PETROCHEMICALS

Presented by: Himanshu Kumar

-----------------------------------------------------------------a CSR perspective

PrefaceIntroductionPerformanceFuture ProspectContributionGrowth DriversIssuesTop CompaniesReliance Industries LimitedBP

Introduction • Petrochemicals are chemicals made from

petroleum (crude oil) and natural gas. The petrochemical industry of today is an indispensable part of the manufacturing and consuming sectors, churning out products which include paint, plastic, rubber, detergents, dyes, fertilizers and textiles

• Paradigm shift from West to East, with the Middle East emerging as global production hub with natural advantages of low cost feedstock and Asia becoming a major consumption centres

Contd..• Job in the petrochemical industry offers

lucrative income, employee welfare facilities and career development opportunities. Career opportunities for educated, highly skilled and motivated workers include jobs as engineers, operating technicians, lab technicians, electricians, environmental, health and safety technicians and managers and supervisors

Performance• The global petrochemicals sector was ravaged by

a huge drop in demand for its products due to the global economic slowdown

• The Indian petrochemical industry has been one of India’s fastest growing domestic industries, comprising both small and large scale enterprises. Due to its linkages with various domestic manufacturing industries such as pharmaceuticals, construction, agriculture, and textiles etc it is undoubtedly an integral part of the energy value chain

Future Prospects• The aggregate demand of all the key segments in

the petrochemical industry is likely to regain a sharp positive trajectory, with key players aiming to ramp up scale and increase recruitment. Hence, those graduates with a strong technical and/ or engineering background should remain confident of being able to find decent employment opportunities

• This is not an industry suitable for the initiated, and fresher with general degrees would be best advised to seek alternate options elsewhere

Contribution

51%

7%

Growth Drivers• Demand for dyes, speciality chemicals and

intermediates: Demand for intermediates, dyes, speciality chemicals etc will increase the demand for petrochemicals. This will result in a significant growth for this industry

• Restart of eight public sector fertilizer plants: The government’s decision to revamp eight public sector fertilizer units by 2009, will lead to a significant growth of the industry, despite a weak overseas market

• Booming plastic industry: Growing demand from the plastic industry will lead to a strong demand in petrochemicals

Issues • Raw material costs: A steep rise in raw material

costs on account of a drastic hike in crude oil prices may affect the profit margins of companies operating in this sector

• Reduced exports: A slowdown in the US and European economies will result in a significant lowering of export revenues

• Low demand from other sectors: A slow demand from textiles, heavy construction and pharmaceuticals industry for petrochemicals will hinder the industry’s growth

Top Companies• BASF (Germany)• Dow Chemical (USA)• ExxonMobil Chemical (USA)• Lyondell Basell Industries (Netherlands)• INEOS (UK)• Saudi Basic Industries Corporation (Saudi Arabia)• Formosa Plastics Corporation (Taiwan)• Sumitomo Chemical (Japan)• DuPont (USA)• Chevron Phillips (USA)

CSR• Corporate social responsibility (CSR) or

corporate citizenship entails companies behaving in a socially responsible manner, and dealing with other business parties who do the same. With growing public awareness and demand for socially responsible businesses, it is little wonder that companies of today take corporate social responsibility into account when planning future socially responsible business operations

Reliance Industries Limited• The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest

private sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of US$ 44 billion. The flagship company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India.

• Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain.

• The Group's activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles, retail and special economic zones.

• Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products.

• Major Group Companies are Reliance Industries Limited (including main subsidiary Reliance Retail Limited) and Reliance Industrial Infrastructure Limited

Social Responsibility and Community Development

• RIL has a long and strong tradition of supporting the larger communities that it connects with - from education, health, drinking water, large-scale development of employable skills, to assistance during natural calamities such as earthquakes and cyclones

• EDUCATION- Education continues to be one of the major thrust areas of RIL's CSR interventions. A network of 10 schools caters to over 14,000 students spread across geographies in India…………….

