Energy

Petroleum - Energy to a Growing World

In this sessionGlobal Consumption & TrendsGlobal Trade & Oil PricesGlobal Production & Refining of CrudeIndian Consumption & TradeIndian Energy Outlook 2025Role being played by RIL in meeting 2025 targets Approx 2 HoursGlobal Oil ConsumptionGlobal oil demand (2010) 87.9 MMBPD Global oil demand (2009) 85.0 MMBPD Global oil demand (2008) 86.1 MMBPD

76% of the Demand growth in 2010 was driven by non-OECD countries which contributed to a growth of 2.2 MMBPD (5.7% on a YOY basis).Refining capacity addition2009 2.6 MMBPD 2010 0.5 MMBPDLimited capacity addition in 2010, strong demand growth and wider margins have helped utilization rates improve during the year. Oil Consumption

USA 18.810 Brazil 2.522 Mexico 2.084 Spain 1.467 Thailand 940 China 8.324 Germany 2.440 France 1.828 Indonesia 1.268 Singapore 927 Japan 4.443 Saudi Arabia 2.438 Iran 1.691 Netherlands 1.165 Venezuela 723 India 3.110 South Korea 2.185 UK 1.667 Taiwan 971 Egypt 716 Russian Fed 2.740 Canada 2.151 Italy 1.528 Australia 950 Iraq 636 In 000 barrels per dayOil Consumption Growth

From historical annual growth rate of around 2.5% it has started declining post 2007 recessionEnergy IntensityCountry (2008)Consumption ('000 bbl/day)population (million)bbl/year /capitaRank by consumptionRank by consumption / capitaSaudi Arabia 2.376 25 34,7 8 1 Canada 2.261 33 25,0 9 2 USA 19.498 314 22,7 1 3 South Korea 2.175 48 16,5 10 4 Japan 4.785 127 13,8 3 5 France 1.986 62 11,7 12 6 Germany 2.569 82 11,4 6 7 UK 1.710 61 10,2 14 8 Italy 1.639 60 10,0 15 9 Iran 1.741 74 8,6 13 10 Russia 2.916 140 7,6 5 11 Mexico 2.128 109 7,1 11 12 Brazil 2.485 193 4,7 7 13 China 7.831 1.345 2,1 2 14 India 2.962 1.198 0,9 4 15 Crude ProductionRank (2006 Prodn)Producing NationCrude Prodn ('000 bbl/day 2009)Share of World Prodn1Saudi Arabia 9.760 11,99%2Russia 9.934 12,21%3USA 9.141 11,23%4Iran 4.177 5,13%5China 3.996 4,91%6Canada 3.294 4,05%7Mexico 3.001 3,69%8UAE 2.795 3,43%9Kuwait 2.496 3,07%10Venezuela 2.471 3,04%11Norway 2.350 2,89%12Brazil 2.577 3,17%13Iraq 2.400 2,95%14Algeria 2.126 2,61%Rank (2006 Prodn)Producing NationCrude Prodn ('000 bbl/day 2009)Share of World Prodn15Nigeria 2.211 2,72%16Angola 1.948 2,39%17Libya 1.789 2,20%18UK 1.422 1,75%19Kazakhstan 1.540 1,89%20Qatar 1.213 1,49%21Indonesia 1.023 1,26%22India 877 1,08%23Azerbaijan 1.012 1,24%24Argentina 794 0,98%25Oman 816 1,00%26Malaysia 693 0,85%27Egypt 678 0,83%(Not including Indias share in overseas assets in Sudan, Colombia, Venezuela, Russia, Vietnam, Syria & Brazil which produce approx 19.85 MMT per annum or 400,000 bpd)

India Oil & Gas Reserves (2009-10)Oil Reserves 1,201 MMTNatural Gas Reserves 1,437 BCM(Not including Indias share in reserves in overseas assets in Sudan, Colombia, Venezuela, Russia, Vietnam, Syria & Brazil)

