business growth plans of ongc group
DESCRIPTION
BUSINESS GROWTH PLANS Of ONGC Group. Presentation to Hon’ble Secretary (P&NG) 30.07.2004. Benchmarking with global players. ONGC – Power Background. Already Producing = 1000 MW Gas Based Part Sent to Grid From 1984 onwards. ONGC’s Gas Business - 15% - PowerPoint PPT PresentationTRANSCRIPT
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BUSINESS GROWTH PLANSOf
ONGC Group
Presentation toHon’ble Secretary (P&NG)
30.07.2004
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Benchmarking with global players
Upstream Midstream Downstream
E&P LNG NG Refining Power Petchem
BP
Shell
Exxon-Mobil
(limited)
ONGC (limited) (inhouse) (Limited)
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ONGC – Power Background
Already Producing = 1000 MW
Gas Based
Part Sent to Grid
From 1984 onwards
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ONGC’s Gas Business - 15%
ONGC’s Value Added Business - 15%
ONGC’s Refining - 20%
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Chemical / Petrochemical Business
Naphtha (Paraffinic Aromatics)
C2-C3 URAN (Supplies to IPCL)
Rich Gas (Supplies to Gail)
Gas Processing Uran Hazira
LPG Since 1981
NGI
Kerosene
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Objectives of Integration
To capture higher values in Product chain
To provide more stable revenue / margins
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Benchmarking with global players
Upstream Midstream Downstream
E&P LNG NG Refining Power Petchem
BP
Shell
Exxon-Mobil
(limited)
ONGC
(limited) (inhouse) (Limited)
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Strategy
SynergisticGroup Level
Integration Global Level
Based on
• existing resources
•Existing experiences/
relationships
-Nationally
- internationally
Based On
• proven global directions
• in line with market
requirements
• if required in association with top global players
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Leading to
Being the lowest cost producer
• For atleast seven years
Being one of the top market player in various segments
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A World of OpportunitiesPower
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Relative Power Consumption
Country Per Capita Consumption (KWH)
US 8747
Australia 6606
China 939
Global Average 768
India 401
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Power SectorPresent Demand – Supply
Scenario
All in MW
Country / State
Demand Supply / Generation (Gas based
%)
Surplus (Deficit)
All India 109000 96900 (10.7%)
(13100)
Karnataka 6440 4140 (Nil) (2300)
Tamil Nadu 8000 7200 (6%) (800)
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Projected Power Scenario Tamil Nadu
Current Deficit
Deficit 2006-2007
Deficit 2014-2015
800 2000 7800
Key Drivers: -
• Rapid industrialization in couple of centres e.g. Coimbatore, Guddalore.
• No new generation projects on the anvil.
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Central Electricity Act 2003
• Separation of Generation, Transmission and Distribution
• Power producers can market directly on Open Access
• Fiscal incentives for Mega power Plant (> 1000 MW)
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A World of OpportunitiesPetrochemicals
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Petrochemicals – Per Capita Consumption
Country KGs
Taiwan 99
US 90
S. Korea 69
Singapore 64
Japan 116
UK 80
Malaysia 49
China 10
India 3.8
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Domestic – Production / Consumption Present Scenario
Capacity Production
Consumption
Polymers 4.20 3.95 4.06
Synthetic Fibre
2.00 1.62 1.67
Fibre Intermediate
2.35 2.38 2.41
Surfactant 0.31 0.35 0.32
Synthetic Rubber
0.11 0.06 0.12
Total 6.62 6.00 6.17
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CARG %
06-07/00-01 11-12/06/07
LLD/HDPE 14 12
PVC 10 10
PP 18 13
PS 15 15
PX 8 8
LAB 8 6
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Demand Projection of Major Commodity Polymers - INDIA
1176 1025
25862767
4557
6330
0
1000
2000
3000
4000
5000
6000
7000
2001-02 2006-07 2011-12LLD/HDPE PP
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PBDIT as % of operating income
Company 97-98 98-99 99-00 00-01 01-02 2-03
