INDUSTRY ANALYSIS Topic: Oil and Gas Industry

Group – 10 MBA – 1 Anurag Roy ChowdhuryAditya Kumar DasSaheb KumarLungthao thai pou

UNIT 1

SECTOR ANALYSISA recent report points out that the Indian oil and gas industry is anticipated to be worth US$ 139.8 billion by 2015. India‘s economic growth is closely related to energy demand; therefore the need for oil and gas is projected to grow more, thereby making the sector quite conducive for investment.

CURRENT STATE OF THE INDIAN OIL AND GAS SECTOR IN INDIA

The oil and gas sector in India is a critical component of the country‘s economy, accounting for 15 per cent of the country‘s gross domestic product (GDP)

In 2011, natural gas accounted for 10 per cent of the country‘s total energy requirements, whereas estimates suggest that this figure will reach 20 per cent by 2025

Market reports estimate that this growth is expected to take the size of the Indian gas market to that of the gas market in Japan, the largest consumer of liquefied natural gas (LNG) in Asia, by the end of 2015

15% contribution to GDP, PSU units contribute around 68%of India's total annual requirement rest by the private sectors.

TOP 10 PLAYER OF INDUSTRY OIL AND NATURAL GAS CORPORATION (ONGC) RELIANCE INDUSTRIES LIMITED (RIL) INDIAN OIL CORPORATION LIMITED (IOCL) BHARAT PETROLEUM CORPORATION LIMITED (BPCL) GAIL (INDIA) LIMITED CAIRN INDIA LIMITED OIL INDIA LIMITED (OIL) HINDUSTAN PETROLEUM CORPORATION LIMITED (HPCL) ESSAR OIL LIMITED PETRONET LNG LIMITED

Type Of Competition:- A competitive oligopoly is a market that is dominated by only a

few large firms. These firms prefer not to compete via price wars and therefore compete in various other ways, such as advertising, product differentiation and barriers.

Geographical spread of plants HPCL Visakhapatnam - 7.50 Hindustan Petroleum Corporation Limited (HPCL) Mumbai - 5.50 Chennai Petroleum Corporation Limited (CPCL) Tamilnadu - 9.50 Bharat Petroleum Corporation Limited (BPCL) Mumbai - 6.90 Kochi Refineries Ltd. (KRL) Kochi - 7.50 CPCL Nagapattnam - 1.00 Mangalore Refinery & Petrochemicals Ltd. (MRPL) Mangalore -

9.69 Numaligarh Refinery Ltd. (NRL) Numaligarh - 3.00 Reliance Petroleum Ltd. (RPL). Jamnagar (Private Sector) - 33.00 Tatipaka Refinery (ONGC) Andhra Pradesh - 0.078

Demand for Petroleum Products Various groups have estimated long-term demand projections for oil for the country from time to time. Some of the main projections are contained in: India Vision 2020, India Hydrocarbon Vision 2025 Energy Information Administration (EIA) and International Energy Agency (IEA)

While the projections by IEA and EIA are based on lower GDP growth rates and are in the range of 230 MMT to 264 MMT, India Hydrocarbon Vision (IHV) 2025 projects the demand for the year 2025 in the range of 235 MMT to 368 MMT.

Approach Adopted to Estimate Future Demand

The following two approaches have been considered for assessing the oil requirements for future.

Top-down Approach: Overall energy requirements with share of various fuels in the primary commercial energy basket (considered by Planning Commission and reported in IEP) by linking GDP with energy elasticity.

Bottom-up Approach: End use approach considering the impact of various parameters. While assessing the requirements factors like impact of gas, vehicle population growth, improved fuel efficiency, technological improvements in engine designs.

Demand for petroleum products

Professional trade bodies of oil and gas industry in India ALGA PROCESSING LLC We are an oil and gas processing consulting and equipment company. Our main services and products are mainly used in oil and gas industry such as separation, oil treating, etc. Many of the products we provide are customized according to the project. Website: www.algaprocessing.com

Illinois Oil & Gas Associaation The voice of the oil and gas producing industry for over 50 years for Illinois Website: www.ioga.com

UNIT 2

Chairman & Managing Director of Top Three players

Hindustan Petroleum Corporation Ltd India's third largest oil marketing company Mr. Mukesh Kumar Surana A Mechanical Engineer with Master‘s degree

in Financial Management Surana joined HPCL in the year 1982. Handled a wide range of responsibilities

including leadership positions in Refineries, Corporate, Information Systems and upstream business of HPCL.

Hindustan Oil Exploration Company Ltd

P Elango Holds a Masters degree in Business Administration and

began his career with ONGC in 1985. One of the five finalist for Platts' first-ever Asia CEO

of the Year award 2013 He was the Chief Executive Officer & Whole Time

Director of Cairn India Limited.

