Global Endeavor

By Janet Kreiling
All photos by Swapan Parekh/Black Star Photos

The Jamnagar complex in northwest India is the largest refinery and petrochemicals complex ever built from the ground up—and it’s about to get even bigger. Bechtel and Reliance Petroleum Ltd. are expanding Jamnagar in a project that will create the world’s largest oil-refining operation, period.

When Bechtel completed the design and construction of the first refinery at Jamnagar in 2000, it had a production capacity of 450,000 barrels of crude oil per day. Subsequently the capacity was increased to 650,000 barrels per day, and today, Jamnagar accounts for nearly one-quarter of India’s refining capacity.

A second refinery, under construction adjacent to the first, will nearly double the capacity, while also increasing the capability and flexibility of the complex by allowing it to utilize lower-grade crude oil and produce higher-value products. In addition to gasoline, diesel, jet, and other fuels produced by the original refinery, it will also increase production of polypropylene, which is used in the creation of products such as fibers, films, and household plastic goods. The gasoline and diesel are for export, predominantly to the United States and Europe.

Bechtel is undertaking the expansion with Reliance Petroleum Ltd., a new company created by Reliance Industries.

Building the new refinery entails over 200,000 engineering and supplier documents, installation of 165,000 tons (150,000 tonnes) and 53 million cubic feet (1.5 million cubic meters) of concrete, more than 4,400 pieces of major equipment in over a dozen complexes within the refinery, and 13 million feet (4 million meters) of piping. The site covers an area bigger than London, and more than 70,000 workers will be employed during the peak of construction.

To meet the challenge, Bechtel created a “virtual company” with global resources. Some 2,800 professionals are handling engineering, procurement, project management, and construction consulting from London, Houston, Frederick, Toronto, Shanghai, New Delhi, Mumbai, and Jamnagar. All told, the project encompasses 19 offices and 10 cities in five countries. Scott Johnson, program director for the new refinery, believes that this is the most widely distributed workforce Bechtel has ever applied to a project.

The goal is to make it possible for everybody to work together as if they’re in the same place, and Bechtel has ensured this outcome through a purpose-built communications network. This network reaches every location and enables simultaneous collaborative work on engineering drawings and other documents among people in multiple locations around the globe. Bechtel has also modified various software to facilitate the immense amount of sharing and record-keeping required.

Integrating the offices and communications has eased such tasks as ensuring that the output from the coker—designed by a subcontractor—and crude complexes supports the requirements for the clean fuels complex designed by Bechtel’s Houston office and the vacuum gas oil complex designed in London. “Now we think in terms of integrated work rather than separate engineering disciplines,” Johnson says.

The virtual team has been especially important in keeping the project on its aggressive record-breaking schedule. Work began in October 2005, with the first production train scheduled to begin operations 30 months later.

With Bechtel and Reliance sharing responsibility for the project, design and construction phases have significantly overlapped; construction is well under way before design is complete. As of January 2007, about 65 percent of the engineering had been finished, while crews in Jamnagar had already completed site preparation and poured over 50 percent of the concrete, including most of the concrete pipe racks. In addition, some 28,000 tons (25,000 tonnes) of structural steel and 20 percent of the piping have been fabricated.

The virtual organization also has been instrumental in procuring goods and services from far-flung suppliers at the best possible prices.

“The marketplace is robust—every day prices are increasing and deliveries getting longer, so buying early has saved money and time,” Johnson says. “We’ve placed orders for $3.5 billion worth of materials, including over 4,000 pieces of equipment, and a lot of this we bought before engineering was complete so we could lock in supplies ahead of shortages we could see coming. In some cases, we bought first and designed later around what we bought. But that’s part of keeping to the schedule.”

Transportation is another project in itself, requiring hundreds of ships. Ships have been identified and reserved for the largest equipment, which reaches more than 1,650 tons (1,500 tonnes) and close to 330 feet (100 meters) in length. In addition, the port serving the complex is being expanded to accommodate very large crude-oil carriers, along with additional ships to transport the export products.

The new refinery will open windows of opportunity within India. The first refinery, which Bechtel designed and built for Reliance Industries Ltd., was able to satisfy one-third of India’s needs for refined petroleum products in 2001, sustaining downstream activity worth $26 billion, one-sixth of India’s economy that year. It also enabled India to become a net exporter of oil products for the first time. The new refinery is expected to increase India’s exports, with its gasoline and diesel earmarked for the U.S. and European markets. According to Mukesh Ambani, Reliance Industries’ chairman, the new refinery supports the com-pany’s “two-fold strategy: strengthening the petroleum retailing business and enlarging the refining capacity.” Its scale is rivaled only by refineries being proposed for Taiwan and Kuwait.

Reliance Industries is the only Indian company included in the Fortune Global 500. It has had great success in an industry formerly dominated by state-owned companies, and its new chain of retail gas stations now accounts for 12 percent of diesel and 6 percent of gasoline sales in India. And it continues to be a valued customer of Bechtel.

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