Summer Internship Report:

Post Completion Project Review

&

Research in Oil and Gas

Submitted to:

Yash Singh

(Director, MPA, IGH)

Dr. Srinivas Ainavolu

Faculty Mentor

Submitted by,

Dewashish Rai

F047

On

31st of May, 2019

Acknowledgement

I would like to express my deepest gratitude to all those who have provided me an
opportunity to complete this report. A special gratitude to my mentor Mr. Yash
Singh for his able guidance and for providing me an opportunity to work on a live
project. I would also like to thank my faculty mentor Dr Srinivas Ainavolu for
constant guidance in maintaining a sense of self direction through the project.

I would also like to specially thank Mr. Kritagya Vairagi, it is his constant
encouragement that has propelled me to push and achieve targets which are way
beyond. And finally, the team that I was working with comprising of Ms. Divya
Arnot, Mr. Arya Dutta and Ms. Snehal Jain, team work is a key to success is what I
have learnt from this engagement. If you have a good team even a difficult project
seems easy.

As I was on boarded in an ongoing project, understanding the nuances of the

project was key to delivering well and in this transition I would like to thank
everyone above, without them this project would not have been a success.

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Executive Summary

This report is part of summer internship report which was from 1 st of April to 31st
of May, during this tenure I worked on two parts, first part is a live project for
which I was sent to client location. The task assigned was Post-Completion review
of an office campus building. First phase of the Post completion review was
reconciliation in identifying any leakages in the set of documents identified. When
I had initially joined, the progress with respect to drawings was roughly 5%, after
about 8 weeks of work the project progress is now around 95% for drawings.

In the Second part of the project I was asked to perform secondary research in the
domain of Oil and Gas to identify the attractiveness of the sector and whether long
term growth can be achieved in this sector if sustainable investment in resources is
made right now. Through the analysis it can be seen that expansion in terms of
refining capacity is needed in the next 5 years to achieve the rate at which the
consumption is growing.

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Table of Contents
Acknowledgement ................................................................................................................................ 2
Executive Summary.............................................................................................................................. 3
Table of Contents ................................................................................................................................. 4
Introduction .......................................................................................................................................... 5
1. On Client Project ......................................................................................................................... 5
1.1 Scope of Work ....................................................................................................................... 6
1.1.1 Daily Roles and Responsibilities ................................................................................. 6
1.1.2 Overall Impact on Project Progress .......................................................................... 6
1.1.3 Re-conciliation of Critical Vendor ............................................................................. 8
1.2 Methodology .......................................................................................................................... 8
1.3 Challenges ........................................................................................................................... 10
1.4 Learnings.............................................................................................................................. 11
1.4.1 Stakeholders in a project and their roles .............................................................. 11
1.4.2 Timeline of a Project................................................................................................. 12
1.4.3 Project Lifecycle ........................................................................................................ 12
1.4.4 Complete Post Completion Project Review ........................................................... 13
1.4.5 Types of Drawings ...................................................................................................... 13
2. Research in Oil and Gas ............................................................................................................ 14
2.1 Current Market Scenario ............................................................................................... 14
2.2 Proposed Projects .......................................................................................................... 15
2.3 Structural Attractiveness .............................................................................................. 16
2.4 Global Supplier Landscape ........................................................................................... 18
Sources .................................................................................................................................................. 20

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Introduction

This report is subdivided into two parts. Part 1 contains the live project on client
site and Part-2 which was a primary research in the oil and gas sector to
understand the current market scenario and future prospect for the sector with
major emphasis on the areas where KPMG can achieve growth in the domain. This
part was augmented in this report because a business need was observed when a
Go-To-Market Strategy was needed for a project in Oil and Gas.

On-Client project is covered first in this document where the scope of work,
methodology adopted, challenges faced if any and learnings are covered. As the
Client project involves attorney-client privilege, sharing of names, data etc are
omitted from this report. The information covered in this part are generic in
nature and doesn’t deep dive.

1. On Client Project

Client had given a contract for construction of its new office space with
approximately a budget of $150 million. This construction was completed and
building is under use by its employees.

Part of the first work stream is reconciliation of critical vendors, which includes
reconciliation in terms of bills, interim payment certificates, final valuation, and
contract variations if any. Identifying whether any form of financial leakages have
taken place during the project. Inclination is towards forensics of the work in
terms of leakages if any, conflict of interest or any negligence that might have
taken place.