Vis--vis current consumption ofOil*160.03 MMTNatural Gas 46.50 BCMWorld Oil Trade Rank (2009)CountryExports ('000 bbl/day)1Saudi Arabia7,3222Russia7,1943Iran2,4864UAE2,3035Norway2,1326Kuwait2,1247Nigeria1,9398Angola1,8789Algeria1,76710Iraq1,76411Venezuela1,74812Libya1,52513Kazakhstan1,29914Canada1,16815Qatar1,066Rank (2009)CountryImports ('000 bbl/day)1USA9,6312China4,3283Japan4,2354Germany2,3235India2,2336South Korea2,1397France1,7498United Kingdom1,5889Spain1,43910Italy1,38111Netherlands97312Taiwan94413Singapore91614Turkey65015Belgium597Japan, Germany, South Korea, France, Italy, Spain, Netherlands & Turkey have large consumptions but produce < 10% of oil consumedTrends in future oil demandChanging product specifications for Sulphur (parts per million) Country201020152020GasolineUS303030EU101010Brazil 10000 DWT4025 Nos of which 2,582 are Double Hulledof which 70% were built in Japan, China or South KoreaGreece (733), Japan (394) & USA (311) are the largest tanker ownersFlag States Panama (592 Nos) Liberia (520 Nos) Marshall Islands (323 Nos) Greece(233 Nos) Singapore (274 Nos) & Bahamas (215 Nos)The India StoryCrude Production 877Oil Consumption 3,110HSD 974LPG (OE) 417MS 233Kerosene 201ATF 100Any change in International Oil Prices or US $ Exchange Rate has a direct impact on our economy In 000 barrels per dayIndia Oil Trade StoryIMPORT/EXPORT2010-11(P)IMPORTSCRUDE 163.594 PRODUCTLPG 4.484 NAPHTHA 2.063 PETROL 1.702 ATF - KEROSENE 1.366 DIESEL 1.996 LUBES 1.291 FUEL OIL 989 BITUMEN 98 OTHERS 3.347 TOTAL 17.337 TOTAL IMPORTS 180.931 IMPORT/EXPORT2010-11(P)EXPORTSLPG 158 NAPHTHA 10.667 PETROL 13.581 ATF 4.478 KEROSENE 34 DIESEL 20.354 LDO 126 LUBES 8 FUEL OIL 6.734 BITUMEN 21 OTHERS 2.973 TOTAL EXPORT 59.133 NET IMPORT 121.798 Net Product Export 41.796 In 000 tonnes per yearRefining

Nelsons Complexity IndexThe Nelson complexity index was developed by Wilbur L. Nelson in 1960-61.The Nelson complexity index indicates the investment intensity (cost index) of the refinery & its potential for value addition. The higher the index number, the greater the cost of the refinery and the higher the value of its products.Jamnagar Refinery Complex is one of the Most Complex refineries in the world with complexity of 14. Average Complexity of Refineries in USA is 9.5 & Europe is 6.5.World Refining Capacity (2009)ContinentNo of Refineries Capacity Average ThruputAfrica 42 3.295.150 78.456 Asia 184 27.492.610 149.416 Europe 155 22.349.900 144.193 N America 197 25.368.900 128.776 S America 57 5.528.365 96.989 Oceania 9 785.290 87.254 644 84.820.215 131.708 India 21 3.902.600 185.838 % share3,26%4,60%141%In 000 barrels per dayWorld Refining Capacity (2009)CapacityNo of RefineriesTotal Production Average > 500,000 bpd 9 6.186.000 687.333 > 400,000 bpd 15 6.426.800 428.453 > 300,000 bpd 32 10.749.700 335.928 > 200,000 bpd 96 22.712.000 236.583 > 100,000 bpd 194 26.840.400 138.353 > 50,000 bpd 116 8.372.650 72.178 > 200,000 bpd 57 2.061.665 36.170 > 200,000 bpd 80 1.255.740 15.697 > 200,000 bpd 45 215.260 4.784 Total 644 84.820.215 131.708 Jamnagar at 1,240,000 bpd is the largest. Next is Ulsan Refinery of S K Energy of South Korea at 850,000 bpd. The smallest is Beihai Refinery of Sinpec of China at 1,200 bpdCapacity Utilization rates (FY 2011)North America 83.8% (LY 81.6%)Europe 77.8% (LY 76.6%)Asia 83.9% (LY 83.5%)With higher global GDP forecasts and higher global oil demand forecasts coupled with minor capacity additions, refining utilization rates are expected to improve over the next few years.India Refining CapacityTotal Installed193.5 MMT (3.660 mil bblsd)of whichPSU refineries122.9 MMTJVC / Pvt refineries70.6 MMTof whichRIL Jamnagar62.0 MMT ( 1.240 mil bblsd)32% of Refinery Capacity & 88% of Pvt. Sector capacityIn FY 2010-11 RIL operated @ 107.4% cap utilization to produce 66.6 MMT agst. 102 % by PSU refineries

