Documente Academic
Documente Profesional
Documente Cultură
Name: Prof. Tushar Kanti Goon Name Of The Student: Debalina Bose
Specialization:H.R.
Session:2008-10
1
CERTIFICATE
This is to certify that Ms. Debalina Bose Enrolment No.08061148171 has
proceeded under by supervision on her Research Project Report on
“COMPENSATION MANAGEMENT”: “AN ANALYSIS IN RESPECT OF
SALARY WITH 9TH PAY REVISION IN IOCL, GUWAHATI REFINERY”
in the Specialization area “HR”.
The work embodied in this report is original and is of the Standard expected
of an MBA Student and has not been submitted in part or full to this or any
other university for the award of any degree or diploma. She has completed
all requirements of guidelines for research Project Report and the work is fit
for evaluation.
2
DIRECTORATE OF DISTANCE EDUCATION
2) DESIGNATION: Professor
7) E-MAIL: tushar.goon@nsb.in
(SIGNATURE)
With Seal
3
Countersigned by the Director of Study Centre with Seal
DECLARATION
This is to certify that the Project Report entitled “ Compensation
Management”: “AN ANALYSIS IN RESPECT OF SALARY WITH 9TH PAY
REVISION IN IOCL, GUWAHATI REFINERY” is an original work and has
not been submitted in part or full to this or any other university /institution
the award of any degree or diploma.
SPECIALIZATION: HR
SESSION: 2008-10
4
ACKNOWLEDGEMENT
lot during the course of my project. Due to his helping hands I was
seniors who has also helped and guided me out to the full extent in
DEBALINA BOSE
TABLE OF CONTENTS
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PAGE NO
1) COMPENSATION MANAGEMENT 7-24
2) EXECUTIVE SUMMARY 25
3) REVIEW LITRETURE AND PROBLEM STATEMENT 26
4) INTRODUCTION TO THE COMPANY 27-30
5) HISTORY OF THE COMPANY 31-41
6) OBJECTIVE OF THE PROPOSED STUDY 42
7) RESEARCH METHODOLGY 43
8) SCOPE/RELEVANCE OF PROPOSED STUDY 44
9) GLOBAL SCENERIO 45-109
10) INDIAN OIL CORPORATION LTD IN NORTH EAST
REGION, GUWAHATI REFINERY 110-115
11) DATA INTERPRETATION AND ANALYSIS 116-124
12) FINDINGS OF THE SURVEY 125-128
a) CONCLUSION
b) RECOMMENDATION & SUGGESTION
13) REFERENCE 129
14) APPENDIX 130-132
QUESTIONNAIRE
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TITLE OF THE PROJECT
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WHAT IS COMPENSATION MANAGEMENT?
Compensation is payment in the form of hourly wages or annual salary combined with benefits
such as insurance, vacation, stock options, etc. that can positively or negatively affect an
employee's work performance.
An ideal compensation management system will help you significantly boost the performance of
your employees and create a more engaged workforce that’s willing to go the extra mile for your
organization. Such a system should be well-defined and uniform and should apply to all levels of
the organization as a general system.. Plus you’ll enjoy clearer visibility into individual
employee performance when it comes time to make critical compensation planning decisions.
With effective compensation management you’ll also enjoy clearer visibility into individual
employee performance when it comes time to make critical compensation planning decisions.
These performance appraisals assist in determining compensation and benefits, but they are also
instrumental in identifying ways to help individuals improve their current positions and prepare
for future opportunities.
Definition
PREFCAE
What is COMPENSATION MANAGEMENT ??????
Human Resource is the most vital resource for any organization. It is responsible for
each and every decision taken, each and every work done and each and every
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result. Employees should be managed properly and motivated by providing best
remuneration and compensation as per the industry standards. The lucrative
compensation will also serve the need for attracting and retaining the best
employees.
Compensation systems are designed keeping in minds the strategic goals and
business objectives. Compensation system is designed on the basis of certain
factors after analyzing the job work and responsibilities. Components of a
compensation system are as follows:
Types of Compensation
Compensation provided to employees can direct in the form of monetary benefits
and/or indirect in the form of non-monetary benefits known as perks, time off, etc.
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Compensation does not include only salary but it is the sum total of all rewards and
allowances provided to the employees in return for their services. If the
compensation offered is effectively managed, it contributes to high organizational
productivity.
Direct Compensation
Indirect Compensation
Need of Compensation Management
Strategic Compensation
Strategic compensation is determining and providing the compensation packages to the
employees that are aligned with the business goals and objectives. In today’s competitive
scenario organizations have to take special measures regarding compensation of the employees
so that the organizations retain the valuable employees. The compensation systems have changed
from traditional ones to strategic compensation systems.
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Compensation is payment in the form of hourly wages or annual salary combined with benefits
such as insurance, vacation, stock options, etc. that can positively or negatively affect an
employee's work performance.
An ideal compensation management system will help you significantly boost the performance of
your employees and create a more engaged workforce that’s willing to go the extra mile for your
organization. Such a system should be well-defined and uniform and should apply to all levels of
the organization as a general system.. Plus you’ll enjoy clearer visibility into individual
employee performance when it comes time to make critical compensation planning decisions.
With effective compensation management you’ll also enjoy clearer visibility into individual
employee performance when it comes time to make critical compensation planning decisions.
These performance appraisals assist in determining compensation and benefits, but they are also
instrumental in identifying ways to help individuals improve their current positions and prepare
for future opportunities.
Definition
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Direct Compensation:
Direct compensation refers to monetary benefits offered and provided to employees in return
of the services they provide to the organization. The monetary benefits include basic salary,
house rent allowance, conveyance, leave travel allowance, medical reimbursements, special
allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time.
Basic Salary
Salary is the amount received by the employee in lieu of the work done by him/her for a
certain period say a day, a week, a month, etc. It is the money an employee receives from
his/her employer by rendering his/her services.
Organizations either provide accommodations to its employees who are from different state
or country or they provide house rent allowances to its employees. This is done to provide
them social security and motivate them to work.
Conveyance
Organizations provide for cab facilities to their employees. Few organizations also provide
vehicles and petrol allowances to their employees to motivate them.
Medical Reimbursement
Organizations also look after the health conditions of their employees. The employees are
provided with medi-claims for them and their family members. These medi-claims include
health-insurances and treatment bills reimbursements.
Bonus
Bonus is paid to the employees during festive seasons to motivate them and provide them the
social security. The bonus amount usually amounts to one month’s salary of the employee.
Special Allowance
INDIRECT COMPENSATION
ndirect compensation refers to non-monetary benefits offered and provided to employees in lieu
of the services provided by them to the organization. They include Leave Policy, Overtime
Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement
Benefits, Holiday Homes.
Leave Policy
It is the right of employee to get adequate number of leave while working with the organization.
The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and
maternity leaves, statutory pay, etc.
Overtime Policy
Employees should be provided with the adequate allowances and facilities during their overtime,
if they happened to do so, such as transport facilities, overtime pay, etc.
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Hospitalization
The employees should be provided allowances to get their regular check-ups, say at an interval of
one year. Even their dependents should be eligible for the medi-claims that provide them
emotional and social security.
Insurance
Organizations also provide for accidental insurance and life insurance for employees. This gives
them the emotional security and they feel themselves valued in the organization.
Leave Travel
The employees are provided with leaves and travel allowances to go for holiday with their
families. Some organizations arrange for a tour for the employees of the organization. This is
usually done to make the employees stress free.
Retirement Benefits
Organizations provide for pension plans and other benefits for their employees which benefits
them after they retire from the organization at the prescribed age.
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Holiday Homes
Organizations provide for holiday homes and guest house for their employees at different
locations. These holiday homes are usually located in hill station and other most wanted holiday
spots. The organizations make sure that the employees do not face any kind of difficulties during
their stay in the guest house.
Flexible Timings
Organizations provide for flexible timings to the employees who cannot come to work during
normal shifts due to their personal problems and valid reasons.
IMPORTANCE OF COMPENSATION
Compensation and Reward system plays vital role in a business organization. Since, among
four Ms, i.e. Men, Material, Machine and Money, Men has been most important factor, it is
impossible to imagine a business process without Men. Every factor contributes to the
process of production/business. It expects return from the business process such as rent is the
return expected by the landlord, capitalist expects interest and organizer i.e. entrepreneur
expects profits. Similarly the labour expects wages from the process.