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 1.1 Scope of Work

1.1.1 Daily Roles and Responsibilities

Daily task involved reconciliation of reviewed contract documents for certain

packages to assess if any discrepancies (such as missing PO value not matching the
invoices, missing change orders etc.). Majority of the work line was in review of
the documents whether codal provisions were followed during the project. If any
financial irregularities exist in the system and might have been overlooked.
Whether the amount paid according to the General Ledger is same as Contract
orders plus the variations. If these numbers are not matching up, then the reason
for this has to be identified by going through the trail of the document.

1.1.2 Overall Impact on Project Progress

When I was introduced to the project the progress in terms of percentage at the
start was somewhere around 5.83% after 8 weeks the project progress was 95.12%
a jump of nearly 90% was observed over the phase of 8 weeks. The same progress
is represented in both graphical and tabular manner as given below. W1 represents
number of week. As it is clearly represented in the table, the gap in the number of
drawings that were scanned and the number of drawings that were reviewed was
on a higher side. This gap was also reduced subsequently. Average Throughput
before I joined was roughly 400 drawings per week this saw a significant jump to
923 drawings per week. As the assumed total number of drawings is roughly 10000.
The same has been used to calculate progress percentage.

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 Drawings Drawings Project
Drawings Drawings
Weeks Scanned Reviewed Progress Contribution
Scanned Reviewed
Cumulative Cumulative (%)

Prior 2559 2559 583 583 5.83 0

W1 893 3452 334 917 9.17 175
W2 1042 4494 776 1693 16.93 454
W3 160 4654 113 1806 18.06 567
W4 720 5374 1426 3232 32.32 1379
W5 1017 6391 1073 4305 43.05 2062
W6 1841 8232 851 5156 51.56 2913
W7 1249 9481 2471 7627 76.27 3953
W8 462 9943 1885 9512 95.12 856
Table1: Weekly Status Update in terms of Number of Drawings Reviewed

Drawing Review Progress

10000

8000

6000

4000

2000

0
Prior W1 W2 W3 W4 W5 W6 W7 W8

Drawings Scanned Cumulative Drawings Reviewd Cumulative Contribution

Graph1: Graphical Representation of Drawings Scanned vs Reviewed

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 1.1.3 Re-conciliation of Critical Vendor

Reconciliation of a critical vendor was also handed over. This task involved going
through the vendor wise sorted documents and identifying the bills, variations and
the amount that was actually paid through the GL. Reconciliation of the vendor is
said to be complete if the final bills and the amount that was paid to the vendor
match exactly. This was one of the most difficult tasks because of the amount of
complexities that were involved in the handling of the subcontractors.
Disclaimer: Because of the Attorney-Client Privileges information like data, names
etc cannot be shared in this report.

1.2 Methodology

Initial part of scanning is performed by the third party vendors. After the drawings
are scanned, one by one these drawings are given a name based on the date of the
stamp on the drawing, vendor of the drawing, whether if the drawing is a good for
construction drawing or a tender drawing or a concept drawing. These elements
are identified by looking at the drawing, this constitutes the review of the drawing
and finally when the review of the drawing is complete, the drawing is uploaded
on the client’s software. Entire activity takes roughly 3 minutes per drawing.

Log of the drawing is maintained in an Excel file, name of the file, name of the
vendor, drawing date, upload date, upload folder location is also mentioned in the
log for future reference and easy accessibility.

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After the digitalization is complete the reconciliation of the documents begin.
After analyzing the drawings with the set matrix, learnings are identified. These
learnings which are identified are communicated to the stakeholders in a
discussion meeting and our recommendations are communicated. These
recommendations also help the stakeholders to improve the overall process.

Scanning (Third Review and

Party) Upload

Discussion with Learnings and

the stakeholder Outcome

Recommendation

Figure1: Process of Review

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 1.3 Challenges

In a Mega project the amount of documentation depends on the duration of the

project, cost of the project and the quality that has to be maintained throughout
the project. To finish the post completion project review of this scale a constant
throughput is required to be maintained to achieve the expected time of
completion.

