iocl_final report by jyoti & arshe from alliance university (1)
TRANSCRIPT
Summer Internship Project Report
On
“SUPPLY CHAIN MANAGEMENT IN LPG”
In partial fulfillment of the Course-Industry Internship Programme (IIP) in Semester II of the Master of Business
Administration(July 2011-13)
Under the kind guidance of
Industry Guide College Guide
Mr. Ashutosh Gupta, Sr. Manager, Dr. Satish kumar Mrs. Kavita Tickoo, Dy. Manager,Indian Oil Corporation Ltd.
Submitted byJYOTIRAMAN DEY & ARSHE NOOR
Date: 20TH JUNE 2012
1
Student Declaration
We, JYOTIRAMAN DEY & ARSHE NOOR to the best of our knowledge & belief, hereby declare that the project report entitled:
“SUPPLY CHAIN MANAGEMENT IN LPG in Indian Oil Corporation Ltd.”
Is the result of our own work in the fulfillment of academic requirement. The training is done in Indian Oil Corporation Limited (IOCL) [Western Region, Marketing HO, Mumbai, Maharashtra State Office] for a period of two and half months commencing from 09.04.2012 to 15.06.2012. This project work is submitted to Alliance University-School of business, Bengaluru. As well as in Indian Oil Corporation Limited [Western Region, Marketing HO, Mumbai, Maharashtra State Office].
JYOTIRAMAN DEY (REGD NO. 11010121427),
ARSHE NOOR (REGD NO. 11010121358)
MBA- MARKETING SPECIALIZATION
Alliance University-School of business, Bengaluru
2
Master of Business Administration
Certificate
This is to certify that Mr. Jyotiraman Dey and Ms. Arshe Noor bearing Regn. No. 11010121427 & 11010121358 respectively has completed the report titled “SUPPLY CHAIN MANAGEMENT IN LPG”
under my guidance for the partial fulfillment of the Course: Industry Internship Programme (IIP) in Semester II of the Master of Business Administration (July 2011 – 2013).
(Signature of Faculty Guide)
Dr. Satish Kumar
3
ABSTRACT
Indian Oil Corporation Limited, with a yearly turnover of about 3 Lac Crores is the biggest Company in India in terms of sales. It has once again topped the Indian Companies in the Fortune 500 list of Companies with a rank of 98. In such a large sized corporation the common problem is the supply chain management. In this fluctuating Gas Market it is very difficult to maintain the price of LPG cylinder and hence the Profits. Moreover the Private Companies are entering the Oil & Gas Industry which has provided a tough competition for IOCL. In this study all over India (every region) are analyzed and provided a suitable pipeline grid for LPG for the smooth transportation of it. All the Regions have been analyzed in details and a few probable solutions to the existing problems has been formulated i.e. pipeline grid.
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AcknowledgementIt’s a privilege to be associated with Indian Oil Corporation Limited, a fortune ‘Global 500’Company, India’s top brand also world’s 18th best largest company. This acknowledgement is not only the means of formality, but to me, it is a way by which I am getting the opportunity to show the deep sense of gratitude and obligation to all the people who have provided me with inspiration, guidance and help during the preparation of the project. At the very outset, I would like to express my gratitude from bottom of my heart to Mr. P.K. JHA [Chief Manager, LPG OPERATION] for giving me the opportunity to do my Summer Internship Project in this esteemed organization.
I articulate my sincere gratitude to my project guide Mr. Ashutosh Gupta, Sr. Manager (LPG-OPS) & Ms. Kavita Tickoo, Dy. Manager(LPG-OPS) , Marketing HO, Mumbai, Indian Oil Corporation Ltd. who have spend their valuable time and guided me throughout the training process in spite their busy schedule, in shaping of my project.
I am also thankful to Ms. S. MATHIAS, Manager (T & D), and Mr. RAJOO, Marketing HO, IOCL for guiding me throughout the project providing me with the required information about Indian Oil.
I would also like to express my indebtedness to my faculty guide Dr. SATISH KUMAR, Faculty Alliance University-School Of Business who helped me in preceding my project work, which ultimately resulted in successful completion of the project.
But last not the least I am thankful to my parents, friends and all well wishers for blessing me for my success.
JYOTIRAMAN DEY (REGD NO. 11010121427)ARSHE NOOR (REGD NO. 11010121358)
MBA- MARKETING SPECIALIZATIONAlliance University-School of business, Bengaluru
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TABLE OF CONTENTS
Sl. No. PARTICULARS Page No.
1. Oil Industry Overview 92. Oil Industry Structure 103. Company Profile 124. Location 155. Vision, Mission & Values 206. Products Profile 247. SWOT of the Company 258. Organizational Structure 279. Pipelines 3010. Introduction to Fossil Fuel 3511. LPG 3612. IOC’s LPG Market Structure 4213. Supply Chain Management 4914. Objectives 5215. Sources 5416. Methodology 6417. Secondary Data 7118. Observations & Analysis 7619. Findings 8320. Pipeline Details 8521. Recommendations 8722. Conclusion 8823. Annexure 9024. References 91
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LIST OF TABLES
Table No. PARTICULARS Page No.
1. Retail Market Share 112. Actual Demand 443. Forecasted Demand 464. Secondary Data 71-755. Calculation of Pipeline 816. Pipeline Details 85
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LIST OF FIGURES
Fig. No. PARTICULARS Page No.
1. Structure of Oil Industry in India 102. Market share of different companies in India 113. Formation of IOCL 134. Organizational Structure of IOCL 275. Pipeline network of IOCL in India 306. Sales 417. IOC’s LPG market statistics 428. Market share of IOCL 439. Sector wise LPG consumption in India 4310. Actual trend graph 4511. Forecasted trend graph 4712. Supply chain of LPG 5013. Industry refineries 5414. Bottling plants of IOC 6715. Import & refineries 7016. Production of LPG 7817. Sales of LPG 7818. Proposed LPG pipelines in India map 84
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OIL INDUSTRY OVERVIEW
Background
After the Indian Independence, the Oil Industry in India was a very small one in size and Oil was produced mainly from Assam and the total amount of Oil production was not more than 250,000 tones per year.
This small amount of production made the oil experts from different countries predict the future of the oil industry as a dull one and also doubted India's ability to search for new oil reserves. But the Government of India declared the Oil industry in India as the core sector industry under the Industrial Policy Resolution bill in the year 1954, which helped the Oil Industry in India vastly.
Oil exploration and production in India is done by companies like NOC or National Oil Corporation, ONGC or Oil and Natural Gas Corporation and OIL who are actually the oil companies in India that are owned by the government under the Industrial Policy Rule. The National Oil Corporation during the 1970s used to produce and supply more than 70 percent of the domestic need for the petroleum but by the end of this amount dropped to near about 35 percent. This was because the demand on the one hand was increasing at a good rate and the production was declining in a steady rate. Oil Industry in India during the year 2004-2005 fulfilled most of demand through importing oil from multiple oil producing countries. The Oil Industry in India itself produced nearly 35 million metric tons of Oil from the year 2001 to 2005. The Import that is done by the Oil Industry in India comes mostly from the Middle East Asia.
The Oil that is produced by the Oil Industry in India provides more than 35 percent of the energy that is primarily consumed by the people of India. This amount is expected to grow further with both economic and overall growth in terms of production as well as percentage. The demand for oil is predicted to go higher and higher with every passing decade and is expected to reach an amount of nearly 250 million metric ton by the year 2024.
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OIL INDUSTRY STRUCTURE
Fig.1: Structure of Oil Industry in India
10
Oil Industry Dynamics in India
At present, there are four PSUs namely, IOC, HPC, BPC and IBP (subsidiary of IOC) marketing oil products in the country. In addition, certain private players like Reliance, Essar and Shell have also in marketing rights for transportation fuels. Their marketing presence today, however, is not significant and is limited to about 1370 outlets out of total retail outlet strength of about 29,380 . Some additional players like ONGC, who have also been granted marketing rights for transportation fuels, are in the process of setting up retail outlets to integrate across the entire hydrocarbon value chain. The company – wise market share in sales is tabled below:
It is evident that the share of the private sector in meeting total consumption of refined petroleum products presently stands at around 15%. This proportion is however, expected to grow significantly in the coming years.
11
COMPANY PROFILE
INTRODUCTION
In order to ensure greater efficiency and smooth working in the petroleum sector, Government
of India decided to merge the refineries and the distribution activities. The Indian Refineries
and Indian Oil Company were combined to form the giant Indian Oil Corporation (IOCL) on 1st
September 1964, with its registered office at Bombay. In 1967, the pipeline division of the
corporation was merged with the refineries division. Research & Development of Indian Oil
Came into Existence in 1972. In October 1981 Assam Oil Company was nationalized and has
been amalgamated with IOCL as Assam Oil Division (AOD).
