Consumption of Petroleum Products during X Plan

Consumption of Petroleum Products during X Plan

1. 
   It has been observed that actual materialization of demand has not been in line with the projections in spite of reasonable growth of the economy. X Plan had projected CARG of 3.7 percent for oil during the plan period (2002-07) under base case and CARG of 5.7 percent under the upper case. However, as per actual data available for first four years of X Plan, CARG achievement may be only 2.6 percent⁴. The details are as follows:
   

Table 3.6: Consumption of Petroleum Products during X Plan (MMT)
Year	X Plan Projections	Actual Consumption	Variation
2002-03	107.1	104.1	- 3.0
2003-04	111.2	107.7	- 3.5
2004-05	113.6	111.6	- 2.0
2005-06	118.7	111.9	- 6.7
2006-07 (P)	123.5	114.0	- 6.5

1. 
   The product wise details are at Annexure V.
   
2. 
   Lower materialization is attributed to following reasons:
   

• 
  Substitution of POL demand by NG/LNG especially after commissioning of Dahej terminal of PLL.
  
• 
  Structural change in GDP composition with now over 55 percent share being that of services which is less energy intensive compared to industry and agriculture sectors;
  
• 
  Other factors like high oil prices coupled with conscious efficiency improvement, improvement in roads, electrification of railways etc.;
  
• 
  Low growth in POL is likely to continue with huge natural gas find in various parts of the country especially in the East-Coast and entry of many players for bringing LNG through imports with a view to provide competitive and clean fuel which is expected to change the pattern of energy consumption in the country in the near future.
  
• 
  Opening of Auto sector to LPG, expansion of CNG to new cities, Government’s thrust on development of National and State highways and rural connectivity with the urban mainstream and resultant thrust to increased road movement activities will all add to changes in consumption pattern of POL different from the past.
  

8. Refining Capacity

   1. 
      The refining capacity at the beginning of the X Plan was 114.67 MMTPA. X Plan document placed capacity in the range of 138 MMTPA (under Scenario – I - Keeping in view the competitive environment in the deregulated scenario, current low refining margins, the slow down of the product demand and the fact that the companies would need to make substantial investments in quality upgradation projects, only expansion projects under implementation may fructify during the X Plan) to 155 MMTPA (under Scenario – II - If the product demand grows at a higher rate, then in addition to the capacity expansion projects under implementation, one or two new grass-root projects may also get completed during the X Plan) by the end of the Plan. Accordingly, increase in capacity was expected to be in the range of 23.33 MMTPA to 40.33 MMTPA.
      

2. 
   Compared to the above projections, the likely achievement in refinery capacity at the end of the X Plan will be 148.97 MMTPA or an increase of 34.30 MMTPA. Clearly, the targets have been adequately met. The details of refinery capacity addition are as under:
   

Table 3.7: Refining capacity by the end of X Plan (MMT)
S. No.	Refinery	Beginning of X Plan	Additions during X Plan	Beginning of XI Plan
	Public Sector
1	IOC, Digboi	0.65		0.65
2	IOC, Guwahati	1.00		1.00
3	IOC, Koyali	13.70		13.70
4	IOC, Barauni	4.20	1.80	6.00
5	IOC, Haldia	4.60	1.40	6.00
6	IOC, Mathura	8.00		8.00
7	IOC, Panipat	6.00	6.00	12.00
8	CPCL, Chennai	6.50	3.00	9.50
9	CPCL, Nagapatinam	0.50	0.50	1.00
10	BRPL, Bongaigaon	2.35		2.35
11	HPC, Mumbai	5.50		5.50
12	HPC, Visakh	7.50		7.50
13	BPC, Mumbai	6.90	5.10	12.00
14	KRL, Kochi	7.50		7.50
15	NRL, Numaligarh	3.00		3.00
16	ONGC, Tatipaka	0.08		0.08
17	MRPL, Mangalore	9.69		9.69
	Total Public Sector	87.67	17.80	105.47
	Private Sector
18	RIL, Jamnagar	27.0	6.00	33.00
19	EOL, Jamnagar		10.50	10.50
	Total Private Sector	27.00	16.50	43.50
	Grand Total	114.67	34.30	148.97

1. 
   Some planned additions did not materialize during the X Plan due to change in demand supply dynamics (IOCL Gujarat, 2.0 MMTPA and KRL Kochi refinery, 2.0 MMTPA) while others faced shortage of land requiring relocation of existing facilities (HPCL Mumbai refinery, 2.4 MMTPA).
   
2. 
   The mid-term appraisal of the X Plan indicated a refining capacity of 141.70 MMTPA at the end of X plan, against which the likely achievement is 148.97 MMTPA i.e. an increase of 7.27 MMTPA.
   

