Toward More Fuel Flow

power.jpg (18860 bytes)The oil and power
segment spending for the year was above Rs 250 crore. IT investments continued into this
segment in the form of large-scale infrastructure upgradation and systems integration
projects. The segment is only addressed by large vendors of national repute, capable of
giving implementation and support services in a large number of remote locations. Though
oil and power segments are characterized differently in terms of their business, the
common line running through them is the nature of process generation, transmission, and

One of India’s proud industries is the petroleum sector which
has been responsible for keeping the sinews of the country energized, and the nation a
viable industrial entity. In spite of the formidable challenges the industry faces in
terms of its responsibility to the nation, there has been a lot of development that has
taken place here. We now have the latest in engineering, system control, and the
integrability of resources in the Indian oil refining and distribution sector. An analysis
of how this industry has adopted IT in all these areas and many more is an indication of
the infrastructure competency in India. At the top of the list is the Indian petroleum
sector which boasts of a company like Indian Oil Corporation (IOC), which is the only
Indian Fortune 500 company, and Hindustan Petroleum Corporation Ltd (HPCL), a company
which has the honor of having the first-ever computer in the country installed on its

While the oil industry is a sum total of a lot of processes
and segments, there are two areas that fall at the very apex of the mission-critical
pyramid. These are refining and marketing, and with the sheer massiveness of the operation
involved in these areas, the gains that are accruing to the oil industry as a result of
adoption of IT are also quite significant. The relevance is not only for the respective
oil companies, but also for the nation as a whole. As in India, oil exploration and
distribution falls under the direct control of the Central Government.

Plan Outlay For IT Investment

Hindustan Petroleum:Rs 77 crore
Indian Oil Corporation:Rs 75 crore
Bharat Petroleum:Rs 60 crore

HPCL has invested close to Rs 55 crore in IT in the
current Ninth plan. IOC has also been investing significantly in IT. In the area of its
reengineering alone, a process that is universal to the company, it hopes to make an
investment of Rs 100 crore. The refineries that fall under this company are also investing
significantly in IT, and figures of Rs 3-6 crore and more are common in these refineries.
Things have been going at a slow pace in the last two years when these oil companies
started to draw on the advantages that accrued through IT deployment and investments. The
latest preoccupation with IT has been more customer responsive and competitive.

Clearly, there is a need to minimize wastage and optimize
processes so that costs can be brought down and have a favorable impact on the overall
economic position of the country. It is for this that the Government has set up a major IT
initiative for oil companies so that the production, refining, distribution, and marketing
areas of the industry can be made more profitable. Today in India, in almost all oil
companies and refineries the Government is the major share holder. IOC, the largest among
these, operates six of these refineries. HPCL has two, and the rest are distributed among
Bharat Petroleum, Madras Refineries, and Cochin Refineries.

power-1.jpg (18775 bytes)In an oil refinery, the
broadest possible process definition is the conversion of crude oil to usable refined
outputs. These products are, inter alia, motor spirit, diesel, naphtha, natural gas,
lubes, kerosene, furnace oils etc. What happens in the oil refinery is the optimization of
the processes to ensure maximum safety, maximum output, minimum wastage and possibility of
upgradation in the future with the eventual linking of geographically-balanced
distribution processes. In short, maximizing on production efficiency is the target toward
which oil refineries work. IT plays an important role here in helping refineries achieve
this target as easily and as productively as possible.

Today, Distributed Digital Control Systems (DDCSs) are
common, with refineries taking to this device of automation in a major way. For this
purpose, major refineries are now either installing or upgrading DDCSs and also
integrating the outputs of the refinery MIS to that of the central corporate MIS of the

The imperatives behind getting to the advanced stage are to
optimize and grow. The optimization results by way of employing automated systems that
determine the ratio by which different crudes are to be mixed in order to get the required
distillate. This blending process is one level of automation which is also followed by or
supplemented in parallel by systems that take care of simulations in a furnance, stores
and management loading and dispatch and inventory. Presently, India imports crude from
Saudi Arabia, Kuwait, and Nigeria.