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Beginning in 1959 as Indian Oil
Company Ltd., Indian Oil Corporation
Ltd. was formed in 1964 with the
merger of Indian Refineries Ltd.
(established1958). Indian Oil and its
subsidiaries account for 49%
petroleum products market share,
40.4% refining capacity and 69%
downstream sector pipelines
capacity in India.
Fig. 3: Formation of Indian Oil Corporation Ltd.
13
In operation for the convenience of large consumers, ensuring products and inventory at their
doorstep. Indian Oil operates the largest and the widest network of petrol & diesel stations in
the country, numbering over 17,600. It reaches Indane cooking gas to the doorsteps of over 50
million households in nearly 2,700 markets through a network of about 5,000 Indane
distributors.
Indian Oil’s ISO-9002 certified Aviation Service commands over 62% market share in aviation
fuel business, meeting the fuel needs of domestic and international flag carriers, private airlines
and the Indian Defense Services. The Corporation also enjoys a dominant share of the bulk
consumer business, including that of railways, state transport undertakings, and industrial,
agricultural and marine sectors.
14
As the flagship national oil company in the
downstream sector, Indian Oil reaches
precious petroleum products to millions of
people every day through a countrywide
network of about 34,000 sales points. They
are backed for supplies by 166 bulk storage
terminals and depots, 101 aviation fuel
stations and 89 Indane (LPG) bottling plants.
About 7,100 bulk consumer pumps are also in
operation for the
LOCATION
Registered Office: Indian Oil Bhavan,
G-9, Ali Yavar Jung Marg,
Bandra(East), Mumbai-400 051
Corporate Office: 3079/3, Sadiqnagar,
J B Tito Marg, New Delhi- 110 049
Refineries Division:
Head Office : SCOPE Complex, Core-2
7, Institutional Area, Lodhi Road,
New Delhi -110003
Barauni Refinery: P.O. Barauni Oil Refinery,
Dist. Begusarai -861 114 (Bihar)
Gujarat Refinery: P.O. Jawahar Nagar,
Dist. Vadodara -391 320(Gujarat)
15
Guwahati Refinery: P.O. Noonmati,
Guwahati-781020 (Assam)
Haldia Refinery: P.O. Haldia Refinery
Dist. Midnapur-721 606 (West Bengal)
Mathura Refinery: P.O. Mathura Refinery,
Mathura -281 005(Uttar Pradesh)
Panipat Refinery: P.O. Panipat Refinery,
Panipat-132140(Haryana)
Bongaigaon Refinery: P.O. Dhaligaon
Dist. Chirang, Assam - 783 385
Marketing Division
Head Office: G-9, Ali Yavar Jung Marg,
Bandra (East), Mumbai -400 051
Northern Region: IndianOil Bhavan,
1, Aurobindo Marg, Yusuf Sarai
New Delhi -110016
Eastern Region: IndianOil Bhavan,
2, Gariahat Road, South (Dhakuria)
Kolkata -700 068
Western Region: 254-C, Dr. Annie Besant Road, Worli Colony,
Mumbai -400 025
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Southern Region: IndianOil Bhavan,
139, Nungambakkam High Road
R&D Centre
R&D Centre: Sector 13 Faridabad -121 007(Haryana)
Pipelines Division
Head Office: A-1 Udyog Marg,
Sector-1, Noida-201301
Northern Region: P.O. Panipat Refinery
Panipat -132 140 (Haryana)
Western Region: P.O. Box1007,Bedipara,
Morvi Road,Gauridad, Rajkot-360 003
Southern Region: 139, Nungambakkam High Road,
Chennai – 600034
Assam Oil Division
Assam Oil Division: P.O. Digboi -768 171(Assam)
IBP Division
IBP Division: 34-A, Nirmal Chandra Street, Kolkata - 700 013
Business Group(Cryogenics): Sewri Terminal II, Sewri (East),
Mumbai - 400 015
Business Group(Cryogenics): A-4, MIDC, Ambad,
Nashik - 422 010
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Group Companies
Chennai Petroleum Corporation Ltd.: 536, Anna Salai,
Teynampet, Chennai - 600 018
Indian Oil Technologies Ltd: SCOPE Complex, Core-2
7, Institutional Area, Lodhi Road,
New Delhi-110003
Indian Oil (Mauritius) Ltd.: Mer Rouge Port Louis
Maruritius
IOC Middle East FZE: LOB 14209, Jebel Ali Free Zone,
P.O.Box: 261338
Lanka IOC PLC: Lanka IOC Head Office Level 20,
West Tower, World Trade Center,
Echelon Square, Colombo - 01,
Sri lanka
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SALIENT FEATURES India’s Most Trusted Fuel Pump Brand (ET. Brand Equity-AC Nielson Survey 2007)
India’s largest commercial enterprise with leading market shares in downstream
segment of oil business.
Highest ranked Indian corporate in Fortune’s list of world’s 500 largest Companies
(2008:: 116th )
20 th largest petroleum company in the world- Fortune Global500
Local Currency Rating of A1+(short-term) & LAA+(long-term) from ICRA
India’s No.1 corporate in annual listing of Business Standards (BS 10000),Business
India(BI Superior 100) &Economic Time (ET 500).
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VISION, MISSION AND VALUES
Vision:
A major diversified, trans-national, integrated energy company, with national leadership and a
strong environment conscience, playing a national role in oil security & public distribution.
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Mission:
To achieve international standards of excellence in all aspects of energy and diversified business
with focus on customer delight through value of products and services, and cost reduction.
To maximize creation of wealth, value and satisfaction for the stakeholders.
To attain leadership in developing, adopting and assimilating state-of-the-art
technology for competitive advantage.
To provide technology and services through sustained Research and Development.
To foster a culture of participation and innovation for employee growth and
contribution.
To cultivate high standards of business ethics and Total Quality Management for a
strong corporate identity and brand equity.
To help enrich the quality of life of the community and preserve ecological balance and
heritage through a strong environment conscience.
VALUE:
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OBJECTIVES & OBLIGATIONS OF IOCL
Objectives:
To serve the national interests in oil and related sectors in accordance and consistent
with Government policies.
To ensure maintenance of continuous and smooth supplies of petroleum products by
way of crude oil refining, transportation marketing activities and to provide appropriate
assistance to consumers to conserve and use petroleum products efficiently.
To enhance the country's self-sufficiency in crude oil refining and build expertise in
laying of crude oil and petroleum product pipelines.
To further enhance marketing infrastructure and reseller network for providing assured
service to customers throughout the country.
To create a strong research & development base in refinery processes, product
formulations, pipeline transportation and alternative fuels with view to
minimizing/eliminating imports and to have next generation products.
To optimize utilization of refining capacity and maximize distillate yield and gross
refining margin.
To maximize utilization of the existing facilities for improving efficiency and increasing
productivity.
To minimize fuel consumption and hydrocarbon loss in refineries and stock loss in
marketing operations to effect energy conservation.
To earn a reasonable rate of return on investment.
To avail of all viable opportunities, both national and global, arising out of the
Government of India’s policy of liberalization and reforms.
22
To achieve higher growth through mergers, acquisitions, integration and diversification
by harnessing new business opportunities in oil exploration production, petrochemicals,
natural gas and downstream opportunities overseas.
To inculcate strong ‘core values’ among the employees and continuously update skill
sets for full exploitation of the new business opportunities.
To develop operational synergies with subsidiaries and joint ventures and continuously
engaged across the hydrocarbon value chain for the benefit of society at large.
Obligations:
Towards customers and dealers: - To provide prompt, courteous and efficient service
and quality products at competitive prices.
Towards suppliers: - To ensure prompt dealings with integrity, impartiality and courtesy
and help promote ancillary industries.
Towards employees: - To develop their capabilities and facilitate their advancement
through appropriate training and career planning. To have fair dealings with recognized
representatives of employees in pursuance of healthy industrial relations practices and
sound personnel policies.
Towards community: - To develop techno-economically viable and environment-
friendly products. To maintain the highest standards in respect of safety, environment
protection and occupational health at all production units.
Towards Defense Services: - To maintain adequate supplies to Defense and other Para-
military services during normal as well as emergency situations.
