The global energy scene reflects some interesting elements today. With the dialogue on Energy Transition, Renewables, Climate change, and Industry 4.o dominating the room, India has emerged as a robust market. Not only efficiently trying to reduce its crude import dependency but the nation is also moving towards cleaner fuels. The BS-VI is set to roll out in April 2020 and the Indian Petroleum sector has put its best foot forward in achieving its energy goals. There have been challenges and there will be in the road ahead. But the story of energy growth, efficiency, and accessibility is stronger than ever. In an exclusive conversation with Energy Dais, the Chairman of Indian Oil, Mr. Sanjiv Singh, opens up about the journey of Indian Oil and the Indian energy sector. We discussed new technologies, sustainability, and development and how is Indian Oil standing tall in a complex global environment. “It would not be fair to call it my journey, it is the journey of Indian Oil and it has been extremely satisfying,” says Mr. Singh. Here’s an excerpt from the interview. A story of major breakthroughs and resilience. A story that inspires.
In Conversation with the Chairman, Indian Oil
What would you describe as the strengths of the Indian oil and gas sector and where do you see the challenges?
There is no doubt that we are facing global competition and we are focused on keeping up with the times. We are extremely cost-competitive when it comes to technology application and adoption. In another few months, the whole country is switching to Euro VI. In terms of technology application, we are world-class. This is a very major challenge. We operate some very old refineries and we also operate very modern refineries. The old refineries are also newly modernized.
Technically, we are extremely capable. During the last decade, Indian refining industry has developed a lot of new technologies on its own. We are almost capable of setting up our own refinery. In terms of refining capacity, we are the 4th largest in the world.
Since the sector started opening up, the Indian refining sector had been self-sufficient. Although we import crude oil but in terms of products, except for LPG, there’s no requirement for importing anything else. We have been exporting products. This is all up to the refining.
When we look at the Customer Connect – the number of customers we handle, I don’t think any single company would probably be handling such large number of customers. Even this part of the business is extremely technology-oriented. We are very proud of our helping initiatives and especially the PMUY.
98% of Indian households have LPG today. Subsidy directly goes to individual bank account. You can imagine nearly 28 crores customers receiving their subsidy within 48 hours, directly in their bank accounts.
The subsidy amount varies depending upon the global price of LPG while the net cost of LPG doesn’t vary. The whole business today stands on a very strong technical background.
I strongly feel that we are globally competitive whether we talk about sourcing, refining or selling our products. And we will remain globally competitive.
We are not limiting ourselves to the commercial line of business and commercial production. Realizing the energy transition which is happening, we strongly believe that the answer to energy transition or the implementation of the energy transition in India will be India specific. We are moving towards gas because we see that gas will play a very major role and for this, even policies are being modified to support the utilization of gas. A lot of infrastructure is being built, not only by the company but also duly supported by the government, including financial support. A lot of capabilities are being built for importing gas, for producing more gas, for monetizing gas as well as for distributing more gas.
Apart from the gas story, the companies, the oil and gas majors including Indian Oil, are also very aggressively looking for other alternatives like biofuels and liquid biofuels and many initiatives towards renewable energy. In a nutshell, the Indian oil and gas industry today is technically equipped, commercially competitive, and agile.
We are discussing Oil and Gas 4.0. How is Indian Oil looking at new technologies for enhancing efficiency?
When we are talking about technology, particularly in the oil and gas sector, it is the technology directly involved used in production, transportation, refineries, and distribution. Along with that, technology is also changing the way we do business. We are extremely competitive and we believe that competition will enhance efficiencies and bring value to customers. Not everything is visible. Today, we have close to 28,000 retail outlets and you won’t believe each of these outlets is connected to our Mumbai headquarters. And we are not depending on other network on connectivity. This is something which we stand committed to and also we are alert to any technological change happening across the sector.
We have a very strong R&D sector and we are proud that it is the strongest R&D sector in Asia. We do develop a lot of our own technology, which we proudly adopt and modify in our refineries. They are very much tailor-made for the requirements of Indian Oil and the nation as well.
How do you look at Collaboration in Oil and Gas? What do you think are the opportunities and roadblocks?
The collaboration today does not limit itself to the financial collaboration alone. All the companies, Indian or overseas, they all have their own strengths. Today, the geographical boundaries do not matter much.
Within the sector and even across the sectors, we have to collaborate and build upon a solution which provides the most sufficient product and service to the customers. We have to leverage the strength of each other. Apart from everything else, time is also very important.