Refinery Capital CostOECD *$ 13,000 / bbl / day (1999)OECD *$ 19,000 / bbl / day (2008)Jamnagar I$ 6,000 / bbl / day (1999)(@ 660,000 bbld a saving of $ 4.62 Billion)Jamnagar II$ 10,000 / bbl / day (2008)(@ 580,000 bbld a saving of $ 5.22 Billion)**Considering OECD complexity (average 7.8 Vs 13 of Jamnagar I & II, savings would be much higher *Organization for Economic Co-operation and Development of 34countries founded in 1961 to stimulate economic progress and world trade. It is a forum of countries committed to Democracy and the Market Economy**In first year itself increased to over 700,000 bpd by de-bottlenecking

Benefit of High Complexity for RILAbility to process inferior quality crude or heavy sour crudes. The Jamnagar Refinery generally processes crudes which are 0.7wt% Sulphur higher compared to Indian peers.Ability to have a superior refinery product slate comprising of high % of LPG, light distillates and middle distillates. The Jamnagar Refinery produces no fuel oil which is unmatched by the Indian peers.Ability to make high quality refinery products such as Bharat 3 gasoline or diesel. For example the Jamnagar Refinery can make Bharat IV grade fuels, unmatched by the Indian peers. Jamnagar II is the only Indian Refinery that produces MS & HSD grades suitable for sophisticated European & US markets.

Landmarks of Jamnagar I & IIBesides cost advantage major achievement includes commissioning Refinery I in approx 60 months & Refinery II in 36 months, both Global records for refineries of its class when commissioned. Project consultant Bechtel had estimated 8 years & 6 years for the projects.There is a 7 km long Jetty where simultaneously 4 VLCCs can be berthed.Combined storage in tank farms is app. 4 MMT.

Jamnagar in pictures

Future Plans for JamnagarThere are plans in the pipeline to process High Pour Point crude oil extracted at Barmer, Rajasthan in the near future. This would require an electrically heated pipeline to be set up from Barmer to Jamnagar.

Gross Refining MarginsGross Refining Margins ($/bbl)FY 2010-11FY 2009-10RIL8.46.6Regional benchmarksSingapore (Dubai)5.23.5US Gulf Coast (Brent)1.12.7US Gulf Coast (WTI)6.43.2Rotterdam (Brent)3.63.1

In FY 2011-12 HI the Gross Refining Margins were approx $10.15 per barrel The Reliance SagaTurnover258,651 Cr 164,479 CrPAT20,286 Cr11,364 CrEquity3,272 Cr3,274 Cr Reserves & Surplus148,267 CrTotal Fixed Assets284,719 Cr No of Employees22,661EPS62 34.7Debt : Equity ratio0.44Production66.6 MMT34.1 MMTCapacity Utilization107.4 %110 %(FY 2010-11)H1 (FY 2011-12)In 2011-12 H1 RIL has commenced production at its Shale Gas JVCs with Chevron & Pioneer in the United States.

The Reliance Export Story2009-10 $ 24.5 billion32.8 MMT2010-11 $ 32.9 billion38.6 MMT2011-12 H1$ 20.8 billion20.5 MMT app.

The Reliance Export StoryOn Long term contracts or on Spot rates.Considering Large Holding Capacity, Financial Muscle, High GRMs and Hedged Crude Supply, Spot rates are preferred over long term contracts.Rates are basis Platts Singapore / Dubai.Insistence on Fully Secured Supplies through reputed global bankers.

HSD Consumption

USA 4.196 India 974 Canada 566 China 2.551 Spain 756 Iran 555 Japan 1.005 Brazil 756 Saudi Arabia 532 Germany 997 Italy 658 Russian Fed. 508 France 981 UK 580 Indonesia 469 Kerosene ConsumptionCONSUMPTION OF PETROLEUM PRODUCTS('000 MT)PRODUCT2006-07 2007-08 2008-092009-102010-11QTY.% GR.QTY.%GR.QTY.%GR.QTY.% GR.QTY.% GR.SKO 9.505 -0,4 9.365 -1,5 9.303 -0,7 9.304 0 8.928 -4,0TOTAL 120.749 6,7 128.946 6,8 133.599 3,6 137.808 3,2 141.785 2,9Decline in Kerosene consumption mainly on account of reduced demand for Lighting & Cooking due to improved Rural Electrification & Availability of LPG.Improved availability of Natural Gas.Customer awareness of Q & Q also led to drop in misuse of Kerosene for adulteration of HSD. LPG ConsumptionCONSUMPTION OF PETROLEUM PRODUCTS('000 MT)PRODUCT2006-07 2007-08 2008-092009-102010-11QTY.% GR.QTY.%GR.QTY.%GR.QTY.% GR.QTY.% GR.LPG 10.849 3,8 12.010 10,7 12.191 1,5 13.135 7,7 14.328 9,1TOTAL 120.749 6,7 128.946 6,8 133.599 3,6 137.808 3,2 141.785 2,9LPG consumption increasing due to greater aspirational demand from semi-urban and rural areas. The number of LPG connections as on 114.95 million as on April 1, 2010 is served by 9,386 distributors.Use of Auto LPG is also being promoted as a vehicle fuel. Over 75% of the consumption is produced in India.MS Consumption

