M13 GED- INTRODUCTION TO THE OIL AND GAS INDUSTRY

ROLE OF VALUE ADDITION IN THE PETROLEUM AND PETROCHEMICAL INDUSTRY IN ENHANCING ECONOMIC GROWTH IN INDIA.

CONTENTS 1. INTRODUCTION

2. PETROLEUM INDUSTRIES IN INDIA

3. PETROCHEMICAL INDUSTRIES IN INDIA

4. CONCLUSION

5. REFERNCE

1. INTRODUCTION
The history of Petroleum and petro chemical industries starts with their discovery in 1850s but t hey have achieved a drastic boom even since the industrial revolution. It has been a long evolution from that period to the present day .During this evolution there has been several changes in the technologies and procedures in every field. Still the petroleum industry stood its way as every sector directly or indirectly depends on petroleum field. Besides the main petroleum products like gasoline or diesel, there have been a lot of other chemical compounds derived from the petroleum products which are broadly classified under petrochemicals. Propylene , benzene , ethylene are the some examples of petrochemicals that has been commonly used for many processes. Petroleum Industry has got a major role in controlling the economic aspects of the world .similar to its character , they can be also referred as Highly Inflammable in economic terms as fluxuation in their prices can change the prices of various other commodities and vary factors like inflation and economic stability of a country. India is regarded as one of the major emerging power in the future world. This is mainly because of its diversity and immense potential and availability of resources. India ranked fourth in terms of the contribution to G.D.P in 2005 with a share of 5.9 %. (Fernandes P, 2006) Automotive industry is another main sector which directly depends on petroleum industry. According to Society of Indian automotive manufacturers, the total sales of automobiles have increased by 30 % in 2010. The requirement of aviation fuel and other petroleum products for agriculture, Electricity has also increased tremendously.( Indian Mirror ,2010)

Availability and consumption of the petroleum products are just like two sides of a weighing machine which explores the strength and weakness of a nation in this field. It is very relevant to understand and analyse the scope of influence of petroleum and related industries and their value additions on the Indian economy.

2. PETROLEUM INDUSTRY IN INDIA

Petroleum industry in India is one of major contributor to the national income and to the Gross G.D.P. Even though the petroleum industry in India has got a long history back, it started its real journey from 1970s since the exploration of Bombay high and picked up its pace in late 90s due to large amount of foreign investments due to liberalization of government policies and due to technology up gradation. In the present day , India is a country which is being carefully observed by the rest of the world due to its immense progress in recent years. Petroleum industry contributed to countrys 15 % G.D.P and brought about foreign exchange worth 23.64 Billion U.S dollars. The allowance of private sector has brought good contribution and investment to this sector. But still the government has a monitoring and controllable hand , as this a sector which can control the progress of the entire nation (Samantha.A, 2010)

Table: Petroleum Industries and contribution by govt of India (Samantha.A, 2010)

The refinery production shares by various companies during the financial year 2009 are as follows.

Graph : Indian Petroleum Market share (Samantha.A, 2010)

As described earlier, the two hands of the petroleum industry are production and consumption, regarding production the entire operation is carried out by the following segments.

1. Refinery production 2. Natural Gas Production 3. Crude Oil production

India An International refining destination India is now regarded as the best choice for oil refining as the cost for the processing is very low, which is up to 25-50 % less when compared with some of the Asian countries and an survey conducted by Deutsche Bank , it suggests that under the current scenario, India will go under steady progress and improves its capacity by 45 % with in upcoming 5 years. The fact that India is the third largest country when dealing with distillation capacity shouldnt be forgotten in this context.( Ghosh .S, 2005)

Table: Percentage growth and impact of petroleum industry in India (Samantha.A, 2010)

PETROLEUM INDUSTRY IN INDIAN RETAIL MARKET In Indian market, the services provided by this sector are by two means, Natural Gas and other petroleum products. Natural Gas is referred as Future fuel by most of the researchers due to its peculiar characteristics. The biggest challenge faced by the petroleum sector is regarding availability, but in case of natural gas, there are abundantly available throughout the earths surface. Natural gas can be either use as a fuel itself or can be easily converted in to L.P.G , L.N.G or C.N.G.

