“emergence of china and india”

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A

DOCUMENTARY REPORT

ON

EMERGENCE OF CHINA AND INDIA

PRESENTED TO

INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT (I2IM)

CONSITUENT OF CHAROTAR UNIVSRSITY OF SCINCE AND TECHNOLOGY (CHARUSAT)

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF

SEMINAR ON CONTEMPORARY ISSUES 1

OF

SEMESTER- I

MBA PROGRAMME (2009-11)

PRESENTED BY

HARSH PATEL

1ST SEMESTER, MBA

(09/MBA/29)

DECLARATION

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I, Harsh V Patel, hereby declare that the report on EMERGANCE OF INDIA

AND CHINA PETROLEUM INDUSTRY is a result of my own work and my

indebtedness to other work publication, if any, have been duly acknowledged.

Place: Changa ( )

Date: 18/12/ 2009. HARSH V. PATEL

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TABLE OF CONTENTS

Sr. NO. PARTICULAR Page No.1 Introduction 42 Petroleum products 53 Economic Profile : India And China Snapshot 84 Opportunities and Growth of Indian and

China Petrochemical Industry10

5 Drive for Growth 116 Plan 127 Conclusion 13

8 Bibliography 14

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Introduction

Indian industry is at present progressing at a rapid pace but seen from ahistorical perspective it is regaining a position in the world, which it had held in theeighteenth century when it supplied cotton textiles in abundant measure to manycountries. Under British colonial rule it lost this pride of place and after gainingindependence it made valiant attempts to recover its due position in the world in thisrespect. But as will be explained later on, Jawaharlal Nehrus industrial policy wasvery encouraging in the short run but restrictive in the long run. In the 1960s and1970s India experienced a long period of industrial recession and stagnation before itsdevelopment was speeded up once more in the 1980s. The economic reforms of 1991then added more vigour to Indias industrialization, but it is only in recent years thatIndia has made a mark in a rapidly growing world economy. Unfortunately, the recent

period of globalization has also led to financial excesses, which have now engulfedthe world in a crisis, which seems to attain the dimensions of the Great Depression ofthe 1930s. The impact of this is discussed in this report.

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Petroleum productsPetroleum products comprise refinery gas, ethane, LPG, aviation gasoline,

motor gasoline, jet fuels, kerosene, gas/diesel oil, heavy fuel oil, naphtha, white spirit,

lubricants, bitumen, paraffin waxes, petroleum coke and other petroleum products.Petroleum products are any oil-based products which can be obtained by distillationand are normally used outside the refining industry. The exception to this are thosefinished products which are classified as refinery feedstocks above. Production of the

petroleum products shows gross refinery output for each product. Refinery fuel (row petroleum refineries, under energy sector) represents consumption of petroleumproducts, both intermediate and finished, within refineries, e.g. for heating, lighting,traction, etc

Aviation Gasoline

Aviation gasoline is motor spirit prepared especially for aviation pistonengines, with an octane number suited to the engine, a freezing point of -60 C, and adistillation range usually within the limits of 30 C and 180 C.

Gas Diesel Oil/(Distillate Fuel Oil)

Gas/diesel oil includes heavy gas oils. Gas oils are obtained from the lowestfraction from atmospheric distillation of crude oil, while heavy gas oils are obtained

by vacuum redistillation of the residual from atmospheric distillation. Gas/diesel oildistills between 180 C and 380 C. Several grades are available depending on uses:diesel oil for diesel compression ignition (cars, trucks, marine, etc.), light heating oil

for industrial and commercial uses, and other gas oil including heavy gas oils whichdistil between 380 C and 540 C and which are used as petrochemical feedstocks.

Heavy Fuel Oil Residual

This heading defines oils that make up the distillation residue. It comprises allresidual fuel oils (including those obtained by blending). Its kinematic viscosity isabove 10 cST at 80 C. The flash point is always above 50 C and the density is alwaysmore than 900 kg/l.

KeroseneKerosene comprises refined petroleum distillate intermediate in volatility

between gasoline and gas/diesel oil. It is a medium oil distilling between 150 C and300 C.

Jet Fuel

This category comprises both gasoline and kerosene type jet fuels meetingspecifications for use in aviation turbine power units.

Gasoline type jet fuel- This includes all light hydrocarbon oils for use in aviationturbine power units. They distill between 100 C and 250 C. It is obtained by blendingkerosenes and gasoline or naphthas in such a way that the aromatic content does notexceed 25 per cent in volume, and the vapour pressure is between 13.7 kPa and 20.6

kPa. Additives can be included to improve fuel stability and combustibility. Kerosene type jet fuel- This is medium distillate used for aviation turbine powerunits. It has the same distillation characteristics and flash point as kerosene (between

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150 C and 300 C but not generally above 250 C). In addition, it has particularspecifications (such as freezing point) which are established by the International AirTransport Association (IATA).

