Abstract
Research Overview
Pressure on Refining Margins Heightens Demand for Maintenance, Repair, and Overhaul (MRO) Services
Aided by the boom in refining margins and deregulation of the refining sector,
India's refining capacity is continuing to witness impressive growth. While
this is prompting the incorporation of new refineries and the expansion of
production capacities, rising crude oil prices and Government control over
retail prices are adversely impacting the margins of oil companies of late.
Consequently, refineries are increasingly looking toward MRO service providers
to reduce costs and improve efficiencies and contracts for MRO services and
these refineries are likely to see strong growth between 2006 and 2012.
Expansion of Refining Capacities Drive the MRO Services Market
India's refining capacity, which presently stands at 127 MMTPA, is expected to
touch almost 180 MMTPA in 2012. While this implies the setting up of more
refineries and increased MRO opportunities, stringent emission norms have also
meant that most refineries are implementing the Clean Fuel project to meet
environmental regulations. As a result, the addition of new process units to
refineries is expected to further enhance opportunities for MRO service
providers.
However, excessive safeguard measures taken by public sector units (PSUs)
could act as a deterrent to organized MRO service providers. "Stringent
clauses adopted by PSU refineries for the contracting process mandate that the
service provider is entirely responsible for any delays and is penalized
excessively in case of the same," says the analyst of this research service.
"Nevertheless, PSUs are expected to do away with the archaic contracting
process in the next three to four years, rendering the modified contracting
processes more attractive to MRO service providers."
Continued Deregulation of the Refining Sector Promises Future Opportunities
Although outsourcing of the operation and maintenance of refinery units is a
new concept in India, deregulation and the entry of private sector-based oil
refining companies are changing the way the PSU management operates.
Incorporating practices followed by Western and Middle East oil refining
companies, the Indian refinery management is considering outsourcing the
operations as well as maintenance of non-core units such as nitrogen, zero
discharge, and demineralization units to service providers. Routine
maintenance is also expected to be outsourced to service providers; however,
with hydrogen units considered very important in regard to safety, outsourcing
the operations of this unit may take longer.
With new refineries being built and existing ones adding to their production
capacity, India is poised to take a huge lead in terms of refining capacity in
comparison to other countries in the Asia Pacific region. "The competitive
market has a mix of large lump sum turnkey (LSTK)/engineering, procurement,
and construction (EPC) contractors, original equipment manufacturers
(OEMs)/process licensors, as well as local maintenance service providers
competing for the majority of the bids for turnaround and maintenance
contracts," says the analyst. "The time of completion of turnaround
maintenance activities has been identified as the most important criteria
considered by refineries in the choice of MRO service providers."
Table of Contents
- 1. Executive Summary
- 1. Introduction
- 1. Objectives
- 2. Scope and Limitation
- 2. Summary of Findings
- 2. Overview of Indian Refinery MRO Services Market
- 1. Refinery MRO Services Market in India
- 1. Introduction
- 2. India's Refining Capacity
- 3. Refining Companies in India
- 4. Refinery MRO Services Classification
- 3. MRO Services of Process Units
- 1. Turnaround Maintenance and Routine Maintenance of Process Units
- 1. Introduction
- 2. Process Overview
- 3. Turnaround Maintenance of Process Units
- 4. Routine Maintenance of Process Units
- 4. Market Opportunity Analysis
- 1. Market Drivers and Restraints
- 1. Market Drivers
- a. Refining Capacity Expansion
- b. Stringent Environmental Regulations
- c. Aging Refineries
- d. Deregulation of the Refining Sector
- e. Refining Margin Pressures
- 2. Market Restraints
- a. Archaic Contracting Process Followed by PSU Refineries
- b. Lack of Large Contracts
- c. Overstaffed Maintenance Departments in PSUs
- d. Consolidation of Oil PSUs
- 2. Market Opportunities
- 1. Market Size Forecasts
- 2. Opportunities in Various Units
- 3. Competitive Analysis
- 1. Competitive Structure and Classification of Service Providers
- 2. Market Share Analysis
- 3. Brief Profiles of Key Market Participants
- 4. Opportunities for New Entrants
- 5. Barriers for Entry
- 5. Selection Criteria for Service Providers
- 1. Selection Criteria of Public Sector and Private Sector Refineries
- 1. Introduction
- 2. Selection Criteria of PSU Refineries
- 3. Selection Criteria of Private Sector Refineries
- 2. Future Trends in MRO Services of Refineries in India
- 1. Short-term Trends
- 2. Medium-term Trends
- 3. Market Insights