Table : Natural Gas production (Samantha.A, 2010)

The other petroleum products that is being available in the Indian retail market are as follows Gasoline High speed diesel and Light Diesel Oil Naphtha Motor spirit Lubricating oil

Graph : Petroleum product share in Indian market ( Parikh .J et al, 2005)

Table : Demand for petroleum products for 2011-2012 ( Parikh .J et al, 2005)

The above table shows that there has been a constant demand for the petroleum products under both BAU and OS constraints. The growth rate suggested by the above table varies from 5.6 -6.7 %. All the components shows a steady progress. The rate of consumption of fuels suggests that the nation is in progress as energy is as an indispensible factor for the growth of the economy. The increased population also adds to this reason, but it improves man power input of the country. These statistics shows that these can bring up steady increase in revenue and foreign investments in India. (Parikh .J et al, 2005)

FUTURE OF INDIAN PETROLEUM INDUSTRY The Indian petroleum industry has got a wide range of scope and chances in the future which can bring up great changes both in Indian and world economy. The following table gives an idea about rate of consumption and production of petroleum products in India.

Table: Production and Consumption of petroleum products in India (Samantha.A, 2010) The table suggests that there has been a high need for petroleum products during last 10 -15 years but the production needs always met the consumption. The major share of the petroleum products is being imported from various countries, which will account about 80 % but these are processed and converted in to value added products . These products are either used in country or exported. This will benefit the nation in two ways. Firstly by meeting the countrys energy needs ,increasing the purchasing capability and controls inflation secondly by earning the foreign exchange and a steady state in world market in this era of globalization.

Graph : Import and Export of petroleum products in India(Samantha.A, 2010)

It has been suggested by most of the scientists that the petroleum products will get exhausted within 200 years if this rate of consumption continues. But the optional fuel suggested id either L.P.G ,L.N.G or C.N.G. The government of India is promoting these fuels for reducing emissions and some of them have been already imposed by law. Anyhow, these all will accounts for the futuristic developments of petroleum industries as these all are either petroleum or petroleum derived products. The current trend shows that there will not be any decline in the progress rate especially in this stage where automotive industries are concentrated in India and China.

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3. PETROCHEMICAL INDUSTRIES

ORIGIN OF INDIAN PETROCHEMICAL INDUSTRY The origin of Indian petrochemical sector might be traced are at the actual core 1800. During India's independence in 1947, the actual petroleum sector has been handled through foreign organizations.

The foundation of Indian Petrochemical Sector was with regards to 60 to 70 years back, with all the very first manufacturing regarding organic and natural substances coming from propane. The term 'petrochemical' means the actual compounds which have been formed straight or perhaps ultimately coming from petroleum-based hydrocarbons in addition to organic unwanted gas. Petrochemicals manufacturing will be one of the most vital industries in every designed countries and a growthdetermining element too. The Indian petrochemical marketplace regenerated the application of benzene to be a petrochemical uncooked stuff. (Business maps of India n.d)

The primary end-use products from the petrochemical marketplace in India are usually: Plastics and Resins Pharmaceutical drugs Car Chemical substances which includes Antifreeze Providers Detergents, Solvents, Plasticizers, in addition to Fresh paint Varnishes Gardening Chemical substances including Fertilizers, Pesticides, in addition to Herbicides Man made Elastomers

Advancement regarding petrochemicals marketplace in India: Within the period of time among each World War, the main uncooked stuff for organic and natural compound marketplace was fossil fuel. Nevertheless with all the war more than, there is a massive demand for aromatic materials. The war in addition introduced the actual manufactured time which are alternatives for inorganic resources similar to a glass, steel, in addition to organic materials similar to timber, fibres, gums, production of fertilizers, resins, waxes, rubber etc. (Business maps of India

n.d)

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Indian Petrochemical Businesses: Overview Similar to petroleum Industry, the major shares are holding up the government and Up on recent years, privatisation has been allowed in this sector which brings more investments and increase the productivity. The major Indian companies in this sector are Reliance Industries Limited Gas Authority of India Limited Indian Petrochemicals Corporation Limited Grasim Industries Limited Indo Rama Synthetics Limited

Fig: General view- petrochemical Industries(Business maps of India n.d)

The mandatory top features of the Indian Petrochemical Businesses are usually:

The excessive price on the raw materials The increase associated with midst classes ultimately causing boost inside the need intended for petrochemicals The close website link between your home and the global current market costs The ownership associated with brand-new design knowhow 12

