EXECUTIVE SUMMARY 1. Hydrocarbon sector plays a vital role in the economic growth of the country. Oil and gas continue to play a pre-eminent role in meeting the energy requirement of the country. Natural gas is emerging as the preferred fuel of the future- in view of it being environment friendly, economically attractive and also a desirable feed stock. The Hydrocarbon Vision-2025 drafted by an Expert Group on Hydrocarbons and endorsed hy a group of Ministers laid stress on specific attention in five areas; (i) Focus on oil security by intensifying exploration efforts; (ii) Maintenance self-sufficiency in refining; (iii) Disinvestments of oil sector in a phased manner; (iv) Securing of acreages in identified countries for long-term supplies; and (v) Strategic storage of crude and petroleum products in various locations. The Vision document also emphasized on R&D efforts for meeting the objectives of Exploration and Production (E&P), Refining of Crude Oil and Natural Gas. S&T outlays in the Petroleum and Natural Gas sectors needing huge investment, trained manpower etc. This is quite evident now from the fact that outlays are increasing in the successive Five Year Plans. 2. The Ministry of Petroleum and Natural Gas (MoP&NG) has a large number of Public Sector Undertakings and other organizations under its fold; however, R&D activities are mainly carried out in the following eleven organisations. a) Oil and Natural Gas Corporation Limited (ONGC) b) Oil India Limited (OIL) c) Gas Authority of India Limited (GAIL) d) Indian Oil Corporation Ltd (IOCL) e) Hindustan Petroleum Corporation Limited (HPCL) f) Bharat Petroleum Corporation Limited (BPCL) g) Engineers India Limited (EIL) h) Chennai Petroleum Corporation Limited (CPCL) i) Indian Petrochemicals Corporation Limited (IPCL) j) Balmer Lawrie and Co Limited (BLCL) k) Kochi Refineries Limited (KRL) 3. The scope of this study is to assess the results arising from the expenditure on R&D in the petroleum and natural gas sector incurred by the Central Government during the last few Five Year Plan periods. The study also proposes to assess the effectiveness of R&D activities undertaken through the Ministry of Petroleum and Natural Gas by evaluating the output of R&D in the well known stream of indicators like patents, scientific papers, technology trade etc. 4. Data collection for the study included both secondary data i.e. published materials collected from various organisations and primary data through a structured quentionnaire. Additional data was also collected during the visits to few Public Sector Undertakings and discussions with various PSU’s officials, which centered around (ix) R&D activities being carried out by them. Data was also collected from Oil Industry Development Board and Centre for HighTechnology who are also associated with the R&D activities. The data collected through primary and secondary sources was then classified for infrastructure building, training and specific projects. Output stream was then analysed in terms of known indicators. 5. The outlay for the petroleum sector in the tenth Five Year Plan period (2002-07) has been fixed at Rs. 103,655 crore. Recognizing that impetus to exploration is essential to enhance self-sufficiency, more than 50% of the plan allocation for the Tenth Plan i.e. Rs.51,969 crore will be used for exploration and about 40 percent of the plan allocation for refining and marketing. ONGC outlay of Rs. 1623 crore in the upstream sector and IOCL outlay of Rs.510 crore in the downstream sector in the tenth Five Year Plan in R&D envisages considerable importance being given to Research and Development activities. 6. The real challenge before the country in the petroleum sector is to bridge the ever-increasing oil and gas demand supply deficit, which are presently of the order of 70% and 46% respectively. These challenges could be met by aggressively pursuing clearly targetted expenditure and exploitation in frontier basins and deep-sea offshore areas in addition to focussing on Coal Bed Methane, Underground Coal Gasification and Gas Hydrate. In the downstream petroleum sector, the upward trend of crude oil prices and the huge cost associated with production of fuels have been major factors of shrinking margins. Also, the dismantling of Administered Price Mechanism and the opening of the petroleum sector to private players have added extra urgency for strategic planning, cost competitiveness and optimised operation. Globally, these factors have led to integration of upstream and downstream sectors. Another challenge to petroleum refining companies has come from emergence of gas as one of the major competitor for supplying primary energy. Use of alternate clean sources like fuel cell technology, hydrogen as fuel, bio-fuels etc.have also emerged as more desirable options. 