Operational flexibility for Indian Refiners

7th December, 2016

PetroTech, New Delhi

Sanjiv Singh

Director (Refineries),

Indian Oil Corporation Ltd.

The Growing Prominence of Asian RefiningPlenary Session

Structure of the Presentation

Indian Refining Scenario

Challenges facing Indian Refining Sector

Technological Interventions

Conclusion

2

Indian Refineries

MUMBAI

(BPC 12.0)

(HPC 6.5)

MATHURA

(8.0)GUWAHATI

(1.0)BARAUNI

(6.0)

HALDIA

(7.5)

KOCHI

(9.5 )

KOYALI

(13.7)

DIGBOI

(0.65)

NARIMANAM

(1.0)

MANGLORE

(15)

PANIPAT

(15)

VISAKH

(8.3)

NUMALIGARH

(3.0)

BONGAIGAON

(2.35)

CHENNAI

(10.5)

JAMNAGAR

(RIL 62.0)

(ESSAR 20.0)

TATIPAKA

(0.07 )

PARADEEP

(15.0)

BHATINDA

(9.0)

BINA

(6.0)

4th largest in World

Avg Size : 200000 bpd

Refineries No. MMTPA

IOC Group 11 80.7BPC group 4 30.5HPC Group 3 23.8ONGC/MRPL 2 15.0RIL (Pvt.) 2 60.0ESSAR 1 20.0 Total 23 230.0

Economy of Scale Operations• Dismantling of APM to MDPM started in 1998.

• Phased Capacity Addition for PSU Refys to meet

– Product demand

– Product Quality Upgradation

– Bottom of the barrel upgradation

– Complexity Factor Enhancement

• Operating higher no. of units - higher Opex

• Strategy :

–Capacity augmentation of existing Refys

–New Refys with higher capacity & lesser no. of units

Indian Refineries 23 (PSU-16, PSU JV- 4 and Pvt - 3)

Very Small Refineries =< 3.0 MMTPA 6 (IOCL-Digboi, Guwahati, Bongaigaon

CPCL – Narimannan, NRL & ONGC – Tatipaka)

Medium Refys > 3.0 but < 9.0 MMTPA 6 (IOCL- Barauni, Haldia, Mathura, HPCL- Vizag, Mumbai, BORL)

Large Refineries > 9.0 but < 12.0 MMTPA 3 (BPC-Kochi, HMEL & CPCL-Manali)

Large Refineries > 12.0 MMTPA 8 (IOC- Gujarat, Panipat & Paradip, MRPL, BPC-Mumbai, RIL -2 & Essar)

Coastal Refineries 12

Coastal Refys having direct Crude SPM 5 (RIL-2, Essar, MRPL,KRL, Paradip)

Refys. with crude pipeline >=1000 km 7 (IOCL-Panipat, Mathura, Gujarat, Haldia, Barauni, HMEL & BORL)

5/32

11.30

14.00

11.80

12.20

6.50

10.50

10.00

5.405.70

8.00

5.886.63

7.708.40

10.40

8.10

7.80

5.97

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

0

100

200

300

400

500

600

700

NCImb/d

Refining Capacity & Complexity indicators

CDU capacity (mb/d) Nelson complexity index

All these refineries are lowcapacity & low complexitycompared to world avg.Further, Refineries in North Eastof India are very small capacity

Low Complexity Factor of many Operating Refineries

Need for Capacity Creep & enhancement of Complexity Factor

57%18%

18%

3% 4%

2014

Middle East

Africa

Latin America

North America

Others63%11%

11%

10%

5%

2040

India’s Refining capacity: 230 MMPTA (4.6 mb/d)

PSUs : 135 MMTPA (2.7 mb/d)

Pvt/JVC : 95 MMTPA (1.9 mb/d)

India’s Crude Import Dependency : ~ 81%

India’s Crude Oil Import

3.7 mb/d 7.2 mb/d

Source : India Energy Outlook WEO 2015

Present Policy provides freedom in Crude Import

Refining Sector - Crude Scenario

65.00

67.00

69.00

71.00

73.00

75.00

77.00

79.00

81.00

83.00

85.00

0

50

100

150

200

250

2010-11 2011-12 2012-13 2013-14 2014-15

%MM

TPA

Installed Capacity(MMTPA) Crude Imports(MMTPA)

