting,
Positioning) - Marketing Analysis

Page 9 of 32

Exxon Mobil
Category

Oil & Gas

Sector

Energy

Tagline/ Slogan

USP

Taking on the world's toughest energy challenges; We're drivers too;

Understanding Energy
One of the six world's "supermajor"

STP
Segment

Corporates, countries, individuals looking to fulfill energy needs

Enterprises looking for energy for production, people for petrol diesel for

Target Group

vehicles and domestic uses

Positioning

Providing the best energy solutions to the world

SWOT
1.One of the strongest brands being one of the top companies of the world
2.R&D and diverse operations
3.Growing financial performance
4.Has over 83,000 employees

Strengths

5.37 oil refineries in 21 countries

1.Employee management across the world
2.Legal issues and human rights issues
3.Environmental hazards and oil spills

Weaknesses

3.Frauds and cases of bribery in global operations

1.Increasing demand for LPG
2.High investments

Opportunities

3.Increasing prices of fuels across the world

1.Government regulations

Threats

2.High Competition
Competition
1.BP
2.Chevron Corporation
3.Royal Dutch Shell

Competitors

4.Total

Page 10 of 32

5.ConocoPhilli

Strengths
1. Strength - Low Cost Upstream Operations
ExxonMobil focused on minimizing its upstream operational costs in FY2015, which
enabled the company to secure leadership in upstream earnings. In FY2015, the companys
average production costs per barrel of oil equivalent declined 16% to US$10.56 from US$12.55 in
2014. In 2015, its close competitors such as Chevron Corporation and Royal Dutch Shell reported
production costs per unit of US$14.60/ bbl and US$13.42/boe. Lower operating costs per unit
enabled the company to strengthen its upstream earnings as compared with its competitors.
Strong upstream margin reflects its strategic choices to improve the production mix such as major
projects and work programs, reduced exposure to lower margin barrels, operating and capital
cost savings, and steps to improve fiscal conditions and certain terms. In FY2015, the company
reported upstream earnings per boe of US$4.6, which was higher than that of its competitors. In
2015, Royal Dutch Shell, Chevron Corporation and BP p.l.c reported negative earnings from their
upstream segments.
2. Strength - Integrated Business Operations
ExxonMobil is an integrated oil and gas company. The company is active in every
facet of the oil and gas industry right from upstream through midstream to downstream.
Integrated business operations enabled the company to mitigate its dependence on third party
operators. Integrated operations enable the company to respond more effectively to changes in
the business environment. ExxonMobil explores for, develops and produces oil and natural gas
from its international upstream asset base. The company produces petroleum products, and
transports and sells crude oil, natural gas and petroleum products. Its investments span the oil
and gas value chain to optimize upstream and downstream returns. Through its integrated
portfolio, it identifies and captures value along the value chain at every step of the way, from the
wellhead until it reaches the consumer. Approximately 80% of its refining operations are
integrated with chemical and lube manufacturing. Such integration provides ExxonMobil
Page 11 of 32

significant flexibility in producing gasoline, diesel, jet fuel, chemicals, lubricants, and other
products based on the market conditions. Its logistics division ensures cost-efficient delivery
throughout operations. The companys global services division tracks product demand across
regions, which leads to efficient value chain investments.

3. Strength - Leading North American Refiner

ExxonMobil is one of the largest integrated refiners, a premier marketer of fuels and
lubes, the largest manufacturer of lubricant base stocks, and one of the largest chemical
companies in the world. The company has the industry's largest refining capacity in the MidContinent and Gulf Coast regions in the US. As of December 2015, the company had interests in
six refineries with total crude distillation capacity of approximately 1.85 MMbbl/d in the US;
three in Canada with 421 Mbbl/d capacity. Its closest refining competitors are Marathon with
distillation capacity of 1.7 MMbbl/d; Valero with 1.7 MMbbl/d in the US Gulf Coast and 0.48
MMbbl/d in Mid-Continent; and Phillips 66 with 0.74 MMbbl/d in Gulf Coast. For the FY2015,
its refinery throughput volume in the US stood at 1,709 Mbbls/d, which accounted for
approximately 38.5% of its global throughput.
4. Strength - Capital Efficiency
ExxonMobil reported the highest return on capital employed (ROCE) compared to
its peers in 2015. ROCE measures the efficiency of utilization of its capital. In FY2015, the
company reported ROCE of 4.2%, which was higher than that of its nearest competitor. Higher
capital returns highlight its strengths such as integrated portfolio, project management, and
application of technology. For the FY2015, ROCE for Chevron and Shell stood at 2.5%, and 1.9%
respectively. Over the past five years, from 2011-2015, ExxonMobils ROCE averaged
approximately 18%, which was higher than that of its competitors.
Weaknesses
1. Weakness - Net Working Capital Deficit
ExxonMobil reported deficit in its current assets in meeting its short-term
obligations in FY2015. Working capital deficit coupled with limited cash reserves could affect its
Page 12 of 32

