In today’s fast changing world energy landscape, energy has become a complex challenge, with strategic, economic and environmental dimensions. Global trade and open markets, combined with capital investment to produce and deliver energy and growing demand has catalyzed Growth in energy production worldwide. According to International Energy Agency (IEA) projections, the world could potentially consume around 40% more energy in 2030 than we consume today.

With its rapidly-growing population, rising demand for energy and potential for large hydrocarbon reserves, India offers a remarkable opportunity for the oil and gas business. India's economy is expanding at a rate second only to China's among the world's major developing countries. The growing economy and population are expected to drive up energy demand by almost 4% per annum, more than doubling energy consumption over the next 20 years. Like many big, growing countries, securing enough sources of energy to meet this growth is the challenge now facing India. And this challenge presents immense opportunities for the energy sector in India.

In transforming challenges into opportunities, IndianOil – nation’s flagship energy company - is focusing on accelerating the execution of its growth strategy while continuing to build on the strengths to be future ready. We at IndianOil recognize that in our pursuit of a vital and finite commodity – oil and gas – we need new and better technology, realign to geo-political changes, get on board qualified and trained manpower, adhere to stringent environment protection laws and face the uncertainties of fluid economics. One thing is certain: the Energy industry must be proactive in anticipating and adapting to change.

To take on the energy challenge, IndianOil’s business strategy straddles the entire hydrocarbon value chain through integration and diversification initiatives. Despite the turmoil in the global economy in the recent past, IndianOil strode ahead as it consolidated its established business and entered into new ones.

Responding to the energy challenge, IndianOil Refineries have also adopted several new innovative systems, strategies and technologies aimed at improving our refinery margins and profitability. Practices like stream sharing, processing cheaper or indigenous crude oil varieties, employing new operational strategies and increasing production of value added products are being pursued aggressively.  Aiming for a new level of operational excellence, IndianOil is building up adequate refining capacity by setting up new refineries and capacity expansions, implementing the emerging technologies to meet the predominant demand for middle distillates and to improve the quality of India's petroleum products to make them environment-friendly and globally competitive.

The thrust on refining today is maximizing value addition from affordable feedstock processing.  With margins under pressure, the way forward is to integrate refining with value-added products such as petrochemicals, and invest in methods to improve distillate yields. Today production of high value products like propylene, ethylene, LAB feedstock or integration with aromatic and/or olefin complex in order to add more value to the refining operations has assumed major significance.  The complexity of our refineries is therefore expected to increase further.

In the days ahead the Refinery processing schemes and the addition of new facilities in existing refineries would be governed by economies of scale and the integration of petrochemicals as well as power generation to maximize profitability.

IndianOil’s Refineries Division displayed its finest achievement by clocking the highest-ever crude oil throughput of 55.6 MMT during the year 2011-12, surpassing the previous best of 53.0 MMT achieved during 2010-11. The overall capacity utilization was 102.7%. With the sustained focus on customized solutions at each refinery to expand the operating cycle, the Refineries Division has recorded a capacity utilization of over 100% for the fifth year in a row. Improving profitability in the challenging environment remained at the top of the agenda for IndianOil Refineries. Efforts to improve profitability got a fillip with improved distillate yield of 77.8%wt from IndianOil Refineries, surpassing the previous best of 75.3 %wt in 2010-11.

Relentless efforts of IndianOil Refineries towards Energy Conservation resulted in reduction of overall specific energy consumption to 57 MBTU/BBL/NRGF (MBN) during 2011-12 against the earlier lowest of 59 in 2010-11. This has been achieved through implementation of various energy saving schemes and close monitoring of energy parameters.

IndianOil Refineries have adopted various measures for control of gaseous emissions. These include use of low-sulphur fuel oil, desulphurisation of refinery fuel gas, tall stacks for better dispersion of flue gases, advanced process control systems; and energy conservation measures to reduce fuel consumption leading to lower CO2 emissions. Water conservation is another important area being vigorously taken up in refineries through re-use of treated water and maximum use of air in cooling systems instead of water, rain water harvesting and zero discharge thereby enabling a water neutral approach in our refineries.

In the quest to reduce Green House Gas emissions and reap the benefits of carbon trading the 5th CDM project pertaining to Flare Gas Recovery System at Guwahati Refinery was registered with UNFCCC. The total CER of the five CDM projects is to the tune of 60000 – a first for the refining sector in the country. Also all IndianOil Refineries are now accredited with ISO 14064 for assessing the corporate carbon footprint. These are pioneering efforts in the refining sector in India.

In pursuit of adding value to profitability through improved Gross Refinery Margins of refineries, profitability improvement studies were carried out through special taskforces at Gujarat, Panipat, Haldia, Mathura and Barauni Refineries recently. The in-house multi-unit army of IndianOil engineers has identified potential benefit equivalent to 0.8 $/bbl, which are under implementation. Similar studies are being carried out at other refineries also.

