Company Background - Indianoil Corporation

Indian Refineries & Indian Oil Company were set up in 1958 and 1959 respectively, to build national competence in the oil refining and marketing business. In 1964 these two companies were merged to form the Indian Oil Corporation (IOCL). IOCL is the 21st largest petroleum company in the world and the # 1 petroleum trading company among the National Oil Companies in the Asia-Pacific region. Indian oil is also the highest ranked Indian company in the Prestigious fortune Global 500 listing moving to 153th position.

IOCL controls 10 of India's 18 refineries with a combined refining capacity of 54.20 million tonnes per annum. These includes two refineries of subsidiary Chennai Petroleum Corporation Ltd and one of Bongaigaon Refinery and Petrochemicals Ltd. IOCL and its subsidiaries account for 47% petroleum products market share among public sector companies, 41% national refining capacity and 51% downstream product pipeline capacity. It also owns and operates crude oil and product pipelines of over 9000 Km across the country. IOCL also has the largest marketing network in the country, comprising over 30000 sales points backed for supplies by 183 bulk storage points and depots, 88 Indane bottling plants and 97 Aviation Fuel Station to cater the Aviation, Defence as well as Civil industry. Indian oil together with IBP, operates the largest and the widest network of petrol and diesel stations in the country numbering over 15,000. In the overseas business, the company continues to explore new opportunities and coordinate business activities between its various overseas offices at Dubai, Kuwait, Kuala Lumpur, Sri Lanka and Mauritius.

IOC has it subsidiaries namely Chennai petroleum Ltd, Bongaigaon Refinery and Petrochemicals Ltd, IBP Co Ltd, Lanka IOC Ltd, Indian Oil Mauritius Ltd, Indian Oil Technologies Ltd, Indian Strategic Petroleum Reserve Ltd.

During 2000-2001, the company acquired the entire holding of Government of India (GOI) in Chennai Petroleum Corporation (CPCL) (51.81%) for Rs.509.33 crore and Bongaigaon Refinery & Petrochemicals (BRPL) (74.46%) for Rs 148.80 crore, thereby making these companies subsidiaries of it. It has also acquired IBP & Co Ltd by purchasing 33.58% equity capital at a price of Rs.1154 crores.

As a vertical integration through E&P intitatives,the company along withONGC Videsh Ltd was awarded the Farsi Exploration Block in Iran. The mainoperator will be ONGC Videsh in which IOCL will have 40% equityparticipation.

The company is investing Rs.24,400 Crore during the X Plan period from 2002to 2007, in integration and diversification projects apart from refiningand pipeline capacity augmentation, product quality upgradation and retailexpansion. As part of expansion, the company commissioned the world largestsingle train Linear Alkyl Benzene plant at Koyali Refinery in August 2004and the on-going integrated Paxaxylene/Purified Terephthalic Acid plant &World-Scale Naphtha Cracker with downstream polymer projects are part ofthis expansion. The company is also planning to convert the ParadipRefinery into a refinery-cum-petrochemicals complex.

IOCL in association with other companies was awarded 11 exploration blocksin NELP and acquired participating interest in on-shore blocks in Assam andArunachal Pradesh region. The company has now finalised an import deal for1.75 Millions tonnes of LNG per annum with Iran for supplies from the year2009 onwards. The company has proposed to develope gas blocks in the NorthPars fields of Iran jointly with Petropars, a subsidiary of NationalIranian Oil Company. IOCL is first Indian and 6th Global Company todevelope marine Oils and also obtained global approvals for shipboardapplications in the entire family of vessels of MAN B&W,Denmark andWartsila, Finland.

During 2005 the new Panipat-Rewari product pipeline was commissioned and this network was expanded to 7,730 km. Also the company has completed LABplant at Gujarat Refinery, MS quality improvement project & Dieselhydrotreating plant at Mathura Refinery, Sidhpur-Sanganer productspipeline. Some of the ongoing projects of the company are Panipat Refineryexpansion from 6 to 12 million tonnes per annum, crude oil blendingfacilities at Mundra, bottling Plants at Ilayangudi, Raipur and Vasai.Thenew projects of the company during this period are Chennai- Bangalore product pipeline, LPG Bottling plant at Mathura etc.,

During 2005-06, Indian oil entered into South India with the commissioning of the 681-km Chennai-Trichy-Madurai product pipeline. With the commissioning of several other key projects, including the Sidhpur-Sanganer product pipeline and branchline to Ajmer and the Mundra-Churwa crude oil pipeline, the pipeline network was expanded to 9024 km during the year. A section of the Kandla-Bhatinda pipeline from Sidhpur to Sanganer was also convered to crude oil service to ensure enhanced crude oil availability to Mathura and Panipat refineries.