Chairman of Green Gas Ltd

Shri M. Ravindran His focus is to help Green Gas in its endeavor of Growth and

Corporate Governance He was also working as Director (HR) of GAIL (India) Limited

since1st June, 2013 He replaces K K Gupta, Director (Marketing), Bharat Petroleum

Corporation Ltd (BPCL)

Child Care Education Health Care Skill Development Sports Environment & Community Development

CSR Policy of Hindustan Petroleum Ltd

Hindustan Oil Exploration Corporation Ltd CSR Policy

Promote local content by developing entrepreneurship Improve access to clean drinking water; Enhance the quality of education in our Operating Area; Promote personal safety, environmental and technology awareness Support promotion of local culture and sports

UNIT 3

Controlling body of the industry Petroleum and Natural Gas

Sector

Central level State level

Energy Directorates DGH (Upstream)

Other Government bodies

Regulators

Oil Industry development Board

Central or High Technology

Oil Industry Safety Directorate

PNGRB (Downstream)

Department of commerce and

industry

Ministry of Petroleum and

Natural Gas

Petroleum Conservation and Research Association

Petroleum Planning and Analysis Cell

The following is a list of the top 10 risk factors

Regulatory and legislative changes and increased cost of compliance Volatile oil and gas prices Inability to expand reserves or find replacement reserves. Operational hazards including blowouts, spills and personal injury. Natural disasters and extreme weather conditions. Inaccurate reserve estimates. Inadequate liquidity or access to capital, indebtedness. Environmental or health restrictions and regulations. General national or global economic concerns General industry competition

Steps taken to Promote Oil and Gas Industry

24 x 7 LPG service via web launched to provide LPG consumers an integrated solution to carry out all services at one place, through MyLPG.in, from the comfort of their home.

Government of India entered into bilateral discussion with Norway to extend co-operation between the two countries in the field of oil and natural gas and hydrocarbon exploration.

oil diplomacy initiatives have been intensified through meaningful engagements with hydrocarbon rich countries

Environmental issues due in Oil and Gas industry

Machinery, gas flares and light pollution disrupt scenic views and clear night skies

Dangerous methane emissions contribute to climate change

UNIT 4

Curre

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Quick R

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Debt E

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Ratio

Stock

Turno

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Debtor

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Ratio

EPS Rati

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P.E Ra

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0

5

10

15

20

25

30

1.57

1.26

0.01

14.0

3

7.64

20.7

3

14.8

1.56

1.26

0

14.5

3

11.2

1

25.8

3

12.3

4

1.74

1.41

0

15.3

3

12.7

6

24.4

6

12.7

4

201520142013

0

10

20

30

40

50

60

70

80

90

4 3.95

0

44.7

8

7.37

7.04

30.3

7

4.92

4.87

0

73.4

6

7.44

39.0

8

8.52

4.85

4.81

0

85.9

6

15.7

3

77.2

3.53

201520142013

0

5

10

15

20

25

1.87

1.25

0.47

11.7

7

23.5

2

11.7

7 14.5

7

1.26

0.98

0.66

9.49

20.3

7

9.49

14.4

3

1.18

0.88

0.68

15.3

2

21.1

5

15.3

2

8.84

201520142013

0

5

10

15

20

25

30

35

1.06

0.85

0.33

23.9

6

19.4

6 23.9

6

16.2

3

1.17

0.93

0.38

34.4

9

21.7

3

34.4

9

10.8

9

1.01

0.84

0.37

31.7

1

21.6

3

31.7

1

10.0

7

201520142013

0

10

20

30

40

50

60

70

80

90

4 3.95

0

44.7

8

7.37

7.04

30.3

7

4.92

4.87

0

73.4

6

7.44

39.0

8

8.52

4.85

4.81

0

85.9

6

15.7

3

77.2

3.53

201520142013

0

5

10

15

20

25

1.87

1.25

0.47

11.7

7

23.5

2

11.7

7 14.5

7

1.26

0.98

0.66

9.49

20.3

7

9.49

14.4

3

1.18

0.88

0.68

15.3

2

21.1

5

15.3

2

8.84

201520142013

0

5

10

15

20

25

1.87

1.25

0.47

11.7

7

23.5

2

11.7

7 14.5

7

1.26

0.98

0.66

9.49

20.3

7

9.49

14.4

3

1.18

0.88

0.68

15.3

2

21.1

5

15.3

2

8.84

201520142013

0

5

10

15

20

25

1.87

1.25

0.47

11.7

7

23.5

2

11.7

7 14.5

7

1.26

0.98

0.66

9.49

20.3

7

9.49

14.4

3

1.18

0.88

0.68

15.3

2

21.1

5

15.3

2

8.84

201520142013

The biggest mistake that oil and gas companies can make in this difficult business landscape is to focus solely on reducing costs (either operating or general and administrative) and spending; this strategy is effective only in a very narrow range of market conditions and rarely effective enough to make businesses successful over the long term. Rather, companies should carefully consider the supply of assets, analyze the logistics of accessing available markets, and ensure a long-term presence in these markets without getting into a bidding war. Oversupply and lower prices represent a real challenge to the industry, but that doesn’t mean the future is all gloom. It just means that producers and refiners need to be prepared and adopt strategies that take advantage of the new reality.

Conclusion