Domestic Crude Production(MMTPA) Import dependency (%)

Based on consumption

Domestic crude accounted for only 17% of total refinery intake in 2015

-0.5

0

0.5

1

1.5

2

2.5

3

0 5 10 15 20 25 30 35 40 45

Sulf

ur

Co

nte

nt (

%)

API Gravity

India’s crude slate-2015

India Saudi Arabia Iraq Venezuela

Nigeria Kuwait UAE Iran

Angola Colombia Brazil Others

Note: Bubble size represents % Vol

Indian Refining Sector - Current Scenario

Figures as on 1st April of each year

Over the last decade, close to 70 refineries have closed globally, whereas India has grown at CAGR of 6% along with adoption of eco-friendly fuels

127 132149 149

178 185 193213 215 215

230

0

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

MM

T

Installed Refining Capacity (MMTPA)

2010

Nationwide

2017

Nationwide

2020

NationwideBS III

BS IV

BS VI

Refinery Utilization

Refining Sector - Performance

127141

151161

187196 204

219 222 223

80

100

120

140

160

180

200

220

240

MM

T

Refinery throughput (MMT)

76.473.6

70.7 69 67.865.7

63.2 62.4 61.5 62

50

55

60

65

70

75

80

85

90

MB

TU/b

bl/

NR

GF

Specific Energy consumption (Industry avg)

73.3 73.474

74.475

75.3

76.977.3

77.778.5

72

73

74

75

76

77

78

79

% o

f cr

ud

e p

roce

sse

d Distillate yield

9/32

Source: PPAC/IHS

India Crude Processing ProjectionNeed for Refining Capacity Expansion

230

344

329

348

381

345

478

458

505

0 100 200 300 400 500 600

Current Refining Capacity in India

OPEC World Demand Outlook 2015

IEA Energy Outlook, New Policy 2015

IEA Energy Outlook, Current Policy 2015

India Energy Report 2015

BP Energy Outlook 2015

2040

2030

2015

With growing MS & Diesel growth, India’s Refining Capacity to reach from current 230 MMTPA to about 350 MMTPA (2030) & about 500 MMTPA (2040).

Huge Demand Growth of Transportation Fuel

0

20

40

60

80

100

120

140

160

180

2011-12 2016-17 2021-22 2026-27 2031-32

1524

34

48

706578

104

133

168

MS

HSD

10%

7.1%

7.1%

7.9%3.8%

5.9%

5.1%

4.6%

Gasoline projected to grow faster than Diesel

Poses Challenges to meet growing Gasoline Demand

Diesel : MS : 4.3 3.2 3.0 2.8 2.4

Millio

n T

on

ne

s

11

• India Polymer consumption of 7.6 Kg / Capita far below world avg. 35.

• Polymer consumption accounted 7% CAGR during past 7 years

• Polymer Import tripled in past 7 years, growing @ 18% CAGR

5824 59776293

69707483

8491 87229367

13153

17256

11521275 2160 2500 2435

3180 3125 3737

5.1 5.25.4

5.96.2

7.0 7.1 7.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

0

4000

8000

12000

16000

20000

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2019-20 2023-24

*POLYMER SUPPLY DEMAND TREND IN INDIA, KTA

CAPACITY DEMAND IMPORTS EXPORTS kg / CAPITA

* : Includes LL+HD+LD+PP+PS+PVC+Ex-PS

India fastest growing Petchem Market

Key facts about India’s Refining Margin

• Refinery Margins improved owing to Crude Mix Optimisation, lesser price reduction of refined products vis-a-vis crude oil price and better refinery utilisation (108% in 2015-16).

• Despite increase in HS processing to 71%, Distillate Yield improved to ~ 80% due to improvements in Refining Processes and Technology.

• Indian Refiners moving towards more integrated and complex configuration considering volatile nature of Oil and Gas Market.

• Deregulation of MS and HSD.