1. Investments

1. 
   Likely achievement of Rs. 78,329.43 crore during X Plan period is anticipated as against the target of Rs. 51,968.95 crore for NOCs i.e. ONGC, OIL and OVL. The projects of upstream NOCs were financed through internal resources only. The company-wise details are as under.
   

Table 3.8: Summary of X Plan - Outlay Targets Vs. Achievements E&P (Rs Crore)
Company	X Plan Target	Achieve-ment up to March 2006	Likely achievement in X plan	IX Plan Actual	% Achievement	% Achievement against IX Plan Actual
ONGC	33418.95	34788.28	49142.56	19989.00	147.0	245.8
OVL	13550.00	17746.78	24401.03	200.00	180.1	12200.5
ONGC + OVL	46968.95	52535.06	73543.59	20189.00	156.6	364.3
OIL	5000.00	2996.89	4785.84	2218.00	95.7	215.8
GRAND TOTAL	51968.95	55531.95	78329.43	22407.00	150.7	349.6

2. 
   Out of the total targeted X Plan investment of Rs. 36,572 crore for Refinery and Marketing, Rs. 26,445 cores are to be invested in refining for capacity augmentation, quality upgradation, de-bottlenecking and revamps in various refineries, while the balance of Rs. 10,127 crore is for marketing and pipelines projects. An investment of Rs. 17,674.75 crore is likely to be realized in the refining sector in the X Plan period. The major shortfalls in investment are due to deferment of the following projects.
   

Table 3.9: Shortfall in Investment in Refining sector for the X Plan
Project	Investment Rs Cores
Grassroots refinery of IOCL in Paradip,	1917
Provision of OHCU at IOCL Haldia	1247
Punjab refinery project of HPCL/ GGSRL	1930
Bina refinery project of BPCL/ BORL	873
Expansion/modernization of Kochi Refinery	1383

3. 
   Though part expenditure has been incurred on the major projects indicated above, some of these projects are now slated for implementation during the XI Plan period. Investments in grassroots Paradip Refinery (IOCL), Punjab Refinery (HPCL/ GGSRL), Bina Refinery (BPCL/BORL) and KRL Kochi were deferred because of delays in finalization of tax concessions by the state governments, demand supply considerations and Auto Fuel Policy requirements. If these projects are excluded from the analysis, the likely investment at the end of the X Plan is about 95 percent of the targeted investment. It may be noted that the targeted/likely investment amounts mentioned here do not include investment in respect of private sector refineries.
   

4. 
   In the X Plan, 4 LNG terminals were envisaged, entailing an investment of Rs. 7,000 – 9,400 crore (US$ 1.5 to 2.0 billion). Besides, transmission and distribution pipeline investments were envisaged in the range of Rs. 13,000 crore to 15,000 crore (a total investment of Rs. 20,000 crore to Rs. 25,000 crore). This investment was based on the overall supply scenario from both domestic and international sources. While the domestic scenario was more predictable, the imported gas scenario had certain uncertainties. The imported gas supply projected in X Plan period and the actual achievements are given below :
   

Table 3.10: Gas supply imports projected in X Plan period Vs actual (MMSCMD)
Source	2002-03	2003-04	2004-05	2005-06	2006-07
LNG projected	NIL	NIL	20	40	50
LNG Actual	NIL	NIL	8	18	18-20
Transnational Pipelines	NIL	NIL	NIL	NIL	10
Transn’l P/L Actual	NIL	NIL	NIL	NIL	NIL

5. 
   In the context of the shortfall of about 40 MMSCMD in supplies from cross border sources, the investment achieved is also expected to be lower. The expected actual investment in the X Plan is about Rs. 10,500 crore to Rs.12,000 crore. The shortfall is due to investment in only two terminals as against four terminals proposed. Besides, the pipeline investments are in the range of Rs.6,000 to 7,000 crore vis-à-vis the target of Rs 13,000 crore to 15,600 crore. The transnational pipeline supply is not even envisaged in the XI plan.
   
6. 
   Against the approved outlay of Rs. 7,500 crore for GAIL, an expenditure of Rs. 6,999.83 crore is anticipated. In addition the X Plan had an outlay of Rs. 7,443.81 crore for petrochemical projects against which an expenditure of Rs. 7,619.77 crore is likely to be made during the X Plan.
   

Table 3. 11: Summary of Plan Outlay Vs. Expenditure during X Plan (Rs Crore)
Sector	Target for the X Plan	Anticipated expenditure for X Plan	Percent achievement
Exploration & Production	59468.59	85329.26	143.49
Refining & Marketing	36572.24	26352.90	72.06
Petrochemicals	7443.81	7619.77	102.36
Engineering	171.0	57.53	33.64
Total	103656.00	119359.46	115.15

1. 
   Thus, the overall achievement in the oil and gas sector was about 115 percent of the approved X Plan outlay.
   
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