Labour plays vital role in bringing about the process of production/business in motion. The
other factors being human, has expectations, emotions, ambitions and egos.
Labour therefore expects to have fair share in the business/production process. Therefore a
fair compensation system is a must for every business organization. The fair compensation
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system will help in the following:
o An ideal compensation system will have positive impact on the efficiency and results
produced by employees. It will encourage the employees to perform better and
achieve the standards fixed.
o It will enhance the process of job evaluation. It will also help in setting up an ideal
job evaluation and the set standards would be more realistic and achievable.
o Such a system should be well defined and uniform. It will be apply to all the levels of
the organization as a general system.
o The system should be simple and flexible so that every employee would be able to
compute his own compensation receivable.
o It will raise the morale, efficiency and cooperation among the workers. It, being just
and fair would provide satisfaction to the workers.
o Such system would help management in complying with the various labor acts.
o Such system should also solve disputes between the employee union and
management.
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o The system should follow the management principle of equal pay.
o It should motivate and encouragement those who perform better and should provide
opportunities for those who wish to excel.
o The perfect compensation system provides platform for happy and satisfied
workforce. This minimizes the labour turnover. The organization enjoys the stability.
o The organization is able to retain the best talent by providing them adequate
compensation thereby stopping them from switching over to another job.
o The business organization can think of expansion and growth if it has the support of
skillful, talented and happy workforce.
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o The sound compensation system is hallmark of organization’s success and prosperity.
The success and stability of organization is measured with pay-package it provides to
its employees.
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• True pay-for-performance culture improves retention.
Employees who outperform their peers will be rewarded
appropriately, feel valued and happy—and more likely to
stay with your company.
• Ongoing compliance. Design your compensation strategy
with objective data and communicate it to managers to stay
within allocated budgets and to employees to show the clear
link between compensation and performance expectations.
• Budget optimization. Run "what-if" scenarios and instantly
see how increasing merit pay to your best employees would
impact your budget.
• Cost savings. Eliminate thousands of dollars from your
expense column each year by making sure you're not
overpaying low performers. Also, the easy-to-use automated
system will save compensation managers time and money.
• Zero error system. Manage your compensation in a secure
environment with streamlined workflows where your data is
determined via calculation and eligibility engines—
eliminating privacy breaches and human calculation errors.
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programs. Pdf-file Analyzing Compensation Data Guide describes three approaches
that Federal contractors may use to analyze their compensation systems; analyses may be useful
in determining if there are patterns of discrimination in the workforce; focus is on analyses of
salaries or wages, procedures can be used to analyze other forms of compensation as well. TOP
Are Higher Pay Increases Necessarily Better? This study investigated the
relationship between pay increase percentages and pay satisfaction among 118 MBA students
and found that pay satisfaction had the largest increase between three percent and seven percent
and appeared to level off between seven percent and eleven percent, suggesting that there may be
a point at which high pay increases may not necessarily lead to more satisfaction. In addition, it
was found that pay increases between six and eight percent are the minimum amounts needed for
pay increase satisfaction. Finally, we suggest that employees may not need as high of a pay
increase to experience satisfaction with their pay increase when providing those employees with
a signal, such as an average pay increase. pdf Building a Better 401(k) 401(k) plan
sponsors are taking steps to make their plans more attractive to employees in 2003. January 2003
Compensation Planning: The Key to Profitability This book can help brokers
create effective individual company compensation plans by giving them a better understanding of
how changes to existing compensation schedules affect the company finances as a whole. Pdf-
file 3.6 MB Compensation Plans An overview, article provided by Salary Source
Explaining Executive Compensation Managerial Power vs. the Perceived Cost of
Stock Options. Working Paper. Pdf-file Glossary Of Employee Benefit Terms Is Your
Long-Term Incentive Plan Really Performance-Based? Long-term incentive
plans (LTIPs) typically provide the largest component of senior executives’ compensation, most
often through one or more of three equity-based types: stock options, restricted stock, and what
are often called performance shares.
Labor Statistics Extensive compilation of statistics and data Misc. Issues Overview
on some compensation- and benefits-related issues: pay equity, variable pay systems, stock
plans, retirement plans, health and welfare plans, paid time off, government mandated benefits
Offer a Choice of Compensation Plans to Gain a Competitive
Advantage pdf-file 2003 Organizational Pay Mix The Implications of Various
Theoretical Perspectives for the Conceptualization and Measurement of Individual Pay
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Components. Pdf-file Organization-wide Broad-based Incentives: Rational
Theory and Evidence Despite the widespread use ofincentive pay, there is limited
evidence about what factors influence its organization-wide, broad-based application. Pdf-file
Paying for Performance: An Overlooked Opportunity Sales force
deployment and compensation are among the most powerful means a company has to improve
growth, market share, and profitability. Yet few companies take the time to align their payout
systems with current strategy. The author explains how to design a successful compensation plan
that is precise, fair, and simple. pdf-file Performance based Pay The Value of
Performance-Based Pay in the War for Talent, pdf-download version Performance
Standards in Incentive Contracts Research in incentives has focused on
performance measures and pay-performance sensitivities but has largely ignored the
“performance standard,” which generates important incentives whenever plan participants can
influence the standard-setting process. Working paper. pdf-file Promise and Peril in
Implementing Pay for Performance: A Report on Thirteen Natural
Experiments Despite the popularity of pay for performance programs, very little research
has examined the dynamics and dilemmas associated with implementing these programs. We
studied the implementation of thirteen experiments in pay for performance that were initiated by
local management in a high-commitment company (Hewlett Packard). We examined Hewlett
Packard documents and interviewed managers to understand their experience with implementing
these programs. Managers reported a relatively unfavorable cost-benefit assessment of programs
and difficulty in designing and maintaining them, especially in a fast changing business
environment. Managers at each site eventually concluded that they could attain greater
performance benefits through alternative managerial tools like effective leadership, clear
objectives, coaching or training, and therefore discontinued their pay for performance programs.
Finally, we discuss implications for management and for future research.
Compensation management chapter contain wage and salary aspect. The word salary applies to
compensation that is uniform from one period to the next and does not depend upon the number
of hours worked.
Job Satisfaction
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Labour and Wage Theories
Classification of Wages
Job Evaluation
The term compensation management is the alternative of wage and salary administration. Wage
word is commonly used for those employees whose pay is calculated according to the number of
hours worked. The concept of wage came from capitalist before it in the Jamindari system the
concept of wage was in the slaves form. Salary applies to compensation that is uniform from one
period to the next and does not depend upon the number of hours worked. When we got for job
definition we found that job is defined as a collection or aggregation of tasks, duties, and
responsibilities that, as a whole, is regarded as the reasonable assignment to an individual
employee. Job is known as impersonal however position is known as personal. Job always
contains a position which defines some set of works.
Job Satisfaction
Job satisfaction depends on the situations and environment of work atmosphere. According to the
MBA Book MB 0027, “Job satisfaction is determined by a set of personal and job factors,
personal factors relate to worker’s age, length of service, intelligence, skill, and other personality
or temperamental factors.
About the Job Evaluation British Institute of Management has defined “job evaluation as the
process of analysis and assessment of jobs to ascertain reliably their relative worth, using the
assessment as a basis for a balanced wage structure.”
“Job analysis is the process of getting information about jobs; specifically, what the worker does;
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how he gets it done; why he does it; skill, education and training required; relationships to other
jobs; physical demands and environmental conditions”.
Ranking methods
Point Method
Factor-Comparison Method
Time-Span Method
Pigors & Meyers give a unique definition of promotion which is, “the advancement of an
employee to a better job – better in terms of greater respect of pay and salary. Better houses of
work or better location or better working conditions-also may characterize the better location or
better working conditions-also may characterize the better job to which an employee seeks
promotions, but if the job does not involve greater skill or responsibilities and higher pay, it
should not be considered a promotions.”
On the Subject of Transfer Pigors and Mayers also writes, “the movement of an employee from
one job to another on the same occupational level and at about the same level of wages or
salary.”
