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State-run Indian Oil Corporation (IOC) will invest Rs 12,000 crore in capex for FY15, a drop of 28 per cent compared with FY14, when the company had a planned capital investment of Rs 16,700 crore.
“Despite the severe financial crunch in the past few years, the Corporation continued with its investments in value-addition projects that would contribute to future growth and expansion of business in the coming years,” said Ashok Balasubramanian, chairman of IndianOil Corporation, in the company’s annual report.
“For Indian Oil, 2013-14 was a year of subdued optimism as the turnover touched a new high of Rs 4,57,553 crore, a jump of 10.3 per cent over the previous year, and net profit surged to Rs 7,019 crore, a leap of 40.2 per cent compared to 2012-13,” he added. Indian Oil, which has been maintaining its leadership in the downstream petroleum sector for the past many years and currently holds a market share of 47.1 per cent, has an expenditure target of Rs 56,200 crore for various projects in the 12th Plan period, which is substantially higher than the Rs 48,655 crore spent in the 11th Plan period.
The pipelines division of IndianOil is currently implementing 13 projects at a cost of Rs 6,800 crore to expand its network of crude oil and product pipelines during the 12th Plan period. “This would result in an additional throughput capacity of 15.5 million tonnes per annum and a pipeline length of 3,200 km. Several LPG (liquefied petroleum gas) pipeline projects are also being planned to leverage the multiple advantages of pipeline transport,” the report noted.
However, the prevailing dual-pricing policy in diesel has resulted in a sharp decline of bulk sales for the company. Even though Indian Oil maintained its position as the market leader with product sales of 75.53 million tonnes (including petroleum products, gas, petrochemicals and exports) for FY14, the overall volumes in domestic sale of petroleum products registered a drop of 1.5 million tonnes, compared to the previous year.
“Even though dual-pricing threatened to erode the Corporation’s market share as well as profits in diesel, we could still maintain our coveted status as the lead supplier to the railways, defence services and several major consumers,” the report noted. The other factors that contributed to the dip in diesel consumption include a decline in sale of commercial and passenger vehicles, improved power situation in the country, and shift of industrial users to alternative fuels.
During the year, IndianOil expanded its overseas portfolio with the acquisition of 10 per cent interest in new integrated upstream and liquefied natural gas (LNG) project Pacific Northwest LNG - based on unconventional gas - in British Columbia (Canada).
This interest was acquired through a wholly-owned subsidiary of the company incorporated in the Netherlands, which in turn incorporated a wholly-owned subsidiary in Canada. “This is a producing asset with total gross 2P (proven and probable) reserves of 8.35 tcfe (trillion cubic feet of gas equivalent) and has generated a gross revenue of CAD 1.56 million during the year. The Corporation will have access to assured LNG supply of 1.2 million tonnes per annum from this project for a minimum period of 20 years,” said IndianOil.