Challenges Faced Measures to Overcome

Monotonous: As the work becomes more A balance of reconciliation and review
and more repetitive in nature, it may was done on a daily basis so that the
lead to reduction in productivity purely work would always be of variety and
on the basis of uniformity of work. would not become monotonous
Exposure to Real-Estate Project: Through constant questioning to my
Without prior experience working in team mates who had 5-6 years of work
Real-Estate has a steep learning curve. experience in the line helped me in
overcoming this.
Reconciliation of Bills: Without prior Through secondary research and calling
understanding of different types of out people with expertise in the field,
taxes that are levied in the invoices, this challenge was overcome.
reconciling bills for a vendor becomes a
tedious task.

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 1.4 Learnings

1.4.1 Stakeholders in a project and their roles

Multiple stakeholders are involved in an Infrastructure project. Coming down from

the Owner, generally they hire an owner’s consultant which handles all the
responsibilities from the owner’s side. Next level constitutes of PMC (Project
Management Consultants) they are responsible for the overall progress of the
project. They also act as mediators between the sub-contractors and the owner’s
consultant.

Cost consultants are hired to check the valuations of claims made by the sub
vendors. One of the key tasks performed by the cost consultants is off
benchmarking different packages with respect to the industry standards.

Main Contractor is responsible for all the civil works that has to be completed in
the stipulated time, from planning, monitoring, coordination most of the activities
performed during the construction phase is handled by the Main Contractor.

Structural Consultants are responsible for designing the structural elements of the
infra from Steel to concrete member in a frame, they prepare design drawings
which are utilized at site to make structural elements according to the
specifications. Payment to the Structural consultants are done on the basis of the
number of design drawings they are able to provide.

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 1.4.2 Timeline of a Project

Timeline of a project involves certain stakeholders which are uncontrollable. For

example State Boards, approval on drawings are required before electricity from
the main grid can be drawn, in case the approval gets delayed it could result in
huge amount of opportunity and time losses. These approvals have to be taken
care of in the planning process. Even after setting different sorts of control
measures it still might lead to opportunity loss.

1.4.3 Project Lifecycle

A project lifecycle involves various factors which might be controllable and

uncontrollable. Risk mitigation has to be done when the planning of the entire
process is taking place. This might involve setting up measures so that
uncontrollable factors might be brought down to a level that may not hamper the
progress of the project. It also involves optimizing the factors that can be
controlled and reduce the overall risk of the project.

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 1.4.4 Complete Post Completion Project Review

Complete post completion review involves going through all the project related
documents and drawings. This review may also include vendor reconciliation, this
reconciliation may not just be limited to bills and payments, and it can include
variation orders, drawings, BOQ. Business case review can also be done in case the
cost escalation of the project goes on a higher side.

Complete post completion project review involves reconstructing the entire time
line of the project. It involves going through all the contract documents to identify
at what phase of the project the vendor will enter the project. What are all the
areas that are to be covered by a specific vendor

1.4.5 Types of Drawings

Drawings are spread out from the conceptual phase to the as built stage. First,
step of the drawing is the concept phase where a conceptual design is prepared
this concept drawing is used to manufacture Tender Drawing. Based on the Tender
Drawings the different bids are invited, based on the bids and the technical
specification final vendor is selected.

Vendor then prepares a final set of detailed drawings which are utilized at the site
for construction.

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 2. Research in Oil and Gas

I was asked to research on the current scenario of Oil and Gas, identify the key
players, and identify the proposed / upcoming projects. This research was
compiled and the analysis is presented below in the report. Complete
understanding of the flow of the product from upstream to downstream is also
required.

2.1 Current Market Scenario

Currently the market is led by two major players namely, IOCL and Reliance with
installed capacities in the upwards of 65MMTPA.

Pro-Rated
Actual Crude
Companies Installed Capacity
Output
(18-19)
IOCL 69.2 71.71
HPCL 27.1 30.91
BPCL 27.5 30.75
BPCL-BORL 7.8 5.71
CPCL 11.5 10.69
NRL 3 2.9
ONGC 15 16.23
RIL 68.2 69.14
NEL 20 18.9
Table 2: Annual Capacity of Crude in India for the year 18 to 19

It is also worth noting that most of the plants in India have a capacity utilization of
more than 100%.

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 Installed Capacity vs Actual Output for FY19
80
70
60
50
40
30
20
10
0

Pro-Rated Installed Capacity (18-19)* Actual Crude Output*

Graph2: Oil Capacity in terms of MMTPA per company

2.2 Proposed Projects

As we will see in the Section 2.3 the need for capacity addition, this section covers
the number of projects which are currently in the pipeline. With a total of
capacity addition coming to 132MMTPA and the total cost of 5.65 Lakh Crores.

