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India Review 2017 - Major Developments in Economy, Energy & Environment

by Jessica Singh, M (CP & ES)

Economic Survey 2016-17 tabled in the Parliament on G

January 31, 2017. The date was advanced by a month. a budgetary allocation of Rs.6 billion for the next three
years with an annual outlay of Rs.2 billion. It will provide
India rank 79th in Corruption Perceptions Index 2016. assistance for setting up and

ints in 2016 from 38 dry ports and SEZs.
points in 2015. The score runs from zero to 100, zero
denoting high levels of corruption. China and Brazil have India joined the International Energy Agency (IEA) as an
the same score as India. Denmark and New Zealand are
ranked first with a score of 90 points, Somalia was ranked Association country.
the most corrupt country in 2016.

Monetary Policy Committee in its sixth Bi-Monthly Nationwide launch of BS IV fuels.

Monetary Policy Statement of 2016-17 kept the policy repo Cabinet approved policy to provide purchase preference in
rate unchanged at 6.25%.
all the public-sector undertakings (PSUs) under the Ministry
Budget 2017-18 tabled in the parliament on 1st February, of Petroleum and Natural Gas. The purchase preference
will be linked to the local content in these companies. Local
main focus was on reviving the agricultural economy and content may include local skills, oil and gas technology,
rural infrastructure, with higher allocations for MNREGA local manpower, or manufacturing.
and the Pradhan Mantri Awas Yojana, among others. Other
highlights, were railways and roads, with a nearly 10% Cabinet Committee on Economic Affairs approved
increase in budgetary allocation to infrastructure, including
24% increase for national highways and there is an 80% marketing and pricing freedom for Coal Bed Methane
increase in allocation towards metro rail. contractors.

Cabinet approved the proposed merger of SBI with its five In its first bi-monthly Monetary Policy Statement for 2017-

associates. The five associate banks of SBI are State Bank 18, the RBI kept the policy repo unchanged at 6.25%.
of Bikaner & Jaipur (SBBJ), State Bank of Patiala (SBP),
State Bank of Hyderabad (SBH), State Bank of Travancore During 2016-17, GDP growth decelerated to 7.1% ( in line
(SBT) and State Bank of Mysore (SBM).
with the advance estimates) from 8.0% estimated for 2015-
Supreme Court bans sale of vehicles not compliant with 16.

BS IV standards from April 1, 2017. I

India ranked 131st on Human Development Index. The UN Nagpur. The pilot project envisages a fleet of 200 electric-
powered public transport vehicles which would be run on
Human Development Report based on data for 2015 has
ranked India 131st out of 188 countries. India is now orm in Nagpur.

1990s due to an increase in life expectancy and mean
years of schooling in the past 25 years.

Dynamic pricing of petrol and diesel made applicable energy security through coordination between different
ministries.
across India from June 16, 2017. Petrol and diesel prices
are being changed on a daily basis across the country. Ministry of Urban Development releases list of 30 new

India reaffirms its commitment to combating climate Smart Cities. Prior to this 60 cities had been selected under
the Smart Cities Mission in 2016. This brings the total
change, post the US decision to pull out from the Paris number of cities under the Smart Cities Mission to 90.
climate pact.
NITI Aayog releases Three Year Action Agenda 2017-18
Union Cabinet approves policy to give preference to local
to 2019-20 for the economy, marking a departure from the
suppliers for government procurements. Five-Year Plan process.

Union Cabinet approves the abolition of the Foreign First Mid-Year Economic Survey tabled in the Parliament.

Investment Promotion Board (FIPB). The second volume of Economic Survey 2016-17
emphasized on a 'rekindled optimism on structural reforms
India ranks 60th in Global Innovation Index 2017. India in Indian economy.

National Data Repository (NDR) set up at Directorate Air India gets Rs.9.3 billion as part of bailout package.

General of Hydrocarbons (DGH) to make the entire E&P Since 2012, the airline has received Rs.250 billion as equity
data available for commercial exploration, research and from the government.
development and academic purposes.
Government sells 7% stake in NTPC.
Government paved the way for direct sale of Biodiesel (B-
Russian government controlled Rosneft-led consortium
100) for blending with High Speed Diesel to all consumers,
in accordance with the specified blending limits and the acquires Essar Oil for $12.9 billion. The deal includes sale
standards specified by the Bureau of Indian Standards. of its 20 million tonne refinery at Vadinar in Gujarat, a
captive power plant and captive port as well as over 3,500
In its second bi-monthly Monetary Policy Statement for petrol pumps.