23
PRODUCTS PROFILE (IOCL)The Products produced by IOCL are broadly classified into the following cases:
Class A:
1. Liquid Petroleum Gas (L.P.G)
Class B:
2. Motor Spirit (M.S.)/Gasoline
3. Super Kerosene Oil (S.K.O)
4. High Speed Diesel Oil (H.S.D)
Class C:
5. High Speed Diesel Oil (H.S.D)
6. Furnace Oil (F.O.)
7. Bitumen
8. Naphtha
9. Aviation Turbine Fuel (A.T.F)
Class D:
10. Mineral Turpentine Oil (M.T.O)
11. Jute Batching Oil (J.B.O)
12. Light Diesel Oil (L.D.O)
13. Unleaded petroleum
14. Lubes & Greases
15. Fuel & Feedstock
16. Super Kerosene Oil
24
SWOT OF THE COMPANY
Controls 10 refineries
Acquired equity stakes in CPCL & BRPL,
& in 2001, became subsidiaries of IOC.
58% of IOC’s refining capacity is
located in the Northern and Western
regions
Very strong distribution network
Acquired management control of the
marketing company IBP
Extensive joint venture agreements
Already entered overseas markets such
as Sri Lanka, Maldives, and Oman.
Major weakness for the company is the
R&D
Petrochemical product development
technology
Technological drawback, as compared
to some major foreign player
Easily go for extension at any point of
time, and can introduce any new
products.
Make the buying process more easy for
the customers.
Think over the issue to build its own
pipelines
Great scope in E&P
Foreign players with more advanced
technology.
Crude oil supply - cannot fix its price ,
In future the market will welcome
more private players
If the Govt. Policies allow the private
players to set their own price, the pvt.
Player can seriously harm IOCL share.
25
STRENGT WEAKNESS
OPPERTUNIT THREAT
MARKETSIndian Oil has one of the largest petroleum marketing and distribution networks in Asia, with
over 34,000 marketing touch points. Its ubiquitous petrol/diesel stations are located across
different terrains and regions of the Indian subcontinent.
From the icy heights of the Himalayas to the sun-soaked shores of Kerala, from Kutch on India's
western tip to Kohima in the verdant North East, Indian Oil is truly 'in every heart, in every part'.
Indian Oil's vast marketing infrastructure of petrol/diesel stations, Indane (LPG)
distributorships, SERVO lubricants & greases outlets and large volume consumer pumps are
backed by bulk storage terminals and installations, inland depots, aviation fuel stations, LPG
bottling plants and lube blending plants amongst others. The countrywide marketing operations
are coordinated by 16 State Offices and over 100 decentralized administrative offices.
Several landmark surveys continue to rate Indian Oil as the dominant energy brand in the
country and an enduring symbol for high quality petroleum products and services. The heritage
and iconic association that the brand invokes has been built over four decades of commitment
to uninterrupted supply line of petroleum products to every part of the country, and unique
products that cater not only to the functional requirements but also the aspiration needs of
millions of customers.
Indian Oil has been adjudged India's No. 1 brand by UK-based Brand Finance, an independent
consultancy that deals with valuation of brands. It was also listed as India's 'Most Trusted
Brand' in the 'Gasoline' category in a Readers' Digest - AC Nielsen survey. In addition, Indian Oil
topped The Hindu Business line’s "India's Most Valuable Brands" list.
26
ORGANIZATION STRUCTURE OF IOCL:
Fig. 4: Organizational Structure of IOCL
27
BUSINESS OF IOCL
REFINING:
Born from the vision of achieving self-reliance in oil refining and marketing for the nation,
Indian Oil has gathered a luminous legacy of more than 100 years of accumulated experiences
in all areas of petroleum refining by taking into its fold, the Digboi Refinery commissioned in
1901.
Indian Oil controls 10 of India’s 20 refineries. The group refining capacity is 60.2 million metric
tonnes per annum (MMTPA) or 1.2 million barrels per day -the largest share among refining
companies in India. It accounts for 33.8% share of national refining capacity.
The strength of Indian Oil springs from its experience of operating the largest number of
refineries in India and adapting to a variety of refining processes along the way. The basket of
technologies, which are in operation in Indian Oil refineries include: Atmospheric/Vacuum
Distillation; Distillate FCC/Reside FCC; Hydro cracking; Catalytic Reforming, Hydrogen
Generation; Delayed Coking; Lube Processing Units; Visbreaking; Merox Treatment; Hydro-
Desulphurization of Kerosene & Gasoil streams; Sulphur recovery; Dewaxing, Wax Hydro
finishing; Coke Calcining, etc.
The Corporation has commissioned several grassroots refineries and modern process units.
Procedures for commissioning and start-up of individual units and the refinery have been well
laid out and enshrined in various customized operating manuals, which are continually
updated. Indian Oil refineries have an ambitious growth plan with an outlay of about Rs. 55,000
crore for capacity augmentation, de-bottlenecking, bottom up gradation and quality up
gradation. Major projects under implementation include a 15 MMTPA grassroots refinery at
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Paradip, Orissa, Naphtha Cracker and Polymer Complex at Panipat, Panipat Refinery expansion
from 12 MMTPA to 15 MMTPA, among others.
In addition, petrol quality up gradation projects are under implementation at Panipat, Mathura,
Barauni, Guwahati and Digboi refineries proposed to be completed by the end of 2009.
On the environment front, all Indian Oil refineries fully comply with the statutory requirements.
Several Clean Development Mechanism projects have also been initiated. To address concerns
on safety at the work place, a number of steps were taken during the year, resulting in
reduction of the frequency of accidents.
Innovative strategies and knowledge-sharing are the tools available for converting challenges
into opportunities for sustained organizational growth. With strategies and plans for several
value-added projects in place, Indian Oil refineries will continue to play a leading role in the
downstream hydrocarbon sector for meeting the rising energy needs of our country.
29
PIPELINES:
Indian Oil Corporation Ltd. operates a network of 10329 km long crude oil and petroleum
product pipelines with a capacity of 71.60 million metric tonnes per annum. Cross-country
pipelines are globally recognized as the safest, cost-effective, energy-efficient and environment-
friendly mode for transportation of crude oil and petroleum products.
30
During the year 2008-09 Indian Oil’s crude oil pipelines registered the throughput of 38.46
million metric tonnes. Corporation’s largest crude oil handling facility at Vadinar marked the
berthing of 4000th tanker since inception. The terminal operates two offshore Single Point
Mooring (SPM) systems, to feed Koyali, Mathura and Panipat refineries.
Raising efficiency and emerging as the least-cost supplier, Indian Oil has added the 330-km
Paradip-Haldia crude oil pipeline (PHCPL) to its bustling pipeline network during the year. The
PHCPL system has a Single Point Mooring installed 20-km off the Paradip coast. With this, it is
now able to pump crude oil from Very Large Crude Carriers to the tank-farm set up onshore and
onward to Haldia through the pipeline. The Pipeline has replaced the earlier system of receipt
of crude oil at Haldia port through smaller tankers.
On the west coast, the Mundra-Panipat pipeline is being further augmented to transport an
additional 3 Million Metric Tonne Per Annum (MMTPA) of crude oil to Panipat Refinery, under
expansion from 12 to 15 MMTPA. Additional requirement of crude oil for Koyali, Mathura and
Panipat refineries is planned to be met by de-bottlenecking and augmenting Salaya-Mathura
Pipeline system.
Indian Oil’s product pipelines, connecting its refineries directly to high-consumption centers,
achieved a throughput of 20.92 million tonnes during 2008-09. Indian Oil has now joined the
select group of companies in India which owns and operates LPG pipelines by building its first
such cross-country facility linking Panipat with Jalandhar. Apart from providing better logistics,
this pipeline can transport 700,000 tonnes of LPG from Kohand near Panipat refinery to Indian
Oil’s bottling plants at Jalandhar and Nabha in Punjab. The pipeline will also simultaneously to
meet the requirement of LPG at Una and Baddi in Himachal Pradesh and at Jammu and Leh in
J&K.
31
Two pipelines linking the major airports of India have been commissioned during the year to
transport Aviation Turbine Fuel to these airports. The 36 km long pipeline from existing
Devangonthi terminal to New Bengaluru International Airport, Devanhalli, Bengaluru was
commissioned in October 2008. The 95 km long ATF pipeline from CPCL to Chennai AFS was
commissioned in December 2008.
In its continuous efforts of expanding the network Indian Oil is implementing 290 km long
product pipeline from Chennai to Bengaluru to facilitate cost effective positioning of products
at consumption centre located in and around Bengaluru and to strengthen product positioning
capabilities of CPCL Refinery. Indian Oil is also implementing a 217 km Long Branch pipeline
from Koyali-Sanganer Pipeline at Viramgam to existing scrapper station at Churwa along with
use of a 14 km long existing pipeline from Churwa to Kandla.
