Indian Oil’s $6.8 Billion Integration Plan to Boost World-Scale Operations

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Researched by Industrial Info Resources (Sugar Land, Texas). Indian Oil Corporation (Bombay, India), currently the country’s largest company by sales with a turnover of $41 billion for 2005, is targeting $61 billion in revenues by 2011/12. To reach this goal it is planning a corporate road map based on vertical integration going forwards into petrochemicals and backwards into exploration and oil production. The company will also diversify into the natural gas market and develop the globalization of its marketing operations. Once the current viability study has been complete, the implementation of the plan will take two to three years to implement.

The petrochemicals master plan will see $6.8 billion invested by the 2011 financial year creating standalone projects that will use product streams from refineries to create improved integration down the hydrocarbon chain. A world-scale linear alkyl benzene plant at the Gujarat refinery to feed high-value MTBE and butane-1 production and an integrated paraxylene/purified terephthalic acid plant at Panipat are already in operation, and a naphtha cracker with downstream polymer units is scheduled for commissioning at Panipat in 2009. A similar refinery-petrochemicals complex is planned at Paradip on India’s east coast, which will further strengthen the company’s presence in the sector.

With an existing refinery at Haldia, IOC is investing $35 million to take a stake in Haldia Petrochemicals and has signed an agreement with the West Bengal government for developing a petroleum, chemicals and petrochemicals investment region at Haldia.

IOC is already marketing 1.43 million tons of gas per annum. To boost its business in this sector it has signed a Memorandum of Understanding (MoU) with Iran to import 1.75 million tons of LNG per annum from 2009 onwards. IOC has also proposed a partnership with Petropars, a subsidiary of National Iranian Oil Company, to jointly develop gas blocks in the North Pars fields in Iran.

In order to reach the status of a transnational energy major, IOC has set up subsidiaries in Sri Lanka, Mauritius and the UAE, and is scouting for new opportunities in energy markets in Asia and Africa. Opportunities to acquire a suitable medium-sized E&P (exploration and production) company are being explored. This acquisition would allow IOC to quickly consolidate its upstream portfolio.

IOC (ranked 153 in the 2006 Fortune 500) and its subsidiaries have 47% of the petroleum products domestic market, 41% national refining capacity, and 74% petroleum products pipeline capacity in India. IOC’s ten refineries have a combined refining capacity of 1.1 million bpd. In the period 200 to 2007, the company will have invested $5.5 billion in integration and diversification projects in addition to the refining and pipeline capacity augmentation, product quality upgrades, and the expansion of marketing infrastructure.

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