IT Proposal for Gas Authority of India

LAN At Corporate & 20 Site Offices
Financial Acct.
Payroll Acct.
Material & Inventory Control
Intranet At Corporate Office
Project Monitoring
ERP At Marketing Offices

IT Investment At Hindustan Petroleum
Corporation Ltd

Hardware: IBM, HP,
Sun, DEC, Fujitsu, HP 9000 (RISC),
1,947PCs including 1,700 Pentium 166 Mhz MMX, 300 Pll Digital Control Systems
Software: Oracle, Ingres, Sybase, Unify X-base, MS Access, Win95, Case Tools

MIS At Indian Oil Corporation, Baruni

Financial Management
Materials Management
Engineering Support
Attendance Recording
Personnel Information
Training Records
Hospital Management
IT Deployment
DRS 6000 with Unix/64 terminals/VT200
Sun 5520
3 Pentium 90 Compaq/60 nodes (Digital)
Thin Ethernet
Ingres 4.0
Unify 5.0
Solaris 2.0
Novell NetWare
WinNT 4.0
SCO Unix

But reducing the inventory holding time is not the only
area where the benefits are coming in. According to IOC estimates, there will be about 60
percent savings from the current level in materials management, power, chemical processes,
freight, and similar refinery-related areas. The company is also looking at 95 percent
customer satisfaction level, up from the 65 percent today.

One very significant area that is being looked in the
refineries today is an Artificial Intelligence system. It is a system that will enable a
business model based prediction for refinery processes that are currently being addressed
by DDCS. This will have a higher level of computer control whereby the entire refinery
processes could be designed for the future. In Mathura, the software package works on set
point algorithms which are also voice recognition based so that decision support can be
enabled in times of crisis. There is a similar operation underway at IOC’s Baruni
Refinery, where these processes are underway to have three control rooms linked through an
FDDI backbone to the central MIS and a Digital computer. In Baranui, the blending
operations will be automated only by the year 2000, something that echoes the highly
decentralized IT deployment in the oil sector as far as the engineering sector goes. The
Haldia refinery, which is the first refinery in the country to see automation happening
also has a DDCS. In fact, it has three of them, two for the refinery and one for the lubes
division. The machines are Honeywell TDC/3000 and the automation is being done at the
level of controls only.

An important area of automation, and one where a considerable
ground has been covered is the MIS. Haldia, for example, has all its systems from
materials to labs to maintenance and even contractor information on its MIS bench.

HPCL now has managed to automate its LPG dealer network,
provide subsidized software to 192 oil dealers, and connect almost all its offices through
VSATs. Curently, the company’s two refineries, four zonal offices, 25 regional offices,
and 12 terminals are linked through VSATs. HPCL too is considering developing its own ERP
package in-house. The company will also automate all its terminal at a cost of Rs 2 crore
each. IOC too has plans to automate its terminals, though on a staggered basis. Recently,
it earmarked Rs 6 crore for the automation of three terminals in the eastern region.
However, terminal automation is simply one of the last stages of refinery and distribution
automation in the petroleum sector. The MIS functions that lead to the oil getting to the
terminals is important to understand in the context of automation in the oil sector.

With MIS systems in place, there have been considerable
benefits. In the area of product dispatch, the manual system has been changed to an
electronic one and security checks have now been reduced to a minimum as a result of which
210 trucks are now being cleared every day as compared to just 140 before automation in
Haldia alone.

One more area of gain is in the reduction of wastage due to
delays. Rail wagons had to wait for long periods before being dispatched or unloaded prior
to automation. Haldia refinery alone paid Rs 30 lakh per cycle and now this figure has
reduced to zero. Even in the area of accounting and financing there have been savings to
the tune of Rs 6-8 crore through efficient IT usage.

With hundreds of crores being spent on IT, and processes and
functions being automated considerably, India still needs to have a lot more done in the
oil sector automation alone. With oil companies having reported significant profits this
year and a spate of new projects being started, IT will definitely be playing a major role

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