Mumbai: India’s top state-run fuel retailers are collaborating and often investing in startups to solve several vexing issues facing the companies. For Indian Oil Corp. Ltd, corrosion of its pipelines has been an enduring problem. The country’s largest fuel retailer spends ₹ 70,000 per kilometre annually to maintain its pipeline and with the task of monitoring a 13,000km-long network, the cost of keeping the pipeline network healthy is mammoth.
That cost is expected to fall, thanks to a startup funded by state-run Indian Oil.
Indian Oil, others seek out startups to improve fuel efficiency
“We have a startup which claims it can develop a novel material composition which when applied on an operating pipeline heals corrosion,” said S.S.V. Ramakumar, director for research and development at Indian Oil.
For state-run Bharat Petroleum Corp. Ltd (BPCL), shutting down its refinery stack (the refinery chimney) and checking underground pipelines has become easy through a startup that uses drones.
“Chimneys and stacks need to be inspected regularly. You raise scaffolding, somebody climbs up to inspect and it is shut for two to three days. However, an industrial drone which is pre-programmed, flies around boilers and stacks assessing the status of these assets. It then brings data which is useful in making reports,” said A. Krishnaswamy, BPCL’s digital and strategy head.
There are underwater drones too which help BPCL monitor single buoy moorings and underwater pipes for leakages and repairs.
“We would like to fund startups so we can also use them to solve our operational issues. We give them funding, assistance, and provide them a platform to test their technology and also contract with them for services,” said Krishnaswamy.
India’s state-run fuel retailers began to fund startups after the government launched a start-up policy in January 2016. Last October, 10 oil companies formed a ₹320 crore fund to support 30 startups in various sectors including fuel and waste. Most of these startups are in the technology space.
So, while BPCL went to incubators and accelerators at technology institutes, Indian Oil and Hindustan Petroleum Corp. Ltd (HPCL) launched an online portal wherein entrepreneurs can register their ideas. Last year, which was the first edition, Indian Oil received 250 entries of which only 11 ideas made the cut.
“Our startup funding is to establish the proof of concept. We are not selecting existing and operational startups but fresh ideas,” said Ramakumar of Indian Oil.
“All our ideas we are going to categorize in two—those that help our day-to-day business (business process re-engineering) and those which will actually bring in some innovative process or products required by the oil and gas industry (technology process re-engineering),” Ramakumar said.
He said Indian Oil is “now nurturing these ideas, providing them grants and helping them establish the proof of concept”.
“Once they can be matured into a business proposition, Indian Oil may deal with the incubatee in any of the following three ways: one, if they wish to commercialize, Indian Oil will let them go and build their product and brand; secondly, if the idea is good for Indian Oil and we see enough business potential in this, we would propose to pick up stake in the prospective startup entity. Thirdly, if the idea is too compelling, we might propose an acquisition of the start-up, if the entrepreneur agrees to sell,” he added.
DeTect Technologies, an Internet of Things startup from IIT Madras’s incubation cell has given BPCL a transducer which, when wrapped around a pipeline, constantly measures the heat and temperature and pressure in the pipeline and keeps sending digital signals continuously. “So pipeline monitoring becomes extraordinarily easier,” said Krishnaswamy at BPCL.
The oil marketers have, for years, been battling the issue of fuel theft from their vast pipeline network.
Executives at Indian Oil, BPCL and HPCL said they lost a combined ₹ 450-500 crore in crude oil and finished products in the last decade. But the companies are more worried about safety of their pipelines than financial losses caused by oil theft.
“Addressing crude oil or product theft has been a challenge for us. Thieves do not realise that when they weld a contraption arrangement on the pipeline to draw crude derivatives, they cause oil leakage which could result in fire leading to loss of lives and property. Technology from startups will help us address such issues too,” said an official at one of the oil marketing companies.
HPCL’s launched It’s HPOpen Innovation Challenge advertisement last year and shortlisted six start-ups for funding from the first round of applications, according to its annual report for 2017-18.
The company has allocated a startup fund of ₹ 25 crore to support innovation and upcoming entrepreneurs by funding projects from new or early stage start-ups in areas associated with its business.