In the end of the chapter we can say that Compensation Management deals not only salary and
wages but also job analysis and job satisfaction.
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EXECUTIVE SUMMARY
The feedback of the respondents was being up to mark and a positive response was
being carried out.
To configure the SAP Enterprise Compensation Review Statement, you would need to access it
in the configuration IMG @ SPRO -> Personnel Management -> Enterprise Compensation
Management -> Compensation Statement.
You first have to define what to include in the Compensation Review Statement for calculation.
You will do this at the “Determine Structure for Total Compensation Statement”. The next piece
is to determine what wage types contain the values you tell it to include in the “Select Wage
Type for Pay Category”.
At the “Create Form For Total Compensation Statement”, you will be working with Smartform
to design the layout of the form used when printing the statement. Enterprise Compensation
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Statement uses the form “HR_ECM_CRS”, no to be confused with “HR_CMP_TCS” used by
the old Compensation Management.
After you completed the first 3 steps outlined above, the 4th step is where the confusion begins. In
the old Compensation Management, you could determine what form to used by the “Total
Compensation Statement” report through an entry in T77S0. If you are access it via the IMG, it is
called “Determine Standard Form For Total Compensation Statement”. The problem is, this
exact structure is available in both the Enterprise Compensation Management and the old
Compensation Management. It is pointing to the exact same entry.
Due to this, you are stuck between a rock and a hard place. If you are implementing SAP, you
will hear numerous times not to change standard SAP code and always make a “Z” copy of what
you want to change and use the “Z” version. In this case, you would have to modify one of the
two standard codes. You have to either modify the include statement in the
RHECM_PRINT_CRS code to remove “NO-DISPLAY” in the selection parameter to allow the
selection screen to show what form it is defaulting and have the user select the right form.
Another option is to change the default form from HR_ECM_CRS to whatever “Z” form you
created.
The second method is to not change the standard program code, but go ahead and modify the
HR_ECM_CRS form. Make a copy of it to “Z” to be used as backup, but use the main
HR_ECM_CRS as being the main form you’ve modified.
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The Corporation is managed by Board of Directors appointed by the
President of India. Besides the Chairman, the board has the following
whole time Directors:
1. Director (Refineries)
2. Director ( Pipelines)
3. Director (Marketing)
4. Director (Finance)
5. Director (HR)
6. Director (R & D)
7. Director (P&BD)
(i)Refineries Division,
Director (Refineries),
Director (Marketing),
REFINERIES DIVISION
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With the Head Office at New Delhi, the Refineries Division is the
successor to the erstwhile Indian Refineries Limited which was
incorporated on 22.8.1958 as Private Limited Company and
subsequently amalgamated with the Indian Oil Company Ltd. on
1.9.1964 to form the Indian Oil Corporation Limited having two
Divisions, i.e. Refineries and Pipelines Division and Marketing Division.
Guwahati (Assam),
Barauni (Bihar),
Vadodara (Gujarat),
Panipat (Haryana).
The Assam Oil Division has one Refinery at Digboi and has a network of
marketing set-up. There are two liaison Offices, one each at Kolkata and
Mumbai.
Personnel
Management Services
Corporate Communication
Vision
A major diversified, transnational, integrated energy company, with national
leadership and a strong environment conscience, playing a national role in oil
security& public distribution.
Mission
To achieve international standards of excellence in all aspects of energy and
diversified business with focus on customer
delight through value of products and services, and cost reduction.
To maximize creation of wealth, value and satisfaction for the stakeholders.
To attain leadership in developing, adopting and assimilating state-of- the-
art technology for competitive advantage.
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To provide technology and services through sustained Research and
Development.
To foster a culture of participation and innovation for employee growth and
contribution.
To cultivate high standards of business ethics and Total Quality Management
for a strong corporate identity and brand equity.
To help enrich the quality of life of the community and preserve ecological
balance and heritage through a strong environment conscience.
Values
Care
Innovation
Passion
Trust
IndianOilPeople...
towards Excellence...
The main objective of the proposed study was to find out how far the employee has
been satisfied and how far their performance has been improved after the
commencement of 9th pay revision in Indian Oil Corporation Ltd, Guwahati
Refinery. It was necessary to analyze this scenario in Guwahati Refinery as
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because prior to the commencement of 9th pay commission in the Indian Oil Sector
the employees were not fully satisfied with their working condition along with the
matching of their payroll. Hindrances and disputes were arising out between the
employers and employees working in this organization.
So it was necessary for a rise in the compensation package in this sector so that the
employees would be satisfied with their performance along with their
compensation package in this organization. So the commencement of 9th pay
commission was implemented in this organization to attain the satisfaction of the
employees in this organization.
Research Methodology
In order to know the satisfaction of the employees working in this organization after the
commencement of 9th pay commission one set of Questionnaire was administered to the
employees ( both officers and non officers) working in this organization on the online basis.
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I.RESEARCH DESIGN: In order to understand the satisfaction of the Employees after the
commencement of 9th pay commission a brief conversation was done with the employers through
online and a survey was done through online basis.
II. Data Collection through Questionnaire:- Primary data have been collected personally from
the respondents through questionnaire through online survey . The respondent includes both the
officers as well as the non officers of every department working in this organization and analysis
on the basis of their working period that is more than 20 years and less than 20 years. The
respondents have been asked to fill up the questionnaire and more over data collection process
also includes oral interview through online.
III. Sampling Design & Sampling Size: - The elements of research of population or universe of
interest are the peoples both the officers and non officers of every department working in this
organization. The sample size of the study consists of samples, which include a study of 70
respondents out of which 5% are officers and 15% are non officers from every department
working in this organization. In this regards out of 70 samples 40 of the respondants were taken
telephonic interview, 20 were given online questionnaire for the survey and for the rest were
conducted an oral interview.
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IMPORTANT FOR BOTH EMPLOYERS AND EMPLOYEES TO
KNOW THEIR POSITION IN THE ORGANIZATION
GLOBAL SCENERIO
==========================
Introduction to Oil Companies According to the Global
Scenario Context
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The effects of global climate change affect every country, but not all are
responsible in the same way of its causes. The response, nonetheless, should
be global, involving as many countries as possible, but taking into account
their development degrees and their priorities and needs. Recognizing that
no individual nation can effectively address a problem of this scope,
governments within the UNFCCC have decided to address this challenge
collectively, fostering collective initiatives to control the enhanced
greenhouse effect, particularly emissions of CO2 from fossil fuel combustion.
Indeed, the problem is very different for the less favored countries with enormous
needs as compared to those who have reached high development levels. The latter
have recently undergone important changes in economic structure, technology and
energy efficiency that make them relatively cleaner countries. However, because of
historic reasons they have contributed to the current environmental problems; so
they bear specific responsibilities. It is not possible to adopt one common standard.
In countries like Mexico, for which international commitments haven´t been set, the
need to take on international commitments, not yet included in the UNFCCC, is
discussed. International political pressure for such commitments will surely occur
considering Mexico's growing involvement in the productive and financial
globalization. In the American continent the most rapid growth in carbon emissions
between 1970 and 1997 was in Mexico (235%) followed by Brazil (220%) and
Argentina (147%).
On what basis can cooperation against global warming be implemented? Which role
can international or local actors play, taking into consideration their influence on the
global environment? How can international institutions influence individual choices
in order to make international cooperation less problematic? How to make an
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objective differentiation and different countries´ efforts compatible with the search
for equity considering relative development degrees and historic responsibilities?
Those are some of the questions frequently posed in the scientific literature and in
international meetings.
Last years´ events show that barriers exist to fully integrate the DES
(Development, Equity, Sustainability) and climate change issues into the
sustainable development agenda, but they show opportunities as well. Sorting out
opportunities from challenges is indispensable for the advancement of dialogue,
negotiations and international cooperation. One of the fields where there is no
consensus is in the emphasis that environmental policies must have: command and
control measures or more flexible instruments which give more options and
responsibilities to economic agents.
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There is a recent shift, indeed, towards giving a more important place to market
instruments and agent decisions in order to reach environmental objectives and
implement climate change policies. This is the case of the Kyoto Protocol's
international trading system, which has been proposed as a key element of
flexibility, but raises many doubts and criticism, including its relation with equity
issues.