2017-18, RBI cut the Statutory Liquidity ratio (SLR) by 50 In its third bi-monthly Monetary Policy Statement for 2017-
basis points. While it kept the policy repo rate unchanged
at 6.25%. 18, RBI cut Repo Rate by 25 basis points, bringing the
benchmark rate down to 6% the lowest since November
Solar tariffs record low of Rs. 2.44/ kWh at Bhadla Park, 2010.

Rajasthan after hitting Rs 3.30 per kWh bit for Rewa Solar GDP (gross domestic product) growth for the June quarter
Park, Madhya Pradesh in February 2017.
at constant prices was 5.7%, lower than the 6.1% notched
Government clarifies that the tax rate on solar modules up in the March quarter. This was the lowest quarterly
growth since June 2012.
under GST would be 5% and not the earlier specified 18%.
The new tax regime will result in effective rate of indirect Ministry of Power launches Pradhan Mantri Sahaj Bijli Har
taxes to go up from zero to 5% on solar modules.
Ghar Yojana (Saubhagya). The scheme seeks to ensure
Countrywide roll of GST. universal household electrification (in both rural and urban
areas) by December 2018 by providing last mile
Cabinet gives its in-principle approval for acquisition of oil connectivity.

marketer HPCL by ONGC. Union Cabinet approved an ordinance to amend the Goods

NITI Aayog releases the draft National Energy Policy and Service Tax (Compensation to States) Act, 2017, that
seeks to increase the cap on the cess levied on certain
(NEP). Objective of NEP is an omnibus policy to achieve types of cars (such as sports utility vehicles) from 15% to
the goal of 25%.

The Indian Institute of Petroleum and Energy Bill, 2017 first ever country to record highest jump in World Bank's
ease of doing business ranking.
passed in Lok Sabha. The Bill establishes the Indian
Institute of Petroleum and Energy, Vishakhapatnam,
Andhra Pradesh.

Supreme Court bans the use of pet coke and furnace oil in The Cabinet Committee on Economic Affairs approved the

NCR and in the states of UP, Haryana & Rajasthan. revision of ethanol price under the Ethanol Blended Petrol
(EBP) Programme for supply to public sector oil marketing
India receives its first shipment crude oil from the USA. companies (OMCs).

IOCL imported 1.6 million barrels of crude oil from USA at In its 5th Monetary Policy Statement for the year, RBI kept
the Paradip Port in Odisha.
repo rate unchanged at 6 % and revised up its inflation
Tata Motors & Mahindra and Mahindra win order for 10,000 forecast for the coming months.

electric vehicles from state-run Energy Efficiency Services Wholesale Price Index (WPI) accelerated to an eight-
Ltd (EESL).
month high of 3.93% in November, from 3.59% in October,
In its 4th Monetary Policy Statement for the year, RBI kept mainly account of a sharp increase in fuel and food prices.
Consumer Price Index (CPI) surged to 4.88% in November,
repo rate unchanged at 6 %. the fastest month-on-month increase in 16 months, driven
by soaring vegetable prices and a rise in fuel inflation.
Indian Renewable Energy Development Agency
ICB Price ($/barrel) December December
(IREDA) listed an Indian rupee-denominated green bond Retail Petrol Price (Rs. /Litre) 2016 2017
(green masala bond) in London, raising Rs 19.5 billion Retail Diesel Price (Rs./Litre)
($300 million). The bond was also certified by the Climate Renewable Energy Capacity (GW) 52.74 62.29
Bonds Initiative. Power Generation Capacity (GW) 68.94 69.97
Lowest Solar Tariff (Rs/ KWh) 56.68 59.64
The four-month long Southwest Monsoon 2017 ended at Power Deficit % 62*
POL Consumption Growth (%)# 50 331
95% of the long period average (LPA). 314 2.44
4.34 0.7*
IMF revised down India's GDP growth projection to 6.7% 0.7
8.8 3.4
from earlier projection (April'2017) of 7.2%, reflecting still
lingering disruptions associated with the demonetization in CPI Inflation (%) December December
November 2016, as well as transition costs related to the WPI Inflation (%) 2016 2017
launch of the Goods and Services Tax in July 2017 Repo Rate (%)
GDP Growth (%)# 3.41 4.88*
MoP&NG in consultation with Public Oil Marketing BSE Sensex 2.1 3.93*
Rs/$ Exchange Rate 6.25
Companies decided to bring forward the date of BS-VI Forex Reserves (US$ billion) 7.1 6
grade auto fuels in NCT of Delhi with effect from April 1, Trade Deficit (US$ billion) @ 26000 6.5
2018 instead of April 1, 2020. 67.9 34057
360.3 63.9
M 67.9 409.4
99.9
investment grade of Baa3 to Baa2, and changed the outlook