One of the major product pipelines currently under execution is 290 km long Chennai-
Bengaluru Pipeline. A 21-km spur line from Mathura to Bharatpur and a 94-km branch line to
Hazira on the Koyali-Dahej pipeline are also under implementation. A grassroots terminal
facility is being set up at Ratlam to feed the local markets. A 118-km pipeline is being laid from
Bijwasan to Panipat for transporting Naphtha from Mathura Refinery to the upcoming Naphtha
Cracker unit at Panipat.
Indian Oil sees gas pipelines as a major growth area in the future. The gas market in India is
expanding fast, thanks to enhanced availability of the product from indigenous sources and
through imports. The Corporation will commission its first regassified LNG pipeline from Dadri
to Panipat (132 km) to synchronize with the completion of the first phase of the power plant
coming up under the Naphtha Cracker project at Panipat.
32
Indian Oil has translated the expertise of its personnel in pipeline operations into a business
opportunity, by offering training and consultancy to several Indian and overseas companies.
Currently, the Corporation is imparting training for personnel of the Greater Nile Petroleum
Company, Sudan.
Reaching out to a Billion Hearts:
Indian Oil has one of the largest petroleum marketing and distribution networks in Asia, with
over 35,000 marketing touch points. Its ubiquitous petrol/diesel stations are located across
different terrains and regions of the Indian sub-continent. From the icy heights of the Himalayas
to the sun-soaked shores of Kerala, from Kutch on India's western tip to Kohima in the verdant
North East, Indian Oil is truly 'in every heart, in every part'. Indian Oil's vast marketing
infrastructure of petrol/diesel stations, Indane (LPG) distributorships, SERVO lubricants &
greases outlets and large volume consumer pumps are backed by bulk storage terminals and
installations, inland depots, aviation fuel stations, LPG bottling plants and lube blending plants
amongst others. The countrywide marketing operations are coordinated by 16 State Offices and
over 100 decentralized administrative offices.
Several l and mark surveys continue to rate Indian Oil as the dominant energy brand in the
country and an enduring symbol for high quality petroleum products and services. The heritage
and iconic association that the brand invokes has been built over four decades of commitment
to uninterrupted supply line of petroleum products to every part of the country, and unique
products that cater not only to the functional requirements but also the aspiration needs of
millions of customers.
Indian Oil has been adjudged India's No. 1 brand by UK-based Brand Finance, an independent
consultancy that deals with valuation of brands. It was also listed as India's 'Most Trusted
Brand' in the 'Gasoline' category in a Readers' Digest - AC Nielsen survey. In addition, Indian Oil
33
Topped The Hindu Business line's "India's Most Valuable Brands" list. However, the value of the
Indian Oil brand is not just limited to its commercial role as an energy provider but straddles
the entire value chain of gamut of exploration & production, refining, transportation &
marketing, petrochemicals & natural gas and downstream marketing operations abroad. Indian
Oil is a national brand owned by over a billion Indians and that is a priceless value.
34
INTRODUCTION TO FOSSIL FUELS
When the remnants of trees and animals get buried in the earth’s crust they are subjected to
high pressure and temperature for a prolonged period of time and get converted to a fuel
which is rich in carbon and hydrogen content. This is called as fossil fuel. Fossil fuels are
naturally found in the earth’s crust and are not unlimited.
Crude oil, the most common fossil fuel, is processed to remove impurities to produce fuels of
different carbon content. As the carbon and hydrogen contents vary in the fuel the calorific
value, i.e. the energy the fuel produces, of the fuel varies.
A COMPARISION OF CALORIFIC VALUE OF FOSSIL FUELS:
CNG @ 3000PSI
METHANOL
LNG
ETHANOL
LPG
PETROL
DIESEL
020406080
100120
35
LIQUEFIED PETROLEUM GAS (LPG)
Liquefied petroleum gas is one of the most common and an alternative fuels used in the world
today. Liquefied petroleum gas is also called as LPG, LP Gas, or Auto gas. The gas is a mixture of
hydrocarbon gases used as a fuel for various purposes. This is mainly used in heating appliances
and vehicles and is replacing chlorofluorocarbons as an aerosol propellant. It is also used as a
refrigerant mainly to reduce damage to the ozone layer.
The main reason behind this being the soaring in the prices of the oil, LPG has emerged as much
preferred choice. LPG is a fossil fuel and can be refined from oil and natural gas.
LPG is basically a hydrocarbon with propane and butane as main constituent. LPG is a by-
product of natural gas processing. It is the product that comes from crude oil refining when
carried with the smaller amounts of propylene and butylenes. LPG is largely propane and thus
the characteristics of propane are sometimes taken as a close approximation to those of LPG.
LPG or Liquefied Petroleum Gas has become the most preferred fuel when it comes to domestic
and certain industrial uses.
LPG is used for:
Cooking
Domestic and Industrial Heating
Automotive Fuel
Propellant for aerosols
Feedstock for production of petrochemicals
36
Properties of LPG:
Flammable
Volatile –Vaporizes readily
Liquid forms lots of vapor – one volume forms 250 volumes of vapor
Liquid expands with temperature
Vapor heavier than air : 1.5-2 times
Colorless and odorless (unless odorized)
Not much heat needed to vaporize
No lubricating qualities
Liquid is light weight: half as that of water
Can cause asphyxiation
There are many advantages which can be associated with LPG:
1) The most important advantage of using LPG is its effect on the environment. It is certainly a more
environment friendly way and this is also another reason why many Asian Countries are also switching
to LPG run cars and other vehicles.
2) LPG offers clean burning and this is also another reason why it is not very detrimental to the
atmosphere in comparison to other fuels.
3) LPG equipments and burners do not demand a high maintenance because the burners have a longer
life due to no soot deposits.
4) LPG is also considered highly efficient in comparison to many other fuels. It is good to be used in
direct firing system.
5) LPG provides instant heat and is ideal when you require faster warm up or cooling down in any
process.
6) With usage of LPG, corrosion effects are also reduced to a great extent.
37
7) Using LPG also avoids the parts of the equipments to get decarburized. At the same time, it also
avoids scaling to a large extent.
8) The flame temperature resultant from LPG is instantly controllable and this is what is required when it
comes to domestic uses of LPG.
9) LPG is indeed a greener and cleaner fuel since it has a low carbon content.
Like LPG, CNG is also a clean gaseous fuel which gives a tough competition to LPG. So we compare the
properties of both to find out the better of the two.
A COMPARISION BETWEEN CNG AND LPG:
CNG LPG
Requires higher initial investment Lower initial investment
Lower running costs Higher running costs
Lesser calorific value Higher calorific value
Bulkier and heavier storage tanks Smaller and lighter storage tanks
Limited availability Far better availability
Safer: It is lighter and has a higher ignition temperature
Heavier and has a lower ignition temperature
More popular with commercial vehicles. More popular with private vehicles.
38
WHY LPG IS BETTER:
LPG MARKETING IN INDIAN HISTORY:
o LPG marketing started in India in the mid-fifties by the multinational oil companies (Burmah Shell / Stanvac)
o The bottling operations were then mainly confined to Refinery plants and marketing was limited to nearby areas
o Though IOC started functioning in the month May 1959, it actually started marketing of LPG in the year 1965 with brand name `INDANE‟.
o Demand started picking up from 1980s with1. its acceptability as clean and safe product2. additional availability from refineries and gas fractionators
o Till 1993, only government oil companies were permitted to market LPG
39
o The LPG (supply and distribution) Order was revised in 1993 to allow Private entrepreneurs to
import, bottle, distribute and market LPG within the country under PMS.
o In the earlier eighties, the total number of customers in the country was about 30 Lakhs. After 3
decades, there is a multifold increase in number of customers/sales.
o LPG sales on account of IOC stood at 6600 TMT during 2010-11 as against Industry sale of 13911
TMT.
o LPG waiting list stands fully liquidated.
GRADES MARKETED/TYPES OF SALES:
1. Domestic LPG-
o Packed product in 14.2kg, & 5kg cylinders, home delivered through distributors.
2. Non domestic LPG-
o Packed product 19kg and 47.5 kg delivered supply through distributors. Exclusive
distributorships in offing.
3. Bulk LPG-
o Delivered to storage tanks of customer’s o Business associates to garner customers.
4. Auto LPG-
o Through retail outlets and stand alone outlets at distributor premises.
40
INTERNATIONAL DEMAND OF LPG:
LPG production in the US has been growing due to the exploitation of growing shale Gas & Oil prices, but global LPG markets have been tighter than expected. This has created an unusual dynamic in which LPG prices in the US have been significantly lower than international prices & arbitrage has resulted in record exports of propane from the US gulf coast.
FACTORS RESPONSIBLE FOR LPG MARKET OUTSIDE THE US TIGHT IN 2010:
o Reduction in LPG production in Algeria resulted in a drop in LPG exports by sonatrach.
o LPG terminal maintenance in the North Sea disrupted trade in northern west.
o Global demand of LPG totaled slightly less than 220 million tons in 2005.Puroin & Gets
estimates that the market will grow to about 228 millions tones in 2006 & reach more than
258 million by the year 2010.