The purpose of this paper is to put this shift to market oriented policies and the role
of some important agents as the international oil companies in a broader
perspective.
Not only have these petroleum companies become amongst the biggest companies
in the world, but thanks to the fundamental importance of this limited resource,
they have also become embroiled in a complex political world of government and
national objectives, international relations - and all too often, outright war.
Oil companies, among the largest employers in the world, cater to the global
energy demand. Their areas of functioning can be grouped into the following:
• Production: This involves the extraction of crude oil from reserves, followed
by its refinement in processing plants.
• Distribution: The daily distribution quota is delivered to various sectors (e.g.
automobiles, agriculture, residential). This is followed by the commercialization of
oil products.
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RUSSIA
Oil
Reserves
According to the Oil and Gas Journal’s 2008 survey, Russia has proven oil reserves
of 60 billion barrels, most of which are located in Western Siberia, between the Ural
Mountains and the Central Siberian Plateau. Eastern Siberia is one area where little
exploration has taken place. The Russian Ministry of Natural Resources estimated in
2005 that A+B+C1 reserves (roughly equivalent to Proven + Probable reserves) in
E. Siberian provinces totaled 4.7 billion barrels.
With production of 9.8 million bbl/d of liquids (not including oil products), and
consumption of roughly 2.8 million bbl/d, Russia exported (in net) around 7 million
bbl/d. According to official Russian statistics, roughly 4.4 million bbl/d of this total is
crude oil. Over 70 percent of Russian crude oil production is exported, while the
remaining 30 percent is refined locally. Crude oil exports via pipeline fall under the
exclusive jurisdiction of Russia's state-owned pipeline monopoly.
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Production
In the 1980s, the Western Siberia region, also known as the “Russian Core,” made
the Soviet Union a major world oil producer, allowing for peak production of 12.5
million barrels per day in total liquids in 1988. Following the collapse of the Soviet
Union in 1991, Russia’s oil production fell precipitously, reaching a low of roughly 6
million bbl/d, or around one-half of the Soviet-era peak (see Fig. 1). According to
observers, several other factors are thought to have caused the decline, including
the depletion of the country's largest fields due to state-mandated production
surges and the lack of investment in field maintenance.
A turnaround in Russian oil output began in 1999. Many analysts attribute the
rebound in production to the privatization of the industry following the collapse of
the Soviet Union. The privatization clarified incentives and increased less expensive
production. Higher world oil prices beginning in 2002, the use of technology that
was standard practice in the West, and the rejuvenation of old oil fields also helped
raise production levels. Other experts partially attribute the increase to after-effects
of the 1998 financial crisis, the fall in oil prices, and the subsequent devaluation of
the ruble.
38
In 2007 Russian total liquids production averaged over 9.8 million bbl/d, including
9.4 million bbl/d of crude oil, a 200,000 bbl/d increase over 2006. This growth rate
was down from annual growth of roughly 700,000 bbl/d annually between 2002-
2004.
Short-Term Outlook
Growth in output from the Sakhalin projects, (see EIA’s Sakhalin Fact Sheet) will be
a main contributor to overall Russian oil output growth. In the upcoming decade, a
few major oil fields (listed in Table 1 below) will contribute to most of Russia’s
supply growth and others will offset decreasing production from mature fields. In
the short term, however, there are only a few large new fields that are planned.
They include Gazprom’s 100,000 bbl/d Prirazlomnoye field (2010), Lukoil's 150,000
bbl/d South Khylchuyu field (mid-2008), and year-round production from the
Sakhalin II field. Lukoil/ConocoPhillips's TimanPechora project, and Rosneft's
Vankorskoye (300,000 bbl/d) and Komsomolskoye fields will also help stem
production losses at older fields. Lukoil also expects around 30,000 bbl/d of
production from its North Caspian fields after 2010.
39
In 2006, around 24 percent (or 2.3 million bbl/d) of Russia’s oil production came
from fields that had already produced 60 percent of their total recoverable reserves.
Achieving continued growth at post-peak fields will become more problematic as oil
companies run out of easy and less costly opportunities to manage the rate of
decline.
Updated assessments of EIA’s short-term outlook for Russian oil supply growth are
available each month from Table 3b of the Short Term Energy Outlook.
Government taxation of production and export revenues along with the continued
lack of clarity concerning the ownership of subsoil resources contributed to lower
output for 2007 and could possibly contribute to stagnating or even negative output
growth during 2008. Export duties on crude oil are directly linked to the global
pricing environment. The tariff schedule for export duty for crude oil at $25/bbl and
higher is 65 percent of the market price minus $21/ barrel. Using this formula, the
government is receiving around $47 per barrel from export taxes at current prices.
40
Therefore, absent changes to the tax structure itself, Russian oil companies are only
very modestly affected by changes in global crude prices.
At current oil prices, the government is also receiving an additional $20 per barrel in
extraction taxes. The government plans to introduce preferential treatment for
those producers that extract resources at fields exceeding 80 percent depletion,
which they hope will encourage oil companies (mostly in the Volga-Urals region) to
bring some idle wells back into production.
Several proposals are currently being discussed to reduce the tax burden. One is a
proposal to raise the non-taxable threshold level from $9 to $15 per barrel. Prime
Minister Putin has also proposed a seven-year mineral extraction tax holiday for oil
companies that develop fields in Timan-Pechora, Yamal, or on the continental shelf
beginning in 2009. A second proposal would provide tax holidays for firms carrying
out offshore exploration or granting them mineral extraction tax breaks. Another
proposal by the Finance Ministry seeks to reduce annual oil company taxes by $4.2
billion from 2009. According to analysts, this is only a fraction of the $40 billion in
extraction taxes and $45 billion in export duties that the government collected from
oil companies in 2007.
Refinery Sector
Russia has 41 oil refineries with a total crude oil processing capacity of 5.4 million
bbl/d, but many of the refineries are inefficient, aging, and in need of
modernization. According to Energy Intelligence, refinery throughput at Russian
refineries increased by roughly 4 percent to around 4.6 million bbl/d in 2007. This
total includes some crude oil exports from neighboring countries. Russian refineries
produced around 1.2 million bbl/d of Mazut (heavy fuel oil), 1.3 million bbl/d of
middle distillates, and 815,000 bbl/d of gasoline.
41
The draft proposals mentioned above for the oil sector are also geared to provide
incentives for refiners to produce more high-quality and environmentally cleaner
fuels. Currently oil companies pay around $21/barrel ($154/tonne) for high-octane
gasoline, $15/barrel for low-octane gasoline, and $6/barrel of diesel.
Geobyte ltd - geological exploring of resources of potential regions of oil and gas
resources and condensate
JSC Gazprom Neft - is one of the largest oil and gas producing companies in Russia
42
Russian frozen ports and along the Northern Sea Route in Arctic waters
Sea Soft Packages and Tehcnologies Ltd - developing software for realtime video
integration with heterogeneous digital data
43
DUBAI HISTORY
The modern emirate of Dubai was created with the formation of the United Arab
Emirates in 1971. However, written accounts documenting the existence of the city
have existed at least 150 years prior to the formation of the UAE. Dubai shares
legal, political, military and economic functions with the other emirates within a
federal framework, although each emirate has jurisdiction over some functions such
as civic law enforcement and provision and upkeep of local facilities. Dubai has the
largest population and is the second largest emirate by area, after Abu Dhabi.[4]
With Abu Dhabi, it is one of only two emirates to possess veto power over critical
matters of national importance in the UAE.[5] Dubai has been ruled by the Al
Maktoum dynasty since 1833. The emirates' current ruler, Mohammed bin Rashid Al
Maktoum, is also the Prime Minister and Vice President of the UAE.
Revenues from petroleum and natural gas contribute less than 6% (2006)[6] of
Dubai's US$ 37 billion economy (2005).[7] A majority of the emirate's revenues are
from the Jebel Ali free zone authority (JAFZA)[8] and, increasingly, from tourism and
other service-oriented businesses. Dubai has attracted world-wide attention through
innovative real estate projects [9] and sports events. This increased attention,
44
coinciding with its emergence as a world business hub, has also highlighted human
rights issues concerning its largely foreign workforce.