in 14 years.

GDP (gross domestic product) growth for the September

quarter accelerated to 6.3%, rebounding from the three-
year low of 5.7% recorded in the June quarter.

India jumped 30 spots to secure a place among the top-100

countries on World Bank's ease of doing business ranking
list in 2018. With this year's performance, India became the

Strong Support from the Maharatna Company; GoI Control: 57.34%
Government of India Government nominated Directors on IOC Board
Contribution to exchequer of US$28 bn in FY17
Largest Refiner in the Country
11 refineries with 81.20 MMTPA Capacity
Pan-India Pipeline Infrastructure 35% of Domestic Refining Capacity

Leading Market Share 12,700+ km pipelines for crude oil and products
Across Portfolio with a total capacity of 93.7 MMTPA
48% share in crude and product pipeline (by
Integrated Operations Across the length)
entire Energy Value Chain
45.1% petroleum market share in FY17 with over
Strong Focus on Innovation Through 46,500 touch points
R&D and Alternate Energy Sources
2nd largest domestic player in Petrochemicals
Driven by a Management Team That E&P: 8 domestic and 9 overseas blocks
has Delivered Results
554 active patents as on 31.03.2017
Note: Company Filings and Petroleum Planning and Analysis Cell (http://ppac.org.in/). New focus on Alternate and Renewable Energy
USD-INR:64.8550 (as on March 31, 2017) (Wind, Solar, Biofuels, Nuclear)

Consistent growth
FY11-FY17 Revenue CAGR: 6.59%

2

80.00 FY17 From a humble beginning to an Oil Giant
70.00 69
60.00 31-Mar-17
50.00 15.4
40.00
30.00 Retail Outlets
20.00
10.00 1975 1985 1995 2005 2015

0.00
1965

Turnover

Source: Company Filings

Refining Capacity Pipeline Network Turnover

MMT Kms US$ in Billion
81 13
11.6x
6.5x
68.7

7 12 24 36 7 14.5
1970 1980 1990 2000 2000
5
4

2

2017 1970 1980 1990 2000 2017 0.1 0.7 2.7 2017
1970 1980 1990

Contribution Fortune Platts Energy Fitch: BBB-
to Exchequer: Global 500 Ranking: 14
status Ranking :
US$ 28 Bn (2016)
(FY17) 161
(2016)

Note: IOC is ranked 14th as per Platt Global Energy Company Rankings 2016. 3
IOC is ranked 161 amongst Fortune Global 500 Companies in 2016.
US$-INR:64.8550 (as on March 31,2017)

Low per Capita Oil Consumption Represents an

Consumption in million barrel per day

19.53

12.53 11.12

4.12 3.74

US EU China Japan India

Source: IMF World Economic Outlook, April 2017 (GDP at constant Prices) Source: CIA World Fact book (2014 & 2015 Est.).-as per website on 21 Aug 2017
ASEAN-5: Indonesia, Malaysia, Philippines, Thailand & Vietnam
in Consumption Across Key Products
Oil Consumption Trends Have Been
FY18 FY22 E CAGR
MMT

Source: Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas, Govt. of India. Note: HSD: High Speed Diesel and MS: Motor Spirit 4
Source: Petroleum Planning and Analysis Cell

Strategic Presence With Access to High Demand Markets Leader in Refining Market Share(1)

Strategically 35%
placed with 26%
access to high
demand market 11% 14% 9%
of North India
6%

IOC Reliance HPCL BPCL Essar Oil ONGC

Note: Figures as of March 31, 2017.
(1) Market share based on group Refining Capacity