Contd..• RIL's project for physically challenged children

at Surat, near the Hazira Manufacturing Division, is fast emerging as a global model of public-private partnership, supporting physically challenged children's education with a local NGO. A hostel for physically challenged female students from the underprivileged segment of the society has also been constructed

• "Reliance Dhirubhai Ambani Protsaham" programme continues to support poor and brilliant students in pursuing higher studies

Contd..• HEALTH CARE- RIL has developed Community

Medical Centres (CMCs) near most of its manufacturing divisions. These CMCs provide comprehensive health services covering preventive, promotive and curative health care to the communities from neighbouring villages

• A unique joint initiative of RIL and the National Association of Blind (NAB), 'Project Drishti' has undertaken over 8,000 free corneal graft surgeries for the visually challenged from the underprivileged segment of the society

Contd..• COMMUNITY’S SAFETY- The Road Safety System

is the most advanced, cost effective and easy to use tool for improving public safety and reducing operating economic costs. RIL has institutionalised road safety training across its numerous manufacturing divisions

• RURAL INFRASTRUCTURE DEVELOPMENT- Reliance Rural Development Trust (RRDT) as a Corporate NGO, continued its activities under the Gokul Gram Yojana of the state government of Gujarat. In FY 2009-10, RRDT undertook development of 1,390 village infrastructure facilities in 1,243 villages of 166 talukas across all 25 districts of the state of Gujarat

Contd..• OTHERS-

Livelihood Support ProgrammesRelief OperationsWildlife and Animal CareHeritage ConservationSupporting Professional Organisations and NGOsPromoting Sports and SportspersonsDhirubhai Ambani FoundationDhirubhai Ambani International School (DAIS)

BP-Snapshot• BP plc is a British-based global energy company which

is the third largest energy company and the fourth largest company in the world. The name is derived from the initials of its former legal name, British Petroleum. A multinational oil company ("oil major"), BP is the United Kingdom's largest corporation, with its head office in St James's, City of Westminster, London. BP America's headquarters is in the One Westlake Park in the Energy Corridor area of Houston, Texas. The company is among the largest private sector energy corporations in the world and is one of the six "super majors" (vertically integrated private sector oil exploration, natural gas, and petroleum product marketing companies). The company is listed on the London Stock Exchange, the New York Stock Exchange, and is a constituent of the FTSE 100 Index

Company Description• BP is one of the world's leading oil companies on the

basis of market capitalisation and proven reserves. Its main businesses are Exploration and Production, Refining and Marketing, and Chemicals. Exploration and Production's activities include oil and natural gas exploration and field development and production, together with pipeline transportation, natural gas processing and gas and power marketing. The activities of Refining and Marketing include oil supply and trading as well as refining and marketing. Chemicals activities include petrochemicals manufacturing and marketing. In addition, the Company has a solar energy business which is one of the world's largest manufacturers of photovoltaic modules and systems.

CSR perspective• ISSUES- There are very few aspects of how a company

behaves as a corporate citizen that do not apply to a company of the size and nature of BP. The most significant of these are the sheer environmental impact - not simply of the extraction of oil and the energy use of BP's own operation, but more significantly of the impact on climate change of the actual use of all the oil by BP's customers

• CRITICISM- BP's move towards positioning itself as a sustainable energy company has been the proverbial red rag to a bull for some. They point out that BP's claim to be a global leader in producing the cleanest burning fossil fuel (natural gas) is an incremental improvement over oil at best, and a distraction from getting away from fossil fuels at worst. BP, they claim, has co-opted the language of the environmentalists without the real commitment to deliver

Contd..• BP STANDS FOR BAD PETROLEUM- Despite among largest

producer of petroleum BP not paying proper attention on Social concerns. In March 2005, corrosion of BP’s pipes and equipment on the North Slope in Alaska led to a spill of 270,000 gallons of oil, the largest spill ever recorded in that fragile territory. Critics said BP wasn’t spending enough money to prevent such spills

• BP GOES FROM BEYOND PETROLEUM TO BIG POLLUTER IN CSR SETBACK- On 11 May 2010, top BP Plc executives face U.S. lawmakers who will grill BP Plc, Transocean and Halliburton on the drilling rig explosion and oil spill that threatens a socially irresponsible environmental catastrophe and a major CSR setback for BP off the coast of Louisiana in the Gulf of Mexico. The colossal oil spill threatens numerous tourist beaches, wildlife sanctuaries and fishing grounds across four states in the United States which has forced Mr. Barack Obama to question offshore drilling activities

Thank you

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