Oil & Gas Sector

Presented By
Minhas kalani (19)
Hetal Mehta (31)
Nilesh Solanki (60)
 INTRODUCTION
• The operation of Oil & Gas Industry can be divided into 3
phases
– Upstream or extracting
– Mid-Stream or refining
– Downstream or marketing
• Oil and Gas Industry in India is a 110 billion USD industry
• The India oil & gas demand ranks it sixth in the world
• 70% of the petroleum oil requirements of India are met by the
imports.
 MAJOR PLAYERS
• Public Sector Undertakings (PSUs):
– ONGC - Oil & Natural Gas Corp (exploration and production)
– OIL - Oil India Limited (exploration & production)
– IOC - Indian Oil Corporation (refining & marketing)
– BPCL - Bharat Petroleum Corporation Ltd (refining and
marketing)

• Private Oil & Gas companies in India

– RIL - Reliance Industries Limited (Indian Oil & gas company)
– ESSAR (Indian Oil & Gas company)
– Cairns Energy India
 PRE-GLOBALISATION
• India's petroleum industry was not always controlled by the
Government
• At the time of independence, India’s domestic oil production
was just 250,000 tonnes per annum
• Industry nationalized.
• Most activities of the Petroleum Value Chain controlled by
various state owned oil companies
• India had adopted Administered Pricing Mechanism in 1976.
• by the late 1970s- need for private investment
• Exploration blocks were offered to international oil companies
in 1979 to attract investment and technology.
 POST GLOBALISATION
• Dependent-foreign capital, expert personnel, and technology
• Foreign involvement in the various important stages
• Various measures taken by Govt.
• Changes in Exploration and Production
– Change in legal status of the Oil and Natural Gas Commission (ONGC)
by converting it into a Corporation
– The Directorate General of Hydrocarbon (DGH) was set up in April
1993
– Involvement of private and foreign companies in the development of
already discovered fields
– From 1991 to 1996, the government had held five rounds of bidding
for exploration
– A new Exploration Licensing Policy (NELP) was formulated by the
government in 1997-98 to provide a 'level playing field'
 INCENTIVES BY GOVT.
• No custom duty on imports required for petroleum operations.
• No minimum expenditure commitment during the exploration
period.
• No mandatory state participation.
• No carried interest by National Oil Companies
• Freedom to sell crude crude oil and natural gas in domestic market
at market related prices.
• Biddable cost recovery limit upto 100%
• No cess on crude oil production
• Royalty payment: 12.5% for onland areas,10% for offshore and 5%
for deep water areas.
• Liberal depreciation provisions
• Seven years tax holidays from the commencement of production.
 Cont…
• Refining
– no major changes
– From 1998, delicensed
• Marketing
– Eligibility for marketing petroleum products
– By April 2002, APM(Adminitered Price
Mechanism) was fully dismantalled
 IMPACT OF SLOWDOWN
• Liquidity constraints
• Cash-rich companies are expected to follow the
inorganic growth route
• The valuation of oil and gas companies has
decreased
– opportunity for Indian company to buy
• Aggressive competition
• International analysts forecast oil prices to be $ 75-
115/bbl
• Refineries- performing well
– the average capacity utilization of our refineries
has been 104%.
• OMCs – combined under-recovery 93000 crore
• The OMCs have declared a combined loss of
 CONCLUSION
• Industry is stagnant
• Lack of technology, personnel,
finance
• Foreign collaborations to bring
technology, personnel & finance
• Professional practice for optimum
utilization of resources
• Resultant growth & development of
oil & gas industry