45
Introduction to Oil Companies In UAE
The oil and gas sector provides around a third of the UAE's Gross National
Product, thanks to a successful programme in recent years of diversification
of the economy, but remains the dominant contributor of Government
revenues. The Abu Dhabi National Oil Company, ADNOC, supervises policy in
Abu Dhabi, under the guidance of the Supreme Petroleum Council.
Production is handled through joint ventures with consortia of international
companies,. ADNOC also owns, on behalf of Government, all of Abu Dhabi's
gas reserves. Oil production is around 2 million barrels a day. Gas is
increasingly important, both for export, and for meeting local demand, from
domestic and industrial consumers and from power generation and water
desalination plants. Dubai produces around 240,000 barrels a day of oil and
substantial quantities of gas from offshore fields, with a major condensate
field onshore, while Saharjah has smaller oil and gas fields. On the East
Coast, Fujairah is the third largest bunkering port in the world, although all of
the fuel is imported. Downstream development of refineries, petrochemical
plants and other related industries is increasingly creating an integrated oil
and gas sector, equivalent to that of industrialized nations.
Oil and gas production has been the mainstay of the economy in the UAE and
will remain a major revenue earner long into the future, due to the vast
46
hydrocarbon reserves at the country’s disposal. Proven recoverable oil
reserves are currently put at 98.2 billion barrels or 9.5 percent of the global
crude oil proven reserves.
As for natural gas, the proven recoverable reserves are estimated currently
at 5.8 billion cubic meters or 4 percent of the world total. This means that
the UAE possesses the third largest natural gas reserves in the region and
the fourth largest in the world. At the current rate of utilization, and
excluding any new discoveries, these reserves will last for over 150 years.
The UA E ’s oil production is limited by quotas agreed within the framework
of OPE C to 2 million barrels per day (mbd). Production capacity, however,
will rise to around 3 mbd in the year 2000. There are plans to boost that level
to 3.6 mbd in the year 2005 and 4 mbd in the year 2010. Gas production is
being expanded to meet a forecast doubling of demand to 3.7 billion cubic
feet per day (bn cfd) by the year 2000. Domestic demand is expected to
increase from 813 million cubic feet per day (mn cfd) in 1996 to 1.137 bn cfd
by the year 2000, while gas used for reinjection is projected to double to 1.8
bn cfd. The value of oil exports dropped from Dh 49.1 billion in 1997 to Dh
35.7 billion in 1998 (-27.3 per cent) due to the deterioration in oil prices
which fell by 34 per cent during 1998 compared with 1997 levels, to reach
US $12.4 a barrel. The value of liquefied gas exports also dropped from Dh
8.5 billion in 1997 to Dh 6.5 billion in 1998, due to the fall in its prices which
are closely linked with oil prices and owing to the fact that the value of gas
exports in 1997 included a one-time payment of Dh 1.5 billion made to
ADGAS by its main importer Tokyo Electricity Power Company. The UAE
exports 62 per cent of its crude oil to Japan making it the UAE’s largest
customer. Gas exports are almost entirely to Japan, the world's largest buyer
of liquefied gas, with the UAE supplying almost one-eighth of Japan's entire
requirements.
47
International Markets
The UAE plays a vital role in achieving stability in international oil markets
through its positive and balanced attitude within OPEC. The UAE participated
in two production cuts in 1998 and also played an important role in the
agreement adopted by OPEC member states in March 1999 to reduce
production by 1.7 mbd. The UAE agreed to reduce its production by 157,000
bd to a low of 2 mbd. By early September 1999 international benchmark
Brent crude oil was trading at a new high of US $21.03 per barrel. Oil prices
were expected to continue rising in the fourth quarter of 1999 when winter
weather in the western hemisphere is expected to increase demand. The
UAE welcomed a proposal to hold an OPEC summit meeting in Venezuela in
late 1999 or the year 2000 in order to reinforce rationalization of the world
supply of oil.
Abu Dhabi
Abu Dhabi is by far the biggest oil producer in the UAE, controlling more than
85 percent of the UAE’s total oil output capacity and over 90 percent of its
crude reserves. Principal offshore oil fields are Umm Shaif, Lower Zakum,
Upper Zakum, Al Bunduq and Abu al-Bukhoosh. The main onshore fields are
Asab, Bab, Bu Hasa, Sahil and Shah. Almost 92 per cent of the country's gas
reserves are also located in Abu Dhabi and the Khuff reservoir beneath the
oil fields of Umm Shaif and Abu al-Bukhoosh ranks among the largest single
gas reservoirs in the world.
In addition to its own concession areas and operations ADNOC has major
shareholdings in 15 ventures forming the ADNOC group. These include the
three main oil and gas operating companies (ADCO, ADMA-OPCO and
ZADCO), five support companies providing services to the oil and gas
industry, two natural gas processing companies (GASCO, ADGAS), two
maritime transport companies for crude oil, refined products and LNG
(ADNATCO, NGSCO), a refined product distribution company (ADNOC-FOD)
and two chemical and petrochemical companies (FERTIL, BOROUGE). ADNOC
49
also owns and operates two refineries at Umm al-Nar and Ruwais, the gas
treatment plants at Habshan, gas pipeline distribution network and the
chlorine industries at Umm al-Nar.
ADNOC Restructuring
Dolphin Project
50
The Dubai Government also joined the multi-billion dollar Dolphin initiative
with the signing of a memorandum with the UOG where by the Dubai Supply
Authority (DSA) agreed to purchase its requirements for Qatari gas from
Dolphin. Under the terms of the agreement, Dubai plans to purchase gas in
the amount of 200–700 mn cfd. The Dubai Government and the UOG also
agreed to cooperate in identifying and maximizing opportunities for
investment arising out of the supply of gas. The Dolphin gas will bridge the
gap between energy supply and demand which will develop over the next
five years as Dubai’s economy expands.
Dubai
Dubai’s oil reserves have reduced over the past decade and are now
expected to be exhausted within 20 years. The main fields are offshore:
Fateh, Southwest Fateh and two smaller fields, Falah and Rashid. The only
onshore deposit is the Margham field. Dubai Petroleum Company (DPC) is the
main operator. Dubai has a 2 per cent share of the UAE's gas reserves.
Dubai’s Margham gas/condensate field can deliver up to 140 mn cfd for
domestic use and offshore fields can provide another 100 mn cfd. Sharjah
also supplies Dubai with 430 mn cfd through a pipeline installed in 1992. The
state-owned Dubai Natural Gas Company (DUGAS) is responsible for
processing natural gas produced in Dubai’s offshore oil fields as well as the
gas piped from Sharjah.
Sharjah
51
Sharjah owns 5 percent of the UAE's gas reserves, mostly non-associated gas
which is being utilised domestically. The emirate’s most important gas
deposits are at the offshore Mubarak field and the onshore Saja’a, Move yeid
and Kahaif fields. Gas reserves are estimated at 10,000 billion cubic meters
and around 800 mn cfd of gas are produced. Sharjah’s offshore Mubarak
field, operated by the local Crescent Petroleum Company, produces around
30,000 bd of condensate. In July 1999 Crescent Petroleum began drilling
Sharjah-2 some 30 kilometers offshore of Sharjah where gas has already
been discovered. The site is located 800 meters from the Sharjah-1 well. Any
gas finds are expected to contain valuable liquid condensates. Crescent
operates the concession area along with London-based Atlantis. Crescent –
Atlantis also announced in July that they were about to begin major seismic
work in the gas-proven areas of Sharjah's interior desert and this would be
followed by drilling. The onshore Sajaa and Moveyeid fields, operated by BP–
AMOCO, produce 35,000 bd of condensate in addition to natural gas.
52
Ras Al-Khaimah
Ras al-Khaimah's reserves are estimated at 400 million barrels of oil and
condensate and 1,200 bn cfd of natural gas. In September 1997, Ras al-
Khaimah awarded Norway’s Atlantis Technology Services and Petroleum Geo
Services a permit to explore the offshore Baih field. The Ras al-Khaimah Oil
and Gas Company, set up in 1996, has exclusive hydrocarbon rights to the
rest of the emirate.