short-term business operations. For the FY2015, the company reported net working capital deficit
of US$11,353 million, which was due to 19.4% decline in its total current assets, which fell to
US$42,623 million. The company reported net working capital deficit in 2014 as well, which stood
at US$11,723 million. In FY2015, its current ratio and cash ratio stood at 0.79 and 0.06 respectively.
In FY2015, its noncash current assets including total receivables and total inventory accounted
for 91.3% of its total current assets. Its cash reserves accounted for 8.7% of its total current assets.
2. Weakness - Refinery Availability
ExxonMobil reported decline in its refinery throughput volume which affected its
total petroleum product sales volume. In 2015, the company reported refinery availability of
approximately 88% which was lowest as compared to its peers. In 2015, BP, Chevron and Shell
reported refinery availability of 94.7%, 89.8% and 90% respectively. In FY2015, the company
reported 1% decline in its total throughput volume to 4,432 Mbbl/d as against 4,476 Mbbl/d in
2014. The decline was visible in its North American refineries. Declining throughput volume
affected its sales volume by 2% which stood at 5,754 Mbbl/d in 2015. In FY2015, the companys
downstream earnings stood at US$3.1/bbl which was lowest as compared to its peers. In 2015,
BP, Chevron and Shell reported downstream earnings of US$3.7/bbl, US$4.8/bbl and US$4.3/bbl
respectively.
Opportunities
1. Opportunity - Globally Available Natural Gas Reserves
ExxonMobil is a leading explorer and producer of natural gas. The company
could strengthen its operations further by harnessing its global natural gas reserves.
According to EIA, the global natural gas reserves amount to around 1.3 trillion boe with the
Middle East and Eurasia (mainly Russia) accounting for 72% of the total. Proven gas reserves
in Russia amount to approximately 330 billion boe, the worlds largest by far. According to
EIA, there is another 1 trillion boe of technically recoverable, undiscovered conventional
natural gas. Russia also ranks highest in this category at over 40 billion boe.
2. Opportunity - Increasing Demand: Oil & Petroleum Products
ExxonMobil could strengthen its business with the expected increase in
demand for oil and petroleum products across the world. According to World Oil Outlook
(WOO), long term oil demand is expected to increase 20 Mbbl/d, reaching 108.5 Mbbl/d by
Page 13 of 32

2035. Of this increase, developing Asia would account for 88%, while the demand in China,
India and other developing countries in Asia would reach 94% of that of the OECD countries
by 2035. According to WOO, the global demand for petroleum products is expected to
increase to 111.1 Mbbl/d by 2040. The demand for diesel and gasoline is expected to grow to
36.1 Mbbl/d and 26.7 Mbbl/d, respectively, by 2040. By 2040, the demand for middle
distillates is expected to increase by 12.5 Mb/d. This represents around 60% of the overall
growth in demand for all liquid products. This trend is most pronounced in the Asia-Pacific
region where gasoline demand is projected to increase by more than 3 Mb/d by 2040.
3. Opportunity - Upstream & Downstream Growth Initiatives
ExxonMobil strives to strengthen its operations through new investments in
upstream and downstream projects. In December 2015, the company announced the
successful startup of the onshore central processing facility at the Banyu Urip field in
Indonesia, which increased production to more than 130,000 bbl/d of oil. In October 2015,
the company announced plans to expand the hydrocracker unit at its Rotterdam refinery to
upgrade heavier by-products into cleaner, higher-value finished products. In August 2015,
ExxonMobil entered into two agreements to obtain horizontal development rights in 48,000
acres in the core of the Midland Basin. In the same month, the company announced plans to
expand the US domestic crude processing capacity at Beaumont refinery. As of December
2014, the company started the construction of a 50,000 bbl/d delayed coker at its Antwerp
Refinery in Belgium, which is expected to be online by 2017. This refinery is on a site with
substantial cost advantage in Western Europe. ExxonMobil Chemical announced capacity
expansion initiatives at its facilities in Singapore (synthetic rubber and adhesives), the US
Gulf Coast (ethylene and polyethylene), and Saudi Arabia (synthetic rubber and elastomer).
Its capacity expansion is expected to be online by 2017. Such new investments could provide
the company growth opportunities.
4. Opportunity - Major Projects under Pipeline
ExxonMobil has interests in several major projects across the world under various
execution phases, which could benefit the company. Its major projects include Alaska LNG
project, Julia project in the Gulf of Mexico, Liza project of Guyana, Ca Voi Xanh (Blue Whale)
offshore project and Sakhalin-1 project. The Alaska LNG project could be among the worlds
largest natural gas-development projects once production commences. Its participants
include affiliates of BP, ConocoPhillips, and ExxonMobil; and Alaska Gas line Development
Page 14 of 32