Crude Refining Companies
1 Indian Oil 4.92% 6.28% 6.61% 4.22% 6.66% 8.15%
2 BPCL 10.21%
7.21% 5.57% 4.09% 5.49% 5.10%
3 HPCL 4.47% 3.78% 5.38% 7.15% 8.89% 5.79%
4 Reliance Petroleum
10.77%
7.77%
Petrochemical Companies
1 Reliance 21.74%
21.39%
18.18%
19.16%
18.05%
2 IPCL 26.78%
24.45%
23.48%
15.73%
23.61%
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A World of synergiesONGC Group
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A World of Synergies
ONGC• Hazira (around 1.4 MMTpa of high aromatic naphtha)• Uran (around 300,000 Mtpa of high grade paraffinic naphtha)Petronet LNG• LNG Terminal• Extraction of C2-C3 (10 MMTpa) and further integration• Dahej SEZMRPL• Highly paraffinic naphtha (500,00 Mtpa)• Pleating in aromatics• Easily upgradeable for higher valuechain• High bottomsOVL Sudan operations• Nile blend based MRPL kerosene – a gold mine for LAB• Precursors for additional projects in Sudan and neighbouring
countries
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A World of Synergies
Mangalore Port All weather Port with 15 Meter Draft & Break Water MRPL already has two dedicated jetties One more jetty for LNG imports committed Plant Locations in / around Port Area committed
MHB Pipeline Possibility of connecting west-coast to east – coast
exists, catering to growing market demand of all southern states
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Operationalisation of Opportunities
(through synergistic integration) At two base hubs Mangalore Dahej
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Base
Dahej
Mangalore
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Composition of LNG
Lean C1 Power / Fertilizer
Rich C1 Power / Fertilizer
C2 Petrochem
C3 Petrochem / LPG
C4+ LPG/petrochem
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ONGC Business Growth Plan at Dahej HUB
1. C2/C3 & LPG extraction project2. Basic Petrochemical Complex3. 1000 MW Mega power plant (C1)4. Dahej Special Economic Zone Development
project
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C2-C3 Extraction – linked to PLL’s LNG terminal at Dahej
LNG being in very cold liquid state (-160°C), to save energy and attendant cost thereof, it is desirable to extract C2, C3 & C4+ components in liquid state itself
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C2-C3 & LPG extraction at Dahej Design
Capacity & Product quantities
Feed capacity LNG Products 10.0 MMTpa
1. LPG 634 KTPa
2. C2-C3 1035 KTpa
3. Lean LNG 8.2 MMTPA
4. No. of stream days / pa 330
5. No. of trains Two
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C2-C3 & LPG extraction at DahejProject economics
PARAMETER Capacity 10.0 MMTPA
CAPEX (Rs Crores) 1127
IRR – Before Tax - After Tax
15.4%12.0 + %
Break Even Point 38.6%
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Financial Appraisals by SBI Caps
IRR Post Tax 24.85% Increase in Project cost (10%) 23.01% Increase in FOB Cost of LNG
o by 10 cents 23.18%o by 30 cents 19.65%
Increase in OPEX by 5% 23.5% Increase in C2C3 price to Rs. 10500/MT
37.64% Max Range in all scenarios 14.41% to
37.64%
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Basic petrochemical Complex at Dahej
Project Economics
CAPEX (Rs Crores) 8933.40
IRR – On Total Capital
Before Tax 17.5%
After Tax 16.1%
IRR – On total Equity
Before Tax 22.8%
After Tax 21.0%
Payback period on Total Capital 5.1 yrs
Break Even point 36.4%
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Stage wise – Value addition
Stage Basic cost of Prodn
Addl. Con. Cost
Total Cost
Avg. Sale Price
Gross VA%
1 C2-C3 8000 N.A. 8000 ~ 8000 Nil NA
2 Ethylene Propylene
- 7000 15000 20000 5000 33%
3 Polymers (AV)
- 6000 21000 ~ 41000
20000
95%
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Dahej Special Economic Zone Project
Govt. of Gujarat already promulgated an ordinance. All projects to be located within Dahej SEZ. Benefits expected to ONGC: Land at reasonable and competitive rate Single Window clearance Significant Tax / Fiscal benefits Exemption of Sales Tax and Other Taxes
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Marketing Plan envisaged from SEZ
Approx. 50% of Petrochemicals to be exported through tie-up arrangement with technology provider.