41
IOC’S LPG MARKET STATISTICS
IOC MARKET SHARE IN LPG
Presently, there are three Oil Marketing Companies (OMC) in India – Indian Oil
CorporationLimited, Bharat Petroleum Corporation Limited and Hindustan Petroleum
Corporation Limited. IOCL has been enjoying the major market share of the three since 2004-
05.
42
SECTOR-WISE LPG CONSUMPTION IN INDIA (2010-11)
43
DEMAND FORECAST OF LPG:
Every plan starts with a demand forecast. So with the past eight years‟ data of actual LPG
demand of the country we have forecasted the future demand of LPG. It is only a quantitative
demand forecast.
The actual demand values for the past 7 years are as follows:
44
By visual inspection we can see that the demand has been increasing every year. So this made
us choose the “trend analysis” method for forecasting demand.
45
The forecasted demand for the next 12 years is as under:
46
Other data:
The trend equation: Y = 8729560 + 678453.3 X
Where X = time and Y = demand
Mean Absolute Deviation (MAD) = 257947.9
The demand figures we have drawn are not accurate even. We tried to reduce the error by
avoiding rounding off. The values for the first couple of years may get closer to the actual
demand but as the forecasted values go further into the future the more unreliable the value
gets. It is because there may be many unforeseen or unanticipated events that may increase or
decrease the demand.
47
FUTURE DEMAND OF LPG:
What do we see over the next 30 years? The answer to that question varies by region, reflecting diverse
economic and demographic trends as well as the evolution of technology and government policies.
Everywhere, though, we see energy being used more efficiently and Energy supplies continuing to
diversify as new technologies and sources emerge. Other key findings of this year’s Outlook include:
Global energy demand will be about 30 percent higher in 2040 compared to 2010, as economic output
more than doubles and prosperity expands across a world whose population will grow to nearly 9 billion
people. Energy demand growth will slow as economies mature, efficiency gains accelerate and
population growth moderates. In the countries belonging to the Organization for Economic Cooperation
and Development (OECD) – including countries in North America and Europe – we see energy use
remaining essentially flat, even as these countries achieve economic growth and even higher living
standards. In contrast, Non OECD energy demand will grow by close to 60 percent. China’s surge in
energy demand will extend over the next two decades then gradually flatten as its economy and
population mature. Elsewhere, billions of people will be working to advance their living standard
requiring more energy. The need for energy to make electricity will remain the single biggest driver of
demand.
By 2040, electricity generation will account for more than 40 percent of global energy consumption.
Demand for coal will peak and begin a gradual decline, in part because of emerging policies that will
seek to curb emissions by imposing a cost on higher-carbon fuels. Use of renewable energies and
nuclear power will grow significantly. Oil, gas and coal continue to be the most widely used fuels, and
have the scale needed to meet global demand, making up about 80 percent of total energy consumption
in 2040.Natural gas will grow fast enough to overtake coal for the number-two position behind oil.
Demand for natural gas will rise by more than 60 percent through 2040. For both oil and natural gas, an
increasing share of global supply will come from unconventional sources such as those produced from
shale formations. Gains in efficiency through energy-saving practices and technologies – such as hybrid
vehicles and new, high efficiency natural gas power plants – will temper demand growth and curb
emissions.
48
SUPPLY CHAIN MANAGEMENT
INTRODUCTION:
Within the organization, the supply chain refers to a wide range of functional areas. These
Include Supply Chain Management-related activities such as inbound and outbound
transportation warehousing, and inventory control. Sourcing, procurement, and supply
management fall under the supply-chain umbrella, too. Forecasting, production planning and
scheduling, order processing, and customer service all are part of the process as well.
Importantly, it also embodies the information systems so necessary to monitor all of these
activities. Simply stated, “the supply chain encompasses all of those activities associated with
moving goods from the raw-materials stage through to the end user." In many organizations,
materials form the largest single expenditure item, accounting for nearly 50 to 65 % of the total
expenditure. With competition growing by the day, cost reduction in business operations and
yet making available various products to customers , as per their requirement, come into sharp
focus. Maintaining a flawless supply chain across all its operations thus becomes absolutely
necessary for any business. Importance of supply chain management need not be over
emphasized as it has become the cutting edge of business, after product quality and
manufacturing capabilities of any business firm.
49
TODAY’S SCENARIO OF SUPPLY CHAIN MANAGEMENT:
If we take the view that Supply Chain Management is what Supply Chain Management people
do, then in 1997 Supply Chain Management has a firm hand on all aspects of physical
distribution and materials management. Seventy-five percent or more of respondents included
the following activities as part of their company's Supply Chain Management department
functions:
• Inventory management
• Transportation service procurement
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• Materials handling
• Inbound transportation
• Transportation operations management
• Warehousing management
Moreover, the Supply Chain Management department is expected to increase its range of
responsibilities, most often in line with the thinking that sees the order fulfillment process as
one co-ordinate set of activities. Thus the functions most often cited as planning to formally
include in the Supply Chain Management department are:
• Customer service performance monitoring
• Order processing/customer service
• Supply Chain Management budget forecasting
On the other hand, there are certain functions which some of us might feel logically belong to
Supply Chain Management which companies feel are the proper domain of other departments.
Most difficult to bring under the umbrella of Supply Chain Management are:
• Third party invoice payment/audit
• Sales forecasting
Supply Chain Management Tomorrow:
The future for Supply Chain Management looks very bright. Two major trends are Customer
service focus and Information technology.
51
OBJECTIVES
52
OBJECTIVES OF THE STUDY:
• To design the pipeline grid across india for smooth transportation of LPG and make a
strategy for cost effectiveness.
• To minimise the logistic cost by using pipeline grid.
• To get an exposure of the actual working environment within a multi national.
• To Study of IOC‟s LPG market share, all India supply and demand of LPG and present
LPG demand and forecasting future demand.
• To Study of supply chain of LPG including road, railway and pipeline distribution network
and suggesting improvements.
53
SOURCES:
1. REFINERIES-: There are 19 refineries in total out of which 10 are owned by IOC,2 by HPC , 3 by BPC ,ONGC holds 2 & 2 are owned by private companies i.e. Reliance & Essar Oil.
2. FRACTIONATORS:-
Only ONGC & GAIL are into exploration & production OF LPG. Thus only they own
fractionators at present there are 12 fractionators out of which 6 are owned by GAIL, 5
are owned by ONGC & 1 is owned by Oil Duliajan.
54
Jamnagar
Koyali
Mumbai
Mangalore
Kochi
Narimanam
Chennai
Vizag
Haldia
Mathura
Panipat
Barauni
BRPL
Guwahati
DigboiNRL
LPG INFRASTRUCTURE / LOGISTICS INDUSTRY
REFINERIES
Vadinar
[HPC & BPC]
Total nos. of Fractionators - 11
3. IMPORTS-:
Basically we import LPG (combination of propane & butane) from GULF Countries.
Mainly from Saudi Arabia, Malaysia. IOC has 4 ports handling LPG imports they are at
Kandla, Haldia, Vizag & Mangalore.
IOC uses “Time chartered “(TC) or Voyage charted ships to import LPG. TCs are
hired on a yearly basis or for a certain time period like 2-3 years. VC's are hired
particular voyage only- as and when sudden increase in demand these are used. These
are also used in coastal movement-transport of LPG along the coast line of India.
TRANSPORTATION OF LPG:
LPG is transported to the bottling plants by 3 modes which are as follows;
1) RAIL- fixed proportion
2) ROAD- costliest
3) PIPELINE- most reliable one
PIPELINES-:
The easiest and safest mode of transporting LPG is through pipelines. On the other hand it is
challenging as well as tough job to establish pipelines across country. As once you have
established the pipelines it is not possible to change the capacity of the pipelines.
55
Benefits of Pipelines-
• Safer mode of transportation
• Environment friendly
• Least energy requirement
• Lowest maintenance costs
• Minimal impact on land use pattern
• Negligible loss of product in transit
• High reliability
RAILWAYS:-
Rails are the cheapest mode of transporting LPG but meanwhile the availability of the tracks as
well as the stations are in the hands of the Government .LPG is loaded into containers called as
tank wagons which have capacity of 37.5 MT( for 8 wheeler tank wagons) and unloaded at the
nearest bottling plant. To unload LPG from the tank wagon, bottling plants should install
separate machinery. Not all bottling plants have this feature as not all the bottling plants have
rail availability.