Corporation (AGDC). The project is anchored by the Prudhoe Bay and Point Thomson fields,
which are expected to produce approximately 3.5 bcf of gas per day. As of December 2015,
the project was in the prefront-end engineering and design (pre-FEED) phase. The Julia
project in the Gulf of Mexico is an ultra-deep water reserve. The company has interests in
five blocks, namely, WR-584, WR-627, WR-628, WR-540 and WR583 with an estimated six
billion barrels of resource. The projects start up is scheduled in 2016. It plans to commence
production from its deep water Liza project in Guyana by 2018. ExxonMobil plans to
commence gas production from Ca Voi Xanh (Blue Whale) offshore project by 2021. Ca Voi
Xanh projected is expected to have 3-10 tcf of natural gas resource. In 2015, the companys
joint venture Exxon Neftegas Limited commenced production at the Arkutun-Dagi field in
the Sakhalin-1 project.
Threats
1. Threat - Variation in Crude Slate Quality
ExxonMobil is a major North American refiner. Variation in crude slate quality could
affect its operations. Since 2005, when the quality was at 32.8 API, the global average crude
lightened and this trend is set to continue, driven in large part by US tight crude. According
to WOO 2015, it is expected to reach 33.7 API by around 2017. However, it is expected to
fall substantially to 33.1 API range by the late 2030s. According to WOO 2015, the US tight
crude supply is expected to reach 4.16 Mbbl/d in 2040 from 3.81 Mbbl/d in 2014. Global
growth in condensate supplies also supports the lightening of the worldwide crude slate
until 2030. According to WOO 2015, from 4.5 Mbbl/d in 2014, global condensate supplies are
projected to increase to around 5.2 Mbbl/d by 2030.
2. Threat - Exploration Production & Development Risks
Future oil and gas exploration and production may involve unprofitable efforts, not
only from dry wells but also from producing wells, when they are not commercially viable.
In FY2015, the company drilled five dry exploratory wells and nine dry development wells.
The combination of technology and recovery cost may be higher than revenue earned from
production. Drilling hazards and environmental damage could lead to well shut down.
Operational risks such as unexpected formations or pressure, bowouts and fire, which could
result in loss of life and damage to properties, would cause production delay and permanent

Page 15 of 32

well shut downs. The company faces challenges related to future exploration development
and production uncertainties. This could affect its revenue.
3. Threat - Lower Oil Price
ExxonMobils crude oil realization is dependent on the global crude oil prices. Oil
prices are dependent on various factors beyond the companys control, including supply of
and demand for oil; weather conditions; and political influences, among others. According
to EIA, North Sea Brent crude oil prices averaged US$38/bbl in December 2015, a US$6/bbl
decrease over that in November 2015, and the lowest monthly average price since June 2004.
Brent crude oil prices averaged US$52/bbl in 2015, which shows a decline of US$47/bbl over
the average in 2014. The decline was due to higher global inventories. According to EIA,
Brent price is expected to average US$40/bbl in 2016, while WTI is expected to average
US$2/bbl lower than Brent in 2016 and US$3/bbl lower in 2017. In 2015, lower price
realization affected its earnings by US$18.8 billion.

Page 16 of 32

Aims and Objectives of Chemical Industry:

Following are the aims and objectives of chemical industry. (European Association of EuroPharmaceutical Companies) more details are available at http://www.eaepc.org/aboutus/aims-and-objectives
1. Analyzing activities and initiatives in the areas of chemical industry.
2. Providing members with relevant data and information that inform their decision
making.
3. Offering a platform for member to network, raise knowledge and share expertise.
4. Carrying out studies and analysis to bring together the industry under specific
commitment and joint actions to improve their competitiveness.
5. To promote and co-operate in the development of parallel trade as a means of completing
the internal market, providing innovative medicines to all at affordable prices.
6. To co-operate with other associations that have similar or inter-related interests.
7. To ensure the acceptance of the Added Value provided by parallel trade.
8. Monitoring policy initiatives at international level, relevant for the industry, contributing
with technical information, representing the industry vis--vis third parties and assisting
in implementing legislation.
9. Providing customers with technology-leading products and services with benefits such as
improved economy/emissions, extended equipment life, and reduced used chemical
generation;
10. Complying with regulations and applying responsible standards where none exist, while
taking structured steps to continuously improve environmental performance of
operations, including greenhouse gas emissions;
11. Establishing select goals and tracking progress;
12. Openly communicating environmental results and experiences, internally and externally,
as industry strive to be recognized by stakeholders for responsible and effective care for
the environment; and
13. Seeking constructive ongoing dialogue with governments and others to encourage
adoption of environmental standards, regulations, and laws that are based on sound
science and consider risks, costs, and benefits."
Page 17 of 32