Refineries
In the UAE there are six refineries operational at present and the existing
refining capacity in the region is estimated to be around 800,000 tones.
Development of downstream industries such as refineries and petrochemical
plants is a central part of UAE efforts to move away from crude oil exports.
Major plans are under way to construct new refineries and increase the
capacity of existing ones in order to attain production of 180,000 bd by the
year 2000. Abu Dhabi is presently in the middle of a five - year (1997–2002)
development project aimed at boosting refining capacity. ADNOC’s US $600
million Ruwais refinery upgrading project is just one of the many down
stream projects that are included in the programme. Others include a 35,000
bd refinery plant in Fujairah and the Dh 600 million Sharjah re finery at
Hamriyyah Free Zone, which commenced operations in mid-1999.
53
Oil companies struggling to keep on top of emerging
Threats
‘The Impact of Risk on National Oil Companies’ also reveals a strong desire
by NOC leaders to understand risk better and find better ways to share
related best practices. More than 90 percent of the NOC leaders Marsh polled
agreed that more discussion forums were needed.
“The spectrum of risk that business leaders face today is far more complex
than ever before,” said Brian Storms, chairman and CEO of Marsh. “Not too
long ago, the top concern for an NOC might have been a fire at a refinery.
But the study we conducted at the Marsh National Oil Companies Conference
in Dubai shows that newer risks – such as the impact of climate change – are
moving near the top of the list.”
54
Insurer warns oil companies about Renewable
Energy
Renewable energy sources were called "a growing risk" at a gathering of oil
executives today in Dubai.
“The normal tendency would be a bias for action, where you might jump to a
tactical, defensive position. But there is a ‘new world’ view of risk –
specifically, how to find opportunity in the kind of global changes we’re
seeing… where risks and potential liabilities can be turned into a competitive
advantage over those companies that don’t move to address them.”
Storms also cited other potential risks faced by national oil companies,
including terrorist acts, the effects of a major natural disaster on production,
55
the concentration of supply chains – especially due to the threat of avian flu
and other risks.
Just a few months after the near-$150 high, the price of a barrel of crude oil
plummeted 70 percent, to about $40. It turns out that this upside has more
than a little downside, and it may mean bad news in the future. Last
summer's high prices were a result of a complex series of events-a "perfect
storm" involving speculation in the oil markets, high demand for oil products,
the peaking or near-peaking of production volumes, the incipient financial
crisis, etc. But at least we now have a pretty good explanation for what went
on in the price increase.
The problem is that no oil producer is making money at $40 per barrel.
We've heard estimates that the break-even point is now $60 to $80 per
barrel, so producers are hurting. Why doesn't a producer simply stop
producing if it loses money on every barrel? That question is answered when
you realize that most of our oil now comes from national entities (Saudi
Arabia, Venezuela, Iran, etc.) rather than companies like Exxon or Shell.
These countries do indeed work with companies, but the basic decisions
there are governmental. These governments are dependent on oil revenue
for infrastructure, social programs, military spending and all the rest. For
them, if revenue stops, the government stops.
56
The OPEC nations want the oil price to climb to at least $70 per barrel, and to
help make that happen they've agreed to cut production by about 4.3 million
barrels per day. Total world production is now about 85 million barrels per
day, so the OPEC cuts represent about 5 percent of the total. The result
should be a boost in oil prices, but it hasn't worked-at least not yet. Part of
the problem is that while the nations may agree, they may not cut as much
as promised to avoid a drop in revenue.
More drastic cuts in production might do the trick, but no one knows the
"tipping point" at which a large reduction in supply might lead to a rapid
price increase like last summer, and those kinds of prices might hurt
everyone by making the worldwide recession worse.
The $40-per-barrel price is hurting oil companies and oil nations around the
world. You heard the mantra "drill, drill, drill" last summer, but something
like $100 billion in new oil-industry projects have been cancelled since the
fall in prices, and oil rigs, infrastructure and equipment are idle or not being
maintained. Alternative energy projects have also taken a hit, as their worth
is compared to the price of oil, and if oil is cheap, why seek alternatives?
Some of the most negative voices are coming from old hands in the oil patch,
and it's not just because of the current price. The industry's infrastructure is
made predominantly of steel, and many of the rigs, platforms, pipelines and
refineries that were new 40 or 50 years ago are rusting and not being
renewed. The industry also has depended on a generation of workers who
are not only aging, but are too often not being replaced.
If demand for oil increases once again as economic recovery begins, where
will the necessary increase in supply come from? Are we, as many analysts
believe, at or beyond the all-time peak of production? Oil at $40 per barrel-
and the financial crisis-has left us a weaker oil industry. And, ironically, a
weaker alternative-energy industry, at a time when we need both to stabilize
57
future energy resources. If we see serious shortages, prices will spike. Let's
hope it's not the making of another perfect storm.
58
Just when companies were getting used to cheap oil, crude prices have recently
started climbing again, keeping businesses jittery and alert in case last year's
record levels are repeated or prices spiral out of control.
Nouriel Roubini, the well-known New York University professor who predicted the
financial crisis, thinks that crude, which currently hovers above $70 a barrel, may
rise to $100 next year.
A Seoul financier predicts a rise, partly because of the weakening trend of the
greenback and the financial constraints oil producers have found themselves in.
The three-digit-mark may seem like a long way off, but the International Energy
Agency's newly revised forecast adds support to the outlook that prices won't go
back to figures seen earlier this year.
59
Crude traded as low as $30 a barrel earlier, a steep crash after it neared $150 a
barrel in the summer of 2008.
The agency projected Thursday that 2009 oil demand would go up on signs the
recession is bottoming out, which fueled trading to spike to a seven-month high on
the same day.
West Texas Intermediate crude for July delivery broke the $70 threshold to nearly
$73 on the New York Mercantile Exchange, while benchmark Dubai crude, Korea's
main import, hit a new high for the first time since last October.
What does all this mean for companies? Anxiety and a rush of worry ― no matter
the industry.
60
Communication Solution for Oil & Gas
Exploration
During May 2006 the GVF organized a series of events to address the
communications imperatives of the Oil & Gas sector, including meetings that
addressed the issue of regulatory and policy reform in the sitcoms sector
to meet the communications needs of the energy sector. Chronologically,
these events were the: Oil & Gas Communications: Satellite Regulatory &
Policy Summit, Houston, 5 May 2006
• Oil & Gas Communications: Africa and the Middle East Conference, Cairo, 15-
16 May 2006
• Oil & Gas Communications: Satellite Regulatory & Policy Meeting, Cairo, 17
May 2006
61
Indian Oil Corporation Ltd in India
===========================
====
Oil & Gas Industry in India
The origin of oil & gas industry in India can be traced back to 1867 when oil was
struck at Makum near Margherita in Assam. At the time of Independence in 1947,
the Oil & Gas industry was controlled by international companies. India's domestic
oil production was just 250,000 tonnes per annum and the entire production was
from one state Assam.
The foundation of the Oil & Gas Industry in India was laid by the Industrial Policy
Resolution, 1954, when the government announced that petroleum would be the
core sector industry. In pursuance of the Industrial Policy Resolution, 1954,
Government-owned National Oil Companies ONGC (Oil & Natural Gas Commission),
IOC (Indian Oil Corporation), and OIL (Oil India Ltd.) were formed. ONGC was formed
as a Directorate in 1955, and became a Commission in 1956. In 1958, Indian
Refineries Ltd, a government company was set up. In 1959, for marketing of
petroleum products, the government set up another company called Indian
Refineries Ltd. In 1964, Indian Refineries Ltd was merged with Indian Oil Company
Ltd. to form Indian Oil CorporationLtd.
During 1960s, a number of oil and gas-bearing structures were discovered by ONGC
in Gujarat and Assam. Discovery of oil in significant quantities in Bombay High in
February, 1974 opened up new avenues of oil exploration in offshore areas. During
1970s and till mid 1980s exploratory efforts by ONGC and OIL India yielded
discoveries of oil and gas in a number of structures in Bassein, Tapti, Krishna-
Godavari-Cauvery basins, Cachar (Assam), Nagaland, and Tripura. In 1984-85, India
achieved a self-sufficiency level of 70% in petroleum products.