56
ROAD:-
To transfer LPG through roads costs highest,as well as it is unsafe also that is high amount of security if we transfer LPG through roads. Trucks of 18 MT capacity is used to carry bulk LPG.As it is the most costly mode of transporting LPG it should be minimize to maximum.
57
COASTAL-:
Whenever there is excess an excess of production at RIL, Jamnagar. The material is moved from Jamnagar to other coastal areas like Kandla, Mangalore, Halsia & Vizag.
Pipeline transport:
It is the transportation of goods through a pipe. Most commonly, liquids and gases are sent, but pneumatic tubes using compressed air can also transport solid capsules.
As for gases and liquids, any chemically stable substance can be sent through a pipeline. Therefore sewage, slurry, water, or even beer pipelines exist; but arguably the most valuable are those transporting crude petroleum and refined petroleum product including fuels: oil (oleoduct),natural gas (gas grid), and befouls.
There is some argument as to when the first crude oil pipeline was built. However, some say pipeline transport was pioneered by Vladimir Shukhov and the Bramble company in the late 19th century.
For natural gas, pipelines are constructed of carbon steel and vary in size from 2 to 60 inches (51 to 1,500 mm) in diameter, depending on the type of pipeline. The gas is pressurized by compressor stations and is odorless unless mixed with a mercaptan odorant where required by a regulating authority.
Types by transport function:
In general, pipelines can be classified in three categories depending on purpose:
Gathering pipelines-
Group of smaller interconnected pipelines forming complex networks with the purpose of bringing crude oil or natural gas from several nearby wells to a treatment plant or processing facility. In this group, pipelines are usually short- a couple of hundred meters- and with small diameters. Also sub-sea pipelines for collecting product from deep water production platforms are considered gathering systems.
58
Transportation pipelines-
Mainly long pipes with large diameters, moving products (oil, gas, refined products) between cities, countries and even continents. These transportation networks include several compressor stations in gas lines or pump stations for crude and multi products pipelines.
Distribution pipelines-
Composed of several interconnected pipelines with small diameters, used to take the products to the final consumer. Feeder lines to distribute gas to homes and businesses downstream. Pipelines at terminals for distributing products to tanks and storage facilities are included in this group.
Construction
When a pipeline is built, the construction project not only covers the civil work to lay the pipeline and build the pump/compressor stations, it also has to cover all the work related to the installation of the field devices that will support remote operation.
The pipeline is routed along what is known as a 'right of way'. Pipelines are generally built using the following stages:
1. Route (right of way) Selection
2. Surveying the route
3. Clearing the route
4. Trenching - Main Route and Crossings (roads, rail, other pipes, etc.)
5. Installing the pipe
6. Installing valves, intersections, etc.
7. Covering the pipe and trench
Russia has Pipeline Troops as part of the Rear Services, who are trained to build and repair pipelines. Russia is the only country to have Pipeline Troops.
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Operation-
Field devices are instrumentation, data gathering units and communication systems. The field Instrumentation includes flow, pressure and temperature gauges/transmitters, and other devices to measure the relevant data required.
These instruments are installed along the pipeline on some specific locations, such as injection or delivery stations, pump stations (liquid pipelines) or compressor stations (gas pipelines), and block valve stations.
The information measured by these field instruments is then gathered in local Remote Terminal Units (RTU) that transfer the field data to a central location in real time using communication systems, such as satellite channels, microwave links, or cellular phone connections.
Pipelines are controlled and operated remotely, from what is usually known as The Main Control Room. In this center, all the data related to field measurement is consolidated in one central database. The data is received from multiple RTUs along the pipeline. It is common to find RTUs installed at every station along the pipeline.
60
The SCADA System for pipe lines
The SCADA system at the Main Control Room receives all the field data and presents it to the pipeline operator through a set of screens or Human Machine Interface, showing the operational conditions of the pipeline. The operator can monitor the hydraulic conditions of the line, as well as send operational commands (open/close valves, turn on/off compressors or pumps, change set points, etc.) through the SCADA system to the field.
To optimize and secure the operation of these assets, some pipeline companies are using what is called Advanced Pipeline Applications, which are software tools installed on top of the SCADA system, that provide extended functionality to perform leak detection, leak location, batch tracking (liquid lines), pig tracking, composition tracking, predictive modeling, look ahead modeling, operator training and more.
Implementation-
As a rule pipelines for all uses are laid in most cases underground. However in some cases it is necessary to cross a valley or a river on a pipeline bridge. Pipelines for centralized heating systems are often laid on the ground or overhead. Pipelines for petroleum running through permafrost areas as Trans-Alaska-Pipeline are often run overhead in order to avoid melting the frozen ground by hot petroleum which would result in sinking the pipeline in the ground.
Maintenance-
Maintenance of pipelines includes checking Cathodic protection levels for the proper range, surveillance for construction, erosion, or leaks by foot, land vehicle, boat, or air, and running cleaning pigs, when there is anything carried in the pipeline that is corrosive.
US pipeline maintenance rules are covered in Code of Federal Regulations(CFR) sections, 49 CFR 192 for natural gas pipelines, and 49 CFR 195 for petroleum liquid pipelines.
In the US, onshore and offshore pipelines used to transport oil and gas is regulated by the Pipeline (PHMSA). Certain offshore pipelines
61
Used to produce oil and gas are regulated by the Minerals Management Service (MMS). In Canada, pipelines are regulated by either the provincial regulators or, if they cross provincial boundaries or the Canada/US border, by the National Energy Board (NEB). Government regulations in Canada and the United States require that buried fuel pipelines must be protected from corrosion. Often, the most economical method of corrosion control is by use of pipeline coating in conjunction with cathodic protection and technology to monitor the pipeline. Above ground, cathodic protection is not an option. The coating is the only external protection.
Pipelines and geopolitics-
Pipelines for major energy resources (petroleum and natural gas) are not merely an element of trade. They connect to issues of geopolitics and international security as well, and the construction, placement, and control of oil and gas pipelines often figure prominently in state interests and actions. A notable example of pipeline politics occurred at the beginning of the year 2009, wherein a dispute between Russia and Ukraine ostensibly over pricing led to a major political crisis. Russian state-owned gas company Gazprom cut off natural gas supplies to Ukraine after talks between it and the Ukrainian government fell through. In addition to cutting off supplies to Ukraine, Russian gas flowing through Ukraine—which included nearly all supplies to Southeastern Europe and some supplies to Central and Western Europe was cut off, creating a major crisis in several countries heavily dependent on Russian gas as fuel. Russia was accused of using the dispute as leverage in its attempt to keep other powers, and particularly the European Union, from interfering in its "near abroad".
Future Plans:
The demand for LPG (Liquified Petroleum Gas) as domestic fuel in the Northern, Central and Western regions is being met from indigenous LPG production from oil refineries and from gas processing units. Besides domestic LPG production sources, the deficit in demand-Supply is being met through import of LPG at Kandla on the West coast.
62
Increasing demand for LPG has also put tremendous pressure on the rail/road network. Accordingly, requirement of LPG pipeline starting from Kandla port up to Loni was identified and world's longest LPG pipeline was commissioned by GAIL to facilitate transportation of imported LPG and LPG production from the indigenous units at Jamnagar to the northern region.
DESIGN CAPACITY: 2.5 MMTPA
Risk Involved in transporting bulk LPG Through cross country pipeline
LPG is stored in Liquid form under high pressure conditions. When released in air it possesses the following risk:
Highly flammable
Settles and flows along ground
High liquid to vapor ratio
High increase in pressure due to temperature rise
Vaporizes rapidly, lowering temperature which may cause frost burn
Low viscosity and poor lubrication
Risk of vapor cloud explosion
Risk of BLEVE
63
METHODOLOGY
64
METHODOLOGY• Collected and organized the data for LPG demand and supply, sources of LPG and modes
of distribution with their details like costs, capacities etc.
• For ease and detail of analysis, we have divided India into four regions namely North, South, East and West.
65
• Analyzing and Interpreting the secondary data and information available with IOCL-HO (Mumbai).
• To study of new pipe line where there is mismatch of demand and supply across India.
• Applying various tools like SECONDARY DATA AND EXPERIENCED SURVEY to bring out various results. Experienced survey is like with whom we are dealing the person who are experienced and has sound knowledge on this topics.
• The proposed study is DESCRIPTIVE AND CAUSAL in nature. In this study the project is very much descriptive and cause and effect type.
• To see the cause and effect of the problem, we have independent variable”COST” and depedent variable “SAVING”.
• Analyzed LPG pipelines all over India.