Indian Oil Businesses makes a wide range of objects needed from the consumers of teams such as videos, bedding, material, filaments, conduits, pages, house solutions like bath tub tubs, plastic crates, buckets, recliners, to call a number of, containers, pots, toys, residence products etc. BENEFITS OF PETROCHEMICAL INDUSTRY IN INDIA

India reveal a fantastic component of Petrochemical organization throughout world market place .A lot of Indian petrochemical products are sold to the different parts of Asia, African countries and in some cases Arab countries too. The particular demand for Indian Petrochemical products are due to its top quality along with reasonably competitive prices. India's low cost along with top end Petrochemical solutions creation experience in addition to establishing top notch commercial infrastructure could be the principal benefiting element for the climb of this marketplace. India gives Petrochemicals with a substantial discount compared to the western counterparts whilst delivering identical quality associated with output.
The advantages of manufacturing top quality Petrochemical Products in India are

Friendly Government of India policies Cheap labour Small as well as first class facilities Sturdy technical schooling Large number of scientific disciplines as well as executive graduates Top quality output Highly skilled employs Entry to revolutionary course of action Excellent buyer associations Massive opportunity regarding creativity Expansion connected with present associations Massive requirement throughout overseas promotes Availability of more technical employees Increased variety as well as good quality connected with instruction establishments (Business maps

of India n.d)

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Significant things involving the Indian Petrochemical market --

Shows 2% involving world marketplace Does business worth USD 30 billion Progress involving the Indian petrochemical market is 10% Benefit sustained approximately 14% Wide selection of products Essential components are usually petrochemicals, inorganic substances and also fertilizers

DEMAND AND FUTURE OF PETROCHEMICALS IN INDIA Indian GROSS DOMESTIC PRODUCT have been amazing within the economical yr 2006-07 which is at 9. 4%.forex trading supplies have got surged ahead to be able to USD two hundred billion dollars to be able to brought Petrochemical opportunities substantially.

The following are the particular groups by which desire and also potential connected with petrochemicals are heading in direction of constructive increase:

Health care Food upkeep Computer hardware Transportation Equipments with place of work

The future of Indian petroleum market is dependent upon:

.Desire regarding petroleum keeps growing inside explodes along with range .Moving concentrate to additional manufacturing of olefin: ethylene, propylene, butadiene, .Price along with availability of gas and oil feedstock would nevertheless be vital variables

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.The actual demand with the end products would have an effect on the demand with the intermediary .goods.

GROWTH OF INDIAN PETROCHEMICAL INDUSTRY Development of Indian petrochemical marketplace is usually actively playing a serious role in increasing the economic system and also the improvement with the production sector. The petrochemicals industry gives value addition to the Indian economic system when compared with most of the other companies. Currently, the actual scope connected with puncture with the petrochemical goods within day-to-day work with is usually huge. It basically insures most of the website connected with everyday living for instance clothing, gadgets, residence goods, furniture, consumer electronics, design, property, vehicles, health-related home appliances, appearance, horticulture, as well as farming. Right now, expectations out of this sector usually are sky-high. The Indian petrochemical marketplace for this element is progressing well and has been adding to appreciably towards the nation's GROSS DOMESTIC PRODUCT from a few years today.

Fig : Petro chemical Demand and companies (Chemtech 2010) INDIAN PETROCHEMICAL BUISSINESS: ESSENTIAL TO ECONOMICAL PROGRESS

India is actually getting 3.17 million square kilometres property large in addition to over 1. 23 billion population in addition to probably the fastest developing economy in the world . They have welldeveloped Method Business. India possesses petroleum-refining capability of over 194 Trillion Tonnes per annum (MTPA). The biggest grass root refinery along with 32 MTPA capacities is situated in India. They have many propane cracker complexes along with downstream ability making 8 MTPA plastics and polymers. India generate 21 years old MTPA of Urea; and has this broadest selection of chemicals such as Caustic (2. 4 MTPA), Soda pop Ash (2. 7 MTPA), in addition to sulphuric chemical p; Dyes & Take dye Intermediates in addition to Good Compounds. India possesses rapidly developing