USA 9.286 Russian Fed. 672 Australia 331 India 233 China 1.286 Germany 493 Brazil 331 France 225 Japan 1.024 Ukraine 410 Indonesia 322 Malaysia 201 Mexico 745 Iran 403 Italy 288 South Africa 195 Canada 725 Saudi Arabia 347 Venezuela 269 Taiwan 174 ATF Consumption

USA 1.622 Germany 190 India 100 UK 273 France 152 Hong Kong 100 China 243 Spain 123 Brazil 95 Russian Fed. 232 Canada 120 South Korea 95 Japan 228 Australia 101 Italy 91 Renewable EnergyGlobally share of RE is around 16% in the Energy pie.10% traditional bio mass mainly for heating.Around 3.5% in shape of hydro-electricity.Around 2.5% in modern renewable sources like Solar, Wind, Geo-thermal & Bio-Fuels.

Large Capital Cost & Financial Viability of the projects are the major deterrents.Renewable Energy Bio FuelsOne acre of Corn produces Ethanol equal to 10 barrels of oil. India would need approx. 23,300 bbls per day of ethanol for a 10% blending of MS. Approx 850,000 acres (3,500 sq km) of Corn Cultivation at stable rates can provide adequate Ethanol. This would need to increase by approx 10-12% per year to account for growth.Demand Projections

Demand Projections

* Assuming that by 2012, adequate gas is available through imports and domestic sources. Projected Shipping trafficSource : Ministry of Shipping & Surface Transports report on TRAFFIC PROJECTIONS FOR 2013-14 BY MAJOR COMMODITY GROUP FOR ALL THE PORTS

India - Hydrocarbons vision 2025Refining & MarketingObjectivesTo maintain around 90% self-sufficiency of middle distillates in the sector with an appropriate mix of national oil companies, foreign players and private Indian players.To develop a globally competitive industry.To have a free market and healthy competition amongst players. To develop appropriate infrastructure such as ports, pipelines etc. for an efficient hydrocarbons industry.To improve customer services through better retailing practices.To make available un-adulterated quality products at reasonable prices.To achieve free pricing for products while continuing subsidized prices for some products in certain remote areas, Which are to be identified and reviewed from time to time.

Private Sectors roleTo have a free market and healthy competition amongst playersImproved efficiency of processesState of the art technologyEnhanced customer expectationInnovation thru competitive pressureInvest in the future thru improved financialsReduced exploitation of manpower

Private Sectors roleTo improve customer services through better retailing practicesSystem generated bill for each transaction means over-charging not possibleOffsite money transactions thru TC cards leads to less working capital and increased securityReduced transaction time since the DSM who fuels collects cashHigh speed dispensers lead to shorter queues

Branding & MarketingStandard signs at all ROs leads to familiarity for regular customersStaff in company uniform means no unauthorized person can rob customer of cashCash less fuelling means increased customer safety since reduced risk of cash theftTechnology-enabled Q&Q assurance systems Periodic promotions and timely payout to all

Branding & MarketingDifferentiation leads to stronger bonding with customers leading to greater RO outputCentrally controlled price changes means no short-charging of customers a 30 minute gap between upward price revision on EPS & dispenser means customer gets a chance to buy at lower priceAdherence to SOPs leads to greater customer satisfaction

Upcoming RefineriesWorldAkdeniz Refinery (Petrol Ofisi Turkey 212,000 bpd)Dou Akdeniz Petrol Refinery (alk Holding Turkey 212,000 bpd)Star Refinery (Petkim Turkey 150,000 bpd)New Alpha Refinery (Alpha ref Co. Ghana 200,000 bpd)Lobito Refinery (NOC Angola 200,000 bpd) Al Zour Refinery (KPC Kuwait 615,000 bpd)Fuijan Refinery (Sinopec, Exxonmobil and Saudi Aramco - China 240,000 bpd)Jazan Refinery (MinPet Saudi Arabia 400,000 bpd)IndiaBhatinda Refinery (HPCL Mittal JVC 280,000 bpd)Bina Refinery (BPCL 116,000 bpd)Haldia Refinery (IOCL 300,000 bpd)Cuddalore Refinery (CPCL 300,000 bpd)Baroda Refinery Expansion (from 300,000 to 360,000 bpd)Essar Vadinar Refinery Expansion (Essar from 180,000 to 300,000 bpd).. And many more