FACTORS NEEDED TO SET-UP PIPELINE:
1. Availability of Source
2. Demand and Consumption Point i.e. Plant
3. Geographical area
4. Distance
5. Future Demand
6. Capital cost
7. Savings
8. Pay Back Period
66
BOTTLING PLANTS OF IOC
67
BOTTLING PLANTS OF IOC
11
7 215
36 9
10
14
15
1617
18
20
1921
22
23
2425
27
28
29
30
31
32
33
343536
37
38
3940
41
42
43
4445
46
47
48
495051
5253
58
55
57
56
59
6160
6263
64
65
54
7576
7067
69
71 72
7473
77
79
78 80
8182 83
8586
87
8889
NORTH EAST SOUTH WEST1.Allahbad
2.Kanpur
3.Lucknow
4.Trisundi
5.Varanasi
6.Aligarh
7.Etawah
8.Farukhabad
9.Lakhmipur Kheri
10.Loni
11.Mathura
12.Pattikalan
13.Shahjanapur
14.Haldwni
15.Haridwar
16.Ajmer
17.Bikaner
18.Jaipur
30.Akola
31.Manmad
32.Pune
33.Ahmedabad
34.Bhabnagar
35.Gandhar
36.Hazira
37.Rajkot
38.Baroda
39.Bhopal
40.Guna
41.Ujjain
42.Raipur
43.Coimbatore
44. Ennore
45.Erode
46.Ilayangudi
47.Madurai
48.Mannargudi
49.Myladaturai
50.Salem
51.Trichy
52.Chenglepet
53. Cpcl
54. Cherlapalli 55.Cuddapah 56.Thimmapur 57.Vijaywada
58.Vizag
59. Belgaum 60.Devanagonthi 61.Shimoga 62.Calicut
66. Budge Budge
67.Durgapur
68. Kalyani
69. Raninagar
70. Malda
71. Patna
72.Barauni
73.Bokaro
74.Jamshedpur
75.Balasore
76. Jharsuguda
77. Bishalgarh
78. Rangpo
79. Port Blair
80.Bongaigaon (Brpl)
81.Guwahati (Sarpara)
82.North Guwahati
83.Silchar
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19.Jhunjhunu
20.Delhi
21.M’pur Khadar
22.Gurgaon
23.Karnal
24.Jalandhar
25.Nabha(Patiala)
26.Baddi
27.Una
28.Jammu
29.Leh
63. Cochin
64.Quilon
65.Pondichery
84. Duliajan
85. Gopanari(Digboi)
86. Kimin
87.Dimapur
88. Mualkhang
89.Sekmai
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IMPORTS & REFINERIES OF IOC:
70
LPG INFRASTRUCTURE / LOGISTICS
“INPUTS” REQUIRED FOR DESIGNING PIPELINE:
Pay Back Period < 15 years
Pipeline Tariff = Rs.0.30 / MT/KM
Road Expenses = Rs.2.4/ MT/KM
Cost of Pipe line= 1 crore /KM
Projected Bottling Plant capacities in the year 2016-17.
We can also say inputs as THUMB RULE. During applying these rules, we have strictly adhered
to these inputs so as to get suitable and correct result.
SECONDARY DATA:
BOTTLING PLANT CAPACITY (TMTPA)
LocationEXISTING
(as of 01.10.11)
14-1516-17
21-22
ALLAHABAD 60 120 120 120ALIGARH 15 60 60 60ETAWAH 23 60 60 60FARUKHABAD 30 60 60 60KANPUR 120 180 240 240PATTIKALAN(KASHIPUR) 23 60 60 60LAKHIMPUR KHERI 23 30 30 30LUCKNOW 90 120 120 150LONI 120 180 180 180MATHURA 120 120 150 180
71
SHAHJAHANPUR 45 120 120 120TRISUNDI 11 11 60 60VARANASI 60 120 120 120MUZAFFARNAGAR 0 0 60 60S'PUR/M'NGAR 0 0 60 60MEERUT 0 0 0 60BAREILY/MORADABAD 0 0 0 60GORAKHPUR 0 60 60 120
SUB TOTAL 740 13011560
1800
HALDWANI 60 120 120 120HARIDWAR 60 60 60 60DEHRADOON 0 0 60 60
SUB TOTAL 120 180 240 240AJMER 60 120 120 120BIKANER 30 60 60 60JAIPUR 90 180 180 180JHUNJHUNU 15 30 30 30JODHPUR/PALI 0 60 60 60UDAIPUR 0 60 60 60ALWAR 0 0 60 60KOTA 0 0 30 30
SUB TOTAL 195 510 600 600DELHI (TIKRIKALAN) 240 240 240 240M'PUR KHADAR 180 240 300 300
SUB TOTAL 420 480 540 540GURGAON 60 120 120 180KARNAL 120 180 180 180HISAR/ROHTAK 0 0 60 60
SUB TOTAL 180 300 360 420JALANDHAR 180 180 180 180NABHA (PATIALA) 120 240 240 240BHATINDA /AMRITSAR 0 120 120 120
SUB TOTAL 300 540 540 540BADDI 30 30 30 30UNA 30 60 60 120
SUB TOTAL 60 90 90 150JAMMU 30 60 60 60LEH 5 15 15 15
SUB TOTAL 35 75 75 75
NR TOTAL 2050 34764005
4365
BUDGE BUDGE 120 180 180 180
72
DURGAPUR 120 120 120 180KALYANI 120 180 180 180RANINAGAR 60 120 120 120MALDA 15 30 60 60MURSHIDABAD 0 0 60 60
SUB TOTAL 435 630 720 780PATNA 120 120 120 180BARAUNI 60 120 120 120BHAGALPUR 0 90 120 120MUZAFFARPUR 0 60 60 120
SUB TOTAL 180 390 420 540BOKARO 30 60 60 60JAMSHEDPUR 60 120 120 120
SUB TOTAL 90 180 180 180BALASORE 60 60 60 60JHARSUGUDA 15 30 30 30BEHREMPORE 0 30 30 60
SUB TOTAL 75 120 120 150BISHALGARH 12 30 30 30
SUB TOTAL 12 30 30 30RANGPO 11 11 11 11
SUB TOTAL 11 11 11 11PORT BLAIR 11 11 11 11
SUB TOTAL 11 11 11 11BONGAIGAON (BRPL) 30 30 30 30GUWAHATI (SARPARA) 23 23 23 23NORTH GUWAHATI 60 120 120 120SILCHAR 20 60 60 60DULIAJAN 23 23 23 23GOPANARI(DIGBOI) 30 30 30 30
SUB TOTAL 186 286 286 286KIMIN 8 11 11 11
SUB TOTAL 8 11 11 11DIMAPUR 11 21 21 21
SUB TOTAL 11 21 21 21MUALKHANG 11 22 22 22
SUB TOTAL 11 22 22 22SEKMAI 15 30 30 30
SUB TOTAL 15 30 30 30
ER TOTAL 1045 17421862
2072
AKOLA (DHANAJ) 60 60 60 60MANMAD 60 60 60 60
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PUNE 30 120 120 120NAGPUR 0 60 60 60KOLHAPUR 0 0 30 60AURANGABAD 0 0 30 60
SUB TOTAL 150 300 360 420AHMEDABAD (SANAND) 120 120 120 120BHAVNAGAR 30 30 60 60GANDHAR 30 30 60 60HAZIRA 60 60 60 60RAJKOT 90 90 90 90BARODA 60 120 120 120KANDLA 0 30 30 30
SUB TOTAL 390 480 540 540BHOPAL 90 120 120 180GUNA 30 120 120 120UJJAIN 60 60 120 120JABALPUR 0 60 60 120GWALIOR 0 30 30 60
SUB TOTAL 180 390 450 600RAIPUR 60 90 90 90
SUB TOTAL 60 90 90 90
WR TOTAL 780 12601440
1650
COIMBATORE 60 120 120 120ENNORE 180 180 180 180ERODE 60 120 120 120ILAYANGUDI 15 60 60 60MADURAI 60 120 120 120MANNARGUDI 11 11 11 11MYLADATURAI 11 11 11 11SALEM 45 60 60 60TRICHY 60 120 120 120CHENGLEPET 60 120 120 120CPCL 120 120 120 120VELLORE 0 60 60 60TIRUNELVELLI 0 30 30 30VIRUDHACHALAM 0 0 60 60VIRUDHUNAGAR 0 0 30 30SRIPERUMPUDUR 0 0 60 60TIRUVANAMALAI 0 0 30 30TANJORE 0 0 30 30KRISHNAGIRI 0 0 30 30DHARAMPURAM 0 0 30 30
SUB TOTAL 682 1132 140 140
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2 2CHERLAPALLI 120 150 150 150CUDDAPAH 60 150 150 150THIMMAPUR 60 120 120 120VIJAYWADA 45 75 75 75VIZAG 60 90 90 120KAVALI 0 60 60 120KARIMNAGAR/KURNOOL 0 0 60 60
SUB TOTAL 345 645 705 795BELGAUM 60 120 120 120DEVANAGONTHI 180 240 240 240SHIMOGA 60 120 120 120MANGALORE 0 60 120 120MYSORE 0 60 60 120
SUB TOTAL 300 600 660 720CALICUT 45 120 120 120COCHIN 180 180 180 180
QUILON 60 120 120 120SUB TOTAL 285 420 420 420
PONDICHERY 30 30 30 30SUB TOTAL 30 30 30 30
SR TOTAL 1642 28273217
3367
*Green color mark place is under construction.