Approx. 50% to entrepreneur within SEZ for manufacture of Petrochemical products for export market.
Balance, if any, for domestic market
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1000 MW Power Plant at Dahej
PLANT CAPACITY 1000 MW
FEED LNG REQUIVREMENT (C1) 1 MMTPA
PLANT CAPACITY – PHASE-I 300 MW
INTERNAL CONSUMTION 144 MW
PROJECT COST (Rs Cr) 3200
Projected demand-supply gap 2006-07
5000 MW
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Base
- Dahej
- Mangalore
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Identified opportunities
1. LNG based chain
2. MRPL & ONGC associated projects
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Base
Mangalore
LNG Based Chain
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Why Mangalore?
The Port All weather port with 15 meter Draft & Break water Suitable location for LNG jetty available Land and RoW available as required ONGC already own two Oil berths New Mangalore Port Trust is supportive
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Why Mangalore?
The Special Economic Zone (SEZ)
Exempt from Duties and Taxes : savings on CAPEX
Single-window clearance for all requirements
Land available for downstream plants
Karnataka Government is supportive
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Why Mangalore?Interlard
• No Petrochemical manufacturing unit• No immediate competition for Gas• 3 Approved Power projects (Mangalore, Ennore, Bidadi) to be assigned• Demand for Power, Fuel & Feedstock, CNG• ONGC established in Mangalore
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LNG Based Business Plan at Mangalore
LNG SOURCING AND REGASSIFICATION PLANT Initial discussion held with M/s Ras Gas, LNG supplier to PLL. Ras Gas team interacted with Karnataka Govt. officials to assess demand. Initial discussion with XXX held. Demand assessment from MRPL, MCF, GMB, PPN power plants consolidated. estimated phased requirement of LNG:
5 MMTPA Q1/2008 10 MMTPA Q4/2008
• NMPT agreed to allocate a jetty and land to ONGC for degasification plant, C2-C3, power plant.• Estimated cost of the plant Rs 5000 cr.
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LNG Based Business Plan at Mangalore
C2/C3 recovery and Basic Petrochemical Complex
Plant capacity similar to Dahej i.e. C2/C3 and LPG recovery plant of 2 x 5 MMTPA capacity
Above C2/C3 & Naphtha from MRPL to be used as feed for petrochemical complex.
Estimated cost: C2,/C3 & LPG recovery Rs 1100 cr. Petrochemical complex Rs 8933 cr.
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Power Plants
In
Southern India
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LNG Based Business Plan at Mangalore
1445 MW LNG Based Power Plant at Mangalore
Peak Power Plant deficit in Karnataka 2000 MW No gas based power plant in Karnataka Karnataka govt. proposal to set up 1500 MW imported coal based power plant at Mangalore could not be firmed up. 1445 MW power plant proposed in Mangalore SEX area which will consume 1.5 MMTPA RLNG. Estimated cost Rs. 4624 cr.
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LNG Based Business Plan at Mangalore
Pipeline transportation of RLNG
Merchant sale of RLNG proposed to various consumers enroute:
Mangalore – Bangalore – Bidadi – Ennore Mangalore – Kochi Mangalore – Goa
• Estimated cost Rs. 2000 Cr.
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LNG Based Business Plan at Mangalore
1100 MW power plant at Ennore
Govt. of Tamil Nadu earlier invitation to private sector for setting up 1100 MW power plant at Ennore could not fructify. Govt. of Tamil Nadu keen to assign to project to ONGC & agreed to extend payment security mechanism for power sales. Power plant to be located within Ennore SEZ area Estimated Cost Rs. 3500 cr.