• Seamless Integration of Supply Chain across Refinery and Petrochemicals to provide further margin improvement and flexibility.

Challenges for Indian Refiners

High Domestic Demand : highest demand growth

Quality upgradation projects : BS VI by 1st Apr 2020

Economy of Scale : Many refineries are old and small

Crude/Feedstock Flexibility : High dependence on imports ~90%

Maximise Value Addition : Cracks’ volatility & IMO “S” Spec.

Operational flexibility : POL demand fluctuation (SK, MS, HSD),

Integration with PetChem

Stricter environmental regulations : Reduced Emissions

BS VI Gasoline

Sulfur

10 ppm

Olefins

21/18 vol%

RON

91/95

Aromatics

35 vol%

BS VI Gasoline Challenges

Reformate

High Aromatics

FCC gasoline

High Sulfur, Olefins

Isomerate

Low RON

2000

1000

500

150 500

500

1000

1500

2000

2500

1999 2000 2005 2010

pp

m

Year

Sulfur in GasolinePre Bis 2000

BIS 2000

BS-II

BS-III

BS-IV

87

88 88

91 91

85

86

87

88

89

90

91

92

1999 2000 2003 2005 2010Year

RON of Gasoline

Pre BIS

BIS 2000

BS-II

BS-III

BS-IV

95

10

Octane boosting Solution

Meeting LPG demand with 100% 95 RON

Focus Areas for Indian Refiners

Increase in Refining Capacity

Upgradation & Expansion of Existing Refineries

Setting Up Grassroot Refineries

Improvement in Refinery Performance

Refinery Margin Improvement

Energy Efficiency Improvement

Plant Reliability & Maintenance

Operational Excellence

Ensuring Availability of Petroleum Products in India

– Supply Chain Optimisation

– BS-VI Quality Compliance Nationwide by 1.4.2020.

– Infrastructure Development

Technological Intervention

Refinery Configuration/ Complexity Factor Improvement to address

– Changing Feed Stocks : Input cost reduction

• Quality – 0API / Sulfur / Acidity

• Widening of crude basket

– Product Mix improvement : Value addition

• Growing demand with stringent product specs. (BS-VI by 2020)

• Shifting Product demand (From Diesel to Gasoline)

• Bio fuel options

– Upgradation of low value/surplus products

• Naphtha to Petrochemicals

• Black Oil to Distillates

Energy efficiency improvement by use of

– Energy efficient technologies/designs

– Energy efficient equipments

– Best operation and maintenance practices

Bottom of the barrel Upgradation

For further reduction/elimination of black Oil or PetCoke

– Residue ebullated bed /Slurry Hydrocracking

• Technology Selection linked with LSFO vs HSD maximisation

– Integration with Gasification

Heavy crude → Extra residue Current employed technologies in India: Coker - Low Cost major upgrading unit for Indian Refys

Low value PetCoke:Profitable with Crude < 70 USD/BBL

RFCC/INDMAX – Product flexibility with high CCR feed

Solvent deasphalting – Integration with Coker

Fixed/Moving Ebullated Slurry

Asphaltene, CCR ↑ ↑↑ ↑↑

Conversion (%) ↑ ↑↑ ↑↑↑

Status Mature Mature Under demonstration

Resid Hydrocracking

Potential Gasification Feeds & Products

Chemicals Production

GasificationPlant

Natural Gas

Refinery Gas

Vacuum Residue

Pitch

Coal

Pet Coke from Refinery Cokers

Bio Mass Fischer TropschReaction

Combined Cycle

CO2, N2, S

Steam

Electric Power

H2 CO Fertiliser ChemicalsMethanol Acetic Acid

Naphtha Jet DieselWax

Slag for Construction Material & Metal Recovery

Way Forward…

• Capacity Addition with flexible configuration

• Leverage strategic advantage of coastal locations

• Tighter project management for upcoming projects

• Port Infrastructure for additional imports

• Economies of scale for Cost competitiveness

• Gap in domestic petrochemical capacity provides

opportunity for integrated petrochemical complex

• Significant investment required in hydro-treating

capacities to meet planned cleaner fuel norms

• Bio fuels usage to increase

Thank You