Special focus has to be maintained on RRPCL with a rough budget of 3Lakh Crores.
If completed it is going to be the world’s largest refinery in terms of annual
refining capacity. Stake holders in the project include IOCL, HPCL and BPCL which
own roughly 50 percent of the project. Rest of the 50 percent is owned by Saudi
Aramco

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 Sl. Capacity Value
Company Location
No. (MMTPA) (crores)

1 RRPCL 60 300000 Ratnagiri

2 BORL 7.2 50000 Madhya Pradesh
3 NRL 6 22594 Assam
4 Nayara 20 85732 Gujarat
5 BPCL 12 6877 Mumbai
6 BPCL 6 11130 Kochi
7 Haldia Petro 12 62714 Kakinada
8 CPCL 9 27640 Chennai
Table3: Proposed projects with Capacity and tentative cost.

2.3 Structural Attractiveness

Consumption data of petro products is available till FY19, considering the historic
data which is available to us Compounded annual growth rate of consumption
comes out to be 5.05%. This growth rate has been considered to calculate
forecasted consumption. Key fact that needs to be highlighted here is that by the
end of 2023, if there is no addition in capacity to the existing facilities break-even
in terms of consumption and production would be reached.

This Break-Even would have serious ramifications on the Indian economy, firstly
India would have to look for opportunities where they can Import refined oil, and
this would lead to heavy import bills and a huge deficit on the foreign exchange
reserves.

To avoid all this future expansions have already been planned and the same will be
executed over the period to maintain a healthy delta between production and
consumption. This implies that this sector remains highly attractive and is
recommended for future growth.

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 Production of Consumption of Consumption as a
Forecasted
Year Petro- Petro- percentage of
Consumption(MMT)
Products(MMT) Products(MMT) Production
2012-13 217.74 157.06 0.721
2013-14 220.76 158.41 0.718
2014-15 221.14 165.52 0.748
2015-16 231.92 184.67 0.796
2016-17 243.55 194.6 0.799
2017-18 243.58 201.9 0.829
2018-19 257.125 211.125 0.821
2019-20 257.125 221.80
2020-21 257.125 233.00
2021-22 257.125 244.78
2022-23 257.125 257.15
CAGR of
Consumption
for 12-19 5.054 %
Table 4: Production vs Consumption (Including forecasted Values)

300
250
200
150
100
50
0
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

Production of Petro-Products(MMT) Consumtion of Petro-Products(MMT)

Forecasted Consumption(MMT) Linear (Production of Petro-Products(MMT))
Linear (Forecasted Consumption(MMT))

Graph 3: Production vs Consumption (Including forecast)

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 2.4 Global Supplier Landscape

As a part of this research I was also asked to identify global level suppliers.
Through extensive research on the internet and calling people, a list of vendors
was compiled which is presented below.

Refinery Units Vendor

Crude Distillation Unit Gardner Denver

Vacuum Distillation Unit Gardner Denver
Naptha Reformer UOP or Axens CCR
Naptha Hydrotreater Axens Solutions
Isomerisation Unit Honeywell UOP
Hydrockracker Unit L&T
Fluor
Haldor Topsoe
Amec Foster Wheeler
Kerosene Hydrotreater
Hyundai Heavy Industries
Daewoo Engineering and Construction
Technicas Reunidas
Fluid Catalytic Cracker Shell Catalysts and Technologies
Delayed Coker Unit McDormett
De-waxing Unit Troika Processes Pvt Ltd
Linde Engineering
Steam Reformer
Johnson Matthey
Honeywell
Gasoline Hydrotreater Shell Catalysts and Technologies
Haldor Topsoe

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Refinery Units Vendor

Süd-Chemie
Haldor Topsoe
Diesel Hydrotreater
Shell
Axens
Haldor Topsoe
Hydrocracker Shell
Axens
Sulphur Recovery Unit No information available
Aromatics Block Reliance
Linde Engineering
Shell
Gasification Unit Reliance

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Sources

1. http://petroleum.nic.in/more/indian-png-statistics
2. https://www.ppac.gov.in/content/146_1_ProductionPetroleum.aspx
3. https://www.ppac.gov.in/content/212_1_ImportExport.aspx
4. https://www.ppac.gov.in/content/147_1_ConsumptionPetroleum.aspx
5. https://www.ppac.gov.in/content/7_1_ForecastandAnalysis.aspx

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