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Alternative Possibility of LNGTerminal At Ennore
If Sufficient LNG from different sources is available, a separate LNG Re-gasification terminal at East Cost of India (possibly at Ennore) with SEZ can be considered.
(Capacity : around 5 MMTPA)
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Cost of Power with LNG Based Plant at Ennore with LNG Supply
from Mangalore
Parameters
JCC (sbbl) 18.00 21.00 24.00
R-LNG Price ($/MMBTU) 3.10 3.61 4.00
Pipeline Charges ($/MMBTU) 0.25 0.25 0.25
Delivered Price ($/MMBTU) 3.35 3.86 4.25
Fixed Cost of Power (Rs./Kwh) 0.61 0.61 0.61
Mariable Cost of Power (Rs./Kwh)
1.13 1.30 1.44
Total Cost of Power (Rs./Kwh) 1.74 1.91 2.05
Levelized Cost of Power (Rs./Kwh)
1.83 2.01 2.15
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LNG Based Business Plan at Mangalore
Mangalore SEZ Development Project• Govt. of Karnataka already notified the area in
and around Mangalore• Govt. of Karnataka also agreed for ONGC to be
co-promoter of SEZ• All ONGC projects proposed to be located within
SEZ to avail various tax and fiscal benefits.• MOU with govt. of Karnataka in this regard is
finalized.
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Additional petrochemical units at Mangalore linked to MRPL and
OVL’s Sudan crude
Paraffinic / LAB Complex
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Background -1
MRPL feed crude mix leads to unique opportunity in Kerosene – very rich in Normal paraffins.
ONGC Nile Blend – 40% NP versus average 18 to 20%
ONGC Bombay High – 23 to 25% NP. Iran mix – 25% NP.Unique Global advantage on production cost - To start with -
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High Value Addition
Price (US $ / MT)
Approx. Conversion Costs
(US$ / MT)
Kerosene 170
Normal Paraffins
480 – 550 75*
LAB 830-850 110** Including catalysts amortized
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Preliminary Budget Economics
Year 2004
Total Investment (Rs. Crores)
1400
Kerosene Price (Rs./MT) 11,094
LAB Selling Price (Rs./MT) 46,000
HNP Selling Price (Rs./MT) 27,600
Gross Margin (Rs. Crores) 364.71
Simple Payback period (years)
~3.84
IRR 14.8
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Further petrochemical units linked to MRPL. MRPL fuel upgradation (Euro-III/IV) and ONGC – Hazira
Naphtha
Aromatic Complex
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Total Estimated Aromatics at MRPL
Feed to reformer 22500 bpd (at full capacity) Aromatic Product from reformer (81 vol%)
18250 bpd. This through available technologies, using A7
and A9 aromatics, ,can produce approximately 0.55 MMTPA of pX + Bz.
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Total estimated aromatics at ONGC – Hazira
Heavy Aromatic naphtha of 11000 bpd (440 KMT pa) available
Highly competitive markets for Naphtha – low margins at present.
Can produce 240000 Mtpa of Px and 70000 Mtpa of Bz.
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Additional Aromatics
Opportunities Emerge
While Meeting Euro 3 and 4 Norms
At MRPL Mangalore
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Final Product Pattern
Para Xylene 1.03 MMTpa
Benzene 0.27 MMTpa
Total Aromatics 1.30 MMTpa
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Preliminary Budget Economics
Case1 Case2 Case3 Case4
CAPEX (Rs. Crores) 0.000 790 1801 2686
Gross Margin (Rs. Crores)
1255 1673 2312 2728
GRM ($ bbl) 3.33 4.44 6.13 7.23
IRR% - 21.5 22.4 21
Simple Payback Period yrs
- 2.5 2.5 2.6
Case1: 11 MMTPA; ISOM & Mixed Xylenes in placeCase2: 11 MMTPA + PFCCUCase3: 11 MMTPA + Aromatic complexCase4: 11 MMTPA + PFCCU + Aromatic Complex