Scope
The chemical industry leads in almost every aspect of the energy and chemical business,
they operate facilities or market products in most of the worlds countries and explore for oil and
natural gas, manufacture paints and detergents and produce pharmaceuticals and cosmetics etc.
Access to energy underpins human comfort, mobility, economic prosperity and social progress. It
touches nearly every aspect of modern life. They offer a broad portfolio of petrochemical, fuels,
cosmetics, detergents, pharmaceuticals and lubricants refining technologies to achieve customers'
safety, reliability and margin improvement goals. The industry is engaged in the exploration and
production of crude oil and natural gas, manufacturing of petroleum products, and transportation
and sale of crude oil, natural gas and petroleum products. The Company also manufactures and
markets petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics,
and various specialty products. The Company operates through the Upstream, Downstream,
Chemical, and Corporate and Financing segments.
Problem Statement
To standardize their business processes and to focus the company to do more with less
and to be more agile when responding to changing business needs.
Proposed Solution
A common platform, dubbed the "upstream suitcase", integrates everything they needs to
move into a new market, including the enterprise resource planning (ERP) system and tools that
monitor equipment, track personnel and manage work permits. "It's a suite of standard
computing applications we can use anywhere in the world. The commitment to standardization
played a critical role during Exxon's merger with Mobil, allowing the combined companies to
reduce staffing by about 15,000. The initiative eventually consolidated business unit operations
onto a single implementation of SAP software
Literature Review
The objectives for this work were: to analyze the Key Issues based on their qualitative
characteristics, quantify the number of occurrences of Key Issues, and search for common Key
(Fyffe, Krahn, Clarke, Kosson & Hutton, 2015) Issues in chemical industry accident reports in
order to potentially identify lines of inquiry to improve safety and efciency of operations at
chemical facilities. In order to accomplish these objectives, this research involved two separate
analyses of the Key Issues identied in chemical industry accident reports: naturalistic and
thematic. The naturalistic analysis involved a qualitative categorization of the chemical industry
Page 18 of 32

accident report Key Issues, verbatim. In the present study, the naturalistic analysis served as a
precursor to the thematic analysis, and only the results of the thematic analysis were carried
forward. In the second analysis, a thematic analysis was performed to determine common themes
that branch across several Key Issues and bring to bear more explanatory power than those
developed during the rst analysis.
The methodology for this study used a qualitative analysis technique to initially gain
insight into the causes of accidents in the chemical industry. Similar qualitative analyses have
been performed on accident documentation, and provided valuable insight. Gephart uses
qualitative data analysis facilitated by a computer to develop key word lists for study, a similar
methodology to the Key Issues analysis described herein. Another study used qualitative data
available through interviews from the chemical industry security eld to provide
recommendations to consider for security improvements. The results of these studies provided
trends that can be used to recommend improvements, similar to the analysis described herein.
The naturalistic analysis. In the naturalistic analysis, the Key Issues were studied as they
Occurred in the chemical industry accident reports; that is, exactly as they were described
by the investigation team. The number of occurrences of each individual Key Issue was tallied in
an attempt to identify Key Issues that were potentially common across several incident reports.
It was anticipated that these commonly occurring Key Issues have the potential to offer clear and
signicant targets to address in working to prevent future accidents. This rst analysis involved
using a naturalistic qualitative method in which the unit of analysis was one chemical industry
accident report. Data collection consisted of the identication of Key Issues for each document,
dividing the Key Issues into related concepts and then further subdividing the identied concepts
into categories. For this approach, the words in the Key Issues were used verbatim, without
making any changes or assumptions. This naturalistic approach to data analysis is further
described in Patton. The main objective was to refrain from manipulating the data in any way
during this initial evaluation, but rather to allow the data to fall into natural groupings based on
similarities in wording. Performing the Key Issues analysis with a naturalistic approach was
intended to capture slight differences in terminology and phrasing resulting from differences in
accident circumstances. This naturalistic method is often used for the analysis of expert opin-ions.
A preliminary assessment of frequently occurring Key Issues was accomplished (see Table 1).
Unfortunately, the Key Issues from the chemical industry accident reports contain inconsistent
terminology and phrasing; the naturalistic approach to the Key Issues analysis yielded over 60
single occurrence Key Issues.
Page 19 of 32

Opportunities
1. Product Portfolio Related:
a. Enhance existing portfolio with advantaged products: Commodity chemicals
companies can improve their product portfolio by adding specialty chemicals such as
polymers additives, water treatment chemicals, lubricating additives, etc more details
are available at http://www.Chemical Industry Challenges and Opportunities or
truly advantaged products. For example- The demand for performance plastics such
as biodegradable polymers is expected to be on rise across the world. Given the
environment concerns with traditional plastics, companies should look at expanding
their portfolio and include more value add products. The advantaged portfolio will
help improving their margins but will require significant R&D efforts.
b. Opportunities for local customization: chemical market is characterized by the
opportunity for local customization. Many customers are willing to sacrifice on some
of the product attributes for a lower product price. These offerings can also be
expanded to other Asian markets.
c. Growth in generic products: During the period of 2014 - 2020 products worth USD
6.3 billion are expected to go off-patent. This will provide opportunities for the generic
product manufacturers to expand their market presence and grow organically.
2. Market Access/ Geography Related
a. Explore global frontiers: Given the capital intensive nature of the project and high costs
associated, the domestic companies may also look outside for organic and inorganic
opportunities. Many western companies are shifting their base to resource rich nations like
Saudi Arabia, Qatar, Russia, etc. Pakistani organic chemical companies may also explore
opportunities outside the country either through Greenfield or brownfield projects.
b. Opportunity to serve a large addressable market: To be able to serve efficiently and
adequately, the companies have to start adopting a twin strategy key account strategy for
large customers and partnership with other companies to foster distribution and access
across geographies. It will be critical growth driver to have a strong vendor base and
partnership arrangements with cost effective local companies to achieve a leadership
position.