Refinery Throughput (MMT) Capacity Utilization* (%)

54 57 65

FY 15 FY 16 FY 17 *Excluding Paradip Refinery

Steady Distillate Yields* (%)

78.8 80.6 79.3

Note: Figures as of March 31, 2017

Importing Crude from Across the Globe

FY 15 FY 16 FY 17
*Excluding Paradip Refinery

North Changing Crude Mix for Enhanced Profitability
America Type of Crude Oil Used

0.23% Central Asia High Low Producing Euro IV grade fuels
Middle East 1.50% Sulphur Sulphur Preparing for Euro VI

66.3% 52% 48%

Africa South
28.13% East Asia

3.84%

Total crude oil import : 63.79 MMT (including 7.74 MMT for CPCL) FY 17 5
Figures for FYE 2017
Note: All figures for the year ended March 31 of the respective years.

6

Capacity : 15 MMPTA 17 onwards INDMAX Unit

Operating at 100% capacity from 7

One of the most modern refineries:

100% HS including 40% Heavy
Nelson Complexity Factor 12.2
Processed 99.99% Sour Crude in Q1 17-18

Product Slate :

MS 25%, HSD 38%, ATF/SKO 13%, LPG 5%, Petcoke 8%

Distillate Yield 80%

For Q1 17-18

Improvising Opex

1.40 $/bbl in Q1 17-18 against 2.05 $/bbl in FY 16-17

Energy Index 50 MBN

Among the best in the industry

Largest Pipeline Market Share - Downstream High Capacity Utilization

%

Others, 94 99 94
51% 70 73 69
118
Others, IOC, Others, FY 15 125 119
27% 49% 44%
FY 16 FY 17
IOC, IOC,
73% 56% Crude Product Indicate Total Capacity
Utilization
Crude Oil Pipelines Product Pipelines Total Pipelines

Note: Figures as of March 31, 2017

Pipelines Throughput Steady Revenue Stream with healthy EBITDA

MMT In US$ millions

76 925 945
28 846
48 764
FY 15
80 83 FY'14 FY'15 FY'16 FY'17
29 31
51 EBITDA
51 FY 17

FY 16 Indicate Total Throughput

Crude Product

All annual figures for the year ended March 31 of the respective years. 8
USD-INR:64.8550 (as on Mar 31, 2017)

Crude Oil Length Capacity
Pipelines (KM)
Product Pipelines 5,301 48.60
MMTPA
Gas Pipelines 7,491
45.09
Total 140 MMTPA

12,932 9.5
MMSCMD(1)

--

As on July 31 2017 9

Pan India Presence with Multiple Consumer Touch Points Leader in Market Infrastructure

SKO / LDO Others LPG Distributor 56% 49% 51%
Dealerships 326(1) 9,570

3,904 Over 46,500
Customer
touch-points

44% 51% 49%

Retail Outlets Bulk Consumer
26,212 Pumps
6,520

Retail Outlets LPG Distributorships Aviation Fuel
Indian Oil Others Stations

All figures for the year ended March 31, 2017 Operating Highlights (Inland / Export Mix)

Other Key Highlights

Sales (MMT)

76.5 80.7 83.5

3.7 3.6 4.8

72.8 77.1 78.6

Note: (1) Others includes Aviation Fuel Stations, Terminals, Depots and LPG Bottling Plants. FY 15 FY 16 FY 17

Inland Export 10

Domestic POL Sales (MMT)

11

Branded Products

Diversified Branded Services
Products &

Brands

Diversified
Customer

Base

The turnover growth is insulated from the cyclical demand
fluctuations due to diversified customer base

12

Gas Moving Globalization
Sourcing Beyond the Exports
Marketing
LNG Terminals Value Consultancy
Chain Training
CGD
Downstream Marketing
E&P
Domestic
Overseas
Operatorship

RE&SD Nuclear
Wind, Solar JV with NPCIL

Biofuels
Sustainability

13

Capacity Sales Breakup (in US$ millions)

Total: US$ 3559 Total: US$ 2975

Total: US$ 3126

FY 15 FY 16 FY 17
LAB Px/PTA Polymers MEG/DEG/TEG Others

EBITDA (in US$ millions)

US$-INR: 64.8550 (as on March 31, 2017)