During the year under review, IOC completed projects for Doubling of capacity at Panipat Refinery from 6 to 12 million tonnes per annum , Paraxylene/Purified Terephthalic Acid (PX/PTA) unit at Panipat., MS quality improvement projects at Mathura and Haldia refineries, Diesel hydro-treatment facilities at Mathura Refinery, Chennai-Trichy-Madurai and Sidhpur-Sanganer product pipelines - Mundra-Churwa(Kandla) crude oil pipeline and conversion of Kandla-Panipat section of Kandla-Bhatinda pipeline to crude oil service.

IOCL's production capacity of Lubricating Oil was expanded from 286000 MTs to 525000 MTs.

Indian oil Blending company Ltd, a wholly owned subsidiary of the company was merged with the company w.e.f 12th May 2006.

The merger of IBP Co. Ltd. with IndianOil is at an advanced stage with the shareholders of both the companies approving the Scheme of Amalgamation with a swap ratio of 110 equity shares of IndianOil for 100 equity shares of IBP Co. Ltd..

The valuation process for the merger of Bongaigaon Refinery & Petrochemicals Ltd. (BRPL) with IndianOil is in progress after the Boards of both the companies accorded 'in-principle' approval for the merger.

In accordance with the decision of the Government of India, IndianOil has transferred its entire equity holding in Indian Strategic Petroleum Reserves Ltd. (ISPRL) to the Oil Industry Development Board, a Government body functioning under the Ministry of Petroleum & Natural Gas. Consequently, ISPRL ceased to be a wholly-owned subsidiary of IndianOil effective 9th May, 2006. IndianOil has formed a wholly-owned subsidiary company, viz., IOC Middle East FZE, in Jebel Ali Free Trade Zone, Dubai, with the objective of marketing lubricants and other petroleum products in the Middle East, Africa and CIS regions.

A joint venture company, viz., Indo-Cat Pvt. Ltd., was incorporated in June 2006. The Company is a 50:50 venture between IndianOil and Intercat. Inc. of USA for manufacture and marketing of FCC catalysts and additives. Green Gas Ltd., was incorporated in October 2005 as a joint venture between IndianOil and GAIL (India) Ltd. for city gas distribution in Agra and Lucknow.

During 2006-07, the pipeline network was expanded to 9,273 Km. IOC also commissioned major projects like Mundra-Panipat pipeline, the Koyali-Dahej product pipeline and a branch line to Chittaugarh on the Sidhpur-Sanganer product pipeline. A state of art marketing facility was also commissioned at Trichy, Tamil Nadu on the 683 km Chennai-Trichy-Madurai product pipeline which was dedicated to the nation during the year.

The ongoing projects of IOC during the year are capacity expansion of Panipat Refinery from 12 to 15 MMTPA, Naphtha Cracker with downstream polymer units at Panipat, Hydrocracker for improvement in diesel quality and distillate yield at Haldia Refinery, Residue upgradation and petrol/diesel quality improvement at Gujarat Refinery, Paradip-Haldia crude oil pipeline Koyali-Ratlam product pipeline, Augmentation of Mundra-Panipat crude oil pipeline from 6 to 9 MMTPA, Dadri-Panipat R-LNG spur pipeline, Automation of 1,000 petrol/diesel stations, New depots/terminals at Chittaurgarh, Jasidih, Ratlam, Zewan, Lalkuan & Ennore, LPG bottling plants at Mathura and Vadodara

The New Projects under taken by the company during the year are 15 MMTPA integrated refinery-cum-petrochemicals complex at Paradip, Petrol quality upgradation projects at Panipat, Mathura, Barauni, Digboi and Guwahati refineries, Panipat-Jalandhar LPG pipeline.

During the year, IndianOil was associated with successful discoveries in two exploration blocks, one each in India and overseas. In the domestic exploration block in offshore Mahanadi, gas discovery has been made and currently the reserve potential is being assessed. In the Farsi Block in Iran, oil & gas have been discovered and the block is presently being appraised for commerciality.

The Corporation farmed-in an exploration block, Shakthil in Gabon along with Oil India Ltd. (OIL) as the operator. IndianOil and OIL have each acquired participating interest in an on-land block in Nigeria. IndianOil, in consortium with OIL and two other companies, had bid for oil & gas exploration blocks in Yemen under the third International Bid Round and succeeded in getting two blocks. Exploration work is continuing in the two exploration blocks awarded to the IndianOil-OlL consortium in Libya earlier in 2005.

In India, under the NELP-VI round of bidding, the Corporation, in consortium with other Indian partners, has been awarded two exploration blocks in Mumbai offshore.