Oil & gas Industry

LSCM PROJECT

Anand S

14016

Nikita Lalwani

14089

Rohit Shettar

14124

Tony Sebastian

14171

RonyFrancis

14126

OIL AND GAS INDUSTRY

The oil and gas sector is one of the six core industries in India.
India is the fourth-largest energy consumer (2013) of oil & gas in
the world, accounting for 37 per cent of total energy
consumption.
India has 19 refineries in the public sector and three in the
private sector.
Domestic oil output is anticipated to grow to 1MBPD by FY16.
Domestic production accounts for more than three-quarter of the
countrys total gas consumption.
India increasingly relies on imported LNG; the country was the
fifth-largest LNG importer in 2013

GROWTH DRIVERS
The countrys natural gas pipeline network amounted to over
15,340 KMs in 2013 and a proposed expansion of 30,000 KMs is
envisaged by 2018-19.
The government has decided to set up strategic storage of 5.03
MMT of crude oil at 3 locations Visakhapatnam, Mangalore and
Padur.
major discoveries in the Barmer basin in Rajasthan and the
offshore Krishna-Godavari basin by smaller companies such as
the Gujarat State Petroleum Corporation and Andhra Pradesh Gas
Infrastructure Corporation hold some potential to diversify the
countrys production.
The government unveiled plans to add another 91 Million barrels
to its crude oil capacity to protect India from supply disruptions
by 2017.

Continued..
Shares in Crude pipeline by length

14%

46%
41%

IOCL

ONGC

Others

In terms of length,
IOCL accounts for
45.5% (4448 km) of
Indias crude pipeline
network

Continued..
Oil Consumption In India (MBPD)
4

2016
2013

3.7

2012

3.7
3.5

2011

3.3

2010

3.2

2009

3.1

2008

0.5

1.5

2.5

3.5

4.5

SUPPLY CHAIN OF OIL AND GAS

INDUSTRY

Exploration
operations.

includes

seismic,

geophysical

and

geological

Production operations include drilling, reservoir, production, and

facilities engineering.
Refining is a complex operation and its output is the input to
marketing.
In the oil and gas industry, almost all significant and important
operations are planned in advance.
The whole process can be massaged and fine-tuned into a high
performance money making machine

INDIAN OIL CORPORATION LIMITED

(IOCL)

Indian Oil Corporation Limited, or Indian Oil, is an Indian state-owned

oil and gas corporation with its headquarters in New Delhi, India.
It is the world's 88th largest corporation, according to the Fortune
Global 500 list, and the largest public corporation in India when
ranked by revenue.
Indian Oil and its subsidiaries account for a 49% share in the
petroleum products market, 31% share in refining capacity and 67%
downstream sector pipelines capacity in India.
The main services offered by Indian Oil are Refining, Marketing,
Pipelines, R&D and Training.
The company is mainly controlled by Government of India which
owns approximately 79% shares in the company

SUPPLY CHAIN OF INDIAN OIL

CORPORATION LIMITED (IOCL)
Indian Oil Corporation Limited (IOCL) has implemented Honeywells
Supply Chain Management solution to integrate and optimize the
supply chain of five separate refineries. The project has resulted in the
following benefits:
Integrated supply chain planning which optimizes the entire supply
chain.
Optimal distribution planning considering transportation costs, taxes
and duties and transportation constraints.
Optimal refinery production planning considering crude assays, unit

The Supply Chain Management solution provided by Honeywell

consisted of the following modules:
Demand planning: for demand forecasting and aggregation of the
final demand numbers
Integrated planning: for the complete IOCL refining supply chain
Distribution planning: for generating
allocation and product distribution

operational

plans

for

Refinery production planning: for generating operational plans

for production

LOGISTICS DRIVERS OF SUPPLY CHAIN OF

IOCL

1. FACILITIES

The Indian oil group of companies owns and operates 10 of India's 22

refineries with a combined refining capacity of 65.7 million metric
tonnes per annum (MMTPA).It has over 23,900 petrol and diesel
stations, including over 6000 Kisan Seva Kendras (KSKs) in the rural
markets.
2. INVENTORY
Indian Oil Corporation encompasses all raw materials, work in
progress, and finished good in large bulk. Main raw material crude
Oil, is purchased from OPEC countries to meet the demand.