Page 20 of 32

3. Process/ Infrastructure Related

a. Opportunities in Backward and Forward integration: The domestic organic chemical players
lack pricing flexibility on account of lack of opportunities for backward integration. However,
with the new finds of natural gas reserves in the country, the manufacturers should be able
to leverage stable pricing going forward. Similarly, petrochemical companies producing
benzene and propylene can look for forward integration opportunity given the demand
supply deficit in phenol market. An opportunity exists for companies with better access to
natural gas supply to venture into the methanol market facing continuous supply deficit. For
e.g. Reliance Industries Ltd. successfully backward integrated from refining and
petrochemical company to oil and gas exploration. ONGC which is primarily an exploration
company recently built a Greenfield petrochemical project (OMPL).
b. Opportunity for setting up reverse SEZs: In order to meet the rising demand for inputs for
the chemical industry, the government can consider exploring the possibility of setting up
SEZs in countries such as Mozambique, Iran and Myanmar. Besides securing inputs at
competitive prices, the reverse SEZ would assure rapid investment in the downstream
projects in India thereby creating large employment in the country. In fact, steps are already
under way to explore the feasibility of setting up a chemical plant in Iran and soon other
countries will be explored.
c. Improved feedstock supply: Domestic products are uncompetitive due to high costs of
naphtha when compared with ethane based products from Middle East. One means to
improve the competitiveness is through improved infrastructure and feedstock support -- as
more natural gas becomes available, the domestic players are likely to shift from naphtha to
cheaper natural gas thereby increasing their competitiveness in the market.
d. Opportunities in coal gasification: With abundant coal reserves, there is an opportunity to
leverage gasification technology to increase production of chemicals and petrochemicals. In
last decade or so, the demand of petrochemicals has gone up substantially leading to
increased imports as the domestic output is lagging due to limited availability of feedstock.
4. Others
a. Growth in herbicides and fungicides: Labor shortage and increased costs, along with growth
in GM corps has spiked the use of herbicides. The herbicide consumption in India currently
stands at 0.3 USD billion and is expected to grow at a CAGR of 15% over the next five years to
reach 0.6 USD billion by FY18. On the other hand the fungicide industry in India has grown
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due to the growth in Indian horticulture industry, which has grown at a CAGR of 7.5% over
the last five years.
b. Opportunity to emerge as a low cost outsourcing option in the global market: There has been
a noticeable global shift towards Asia as the worlds chemical manufacturing hub. While China
leads in this space, countries like Singapore, South Korea and Thailand have also quickly
emerged as favorable low-cost sourcing destinations. By leveraging its ample labor force,
available resources, and new technologies in alternative feedstock options- coal gasification,
syngas and pet coke, even India can emerge as a low-cost outsourcing option in the global
market.
Issues
1. Raw Material related issues
a. Lack of adequate raw material (feedstock) Continuous availability of feedstock at
competitive cost is a key concern for companies operating in this sector. Feedstock
(naphtha and natural gas) are critical inputs for both organic and inorganic chemicals
industry. Costs of these raw materials are high in various countries. This makes the
domestic products uncompetitive in the international market. In order to address this
issue, the governments are taken some positive steps. Gas prices have been linked to
international prices to bring in investment to explore and increase supplies. Further,
the governments are also exploring the possibility of setting up Reverse Special
Economic Zones (SEZ) in various nations starting from Iran. In fact, steps are already
under way to explore the feasibility of setting up a chemical plant in Iran and soon
other countries such as Mozambique and Myanmar would be also explored in this
regard.
b. High dependence on imports for chemical needs In last decade or so, the demand
of petrochemicals has gone up substantially and this has led to increase in imports, as
domestic output is lagging due to limited availability of feedstock like gas and oil.
Given that the country lacks reserves of petroleum and gas but rich in coal, the
industry has also not leveraged modern technology and new methods of exploration
and production to use coal gasification as feedstock to produce chemicals and
petrochemicals. Volatility in raw material prices: More than 50% of global
petrochemical capacities are based on naphtha, a crude oil derived product. The prices