In 1984, Gas Authority of India Ltd. (GAIL) was set up to look after transportation,
processing and marketing of natural gas and natural gas liquids. GAIL has been
instrumental in the laying of a 1700 km-long gas pipeline (HBJ pipeline) from Hazira
in Gujarat to Jagdishpur in Uttar Pradesh,
62
passing through Rajasthan and Madhya Pradesh.
After Independence, India also made significant additions to its refining capacity. In
the first decade after independence, three coastal refineries were established by
multinational oil companies operating in India at that time. These included refineries
by Burma Shell, and Esso Stanvac at Mumbai, and by Caltex at Visakhapatnam.
Today, there are a total of 18 refineries in the country comprising 17 in the Public
Sector, one in the private sector. The 17 Public sector refineries are located at
Guwahati, Barauni, Koyali, Haldia, Mathura, Digboi, Panipat, Vishakapatnam,
Chennai, Nagapatinam, Kochi, Bongaigaon, Numaligarh, Mangalore, Tatipaka, and
two refineries in Mumbai. The private sector refinery built by Reliance Petroleum Ltd
is in Jamnagar. It is the biggest oil refinery in Asia.
By the end of 1980s, the petroleum sector was in the doldrums. Oil production had
begun to decline whereas there was a steady increase in consumption and domestic
oil production was able to meet only about 35% of the domestic requirement. The
situation was further compounded by the resource crunch in early 1990s. The
Government had no money for the development of some of the then newly
discovered fields (Gandhar, Heera Phase-II and III, Neelam, Ravva, Panna, Mukta,
Tapti, Lakwa Phase-II, Geleki, Bombay High Final Development schemes etc. This
forced the Government to go for the petroleum sector reforms which had become
inevitable if India had to attract funds and technology from abroad into the
petroleum sector. The government in order to increase exploration activity,
approved the New Exploration Licensing Policy (NELP) in March 1997 to ensure level
playing field in the upstream sector between private and public sector companies in
all fiscal, financial and contractual matters.
To meet its growing petroleum demand, India is investing heavily in oil fields
abroad. India's state-owned oil firms already have stakes in oil and gas fields in
Russia, Sudan, Iraq, Libya, Egypt, Qatar, Ivory Coast, Australia, Vietnam and
Myanmar. Oil and Gas Industry has a vital role to play in India's energy security and
if India has to sustain its high economic growth rate.
63
Oil Companies In India
IBP
IBP was established in the year 1909 in Rangoon. IBP is now part of the
prestegious Indian Oil Corporation Group. Indian Oil is India's flagship Oil
Company with nine refineries, over 6500 kms of cross country pipelines and
186 bulk storage depots and terminals.
Shell in India
Shell businesses exist to meet the energy needs of society in ways that are
economically, socially and environmentally viable, now and in future. All of
64
our businesses are united by common goals; to make the most of our existing
business; to gain new business and to break new ground.
Cairn India - largest producing oil field in the Indian private sector
Essar Oil - operates a fully integrated oil company of international size and scale in
India.
Gumpro Chem Drilling Fluids - offers a complete range of drilling fluid additives like
Specialized Lubricants, Stuck Breakers, loss Circulation material Dispersants,
Guru Industrial Valves Pvt. Ltd. - one of the pioneers in the world of Valves and Pipe
65
fittings
Indiana Gratings Pvt. Ltd. - design, manufacture, supply and erection of gratings all
over the world.
Jindal Drilling & Industries ltd - deep ocean well drilling engineering and more
M/S Kunj Forgings P LTD - manufacturer of pipeline accesories such as forged &
casted valves & forged flanges
66
HALDIA
INTRODUCTION OF OIL COMPANIES IN HALDIA
67
eastern India through two product pipelines as well as through barges,
tank wagons and tank trucks. Products like MS, HSD and Bitumen are
exported from this refinery. Haldia Refinery is the only coastal refinery of
the corporation and the lone lube flagship, apart from being the sole
producer of Jute Batching Oil. Diesel Hydro Desulphurisation (DHDS) Unit
was commissioned in 1999, for production of low Sulphur content (0.25%
wt) High Speed Diesel (HSD). With augmentation of this unit, refinery is
producing BS-II and Euro-III equivalent HSD (part quantity) at present.
Resid Fluidised Catalytic Cracking Unit (RFCCU) was commissioned in
2001 in order to increase the distillate yield of the refinery as well as to
meet the growing demand of LPG, MS and HSD. Refinery also produces
eco friendly Bitumen emulsion and Microcrystalline Wax. A Catalytic
Dewaxing Unit (CIDWU) was installed and commissioned in the year 2003
for production of high quality Lube Oil Base Stocks (LOBS), meeting the
API Gr-II standard of LOBS.
In order to meet the Euro-III fuel quality standards, the MS Quality
Improvement Project has been commissioned in 2005 for production of
Euro-III equivalent MS. The refinery expansion to 7.5 MMTPA as well as a
Hydrocracker project has been approved, commissioning of which shall
enable Haldia Refinery to supply Euro-IV and Euro – III HSD to the eastern
region of India.
Indian Oil Corporation (IOC), the country’s largest oil marketing company, has put
on hold its plan to set up a 15-million tonne refinery at Haldia due to the economic
downturn. IOC was supposed to rope in an international partner for the project.
“The project has been put on hold because of the financial turmoil and no progress
has been made,” said an IOC executive.
68
Now, it may be difficult for IOC to find an international company for such a large
complex, said an industry expert.
IOC and the West Bengal government were to jointly explore the possibility of
roping in an internationally-reputed multinational company as a partner. IOC along
with this international partner was supposed to carry out a techno-economic
feasibility study for the project. The study has not yet been conducted in the
absence of such a partner.
In September 2006, IOC had signed a memorandum of agreement (MoA) with the
West Bengal government to develop Haldia as a Petroleum, Chemicals and
Petrochemicals Investment Region (PCPIR). The agreement envisaged setting up of
a refinery of 15-million tonne capacity with downstream petrochemical facilities. IOC
already operates a 6-million tonne refinery at Haldia, which is being expanded to
7.5 million tonnes.
IOC is not the only company that has put on hold its expansion plan. Last week,
Mangalore Refinery and Petrochemicals, a subsidiary of Oil and Natural Gas
Corporation (ONGC) said it has shelved its plan to build a 15-million tonne refinery.
Analysts say the economic downturn is not the only reason behind putting such
plans on hold. Such decisions are also being influenced by the increasing surplus
refining capacity in the country. India has surplus refining capacity of nearly 45
million tonnes, which is set to increase further.
70
After a delay of more than a year, Indian Oil Corporation (IOC) is now poised
to complete the Paradip-Haldia crude pipeline, hopefully in a month or two.
The project will reduce the transportation cost of crude to both Haldia and
Barauni refineries in West Bengal and Bihar respectively.
Escalation
Though the decision may lead to legal complications between IOC and IOEC,
IOC is now hopeful of completing the project shortly. There are, however,
chances of escalation in project cost depending upon the legal
developments.
"The Australian company has just set foot on the project. There is 30-35 days
residual work left in regard to the offshore pipeline connecting the SPM to
onshore storage facility. However, considering the heavy monsoon in the
East coast, which is about to arrive, there may be some minor delay. Overall
we are now hopeful to complete the project in next two months," a senior
company official said.
71
Sub-surface pipeline
Meanwhile, IOC sources said Punj Llyod has helped overcome technical
problems in laying the 330 km sub-surface pipeline from Paradip to Haldia
crossing a number of river estuaries, including the largest and most difficult
of them all - the estuary of the Mahanadi.
"There were serious problems in laying the pipeline under the Mahanadi
leading even to a change in design. However, the project contractor struck to
work at the agreed cost," the official said, adding that the pipeline project
has been completed.
The company which had a pipeline network of 9,273 km at the start of this fiscal year,
plans to add 4,000 km before the end of the current Five-Year Plan, which ends in
March 2012. "We are currently working on 13 different projects with a total investment of
Rs 2,500-2,600 crore. The pipelines are an integral part of these 3 projects," the source
said.