LPG

These are the light hydrocarbons fraction of the paraffin series, derived fromrefinery processes, crude oil stabilisation plants and natural gas processing plantscomprising propane (C3H8) and butane (C4H10) or a combination of the two. Theyare normally liquefied under pressure for transportation and storage. Ethane is anaturally gaseous straight-chain hydrocarbon (C2H6). It is a colourless paraffinic gaswhich is extracted from natural gas and refinery gas streams.

Motor Gasoline

This is light hydrocarbon oil for use in internal combustion engines such as

motor vehicles, excluding aircraft. Motor gasoline is distilled between 35 C and 215 Cand is used as a fuel for land based spark ignition engines. Motor gasoline mayinclude additives (such as ethanol), oxygenates and octane enhancers, including leadcompounds such as TEL (Tetraethyl lead) and TML (tetramethyl lead).

Naphtha

Naphtha is a feedstock destined for the petrochemical industry (e.g. ethylenemanufacture or aromatics production). Naphtha comprises material in the 30oC and210oC distillation range or part of this range.

Other Petroleum Products

White Spirit and SBP: White spirit and SBP are refined distillateintermediates with a distillation in the naphtha/kerosene range. They are sub-dividedas:

Industrial Spirit (SBP): Light oils distilling between 30 C and 200 C, with atemperature difference between 5 per cent volume and 90 per cent volume distillation

points, including losses, of not more than 60 C. In other words, SBP is a light oil ofnarrower cut than motor spirit. There are 7 or 8 grades of industrial spirit, dependingon the position of the cut in the distillation range defined above.

White Spirit: Industrial spirit with a flash point above 30 C. The distillationrange of white spirit is 135 C to 200 C.

Lubricants: Lubricants are hydrocarbons produced from distillate or residue;they are mainly used to reduce friction between bearing surfaces. This categoryincludes all finished grades of lubricating oil, from spindle oil to cylinder oil, andthose used in greases, including motor oils and all grades of lubricating oil basestocks.

Bitumen: Solid, semi-solid or viscous hydrocarbon with a colloidal structure,being brown to black in colour, obtained as a residue in the distillation of crude oil,vacuum distillation of oil residues from atmospheric distillation. Bitumen is often

referred to as asphalt and is primarily used for surfacing of roads and for roofingmaterial. This category includes fluidised and cut back bitumen.

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Paraffin Waxes: Saturated aliphatic hydrocarbons (with the general formulaCnH2n+2). These waxes are residues extracted when dewaxing lubricant oils and theyhave a crystalline structure with carbon number greater than 12. Their maincharacteristics are as follows: they are colourless, odourless and translucent, with amelting point above 45 C.

Others: Includes the petroleum products not classified above, for example: tar,sulphur, and grease. This category also includes aromatics (e.g. BTX or benzene,toluene and xylene) and olefins (e.g. propylene) produced within refineries.

Petroleum Coke

Petroleum coke is defined as a black solid residue, obtained mainly by crackingand carbonising of residue feedstocks, tar and pitches in processes such as delayedcoking or fluid coking. It consists mainly of carbon (90 to 95 per cent) and has a lowash content. It is used as a feedstock in coke ovens for the steel industry, for heating

purposes, for electrode manufacture and for production of chemicals. The two mostimportant qualities are "green coke" and "calcinated coke". This category alsoincludes "catalyst coke" deposited on the catalyst during refining processes: this cokeis not recoverable and is usually burned as refinery fuel.

RefineryGas

Refinery gas is defined as non-condensible gas obtained during distillation ofcrude oil or treatment of oil products (e.g. cracking) in refineries. It consists mainly ofhydrogen, methane, ethane and olefins. It also includes gases which are returned fromthe petrochemical industry. Refinery gas production refers to gross production. Ownconsumption is shown separately under petroleum refineries in the energy sector.

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Economic Profile : India And China Snapshot

India is currently the worlds 4th largest consumer of energy accounting for5.9% of Worlds annual energy consumption. USA, China and Japan are the topThree energy consumers. Indias import dependence on crude oil and petroleum

products is more than 70%. In 2008-09, consumption of petroleum products wasabout 120 million metric tones (MMT), which is about 7.9% higher than the previousyears consumption of 113 MMT.