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of crude oil products have witnessed significant volatility, thereby making

petrochemicals prices highly volatile.
2. Infrastructural and Logistical issues
a. Inadequate infrastructure facilities and power shortage - Due to the poor
infrastructure facilities with in-adequate facilities at ports and railway depots and
poor pipeline connectivity, domestic manufacturers face difficulties in obtaining raw
materials from suppliers at competitive prices. Apart from this, intermittent power
supply is another issue which is affecting the energy intensive chemical industry and
it is more pertinent to the small & medium players in the industry, who do not have
the resources to invest in captive power plants like the large players. However, the
government has taken some initiatives to address this issue. This includes proposal
for building of highway projects and corporatization of public ports for improving
their efficiency. Further, transparent auctions of coal blocks and spectrum have also
helped the cause.
b. Logistical Issues The bulk chemical industry is mainly concentrated in the west
coast, due to proximity to raw materials and ports, while majority of the demand
comes from the end-use industries located in the eastern and the southern regions of
the country leading to distribution-related hurdles. This results in high transportation
cost and raises the overall production cost, thereby making the imports cheaper
compared to domestic purchase.
3. Competition
a. The manufacturers in this industry are subject to high level of competition. This
leads to reduced prices, which could negatively affect the margins.
b. Availability of cheaper Imports - The chemical industry faces a major challenge in
the availability of cheaper imported chemicals from low cost manufacturing hubs.
Trade Organization, the governments have been reducing the import tariffs on various
products. Under various multilateral and bilateral agreements, also, many of the
chemicals are placed in Open General License (OGL) of imports. This has increased
the import of various chemicals, intermediates and end products. However, the
import duty tariff levels are still higher as compared to other chemical importing
country. But, if the government decides to reduce the import tariffs further to meet

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increasing demand of the chemicals in the country, then the level of competition in the
chemical industry will further intensify.
c. Large global capacity additions- Large capacity additions in countries such as ethane
rich Middle East and shale gas rich USA is another cause of concern for the domestic
players as it may affect their market. It is estimated, that out of the 30 million tons of
ethylene capacity additions expected during period 2014 and 2018, 12.5 million tons is
expected in the US alone. Since, ethane and shale gas based petrochemical products are
cheaper than petrochemical products; it will affect the margins of the domestic players
in the market.
4. High entry barriers
Given the capital intensive nature of the petrochemical plant and tariff barriers, new
entrants and small and medium size companies are prohibited from easily entering into
the market.
5. Low capacity utilization:
a. Due to oversupply in global markets, the prices of petrochemicals have witnessed a
steep decline, thereby forcing the domestic companies to underutilize their plants
operating levels. The average capacity utilization has fallen from 95% levels before
global economic crisis to 80% in 2013.
b. Growing circulation of counterfeit products - According to industry estimates,
counterfeit pesticides account for up to 40% of the pesticides. Sold in FY13. These
products are inferior formulations and do not show the expected results. The damage
through such products is multifold. Apart from crop loss and damage to soil fertility,
use of non-genuine products leads to loss of revenue to farmers, agrochemical
companies and government. Some of the key reasons for use of non-genuine products
are lack of awareness amongst the farmers, difficulty in differentiating between
genuine and non-genuine products, supply chain inefficiencies, law enforcement
challenges and influencing power of distributors/retailers.
6. Regulatory issues
a. Inverted duty structure discourages local manufacturing - The prevailing duty
structure taxes raw materials (inputs) at a higher rate than the finished product, and
thereby discourages domestic value addition through local manufacturing. In fact,
some chemicals used in making medicines draw a duty of as high as 12 per cent, while
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free trade agreements (FTAs) ensure that the finished products draw negligible duty.
In terms of finished goods, the domestic manufacturing industry has grown by 4 per
cent in the last three years whereas the imports have grown by over 20 per cent for the
same period. The government has taken few steps towards removing anomalies in the
duty structures in this years budget. In the union budget 2015, the government
announced reduction in customs duty and special additional duty on certain raw
materials used in manufacturing of chemicals. The government may further
rationalize the duty structure to discourage low cost imports and facilitate better off
take from domestic markets. Further, the much awaited roll-out of GST in 2016 is
expected to have a sizeable impact on the chemical industry by reducing logistical cost
of companies as much as 20% and contribute to the overall growth of this sector.
b. Complex regulations licenses - Up until recently, the sector was affected by too many
and complex regulations and multiple licenses / certificates that were required to
operate a plants in various countries. However, with the governments focus on
improving the ease of doing business, several policy reforms have already been made
including scrapping of industrial licensing for most sub-sectors except the ones
dealing in hazardous chemicals.
c. Slow implementation of Petroleum, Chemicals and Petrochemical Investment
Region policy (PCPIRs) Though the PCIPR policy was notified in 2007, it has not
witnessed significant offtake by the states till now. However, the governments are
planning to revise the PCPIR policy to make it attractive for states to implement it
and attract investment. Revisions are expected to make the policy more attractive and
feasible for the states to execute. Other aspects such as financial support, clearances,
additional anchor tenant and single window clearances were likely to be
incorporated in the revised policy.
d. Long gestation period for new products - It takes significant time, almost up to 10
years to bring a new molecule into the market. Even for the generic products, it can
take up to 5 years to get the product registered. The regulatory bodies do not have
adequate resources and infrastructure
7. R&D related issues
a. Low focus on R&D by domestic manufacturers due to high costs- The industry is
witnessing low R&D activity due to the high costs involved. It takes almost USD 250
million in research and development to introduce a new product in the market. This
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prevents the companies to invest in R&D activities and focus more on the generic
products which require low investments in research and development.
8. Distribution and awareness related issues
a. Need for efficient distribution systems The lack of robust distribution systems
make it difficult for the agrochemical companies to reach the farmers to promote their
products and educate them about their usage and benefits. At present, the industry is
facing issues due to supply chain inefficiencies and inadequate infrastructure which
results in post-harvest losses thereby impacting the farmers.
b. Lack of education and awareness among farmers Lack of knowledge on the part of
the farmers on the appropriate kind of pesticide, its dosage quantity and application
frequency have hurt the demand for agro chemicals. This issue has been difficult to
address due to poor reach of the farmers owing to infrastructure issues, regional
languages and dialects. Furthermore, the retailer, who is the main point of contact
between the manufacturer and the farmer often lack the technical experience and
knowledge to provide correct advice to farmers.
9. Human resource related issues
a. Shortage of skilled man power Lack of skilled manpower is another issue faced by
the industry. However, to address the industrys need of skilled manpower, the
Ministry of Chemicals and Fertilizers recently signed three Memorandum of
Understandings