3. TRANSPORTATION
For Transportation Indian Oil Corporations uses pipeline, ship, rail or
road. LNG is transported in specially-built tanks on double-hulled
ships. Coastal cities can be supplied through sea.
4. INFORMATION
IOCL deployed SAP NetWeaver Process Integration technology and the
SAP NetWeaver technology platform. This ERP Improved data
accuracy by 99% and Minimized inventory levels.
5. PRICING
The company use flexible price for its products. The price is mainly
based on international crude oil price.

ONGC
SIZE IS WORTH RS. 2,100 CRORE ANNUALLY AND THEY EMPLOY NEARLY 2,000
PEOPLE.
THERE ARE 22 ONSHORE LOCATIONS, HAVING DECENTRALISED LOGISTICS
AND SUPPLY CHAIN MANAGEMENT, WHERE PRODUCTION AND EXPLORATION
ARE IN PROGRESS.
ONGC HAVE TOTAL OF 21 RIGS, NINE OF THEM DEPLOYED ON THE EAST
COAST AND 12 OTHERS ON THE WEST.
BOTH ONSHORE AND OFFSHORE OPERATIONS

SUPPLY CHAIN STAGES IN ONGC

ACQUISITION OF ONSHORE AND OFFSHORE FOR EXPLORATION
OPERATIONS EXPLORATION, FORECASTING, PRODUCTION.
LOGISTICS MANAGEMENT - DELIVERING CRUDE OIL FROM REMOTELY
LOCATED OIL WELLS TO REFINERIES

LOGISTICS DRIVERS OF SUPPLY CHAIN

OF ONGC
1. FACILITIES
THEY HAVE A TOTAL OF 21 RIGS, NINE OF THEM DEPLOYED ON THE EAST
COAST AND 12 OTHERS ON THE WEST.
TWELVE OF THEM ARE ONE HIRE WHILE NINE OTHERS ARE OWNED BY THEM
HAVE NEARLY 5,000 KM OF PIPELINE FOR OPERATION AND MAINTENANCE.
2. INVENTORY
. INVENTORY IN ONGC HAS BEEN CLASSIFIED INTO TWO BROAD GROUPS:
. STORES
. SPARES

3. TRANSPORTATION
FOR TRANSPORTATION ONGC USES PIPELINE, SHIP, RAIL OR ROAD. PIPELINE IS
THE CHEAPEST FOR THE BULK TRANSPORTATION BUT CANNOT BE USED FOR
SMALL QUANTITY.
SMALL QUANTITIES ARE SUPPLIED THROUGH ROAD IN REMOTE AREAS.
COASTAL CITIES CAN BE SUPPLIED THROUGH SEA.
4. INFORMATION
OIL AND NATURAL GAS CORPORATION LIMITED (ONGC) HAS CHOSEN THE SAP
NETWEAVER PROCESS INTEGRATION (SAP NETWEAVER PI) OFFERING.
NOW ONGC COLLABORATES IN REAL-TIME GAINING VAST EFFICIENCIES IN
PRODUCTION AND ACCOUNTS PAYABLE.
5. SOURCING
STATE-OWNED OIL AND NATURAL GAS CORP (ONGC) HAS EXTENDED PACT
WITH HINDUJA GROUP FOR SOURCING OF LIQUEFIED NATURAL GAS FROM IRAN
AND OTHER MIDDLE EAST NATIONS BY ONE MORE YEAR.

6. PRICING
THE STEEP FALL IN CRUDE PRICES MEANS THAT THE DISCOUNT ONGC HAS TO
GIVE ON ITS PRODUCE IS HIGHER THAN THE ACTUAL OIL PRICE.
WHILE ONGC HAS TO GIVE A DISCOUNT OF $56 A BARREL TO PUBLIC SECTOR
BUYERS AS PART OF THE GOVERNMENTS SUBSIDY-SHARING MECHANISM,
INTERNATIONAL CRUDE OIL PRICES ARE $6-7/BARREL BELOW THAT LEVEL.
ONGC AND OIL INDIA OFFER DISCOUNTS TO THEIR COUNTERPARTS IN THE
REFINING-CUM-RETAILING BUSINESS.