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Pharmaceutical drug Business along with well-developed substance intermediates manufacturing facilities. (NPCF 2012) Petrochemicals include fundamental chemicals such as Ethylene, Propylene, and Benzene in addition to Xylene. The other major ingredients are classified as the intermediates such as MEG, PAN, and LAB in addition to RESEARCH LABORATORY and so on. synthetic fibres such as Nylon, PSF in addition to PFY, Polymers such as LDPE/HDPE, PVC, Polyester and PET and rubbers such as SBR, PBR, in addition to Manufactured. Indian industry has a significant development potential. Even though the recent each capita usage of petrochemicals merchandise is actually minimal, but the requirement with the products are growing. The US usage has arrived at saturation levels, china's usage is above the sector, is actually trade led. India possesses the advantage of higher population in addition to expect to sustain higher economic development. This should propel Indias consumption in polymer to completely new degrees within coming calendar years. (NPCF 2012)

Indian petrochemical sector grew at a rate of ~11% within 2010-11. The view for 2011-12 is usually firm, as well as the chemicals market place is actually expected to develop at 11-13% g. a. over the coming five years. It is being led by means of solid development within polymers, nutritional fibre intermediates, and manmade nutritional fibre in addition to elastomers. For each capita consumption within India is still flying at 7. 0 kgs, in comparison with46 kgs within China and Taiwan in addition to 65 Kgs within The European countries. This indicates massive potential of future development, planning by means of recent international per capita consumption. (NPCF 2012)

Fig : Structure of Petrochemical industry (NPCF 2012)

Ethylene capability arrived at 3. 1 MMT within 2011 which is expected to accomplish 6. 5 MMT by means of 2016.Propylene capability arrived at 3. 9 MMT within 2011 which is expected to become 5. 3 MMT by means of 2016.Increasing demand of automobiles, Packaging, White good, Medicare, 16

Agriculture and Building and Structure is likely to stay solid. Petrochemical sector also has a huge significance in the development of economic climate with the country as well as the development in addition to advancement of manufacturing sector also. It offers the walls pertaining to create industries such as structures, pharmaceuticals, agriculture, fabrics and so on. (NPCF 2012)

Graph : Comparison of Demand (APIC, 2012)

The industry possesses massive unrealised potential. The industry as well as the government has to function and achieve the goals for the establishment of chemical sector.

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4. CONCLUSION The study conducted on petroleum industry and its impacts of Indian economy suggests that it is on the progression stage. Even though India depends 70 % of its need on import, the facilities and refining capabilities of India are high and is of world class standard. The reduced operational cost is an added advantage. India is gifted with immense potential including Manpower and high skilled labourers. The government is always in a supporting mode for this sector as they are in path of liberalization and globalization. Various statics shows that there is a steady increase in the production and consumption of fuel which is symbol of progress. All these factors uphold the fact that Petroleum industry has got a very bright future in India.

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5. REFERENCES

APIC (2012) Indian Petrochemical Industries

[online] available from

<

http://www.researchfindr.com/indian-petrochemical-industry> [27 February 2013] Business maps of India (n.d) Origin of India Petro chemical Industry [ online ] available from < http://business.mapsofindia.com/india-petroleum-industry/origin-ofindia-petrochemical.html> [ 21 February 2013] Chemtech (2010) Indian Petrochemical Industry [online] available from <

http://www.chemtech-online.com/events/chemtech/2010/01/indian-petrochemicalindustry.php> [ 22 February 2013] Fernandes P, Ignatius G. (2006) Role of India in Global economy ;The Economic times [Online] available from < http://articles.economictimes.indiatimes.com/200610-28/news/27444338_1_gdp-power-parity-gross-national-income> [ 25 February 2013] Ghosh .S, (2005) Future demand of petroleum products in India [online] available from < www.sciencedirect.com> [ 26 February 2013]
Indian Mirror (2010) Indian Automotive Industry

[online] available from <

http://www.indianmirror.com/indian-industries/automobile.html> [ 26 February 2013] NPCF (2012) Indian petrochemical Industry : Vital to economic growth [online] available from < http://www.ficci.com/sector/88/Project_docs/sector-profile-FICCIpetrochemical.pdf> [ 20 February ] Pairakh J, Purohit.p , Maithra . p (2005 ) Demand projections of petroleum products and Natural Gas in India [online] available from < [20

http://www.sciencedirect.com/science/article/pii/S0360544207000382#> February 2013] Samantha.A, (2010) Industry Research : Indian Petroleum Industry

[online ]

available from < http://www.scribd.com/doc/45640583/Indian-Petroleum-IndustryResearch> [ 26 February 2013]

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