(MoUs)

with

the

Ministry

of

Skill

Development

and

Entrepreneurship. The MoUs aim to collectively address the incremental human

requirement in the fertilizer, pharmaceutical and chemicals & petrochemical industry.
10. Environment protection related issues
a. Environment risk protection and pollution control measures entail significant
expenditure - Environment protection issues are emerging as a great challenge for the
chemical industry. The operations of the company are subject to various government
regulations including those pertaining to environmental protection. These laws and
regulations stipulate higher environmental protection standards pertaining to air
emissions, the use, handling and transport of hazardous or toxic materials, wastewater
storage, treatment and discharges, waste disposal practices, as well as the remediation
of environmental contamination. Complying with these regulations adds up new
costs to the company, which could affect its operational performance. If the company
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fails to comply with these regulations, it may be penalized with hefty fines and
penalties, which could have a material impact on the profitability of the company. The
company may also be denied new projects, which might hamper its business
prospects.
Challenges
i.

Increased competition requires agility

Staying ahead of traditional competitors is challenging, but for the chemical industry, new
competitors are coming from outside as well as from inside the industry more details are
available

athttp://www.digitalistmag.com/industries/chemicals/2015/06/29/effect-

global-mega-trends-chemical-industry-03005305. Emerging competition is coming from

nontraditional sectors such as energy, utilities, and mining, and its especially heavy from
healthcare, pharma, and life sciences companies. Chemical companies hoping to retain or
grow market share are looking for ways to become more agile. Companies find that their
IT teams are torn between strategic initiatives to increase agility and tight budgets. As a
result, many are adopting a cloud strategy. Using the cloud can relieve IT from mundane
day-to-day tasks so they can focus on streamlining business processes to increase agility
while controlling overall costs.
ii.

Customerseven B2B customerswant more intimacy

Customer behavior is changing rapidly. Customers of all types have a stronger desire for
more information and intimacy than ever before. They want to see information about their
orders and track delivery status to the minute. They want to interact and consult with
development and service teams on upcoming projects, and they expect advice and input
from their chosen suppliers.
To address the customers desire for connection, its no longer enough to have just a
website, no matter how informative it may be. Today, companies are fielding their own
mobile apps so that customers can have constant connection. In fact, Gartner predicts that
by 2016, use of mobile apps will exceed Internet access to domain names. The best apps
will include product specifications, guidance on applications, and customer-specific
inquiries. Many in-house IT teams will need to strengthen their expertise to tackle this
challenge, which has not been part of the traditional operational role.
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iii.

Chemical companies strive to keep pace with rapid regulatory changes

The chemical industry must show compliance with a complex tangle of overlapping
regulations governing everything from labeling, handling, and manufacturing to
shipping and storage of the products. Every countryand even many localitiesenacts its
own rules, and U.S. chemical companies alone spend more than $12 billion a year on
compliance. Yet the changes keep coming, and companies must respond quickly to the
required reporting as well as the mitigation processes. Here aspects like real-time
simulations of the impact of new regulations in certain countries or regions become
pivotal to success.
Also many companies have found that running their business systems in the cloud help
they manage the cost of compliance. Unlike complex on premise systems that are costly
and disruptive to upgrade, cloud solutions are typically updated on a frequent basis. As
report formats change or new requirements are added, cloud-based reporting systems
mean companies have faster access to solutions that conform to the latest regulations.

iv.

Business is happening in real time

Business is moving faster than ever, and business systems need to keep up. New
transaction processing systems that run completely in memory have raised expectations
for how quickly information can be available. Chemical companies are hungry for the fast
insights they can get from big data, IoT (Internet of Things), predictive analytics, and inmemory databases. As technology advances, companies are using more data sources to
help hone their predictions. Plants monitor production in real time using sensors that feed
quality and performance data to dashboards in real time. Weather patterns or politics on
the other side of the world may affect demand for products, and chemical companies are
tapping into both structured and unstructured data for insight.

v.