GDP based on PPP; Source : World Economic Outlook 2008

Economic growth rate of 8% to 10% in the country calls for rapid developmentof the energy market. Indias energy needs are growing at a faster rate as incomelevels and population are both showing rising trends. Our main focus is to enhanceenergy security for the country. Government of India and our Oil Companies havetaken several steps to enhance energy security for the country, which inter-aliaincludes :

(a) increasing exploration and production activities in the country

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(b) acquiring oil and gas assets abroad

(c) development of alternate sources of oil and gas

(d) strategic storage of crude oil

(e) conservation and implementation of environment friendly policies.

The national endeavor to bridge the ever-increasing gap between demand andsupply of petroleum products in India by intensifying exploratory efforts for oil andgas in the Indian sedimentary basins and abroad need to be supported by otheralternate sources of energy like Coal Bed Methane, Gas Hyderates, Coal Liquefaction,Ethanol and bio-diesel etc. It is inform that first CBM gas production from RaniganjCBM block in West Bengal has started in July 2007.

GDP based on PPP; Source : World Economic Outlook 2008

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Opportunities and Growth of Indian and China PetrochemicalIndustry

Per capita consumption in India is much lower than world average Ample potential for growth

Task Force Report on Petrochemicals, April 2008

Growth Potential for India and China Polymer consumption in developed countries are reaching a stagnation :

growth areas in Asia. Amongst fastest growing world economies. Opening up of petrochemical sector for investment. Large and growing domestic consumer market. Investments in Infrastructure Large working age population Growing middle class households.

Emerging opportunities Fibres Global restructuring of textile and clothing trade post MFA. International competitiveness in Quality, Service India and China are best placed in entire clothing value chain- cost

competitiveness

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Petrochemicals Imperatives Indian And China petrochemical industry has:

Large & growing domestic market Low per capita consumption Growing GDP growth

Expertise in specialized products Large availability of trained manpower Ability to adapt & assimilate new technology Competent managerial & technical manpower Emergence of petrochemical hubs

Drive for Growth Indian and chiness companies are willing for collaboration with

international majors to add new capacities in India to explore the growingdemand of products.

Both countries Government are also advocating and promoting new

investments in the country.The global petroleum market has been significantly affected since the summer of

2008 by the impact of earlier high prices, an economic slowdown and the credit crisis.As per the IEA, global petroleum product demand for 2008 declined by 0.2 MBPD.This was earlier projected to grow by approximately 2.0 MBPD.

The year 2008 witnessed unprecedented crude price volatility with prices peaking inthe second quarter of FY 2008-09. The spurt in crude prices was due to a suddensurge in demand from China (pre-Olympics), Middle East (power generation),Australia and Latin America (gas outages) and combination of geopolitical events. Inthe third quarter of FY 2008-09, crude prices plunged to lower levels with WTI, Brent

and Dubai averaging $ 59.1, $ 55.5 and $ 52.8 /bbl respectively, almost half of that ofthe previous quarter prices of $ 118.1, $ 115.1 and $ 113.6 / bbl respectively. Thedepressed price outlook for crude continued in Q4 FY 2008-09 with WTI, Brent andDubai averaging further down to $ 43.2, $ 44.5 and $ 44.3 /bbl respectively.

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BIBLIOGRAPHY

www.fas.usda.gov/gainfiles

http://www.reportlinker.com/p0149626/China-and-india-Report-Q4-2009.html

www.ril.com/html/business/refining_marketing.html

www.indian-oil.com

www.indiaprline.com/.../chinas-transition-to-a-clean-energy-

economy-will-fortify-its-lng-industry-growth

www.indiachem.in/.../SessiononGrowthStrategies&IssuesAffectingIndia'sCompetitiveAdvantageinChemical.../

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http://www.fas.usda.gov/gainfileshttp://www.reportlinker.com/p0149626/China-and-india-Report-Q4-2009.htmlhttp://www.reportlinker.com/p0149626/China-and-india-Report-Q4-2009.htmlhttp://www.indian-oil.com/http://www.indiaprline.com/.../china's-transition-to-a-clean-energy-economy-will-fortify-its-lng-industry-growthhttp://www.indiaprline.com/.../china's-transition-to-a-clean-energy-economy-will-fortify-its-lng-industry-growthhttp://www.reportlinker.com/p0149626/China-and-india-Report-Q4-2009.htmlhttp://www.reportlinker.com/p0149626/China-and-india-Report-Q4-2009.htmlhttp://www.indian-oil.com/http://www.indiaprline.com/.../china's-transition-to-a-clean-energy-economy-will-fortify-its-lng-industry-growthhttp://www.indiaprline.com/.../china's-transition-to-a-clean-energy-economy-will-fortify-its-lng-industry-growthhttp://www.fas.usda.gov/gainfiles

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