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OBSERVATIONS & ANALYSIS
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OBSERVATIONS & ANALYSIS
Concentration of production:
Earlier, we have seen that the production of LPG is from three sources viz. refineries,
fractionators and imports. The sources are distributed across the country and so are the
markets.
We learnt that most of the imports are from Saudi Arabia which is near to the west of India. So
obviously, LPG is imported to the ports at the west coast of India and later distributed to the
other parts by land.
Similarly, even crude is imported from Saudi Arabia and so imported at the ports on the west
coast. Observing these points, we wanted to analyze the distribution of sources across India
and if they are meeting the demands of their locality.
Broadly, we divided India into four major regions viz. North, East, West and South and
categorized all the sources of LPG (IOC, BPC, HPC, RIL, ONGC) into the four categories. On doing
so, we found a very huge imbalance in the production and demand of LPG in the corresponding
regions.
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The maximum consumption is at the north region (32%) followed by the south region (30%)
where the production is only 11% and 15% respectively. So the difference is 21 percentage
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points at north and 15 percentage points at south which is equivalent to 3348 TMT and 2852
TMT respectively. The maximum production is at the west (67%) where the consumption is only
25%. So, the material has to move from west to north and south.
These imbalances infer that the material, a total of 6200 TMT, has to be transported from the
source to the markets to meet the respective demands. With such huge imbalances, a lot of
material has to be transported which will cost millions of dollars.
Rs. 1480 is the average price to transport 1 MT of LPG for 1km and if the average distance
between the reference points of north (Delhi) and west (Kandla) is 1100 km then the average
cost of transporting 3348 TMT is
1480 * 3348 * 1000 * 1100 = Rs. 5,450,544,000,000 per annum
Similarly, the average transportation from west (Kandla) to south (Bangalore) is
1480 * 2852 * 1000 * 1800 = Rs. 7,597,728,000,000 per annum.
DETAILED EXPLANATION OF NEW DELHI- PANIPAT PIPE LINE:
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Background:
Industry transports LPG from its LPG
Refinery Facility to various bottling
plants in North India through road
and rail.
Demands in mainly New Delhi in 11-
12 is 0.42 MMT
80 % thru Road & 20 % Rail
Frequent Road Accidents
Industry on Look out for Alternate safe mode of transportation
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PANIPAT
NEW DELHI
The project aims at
• Decongesting of the roads near tikrikalan, Khadar.
• Reduce the Bulk LPG Tank truck movement.
• Improve the Safety in Road transportation
• Promote environment protection by shifting bulk LPG Movement from Road to Pipeline
transfer
• Savings in cost, transit loss & improved safety
• Provide Safe & secure mode of Transportation
Pipeline Schematic
Calculation:
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Tikrikalan(New Delhi)
Panipat96KMs14”/16” dia
TMTPA= thousand metric ton per annum
MMTPA=million metric ton per annum
KM=kilometer
Cr=crore
• Forecasted demand of Delhi (TIKRIKALAN)is extremely high i.e. 240 TMTPA.
• This proposed pipeline can help to avoid the mismatch of demand-supply in the year
2016-17.
• Can help to its nearby district like Gurgaon, Rohtak, Noida, Jind, Hisar etc.
• Analyzed the data of year 16-17 and proposed one suitable pipeline for it.
Other costs also associated in this pipe lines are -
Land & RoU
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Station mechanical, Electrical & Instrumentation
Station civil works
Miscellaneous expenses* including contingency
Interest & Misc charges
Likewise we have found other 7 feasible proposed pipe lines. Everything is calculated using
same formula and secondary data.
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FINDINGS
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PIPELINE DETAILS85
PROPOSED LINEEXISTING LINE
JALANDHAR
VIZAG
AKOLAMANMAD
CUDDAPAH
LUCKNOW
AJMER
JAMNAGAR
GUNA
KOCHI
SL No. PROPOSED LINE REMARKS APPROX LENGTH IN KMs
1 Kochi-Coimbatore-Erode-Salem-Trichy
PROPOSED LINE 458
2 Hyderabad-Warangal-Karimnagar
PROPOSED LINE 197
3 Newdelhi-Panipat PROPOSED LINE 96
4 Mumbai-Nashik-Manmad-Akola-Nagpur
PROPOSED LINE 672
5 Panipat-Muzafrnagar-Bareilly-Shahjanpur-Kheri
PROPOSED LINE 517
6 Mathura-Gwalior-Guna-Bhopal-Ujjain
PROPOSED LINE 697
7 Ennore-Tiruvallur-Cuddapah PROPOSED LINE 268
8 Guna-Bhopal-Ujjain PROPOSED LINE 321
9 Kandla – Loni – Panipat New Pipeline 1521
10 Rewari – Mathura - Allahabad New Pipeline 620
11 Koyali – Sanand – Patan New Pipeline 110
12 Vizag – SecunderabadAugmentation in existing pipeline
589
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13 Paradip – Haldia – Budge Budge - Kalyani – Durgapur
New Pipeline 673
14 Durgapur – Barauni - Varanasi New Pipeline 830
15
Mangalore – Bangalore New Pipeline 376
16
Ennore – Trichy New Pipeline 382
17 Mumbai – Chakan
New Pipeline 166
Finally we have found 8 feasible pipe lines to avoid mismatch of demand – supply in these areas
with a profit of approx. 266 Crores.
RECOMMENDATIONS
In the current scenario, these are the 8 possible LPG pipelines which are feasible according
to Thumb Rule.
If these pipe lines will be set up then almost 90% of the country will be covered by the
pipelines.
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IOC should focus on the extreme Eastern region so that whole India can get LPG easily
without any hesitation.
It should also work on the top of Northern Region like Jammu, Leh, and Srinagar etc and hill
area Himachal Pradesh.
Already it has a strong network of LPG pipelines in Southern, Northern and Eastern Region.
It should focus on the western region to make its pipeline networking more stronger.
As the taxes vary from state to state, it is not wise to calculate the “profit after tax” (PAT) to
assess the manager. Instead, “operating profit” makes a better performance measure in this
case.
As the demand varies from state to state or market to market it is not right to assess the
plant managers on the profit they make in numbers. So the performance measure to be
used here is a ratio. The ratio should be:
Operating profit/cost of goods sold
CONCLUSION
• Can easily handle the mismatch of demand- supply in the year 2021-22 if these
proposed pipe lines will function.
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• In future the projected demand will gradually decrease mostly after the year 16-17 as
the demands will be fulfilled significantly by IOC, HPC, and BPC jointly.
• a profit center empowers the plant manager to choose his/her supply sources and also
his markets or price of the material to maximize the profits of his plant. But as the price
of LPG is fixed by the government the plant manager has to reduce the cost as much as
possible.
Pricing factors of LPG:
• To know what measures a plant manager can take to reduce the price of LPG it is
necessary to study how LPG is priced.
• Free/Fuel-On-Board (F.O.B.) price: This is the actual price of LPG at the time of loading
into the ship at the port of the country exporting it.
• Ocean freight: It is the cost of transportation of LPG from the exporting country to the
importing country by ship.
• Insurance: It is the cost of shipping insurance.
• Ocean loss: A small portion of loss (0.305%) is considered during the shipping.
• Port dues & Wharfage: The price the import port charges for disporting the material.
• Import Parity Price (IPP): The sum of all the costs listed above. Even if the plant manager
wishes to procure LPG from any fractionator or refinery, he has to buy LPG at IPP of the
nearest port.
• Terminal charges: The charge for using the terminals at the port to store LPG.
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Freight charges: The cost of transportation of bulk LPG to the bottling plant. Fill cost:
The cost of bottling.
ANNEXURE
Find the attachment with it i.e. the Excel Sheet.
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REFERENCES
http://www.iocl.com
http://www.hpcl.com
http://www.bpcl.com
http://myiris.com/shares/research/motilal/INDOILCO_20100129.pdf
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http://www.google.co.in/search
en. wikipedia .org/ wiki
Indian Oil official ppt & excel sheet
Indian Oil monthly magazine (april,may & June)
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