As IndianOil surges ahead, we are constantly evaluating our businesses for their growth and profit potential besides stretching the existing assets to the fullest, low cost modifications and revamps at our refineries. This will ensure energy efficiency and greater refinery margins. IndianOil’s strategy of achieving capacity augmentation through de-bottlenecking and expansion plans at existing refineries has resulted in significant cost savings vis-à-vis building grassroots capacities.

We have entered an era of processing heavier and cheaper crudes to meet increasing demands for higher quality transportation fuels. However, these heavier crudes present many new operational challenges. Therefore, as feed stocks to refineries change, there must be an accompanying change in refinery technology. This means a movement from conventional means of refining heavy feed stocks to more innovative processes that will coax the last drops of liquid fuels from the feedstock.

In the days ahead, investment in new technologies and heavy crude processing facilities will help our refineries sustain and build competitive positioning. Key emerging and nascent technologies including plant virtualisation, enabling 3D modelling of planned facilities; industrial wireless applications; predictive analytics, equipment health monitoring; and visualisation, enabling collaborative processes and centralized interactive control rooms would be giving shape to the refineries of the future.

Operational excellence – now a prerequisite for success in refining – requires fast, fact based decision making in a complex environment, real-time monitoring of operational performance, and integrated operational performance management systems.

The Refining Challenge we face in the changing energy landscape include availability of feedstocks,  Product mix variation and Changing Patterns,  Environmental Regulations, efficiency Improvement for improving Gross Refinery Margin and Funding for New Projects. The strength of IndianOil springs from its experience of operating the largest number of Refineries in India and adapting to a variety of refining processes along the way. IndianOil has continued to add new process technologies from internationally reputed licensors to improve refinery configuration for enhanced performance of our refineries.

It is a matter of great pride that IndianOil has joined the league of global technology providers with the selection of its in-house developed INDMAX technology (for maximising LPG yield) for the 4 MMTPA Fluidised Catalytic Cracking (FCC) unit at the upcoming refinery at Paradip, as well as for the FCC unit coming up at Bongaigaon Refinery.

IndianOil believes in constantly harnessing innovation in striving to bring new technologies to the forefront of refinery operations. From developing new and improved processes to adapting time-tested global practices, we are at the forefront of exploring newer ways for achieving high performance.

All out efforts are now directed at realizing IndianOil’s big dream of the commissioning of the 15 MMTPA Paradip Refinery which is designed as one of the world’s most technologically advanced petroleum refinery complex, with a  Nelson Complexity Index of 11.3. The refinery will be equipped to process a broad basket of crude oils, including cheaper, high sulphur and heavy grades and is configured to perform with high energy efficiency. The investment of about Rs 30,000 crore for the Paradip Refinery Project is so far the highest at one location for a single project in the country. With this upcoming greenfield refinery at Paradip and the brownfield expansions, our aim is to make India a refining hub. We aspire to take our refining capacity beyond 100 MMTPA by 2021-22 and achieve a turnover beyond Rs. 7,00,000 crores (USD 158 billion) by 2021-22.

In the days ahead, IndianOil will continue to be India’s largest Refiner with capacity expansion projects underway to increase refining capacity of Gujarat Refinery to 18 MMTPA, Mathura Refinery to 11 MMTPA and Panipat Refinery to 18 MMTPA. Other important projects underway include the Capacity Revamp at FCCU at Mathura Refinery, CDSP (Coke Drum System Package) project at Guwahati Refinery and Butadiene Extraction Unit at Panipat while new projects approved for implementation include Butene-1 at Panipat Naphtha Cracker Complex, among others.

India is amongst the fastest growing petrochemicals markets in the world. Taking this into consideration and to enhance its downstream integration, IndianOil is focusing on increasing its presence in the domestic petrochemicals sector besides the overseas markets through systematic expansion of customer base and innovative supply logistics.

Petrochemicals have been identified as a prime driver of future growth by IndianOil. The Corporation is envisaging an investment of Rs 30,000 crore in the petrochemicals business in the next few years. These projects will utilise product streams from the existing refineries of IndianOil, thereby achieving better exploitation of the hydrocarbon value chain.

IndianOil made its big-ticket entry into petrochemicals with the commissioning of the country’s largest Linear Alkyl Benzene (LAB) plant at Gujarat Refinery in August 2004. It is also the largest grassroots single train Kerosene-to-LAB unit in the world, with an installed capacity of 1,20,000 metric tonnes per annum (MTPA). Currently, two grades of LAB – high molecular weight and low molecular weight – are being produced for manufacture of environment friendly biodegradable detergents. The quality of the LAB produced here has found wide acceptance in the domestic and overseas markets.