Preparing for distribution channel changes

Trends like mass customization and lot size 1 have also reached the chemical industry
and are expected to have a pronounced impact on chemical manufacturing and supply
chains. Rather than shipping product to a few manufacturers that create their own
products and manage the distribution, chemical companies may soon begin shipping
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directly to a variety of new customers who will use the chemicals to create products or
formulations with distinguished properties right at their facilities rather than buying
finished products from suppliers. In the near future, companies might be selling the
information about how to make a product rather than the product itself. Physical supply
chains might evolve to consist primarily of raw materials and chemicals, while the bigger
supply chain will shift to becoming more about moving and accessing information.
Chemical companies will need to gear up for both types of supply chain challenges. More
customers will be placing smaller orders, so distribution will need to be much more
efficient. The information supply chain will require major enhancements to ensure that
information flows as quickly and seamlessly as customers require.
Rising to meet the future challenges can be a challenge in and of itself, but you dont need
to solve every problem on your own. Having the right systems and technology in place
can make everything simpler. Contact us today to find out more about how the chemical
industry of the future will use technology as the cornerstone of global growth.
Essential skills
The Human Resources function at ExxonMobil is integrated into their many different
businesses. A variety of specialist or generalist assignments exist for them to gain broad
functional experience and develop expertise. In addition, they will also gain an understanding of
how HR is integrated into our various companies and operations around the world. Their global
business requires effective and timely delivery of HR support business organizations around the
globe. The design of their global HR organization enables projects and best practices to be
implemented through centralized services, expatriate assignments and international business
travel.
Successful managers rely on a collection of essential skills. They include:

Proven analytical and leadership skills

Excellent interpersonal and communication skills

Ability to collaborate effectively in a team environment

Project management. Manage tradeoffs among costs, schedule, technical

solutions, and stakeholder requirements to ensure the project's value.
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Local content and other stakeholders. Ensure proper alignment with

stakeholders while meeting requirements to use local content and contractors.

Costs and schedule. Provide an accurate estimate and control of project results,
from concept to completion, monitoring project costs and schedule.

HR and support functions. Manage resources, training, and compensation to

ensure that the necessary skills are available to the project when needed.

Production operations. Take into account all aspects of the asset's operability
and maintenance, from planning through commissioning, start-up, and
performance tests.

Engineering. Identify technologies that deliver innovation and competitive

advantage in terms of quality, costs, and schedule while avoiding overengineering.

Procurement. Source goods and services based on best market opportunities.

Contracting. Define and manage contracts to meet quality, costs, and schedule
requirements.

Risk

and

opportunity

management.

Minimize

the

probability

and

consequences of threats while maximizing opportunities in a systematic and

constantly updated process.

Quality and HSE. Guarantee the health and safety of employees, contractors,
customers, local communities, and the environment throughout the project life
cycle.

Operations
An industry leader in almost every aspect of the energy and petrochemical business, they
operate Facilities or market products in most of the worlds countries and explore for oil and
natural gas on six continents. They operate in the following Continents and countries more
details

are

available

http://corporate.exxonmobil.com/en/company/worldwideoperations/locations
North America

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Canada

Mxico

Caribbean / Guatemala

United States

Middle

East/North

Africa

Egypt

Kuwait

Saudi Arabia

Iraq

Qatar

United
Emirates

Asia Pacific

Australia

Indonesia

Singapore

China

Japan

South Korea

Guam Sub-Cluster

Malaysia

Taiwan

Hong Kong

New Zealand

Thailand

Papua New Guinea

India

Vietnam

Sub-Saharan Africa

Angola

Chad and Cameroon

Equatorial Guinea

Nigeria

Madagascar

Tanzania

Europe

Azerbaijan

Ireland

Romania

Belgium

Italy

Russia

Germany

Kazakhstan

Turkey

Cyprus

Luxembourg

Turkmenistan

Finland
France

The Netherlands
Norway

Ukraine
United
Kingdom

References
1. Chem_World_Final
2. http://www.eaepc.org/about-us/aims-and-objectives

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Arab

3. http://www.essentialchemicalindustry.org/the-chemical-industry/the-chemicalindustry.html#section_1
4. https://www.selectusa.gov/chemical-industry-united-states
5. Fyffe.L, Krahn.S, Clarke.J, Kosson.D & Hutton.J, 2016, A preliminary analysis of Key
Issues in chemical industry accident reports, Safety Science 82 (2016) 368373
6. http://corporate.exxonmobil.com/en/company/worldwide-operations/locations
7. http://www.Chemical Industry Challenges and Opportunities
8. http://www.digitalistmag.com/industries/chemicals/2015/06/29/effect-globalmega-trends-chemical-industry-03005305
9. http://www.uniassignment.com/essay-samples/engineering/aim-and-objectivesof-exxon-mobilcorporation-engineering-essay.php
10. https://www.ft.com/content/f247179a-c9d1-11e5-be0b-b7ece4e953a0

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