IOC aims at $60 bn turnover by 2012

Hydrocarbon major Indian Oil Corporation (IOC) is planning to raise its turnover from $35-bn to $60 billion by 2011-12 mostly by going for forward integration into petrochemical business.

To achieve the target, the company intends to invest over $15 billion over next couple of years, said Sarthak Behuria, chairman-cum-managing director, IOC.

IOC's business development efforts are now focused on globalisation of marketing operations, export of products and services, diversification into natural gas marketing and linear integration-both upwards into oil exploration and production and downwards into petrochemicals, Behuria said.

Behuria was here to address the annual day function of Utkal Chamber of Commerce and Industry. Stating that IOC had established its dominance in sectors like oil refining, pipeline transportation and marketing, he said, the company was now looking at new areas beyond these traditional fields for achieving higher growth.

Major structural readjustments are required following the entry of private sector and multinational companies into the hydrocarbon sector in India, he said.

"We account for 42 per cent of the national refining capacity, but the changed environment has made it imperative for us to go for forward integration into petrochemicals by exploiting the refinery-petrochemicals interface to add value", he said.

This model offered many advantages like value addition to refinery streams, availability of feedstock for setting up world scale petrochemical plants, and most importantly, mitigation of risk on account of the cyclic nature of refining and petrochemical businesses, he said.

The IOC chief pointed out that refineries worked as nucleus for catalysing development of downstream industries around its vicinity.

For example, IOC's Gujarat refinery, set up in the 1960s, has supported the establishment of many industries like petrochemicals, fertilisers, chloro-alkalies etc in its vicinity by making available the feedstock for them.

In fact, IOC has drawn up a $ 5.7 billion petrochemicals master plan, which would broadly involve development of world scale petrochemical hubs at Panipat in Haryana and Paradip in Orissa, he said.

"These two centres could emerge as major catalysts for the development of a wide range of downstream allied industries in their respective areas", he said.

Stating that the growth in demand for petroleum products in India was amongst the highest in the world, Behuria said in the past decade, it has grown by 5.5 per cent compounded per year against a world average of only 1.2 per cent. In the future too, the growth was expected to be more than the global average, rising from the current 112 million tonne per annum to about 270 million tonne (base case) by 2025.

He further pointed out that in the area of refining, huge investments are needed for setting up grassroot refineries, incorporating technologies to process a wide array of crude oils, improving distillate yields, and more importantly, for producing environment friendly green fuels meeting national and international norms.