IndianOil has also set up an integrated Paraxylene/Purified Terephthalic Acid (PX/PTA) plant at Panipat. The most technologically advanced plant in the country, the PX/PTA plant marks IndianOil’s major step towards forward integration in the hydrocarbon value chain by manufacturing Paraxylene (PX) from captive Naphtha and thereafter, converting it into Purified Terephthalic Acid (PTA).

The world-class Naphtha Cracker at Panipat, built at a cost of Rs 14,400 crore, is the largest operating cracker capacity in India. The largest single train Naphtha Cracker Unit is designed to produce 800 KTA of Ethylene and 665 KTA of Propylene, which will act as feed for downstream polymer units.  The naphtha is being sourced from IndianOil’s Refinery in western India and Panipat and Mathura Refineries in north.

Growth and consolidation marked the Petrochemicals domain in the year gone registering highest ever yearly PTA production of 555 TMT as against the previous best of 531 TMT in 2009-10. The PX complex operated more than design capacity to 115% on sustained basis and achieved annual PX production of 390 TMT against the design of 364 TMT.

Heralding a new chapter in IndianOil’s foray in the field of Polymers and Glycols, the last FY witnessed Naphtha Cracker Unit (NCU) operating steadily while the Polymer units as well as the MEG plant could demonstrate operation at or above design capacity.

On the polymer front, a total of 43 grades were produced with 11 new grades launched in all the three polymer units which include niche grades like Fiber and Filament grade in Polypropylene unit, Monofilament grade in High Density Polyethylene Unit and Tarpaulin grade in Swing Unit. All these grades received tremendous market acceptability boosting IndianOil’s market share.

All these initiatives are designed to catapult IndianOil among the top three petrochemicals players in Southeast Asia in the long term.

In the direction of alternate energy resources IndianOil has also successfully installed and commissioned a Wind Power project of 21 MW capacities in Kutch district of Gujarat this year to mark the beginning of renewable energy generation by the corporation. This project will reduce CO2 emissions to the extent of 34,700 MT/Yr.  Further, exploring the frontiers of nuclear energy, IndianOil has signed a MoU with the Nuclear Power Corporation of India Ltd. (NPCIL), for investing in the nuclear energy sector in the country. IndianOil has also successfully commissioned a 5 MW Solar Power Station in Rajasthan.

On the CSR front, as a constructive partner in the communities in which it operates, IndianOil has been taking concrete action to realize its social responsibility objectives, thereby building value for its shareholders and customers. The Corporation respects human rights, values its employees, and invests in innovative technologies and solutions for sustainable energy flow and economic growth. In the past five decades, IndianOil has supported innumerable social and community initiatives in India. Touching the lives of millions of people positively by supporting environmental and health-care projects and social, cultural and educational programmes.

Every year, IndianOil sets aside a fixed portion of its profits for spreading smiles in millions of lives across the country through a comprehensive community welfare and development programme. About one-fourth of the community development funds are spent on the welfare of Scheduled Caste and Scheduled Tribe beneficiaries.

As part of its environment-protection initiatives, IndianOil has invested close to Rs. 20,000 crore in state-of-the-art technologies at its refineries for production of green fuels meeting global standards. To further reduce dependence on precious petroleum products and to secure the nation’s energy security, the Corporation is now in the process of commercializing various options in alternative fuels such as ethanol-blended petrol, biodiesel, Hydrogen and Hydrogen-CNG as well as taking initiatives in solar and wind energies.

With safety, health and environment protection high on its corporate agenda, IndianOil is committed to conducting business with a strong environment conscience, so as to ensure sustainable development, safe work places and enrichment of the quality of life of its employees, customers and the community. IndianOil is also committed to the Global Compact Programme of the United Nations and endeavours to abide by the 10 principles of the programme, some of which are already part of the Corporation’s Vision and Mission statements. It is the firm resolve of IndianOil People to move beyond business, touch every heart and fuel a billion dreams.

Certainly, there is no shortage of issues facing our industry. We not only have to continue to plan and invest for the long-term… we also have to continue to provide energy for today… responsibly, reliably and safely. We at IndianOil firmly believe that we can turn the uncertainties surrounding the challenges of market stability, security, sustainability, technology and investment into opportunities in the days ahead.

Change has become the norm for the changing energy landscape which is moving from being a ‘hydrocarbon’ landscape to a ‘new-energy’ landscape.   We, therefore need to focus on strengthening import/export infrastructure; enhancing scale of operations; upgrading processing facilities; implementing robust environmental management; strengthening marketing and distribution infrastructure and promoting brands; entering into strategic alliances; venturing into other areas of the energy value chain for optimising the risk-return profile and organizational climate change to respond to the new challenges and opportunities in the deregulated environment.

In the backdrop of the uncertainties, challenges and opportunities of the changing energy landscape we envision a future where IndianOil will be a globally admired energy leader, touching the lives of billions around the world.