Opportunities Galore, Oil & Gas Sector Bouncing Back

After a downturn of two years, things in the oil and gas industry in India seem to have started looking up. The Q4, 2017 and 2018 saw a significant recovery in terms of projects along with the increase and stabilization of crude oil prices. At least that’s what Shekhar Balvalli, senior vice president-country management–onshore business at Technip India Limited, the Indian arm of TechnipFMC, a global leader in subsea, onshore/offshore, and surface projects, feels.

Shekhar Balvalli

Speaking to Baishali Mukherjee, the topbrass of the London-based company with its operational headquarters in Houston (US) and Paris (France) delves at length on various issues facing the oil and gas sector.

Excerpts:

Q- How has been the year 2018 for the Oil and Gas Industry as a whole and for your business operations in particular?

A. After the downturn in the Industry for about 2 years, Q4 2017 & 2018 saw a significant recovery in terms of projects along with the increase & stabilization of Crude Oil Prices. With the drive to produce Euro VI stage fuels combined with major refinery expansions, 2018 offered many opportunities to the Oil & Gas Industry. Major refiners also set forth to integrate petrochemical complexes with the existing refineries to upgrade the refinery product slate.

Besides the PSUs, a number of private players also upgraded & expanded their refineries adding additional units or expanding existing facilities - pooling into the market opportunities.

Another wave in the industry was that of biofuels & waste to value that has driven certain niche, technology-oriented projects such as 2nd generation bioethanol & some involving waste plastic.

As far as TechnipFMC India goes, the business operations responding to the market opportunities, picked up as well. Some of the major projects we secured are the largest Hydrogen Unit in India that is licensed & to be constructed by us on LEPC basis. Additionally, we secured 2 out of 3 Urea & Ammonia world-scale fertilizer projects on LEPCC basis from HURL in consortium with L&T Hydrocarbon Engineering. These are of national importance as they aim to satisfy the demand for fertilizer in India. Besides this, there was a strong focus on sustainable projects & studies. TechnipFMC India has also secured the PMC for a massive refinery expansion project in India.

Looking forward, with the announcement of new grassroot refineries & petrochemical complexes like HRRL, CPCL, RRPCL & also the next wave of refinery expansions, the Oil & Gas market looks promising for the next few years to come.

Q- Could you briefly give us a roundup review on the growth of opportunities from the Industry for your sector and where do your company’s focus in the market today?

The market is seeing a shift from a largely refining project driven market to an end-product market with a focus on petrochemicals & chemicals. Additionally, with stringent norms on emissions as well as requirement to maximize “Green Chemicals” and bottom of the barrel upgradation, the market is becoming more receptive to reduce the carbon footprint while enhancing efficiency & capacity. Modernization projects, capacity expansions, product slate upgradation & new facilities all offer ample opportunity in the industry. Digitalization & automation efforts are the new way forward with the use of modern technology to predict operation/failure & optimize facilities with minimum human intervention.

TechnipFMC India has a large business portfolio covering the entire Oil & Gas value chain from conceptual studies to complete EPC Projects. Our focus is to continue our stronghold on refining & parallel to that, focus on petrochemicals & chemicals & keep up with our Clients’ needs & market trends. Further, we are working on several sustainability-driven projects like waste plastics to fuel, 2ndgeneration bio-Ethanol refineries etc. as we believe it is the need of the hour & will pave a way for projects in the years to come.

Q- What do you think about the oil and gas industry challenges of the present government?

The current major challenge our Govt. faces is to ensure internal Energy security. Our high dependence on crude imports - the large quantum of crude imported to run our refineries & cater to local demand is a pressing issue & the ever-growing demand just amplifies the problems. Additionally, our requirement to import downstream petrochemicals & chemicals due to the demand-supply gap has further increased our import dependency.

Second is the pressing demand to blend fuel from non-petroleum sources e.g. ethanol in the gasoline pool. Our current target is to blend about 5% of ethanol with motor gasoline fuel. However, though it is a point of focus, we are failing to meet this blending requirement. Lastly; the share of gas in our energy basket is rather low. Increased focus on gases is needed– a clean energy source & a trend seen across the globe.

Q- What according to you should be the government’s priority over the next six months?

As said previously, one of our major challenges is our heavy dependency on crude feed, petrochemicals & chemicals. Of course, it is not a problem that can be solved overnight or even in six months for that matter – but time is the essence & must be used to the best possible way to move toward our goals.

Over the next six months, the government & ministry should focus on bringing on track the refineries announced. The newly announced refinery-petrochemical complexes are facing multiple local issues – land, clearances, funding, approvals etc. – these activities should be taken up & closed on priority. This would help maximize petrochemical exports / be self-sufficient at the earliest.

In addition to this, the focus on sustainable energy sources is a must. Stronger push on 2nd generation ethanol & the pressing need on waste plastic & municipal waste to fuels & chemicals is the need of the hour.

Lastly, formulate suitable policies & drivers to create a base to ensure a healthy share of “gas” in our energy pool.

Q- Tell us about your recent projects?

TechnipFMC India has a large share of projects in the domestic market & supports our Group offices in global megaprojects. As far as our domestic projects go, end 2017 & 2018 have been good years with some significant wins.

As part of Vizag Refinery Project for HPCL, we secured 3 major EPCC projects. One of these being the licensing, design & EPCC for the largest Hydrogen Project in India. Besides this, we are PMC for a significant Refinery Expansion project on the west coast.

Of national importance are the massive fertilizer projects by HURL. TechnipFMC in consortium with L&T HE secured 2 of these on LEPCC basis. These units aim to cater & fulfill the fertilizer deficit in the country.

In terms of sustainability, we are executing a PMC for HPCL Bhatinda for a 2nd Generation Bio-Ethanol Plant. For IIP Dehradun, we are completing a demo plant for Waste Plastic to Diesel & working on projects with other institutes and R&D firms.

Besides the above wins, we have recently completed/nearing completion for ethane crackers, petrochemical & chemical units for private clients in India.

Q- Going ahead how do you see the opportunities in India? What would be your growth agenda to tap in these potentials?

Moving forward, with the growing demand in the country & lifestyle enhancement – the demand for fossil fuels & petrochemicals is on the rise. Refiners are integrating petrochemical units along with the refineries and upgrading to more valuable end products.

Opportunities in India lie on several fronts – new grassroot refineries & petrochemical complexes, Renewables, LNG regasification projects etc.

There is a lot of talk of electric vehicles, renewable energy sources replacing the conventional fossil fuels – however, even if one is optimistic, in reality, this will take years to implement, maybe more than a decade. In such a scenario, the focus will lie across the value chain of Oil & Gas.

With the recent OALP programs by the Govt. and auctioning of Oil & Gas fields in the country, there have been new avenues to target the Oil & Gas upstream market – both Onshore & Offshore.

To summarize, India is surely a growing market with a lot of opportunity across the industry – of course, TechnipFMC India will grow & adapt with the market while strengthening what we’re best at (licensing several units in India & globally) - Ethylene, Hydrogen, FCC / Petro-FCC & Refining and further our market share in Petrochemicals & Chemicals and Renewables. Our growth agenda is to offer highly integrated solutions to our customers, strengthening our licensing portfolio, both in-house & by way of strategic partnerships – delivering all this with inherently safe plant design & execution, maintaining the highest standards of quality engineering. Of course, our strategies will be in-line with our Clients’ needs and market trends – TechnipFMC is a flexible organization with a wide array of experience – conceptualizing & building industry firsts globally.