14

IOC: E&P Capabilities Status of Domestic and Overseas Blocks

Stake in 17 exploration blocks

8 Domestic blocks

With ONGC / OIL / GAIL / GSPC
Including 2 Coal Bed Methane blocks with
ONGC (20% participating interest)

9 International blocks

Libya (1), Yemen (1) , Nigeria (1), Gabon (1),
Venezuela (1) , USA (1), Canada (1) and
Russia (2)

Domestic Blocks Appraisal Overseas Blocks
Discovery Exploration Under Development Production

All figures as on March 31, 2017

A view of the Recent Developments on E&P
drilling site at
IOC Khambat 1 Increasing Equity Oil and Gas Production.

New Asset

Taken stakes in Vankor and Taas Yuryakh (
Russian Assets). Both are producing Assets.

All figures as on March 31, 2017

15

Investment Approval for
$1.23 billion

16

Geographical Diversification Gas Diversification Across Sources
JV for City Gas Distribution with
Figures for the year ended March 31,2017 Wind presence in 9 Cities
Power
5 MMTPA LNG import, storage and re-
gassification terminal under
construction at Ennore (Near Chennai)

Ennore Tuticorin Pipeline (1175 km)

Wind 167.60 installed capacity
21 MW plant at Gujarat;
48.3 MW plant at AP
72.3 MW plant at Rajasthan

Solar

6000+ Retail Outlets Solarised. Installed
Other Solar capacity is 20 MW

17

Focus on Products & Technology Collaborations

INDMAX Technology developed to Indane Hi-therm LPG based metal Game-changing technology for
maximize light distillates from NANOCUT cutting gas Conversion of CO2 to value
Diesel Hydro refinery residue added products
treating LPG Improved efficiency and safety
standards Conversion of Carbon dioxide to
Naphtha chemicals
Isomerization Commercialized 1.2 MMTPA Railroad Oils 1st in India to introduce multi-
grass-root DHDT facility in grade railroad oil to Indian
Fuel Bongaigaon Railways - significant fuel and oil
Efficient savings
Engine
Retrofitting of Bongaigaon One of six companies to
Oils refinery for producing Euro-III/
IV motor spirit Marine Oils develop Approved Marine

Technology

Commercialization of R&D Hot Rolling Commercialization of R&D
developed fuel efficient engine Oils developed energy efficient hot
oil for gasoline & diesel car rolling oil in association with
RDCIS in steel plants

Active Patents Portfolio Investments in Research & Development

As on March 31, 2017 By Division Indalin: Technology for conversion of naphtha to light olefins, LPG &
aromatic rich gasoline; feasibility under study
By Geography

244 Delayed Coking: Thermal cracking technology for conversion of long/short
188 residue to distillates. Partnership with Engineers India Limited

Octamax: Technology for dimerization of cracked C4 to high octane
(RON) component for Euro IV/V gasoline

FCC Catalyst Additives: CO - Combustion promoter, Coke Reduction
Additive, Residue Upgradation Additive for bottom Upgradation

122 DHDS / DHDT Catalysts: Demonstrated at CPCL for ULSD in 2009. 18
Total Patents: 554 Partnership with Sud-Chemie India Limited (SCIL)

Vegetable Oil co-processing in DHDT: Successful technology
demonstrated in 2013 including demetallation of vegetable oil

INDMAX: INDane MAXimization
INDMAX unit being installed at Bongaigaon refinery as well 19

Refining CO2
Technology Research

Pipeline Catalysts
Research

Alternate Energy

Lubes Nanotech Research
Technology

20

Major Ongoing Projects Planned Capital Expenditure Outlay(1) (2017-18)

Project Estimated Cost (US$ millions)
Polypropylene unit at Paradip (US$ mn)
Coker at Haldia Capex planned for 2017-18, approx USD 3.0 bn
BS-VI Projects 486
474
INDMAX unit at Bongaigaon 2376

Paradip-Hyderabad Pipeline 398
(1150 km, 4.5 MMTPA)
341

Major approved Capex Plans

Project Estimated Cost
Ennore Tuticorin Natural Gas Pipeline (US$ mn)
Koyali Ahmednagar Solapur Pipeline
693

303

Phase IV of Retail Automation 206

Haldia Barauni Product Pipeline 160

US$-INR: 64.8550 (as on March 31,2017) 21

Management Team Contribution to Exchequer (in US$ billions)

Sanjiv Singh Handled all aspects of Refining activities.
Chairman Previously headed the Refinery Division. Also
35+ Year Experience worked with centre for High technology and with
Nigeria Petroleum National Company.