Whatever changes we want to adopt, has to happen very fast. Collaboration is a very strong way to do that.
Apart from many other offerings, in terms of tech know-how, skills, manpower, India provides a very strong market. This is a huge attraction for overseas companies. The way we are doing business today will also undergo a change. With digitalization, there is big data, analytics, IIOT. A lot of inputs and assistance can be provided by the experts in this area as well.
A lot of initiatives which we are taking today is because we are seeing a very robust market within the country. We have all the flexibility and capability to export our products overseas also. Domestic market provides a sense of comfort. Due to this, India is a very big attraction for overseas companies.
You are recognized as a champion of clean energy spearheading India’s LPG transformation and BS-VI is also set to roll out in 2020. How do you view this transformation amid the climate change debate?
Rolling out BS-VI is a major change and no other country has ever attempted to switch from Euro IV to VI within a span of 3 years. Originally, the target was 2024 which the industry and the government decided to advance. This reflects a strong commitment by the Government of India as well as the sector.
Apart from the transportation sector, a lot of initiatives would be needed to address the issue of climate change. Apart from switching to BS-VI, a lot of initiatives are moving towards gas. BS-VI Diesel Engine Emission Standards are the same as BS-VI CNG. So when we are talking about the transport sector, I think BS-VI provides a wonderful solution while sticking to conventional fuel also. While gas will provide a lot of advantage when we are going for the industrial application, where it is replacing other fuels like heavier oils. Apart from this, the other major initiatives do include biofuels.
We have come up with strong policies.
Sustainable Alternative Towards Affordable Transportation (SATAT) where individuals entrepreneurs are encouraged to set up their own gas plants. And oil companies including Indian Oil, buy that biogas, anywhere in the country in any quantity.
Marketing biogas does not require any special license. While CNG can only be sold by an authorized licensee, who has the permission given by the government, for a certain period and in a certain geographic area, now anybody who is a producer of compressed biogas and if it is meeting certain specifications, they are allowed to market biogas. It’s very strong support from the oil sector and the Indian government to encourage biogas. A very good initiative to set up a biogas plant, very fast.
The second initiative is to generate bio-ethanol. This move is also supporting farmers. Wonderful initiative for inclusive growth. Taking each and everyone along with the energy requirement. While addressing the energy requirement issue, we are also taking care of all the sectors where the people who are otherwise finding it difficult to sell their produce. BS-VI is very visible but initiatives like these are extremely positive steps towards a cleaner environment.
Today, how “accessible” is energy and what needs to be done to take it to the next level?
We are responsible for hydrocarbon energy being available to each and every citizen of India. A classic example being PMUY. Our target was 8 crores 80 million households which we achieved in nearly three and a half years. Today, we are close to 98% of penetration.
Apart from this, we are also providing liquid fuels, IOCL, BPCL, HPCL. We are not looking for locations that are very lucrative for the companies when we are deciding on the LPG distribution.
We are taking care that it is convenient for the public and fuel is available in each and every corner of the country. We take it as our responsibility for the company. Energy access, efficiency, sustainability. These factors are extremely important for energy transition. For a country like India, energy accessibility, affordability, are very strong factors. If we compare these with a developed country, they may not appreciate these issues. That’s why when we talk about cleaner energy, we talk about each and every aspect.
You are leading Indian Oil, the “Energy of India”. How does it feel and how do you look back at your journey?
It won’t be fair if I talk about my journey. I believe it is the journey of Indian Oil and it has been extremely satisfying.
I have been with this company for nearly 39 years and it started because the company had been growing. Initially, it had been taking small strides and then giant strides. We take pride in doing everything. We have the capability of doing everything on our own. Whatever is required to be done in the business, we can do it on our own. That’s the strength of the company and we do understand our priorities. Many times, a lot of things that we are doing is not even visible to the outside world. For instance, at the time of any natural calamity, the fuel is something that is required first. We offer all kinds of support.
Offering a Sustainable Model of Development
With Indian Oil, we are looking at a model of development that is not only inclusive but also sustainable. And there is no compromise on new technologies. Everything that makes the organization efficient and the fuel accessible for the larger community is being taken charge of. The Indian Oil narrative reflects high growth and immense potential for the times ahead. Everyone who has been and is a part of this growth story is a changemaker in the Indian Energy arena.
We are extremely thankful to Mr. Sanjiv Singh for taking out some time to share Indian Oil’s journey with us.
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(This is an excerpt from an exclusive interview with Mr. Sanjiv Singh and Energy Dais reserves all rights of publication.)