Table of content of Industry Analysis

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Introduction Overview of the industry
o Evolution of oil and gas industry in India o Global Environment

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Key drivers Porter¶s 5 forces model Top players« where is ONGC placed? Future of the industry Environmental impact

III Opening up of Hydrocarbon Sector (1990-till date) Phase I [1889-1947] Birth and Pre-Independence era ‡ ‡ ‡ ‡ Commercial discovery of crude oil made in 1889.  In 1961. ‡ Oil India Private Limited formed in 1959.Introduction to Oil Industry: EVOLUTION OF OIL AND GAS INDUSTRY IN INDIA:-  At Independence.  In 1981 it became a fully Govt. under Industrial Policy Resolution. owned entity . Most foreign experts had written off India as far as discovery of new petroleum reserves was concerned. Phase II [1947 1990] ‡ Oil and Natural Gas Directorate (the predecessor to ONGC) in 1955. India's domestic oil production was just 250. that petroleum would be the core sector industry. it became a joint venture company between the Indian Government and Burmah Oil Company Limited. UK. 1954. The Government announced. A small refinery built in Margherita in 1893 ± shifted to Digboi in 1901. Thereafter systematic drilling began in 1891. Industry showed modest growth over the next 50 years. The entire production was from one state-Assam.I Phase II Birth and Pre-Independence era (1889-1947) Emergence and Growth of National Oil Companies (1947-1990) Phase . Growth of E&P Industry Phase .000 tones per annum.

in 1997-98:  To provide level playing field to Public and Private players.¶08 Oil and Natural Gas Commission becomes Oil and Natural Gas Corporation on 1st Feb. took over the operations of IBP. ONGC becomes a ³Maharatna´ PSU in 2010.  Overwhelming response received for private and public players ± both Indian and foreign. Phase 3(1990-till date) ‡ ‡ The Nineties (90¶s) saw the opening up of Petroleum Sector New Exploration Licensing Policy formulated by Govt. In 1997 ONGC is declared as one of the ³Navratna´ PSU. . FDI limit increased from 26% to 49% in new refinery projects by PSUs in Jan.‡ Creation of State owned refineries  Indian Refineries Limited in 1958  Indian Oil Company Limited in 1959  Both merged to form Indian Oil Corporation in 1964  In 70s Petroleum Sector was largely nationalized as Govt. Caltex and Burma-Shell. with the aim of giving impetus to exploration in India. 2000. Esso.¶1994. ‡ ‡ ‡ ‡ ‡ 100% FDI allowed in refinery sector in July.

Require revamping of surface facilities ± more investment with lesser returns from mature fields.poorly explored 44% . Development of City Gas Projects . Infrastructural requirement for development of projected gas market. Redevelopment of Brown Fields ‡ ‡ ‡ Most of the major producing fields are aged & mature.Key Drivers: y y y MAINTAINING GDP GROWTH IMBALANCE IN SUPPLY AND DEMAND EQUATION GROWING PRIMARY AND ENERGY REQUIREMENT Key Thrust Area 1. Exploration ± out of 3. Require induction of technology for improved production and Recovery Factor.exploration just initiated 14% .moderate to well explored. (Source: ICRA) Infrastructure and Development of New Finds ‡ ‡ Major finds made under NELP mostly in deep water and frontier Development of technology and Infrastructure for development of these finds will require massive capital infusion.still remaining unexplored. ‡ ‡ ‡ ‡ 22% . Kms.14 sq. Pipeline Network ‡ ‡ ‡ Increase in pipeline coverage for gas and product transportation required. 20% . Technology up-gradation of existing refineries to meet future fuel norms. Refining Sector ‡ ‡ Further capacity enhancement required to meet growing product demand.