COMPARISON BETWEEN THE TWO COMPANIES

INDIAN OIL CORPORATION LIMITED (INDIAN OIL) IS THE LARGEST OIL REFINING AND
MARKETING COMPANY IN INDIA.
APART FROM THE 61.7 MMTPA (MILLION TONNES PER ANNUM) OF EXISTING REFINING CAPACITY
WITHIN THE INDIAN OIL GROUP, A NEW REFINERY AT PARADIP, ORISSAIS COMING UP WITH A
CAPACITY OF 15 MMTPA.
THE COMPANY ALSO OPERATES OVER 10,541 KILOMETERS OF CRUDE OIL AND PRODUCT
PIPELINES.
IT ALSO HAS A RETAIL NETWORK OF OVER 18,643 OUTLETS. ITS GROUP COMPANIES INCLUDE
CHENNAI PETROLEUM CORPORATION LIMITED, INDIANOIL (MAURITIUS) LTD, LANKA IOC PLC, IOC
MIDDLE EAST FZE, INDIANOIL TECHNOLOGIES LTD AND INDIANOIL - CREDA BIOFUELS LIMITED.
TECHNOLOGY USED: PROCESS INTEGRATION TECHNOLOGY, SAP NETWEAVER TECHNOLOGY
PLATFORM

 ONGC IS THE COUNTRY'S LARGEST OIL EXPLORATION AND PRODUCTION

(E&P) COMPANY ACCOUNTING FOR NEARLY 90% OF INDIA'S PROVEN OIL AND
GAS RESERVES.
AT THE CURRENT RATE OF PRODUCTION, THE COMPANY ACCOUNTS FOR
OVER 80% OF OIL AND GAS PRODUCTION. APART FROM E&P, THE COMPANY
ALSO PRODUCES VALUE-ADDED PETROLEUM PRODUCTS SUCH AS LPG,
KEROSENE, NAPHTHA AND DIESEL.
WHILE LPG IS SOLD TO THE PSU MARKETING COMPANIES, A MAJOR CHUNK
OF NAPHTHA IS EXPORTED AND DIESEL IS USED FOR CAPTIVE
CONSUMPTION. ONGC ALSO HAS A 72% STAKE IN MRPL, A STAND-ALONE
REFINERY WITH A CAPACITY OF NEARLY 9.7 MMT (MILLION METRIC TONNES).
TECHNOLOGY USED : UOP TECHNOLOGY, BIOREMEDIATION TECHNOLOGY
MNRE, LED ERP, SAP, R3

FINANCIAL COMPARISON
INDIAN OIL CORPORATION
2014

2013

2012

2011

2010

Number of Days In Working

Capital
18.76
Inventory Turnover Ratio
7.31
Return On Capital Employed(%) 9.11
Operating Profit Margin(%)
3.31
Average Raw Material Holding
58.23
Average Finished Goods Held
22.8

33.14
7.54
8.64
3.07
62.8
24.65

30.55
8.15
13.08
4.2
60.85
26.32

26.43
7.56
10.32
3.8
56.27
23.96

13.2
8.37
15.83
5.6
45.53
24.77

ONGC
2014
2013

2012

2011

2010

80.99
14.81
28.56
60.01
3.4
6.24

46.43
16.59
28.38
58.81
1.5
10.8

151.48
87.82
34.54
62.57
0.27
7.42

Number of Days In Working

Capital
6.1
Inventory Turnover Ratio
14.26
Return On Capital Employed(%) 23.53
Operating Profit Margin(%)
52.72
Average Raw Material Holding
2.34
Average Finished Goods Held
8.5

47.82
14.55
24.6
52.53
2.5
9.21

ISSUES
Complex operations- logistical coordination for large complicated projects
becomes a problem
End to end visibility- this is also an issue since there exits a time lag
between operations on the ground or at sea and information available to
the management in the offices
Fragmented supply chains- since there are numerous stakeholders and
multiple drilling sites, visibility of materials becomes an issue and this
results in fragmented supply chains
Unpredictability- Due to presence of multiple stakeholders and with data
management and materials monitoring being an issue there exists a
degree of unpredictability in the supply chain which is undesirable

RECOMMENDATIONS AND SUGGESTIONS

Segment Customers Based Their Needs:
Form Partnerships to Enhance Supply-Chains
Apply Strategic Sourcing
Adapt a Supply-Chain Wide Technology Strategy