7. ONGC’s nine R&D institutes provide a wide range of services on exploration, drilling, reservoir management production, process engineering, offshore technology, environment, safety and human resource development. Keshava Deva Malviya Institute of Petroleum Exploration (KDMIPE), Dehradun is the country’s premier centre for basic and applied research in petroleum exploration. Institute for Drilling Technology (IDT), Dehradun is engaged in applied R&D in the area of oil and gas well drilling technology and has rendered excellent services over the years. Geodata Processing and Interpretation Centre (GEOPIC), Dehradun caters to the specialized needs of seismic data processing and interpretation of geoscientific data. Institute of Reservoir Studies (IRS), Ahmedabad is a single source and multi-service reservoir-engineering agency for enhanced oil recovery. Institute of Oil and Gas Production Technology (IOGPT), Mumbai is the first institute in the country to provide integrated R&D support to the entire spectrum of oil and gas production, processing and transportation which begins at the well bore and ends at consumer point. Institute of Engineering and Ocean Technology (IEOT), Mumbai is a nodal centre in ONGC for technology management in the area of risk analysis and conceptual engineering, structural engineering, material and corrosion engineering. Institute of Biotechnology and Geotechtonic Studies (x ) (INBIGS), Jorhat, Assam is engaged in the innovative research of petroleum biotechnology through its highly specialized laboratories thus enhancing oil recovery from reservoir and environment protection by bioremediation of oily waste. Institute of Petroleum Safety and Environmental Management (IPSEM), Goa has been set up with the objective of promoting standards of safety, health and environment in petroleum sector. The institute has collaborations/association with some leading organizations like NEERI, WAPCOS, IICT etc. Institute of Management Development (IMD), Dehradun is a nodal agency of ONGC for training and developing human resources. Every institute of ONGC is now a profit centre of its own. ONGC has nine platform institutes with fine infrastructure for R&D in the petroleum exploration and production sector. However, R&D expenditure viz-a-viz annual turnover is quite insignificant. ONGC Videsh Ltd (OVL), a subsidiary of ONGC has been the most aggressive mover lor exploration of equity oil. It has picked up a 20% stake in Sakhalin I field in Russia for $ 1.7 billion and 25% stake in the Greater Nile Project in Sudan for $ 77.1 million. Apart from this, it is involved in exploration efforts in Myanmar, Iran, Iraq, Libya and Syria. ONGC’s expenditure on R&D is met substantially from in-house resources and partly from grants provided by OIDB. 8. R&D centre of OIL is located at Duliajan, Dist. Dibrugarh, Assam. The centre provides solutions to problems encountered by OIL in its main areas of operations, exploration, drilling, production, transportation and pollution control. OIL expenditure on R&D is met through internal resources of the corporation 9. GAIL’s Research and Technology Development (R&TD) is located at Noida and provides services to enhance the Company’s future profitability and growth. GAIL is carrying out mostly collaborative research projects with reputed engineering and research organisations. With the fund available from OIDB and the fund generated from internal resources, GAIL has undertaken number of ambitious R&TD programmes to meet the company’s objectives. GAIL has joint ventures in National Hydrate Programme (NGHP) for geo-scientific investigations of Gas Hydrate in Goa. Similarly, GAIL has set up joint ventures companies like Petronet LNG Limited and Indraprastha Gas Limited for supply of LNG and CNG respectively. GAIL is also actively pursuing participation in various gas based power projects. 10. Indian Oil Corporation is the first oil company in the country to venture into R&D in the areas of lubricant and refining process technologies with the establishment of a full fledged R&D Centre at Faridabad. The R&D centre of IOCL is mostly doing applied research and are collaborative in nature through active participation of EIL, GAIL etc. IOCL has well equipped laboratories of Lubricant technologies, Fuel, Bitumen, Tribology, Refining Technology, Vehicle Testing, Fuel Evaluation and Emission Studies etc. In order to exploit the technologies developed by R&D Centre, Indian Oil Technologies Limited has been floated as a separate company recently as marketing company of IndianOil. Activities of the R&D centre in the area of Intellectual Property Rights has led to grant of 158 patents including 118 Indian and 40 in US, Australia, Canada, China, South Africa etc. (x i) 11. HPCL’s R&D (Product and Development Centre) is located at Mumbai and the R&D cells at its refineries at Mumbai and Visakhapatanam. The R&D groups acts as a vital interface between the Corporation and the external research agencies with which the collaborative research is undertaken to evolve and develop value added, user- friendly solutions for the benefit of its valued customers. 12. R&D activities of BPCL are at: (i) R&D centre at Mumbai; and (ii) Corporate R&D centre at Greater Noida.