This is assuming that the company would be researching and developing on domestic soil.Development of Alternate Source of Energy ‡ ‡ Development of alternate sources of energy like CBM. y With this being said there is not much to worry about the bargaining power of the suppliers. Capital investment required on the technology and development front. It is different in the fact that people really cannot go without their product. These would be very high capital requirements as well as access to Cost disadvantages independent of scale. PORTERS 5 FORCE MODEL Threat of new entrants: y Due mostly to the industry that ONGC is in. it¶s hard for there to be many new entrants. Bargaining Power of Suppliers: y ONGC is a vertically integrated company that really deals in all areas from finding the product to refining the product to selling the product. The only real threat that might arise would be another government funded Oil and Gas company. y The industry that ONGC is a part of is different than many other industries. While over a . The reason for this is that a government would not have as hard a time raising funds and gaining access to resources. Bargaining Power of Buyers: y Not too critical for most companies as refining operations are a part of the complete supply chain. UCG and Gas Hydrate in primitive stage. y y There is really not much of a threat because there are two main barriers to entry that would be stopping potential threats. with the refining operations supplying the product to the marketing company.

This is where the main players in this market must be careful. Top players« where is ONGC placed? The oil & gas companies in India have been actively participating in contributing towards the rapid growth of the economy of India. y However. y y As stated above there is not a real alternative to oil at this time. y The largest competitors in this industry for ONGC are Exxon Mobile and Royal Dutch Shell. none of them are big enough to impact the demand of the petroleum products. During the financial year 2009-10. the country has a total reserve of more than 1400 billion cubic meters of natural gas and 1200 million metric tonnes of crude oil as on the 1st of April 2010. There is research being done to try and find substitutes. the level competition has increased with Reliance and other MNC becoming more aggressive. The list of top players in India in the sector of Oil & Gas is given below: y Top 10 companies in the Oil & Gas sector in India: . solar power etc exist as substitutes. According to a report published by the Ministry of Petroleum and Natural Gas of India. Threat of Substitutable Products: y Although gas. y While Exxon may be a larger company now ONGC is growing and is becoming a very important global player. y ONGC is currently in 14 different companies whereas Exxon Mobile is in 20 different countries.long period of time it may be possible to find other fuels it is not really feasible in the short term. \ Intensity of Rivalry among Competitors: y The rivalry in the industry was low till as the industry was tightly regulated by the government. it is only giving more reason to try and find other fuel sources. With the price of oil as high as it is at this time. the country has exported more than 50 Million Metric Tonnes of petroleum products with the contribution offered by the companies in the sector of Oil & Gas industry.

Price and easy availability of crude oil and gas as feedstock. These developments present India with tremendous opportunities in the future to be one of the major players in the export of petrochemical intermediaries.  The Hubbert peak theory. By 2012. The future of Indian petroleum industry depends on: y y y Demand for petroleum is growing in leaps and bounds. sulphur dioxide. As per the latest CII-KPMG analysis.  As petroleum is a non-renewable natural resource the industry is faced with an inevitable eventual depletion of the world's oil supply. the prospects in India Petroleum Industry are estimated to accomplish US $35 billion to US $40.ethylene. Environmental impact and future shortages  Petroleum industry operations have been responsible for water pollution through byproducts of refining and oil spill  The combustion of fossil fuels produces greenhouse gases and other air pollutants as by-products. propylene.  It suggests that after a peak in oil production rates. a period of oil depletion will ensue. The arena for business has now gone global since trade boundaries are fast dissolving.‡ Indian Oil Corporation ‡ Oil & Natural Gas Commission ‡ Bharat Petroleum ‡ Reliance Petroleum Limited ‡ Essar Oil Limited ‡ Gas Authority of India ‡ Hindustan Petroleum Corporation ‡ Aban Offshore ‡ Oil India Limited ‡ Tata Petrodyne Future of the industry The future of Indian petroleum industry has good potential but it needs developmental activities in this sector to strengthen itself. . questions the sustainability of oil production. volatile organic compounds and heavy metals. the energy industry of India will help tin the expansion of the petroleum sector by bringing in investments worth US$ 120 billionUS$ 150 billion in the next 3-5 years. Pollutants include nitrogen oxides. butadiene. which introduced the concept of peak oil. Shifting focus to more production of olefin .

 Since virtually all economic sectors rely heavily on petroleum. peak oil could lead to a partial or complete failure of markets. Source: AFX International Focus (2006): ³Global Oil Industry faces Broad Spectrum of Political Risk´ (10/04/2011) .

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