The first of the projects was a small Bangalore ATF line pipeline which was
commissioned in October 2008. The second was IndianOil's first LPG pipeline from
Panipat to Jalandhar Spanning 275 km, it was commissioned in November. The third is
the Panipat Haldia pipeline.
This pipeline will connect Paradip port in Orissa with IOC’s refinery at Haldia in West
Bengal and further with the help of existing Haldia-Barauni pipeline, which carries
crude to IOC’s Barauni refinery in Bihar.
“The new pipeline will be the lifeline for IOC, as Haldia and Barauni refineries
are incurring huge losses because of the additional cost of transporting crude
through Haldia port where larger vessels cannot call in,” Mr Ramachandran
said.
IOC will set up a single-buoy mooring (SBM) facility off the Paradip coast to
enable VLCCs or very large crude carriers to discharge their cargo. The crude
will then be piped on to the Haldia and Barauni refineries.
GUJARAT
74
Introduction To Gujarat Refinery
More than 25 years ago, the Government of Gujarat conceived of the formation of a
petrochemical company, that has today metamorphosed into a large-scale Rs. 3900
crore energy organization, excelling in a wide gamut of hydrocarbon activities.
Notwithstanding its limited role and the low key infrastructure, the organization
drew inspiration from the exciting opportunities that the hydrocarbon sector offered
in the wake of liberalization of Indian economy. It gradually began to expand its
vision, widened the scope of its activities and rechristened itself as Gujarat State
GSPC has grown from operator ship of small fields in Gujarat into an expansive oil
and gas exploration and production company across India and overseas within just a
decade. The company has recently drilled its 50th onshore well, which is a landmark
considering the fact that GSPC has been an Operator only since Aprill 2000. Its rise
in the hydrocarbon sector was helped in no small measure by the Central
Government's opening of the sector to private participation in the early 1990s.
75
(Guwahati Refinery)
The Guwahati Refinery in North East India -- the first Public Sector
refinery of the country -- was commissioned in 1962 with a
capacity of 0.75 MMTPA which was subsequently increased to 1.0
MMTPA through debottlenecking projects. The refinery processes
only indigenous crude oil from the Assam oil fields. With its main
secondary unit, a coking unit, it produces middle distillates from
heavy ends and supplies petroleum products to North-Eastern
India, and surplus products onward to Siliguri in West Bengal in
2003. Hydrotreater Unit for improving the quality of diesel has
been commissioned in 2002. In 2003, the refinery installed an
Indmax Unit, a novel technology developed by Indian oil’s R&D
Centre for upgrading heavy ends into LPG, Motor Spirit and Diesel
oil.
76
INTRODUCTION TO HUMAN RESOURCE
DEPARTMENT
GUWAHATI REFINERY
===========================
====
The Human Resource Department The Personnel, Administration,
Management Services, HRD & Training and Corporate Communication
Department at Refineries are headed by ED (HR) with the following functions
under his charge:
1
2 Personnel
3 Administration and Welfare
4 Training and Development
5 Management Services
6 Corporate Communication
In Guwahati refinery the functions are divided amongst two senior human
resource managers (SHRM). Each SHRM appoints deputy manager to
subdivide their functions. SHRM also appoints Senior Administrative officers
(SAO) to take care of the administrative functions.
79
HUMAN RESOURCE FUNCTIONS IN GUWAHATI
REFINERY
==================================================
=======
STAFFING
o Manpower planning
o Job description
o Recruitment
o Personnel records
o Promotion
o Transfer
PERSONNEL MAINTENANCE
o Motivation
80
o Performance Appraisal
o Recreation
o Communication
o Safety
o Medical Services
o Security
INDUSTRIAL RELATIONS
o Productivity Bargaining
o Grievance Handling
o Discipline Administration
COMPENSATION
o Negotiations
81
o Incentives/bonus
1) For how many years have you been working in this organization?
INTERPRETATION:
28.57
GRADE A %
82
14.29
GRADE B %
28.58
GRADEC %
14.29
GRADE D %
14.29
GRADE E %
3) What was your Compensation Package before the commencement of 9th Pay
Commission?
83
d) 30,0000-40,000( ) (e) More than 40,000( )
Interpretation:
14.29
Below 10 000 %
42.86
10000-20000 %
28.58
20000-30000 %
30000-40000 7.14%
More than 40 000 7.14%
ANALYSIS: It was analyzed that before the commencement of 9th Pay Revision
maximum of the employees compensation package was between 10 000 to 20 000
respectively.
INTERPRETATION
85.71
Yes %
14.29
No %
ANALYSIS: It was analyzed that maximum of the employees were satisfied with
their working condition prevailing in this organization.
5) Are you satisfied with your payroll along with your working condition?
a) Yes ( ) ( b) No ( )
Interpretation:
71.42
Yes %
28.57
No %
85
Analysis: It was analyzed that maximum of the employees were satisfied with their
payroll along with their working condition in this organization. The ratio of their
Payroll in respect to their Working Condition was beneficial to them.
a) Yes ( ) ( b) No ( )
INTERPRETATION:
57.14
Yes %
42.85
No %
86
Analysis : Maximum of the respondants stated that there should be a rise in the
salary package in respect to this organization.
a) Yes ( ) ( b) No ( )
INTERPRETATION
71.42
Yes %
28.57
No %
87
ANALYSIS: It was analyzed that maximum of the respondants stated that the 9th
Pay Revision should be implemented in this organization.
8) What was the reimbursement in your salary package after the commencement
of 9th pay revision?
INTERPRETATION:
28.58
10% %
14.29
20% %
28.58
30% %
14.29
40% %
14.29
50% %
Here , 1=10%, 2=20%, 3=30%, 4=40% and 5=50% as indicated in the graph below.
88
ANALYSIS: It was analyzed that at an average maximum of the respondants
reimbursement was to a rise of 10% & 30% after the commencement of 9th pay
revision in this organization.
9) Now are you satisfied with the payroll along with your working condition after
the commencement of 9th Pay Revision?
89
INTERPRETATION
14.29
Strongly Dissatisfy %
14.29
Dissatisfy %
14.29
Neither Satisfy Nor Dissatisfy %
28.58
Satisfy %
28.58
Strongly Satisfy %
90
91
CONCLUSION
This was because of the reason that there was a strong rise in the
increment given to employees working in this public sector unit.
There was a tremendous rise in the increment i.e 50%. This made
the employees achieve their job satisfaction in respect to the
point of view in regards to the compensation package in this
particular unit.
92
93
RECOMMENDATION AND SUGGESTION
Although it was found that the employees were fully satisfied with their payroll
after the commencement of 9th pay revision in Indian Oil Corporation, Guwahati
Refinery it was still advised to recommend that there should be a slight rise in the
compensation package in the group of A Grade and B Grade employees. This is
because of the reason that since this two categories comes under the designation of
officer in this reputed organization.
No doubt Indian Oil Corporation Ltd is one of the most reputed organization all
over India so to keep its position mandatory in respect to the payroll scheme a
slight rise increment will give a strong reflection in the virtue and vice in respect to
this category.
REFERENCE
94
Websites Referred:
www.iocl.in
www.monetarycontrol.com
www.quickmba.com
www.netmba.com
www.investorwords.com
www.answers.yahoo.com
www.motorcyclist.com
www.businessmirror.com
www.adnoc.ae.com
www.iloveindia.com
www.valuenotes.com
INTRANET REFERRED
95
Questionnaire
ON
96
COMPENSATION MANAGEMENT: “AN ANALYSIS IN RESPECT
OF SALARY WITH 9TH PAY REVISION IN IOCL, GUWAHATI
REFINERY”
1) For how many years have you been working in this organization?
3) What was your Compensation Package before the commencement of 9th Pay
Commission?
a) Yes ( ) (b) No ( )
5) Are you satisfied with your payroll along with your working condition?
a) Yes ( ) (b) No ( )
97
6) Do you think there should be a rise in salary package in this organization?
a) Yes ( ) ( b) No ( )
a) Yes ( ) ( b) No ( )
8) What was the reimbursement in your salary package after the commencement
of 9th pay revision?
9) Now are you satisfied with the payroll along with your working condition after
the commencement of 9th Pay Revision?
98
99
100
101