Chemical engineer from IIT Roorkee

A K Sharma Handled various assignments in finance functions. Strong Support From the Government of India
Director (Finance) Was at the forefront of treasury operations to raise
32+ Year Experience funds for IOC. Credited for issuing the first ever Two government Government Board Control:
foreign currency bonds of IndianOil in the nominated Approval for Members
Verghese Cherian international market. Capital Raising
Director (HR) director on board nominated to
32+ Year Experience Chartered Accountant (CA) by profession. Also of directors IOC Board
possesses law degree.
Anish Agarwal Performance: Pricing: Functional
Director (Pipelines) Possesses a rich and comprehensive experience Annual MoU Select petroleum Directors:
36+ Year Experience in human resource discipline in various positions at with Government products based Appointment by
IndianOil. Also headed IIPM, an apex training on Government President of India
B S Canth centre of IndianOil of India
Director (Marketing) initiative 22
32+ Year Experience Post graduate in Social Work (MSW).

G K Satish Has held various important portfolios in Pipelines,
Director (Planning & and has worked in various disciplines like
Business Development) operations, maintenance, engineering services,
30+ Year Experience projects, etc.

Dr. SSV Ramakumar Electronics engineer from Punjab Engineering
Director (R&D) college and Executive MBA from MDI, Gurgaon.
30+ Year Experience
Has held several key portfolios including sales,
operations, human resources etc. Has made
significant contribution as a member of Retail
Advisory Committee.

PG in Personal Management & Industrial Relations
and a Law graduate.

Has experience in varied areas of business
including International Trade, Business
Development, Natural Gas, Marketing Operations,
Logistics and Human Resources.

A Graduate in Mechanical Engineering from the
NIT Surat, and a Post-Graduate in Management
from MDI, Gurgaon .

Has three decades of R&D experience
in downstream hydrocarbons sector, notably in
the areas of refinery process research streams

A doctorate in Chemistry from IIT-Roorkee

Turnover (in US$ billions) EBITDA (%)

Net Profit (in US$ billions) and Dividends (%) Contribution to FY17 EBITDA

EBITDA (in US$ billions)

30% 30% 30% 33% 48% $5.5

$2.9

$1.7 $3.6

$1.1 $2.7 $2.9
$0.8 $0.8 $2.2

FY 13 FY 14 FY 15 FY 16 FY17 FY 13 FY 14 FY 15 FY 16 FY 17

Exchange Rate 1USD= INR 64.8550 Dividend Payout Ratio (% of PAT)

23

Net Worth (in US$ billions) Cash breakdown & Debt (in US$ billions)

$15.4

$13.6

$9.4 $10.2 $10.5 0.1 0.1
$13.3 2.9
3.7 0.0 0.1 0.0
$12.5 1.8 1.5 1.6 1.2
$8.5 1.9 $8.2 1.8 $8.5 1.4
2.1
3.8 2.8 3.9
3.8 4.0

FY 13 FY 14 FY 15 FY 16 FY17 FY 13 FY 14 FY 15 FY 16 FY 17

Total Debt Market Value of Investments
Special Oil Bonds Amount Recoverable from Govt.
Cash Equivalents

Debt / Equity Reduction in Debt Level

$12.5 $13.3

$8.5 $8.2 $8.5

FY 13 FY 14 FY 15 FY 16 FY17

US$-INR: 64.8550 (as on march 31, 2017) 24

(1) Received from Government of India in lieu of compensation till the year FY 2009.
(2) Core Debt = Debt less cash receivable from Government

1 Largest Refiner in the Country
2 Pan-India Pipeline Infrastructure
3 Leading Market Share Across the Portfolio
4 Integrated Operations Across the entire Energy Value Chain
5 Strong Focus on Innovation Through R&D and Alternate Energy Sources
6 Driven by a Management Team That has Delivered Results
7 With Strong Support from the Government of India

25

Fluctuations in commodity prices (e.g. crude oil)
Fluctuation in exchange rates (INR US$)
Fluctuations in global petroleum product prices

26