Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Ia final presentation

1,623 views

Published on

Financial and Business analysis of Oil and gas industry in India.

Published in: Economy & Finance
  • Login to see the comments

  • Be the first to like this

Ia final presentation

  1. 1. OIL and GAS Industry ( UPSTREAM ) 1
  2. 2. Sectors Upstream Sector It deals with exploration and production of the crude oil and natural gas Midstream sector It deals with the transportation of crude oil and natural gas to refineries Downstream sector It deals with the refining and marketing of the refined and processed petroleum products 2
  3. 3. Porter’s 5 forces model Threat of New Entrants Rivalry among competito rs Bargaining power of Suppliers Threat of Substitutes Bargaining power of Buyers 3
  4. 4. Threat of New Entrants • High capital requirements • Risk and uncertainties • Price volatility • Access to reserves • Political interference 4
  5. 5. Rivalry among competitors • Dominated by 3‐4 players • Midstream and downstream also have moderate competition as there is no any product differentiation • India is a growing economy, which can lead to increase in market share for all firms • High exit barriers makes difficult for firm to leave the industry 5
  6. 6. Threat of Substitutes • Substitutes are alternate form of energy • Stricter emission norms and climate challenges is the reason for shift • Uncertainties in the demand and supply due to political reasons 6
  7. 7. Bargaining power of Buyers • Bargaining power of buyers is low in the upstream sector • In downstream sector, it lies with few players • No bargaining power in midstream sector due to no differentiation 7
  8. 8. Bargaining power of Suppliers • In the Upstream sector, the main suppliers are the oil field equipment providers, and as there are few players in this sector and concentrated, so low bargaining power. • Bargaining power of suppliers is low in Midstream sector • Downstream is fully dependent on the import of the crude oil and natural gas, so the bargaining power of suppliers is high. 8
  9. 9. Industry Life Cycle 9
  10. 10. Market Overview Oil India Limited 10% Crude oil production 2012-13 ONGC 60% RIL 2% Cairn India Ltd. 16% Others 12% Natural Gas production 2012-13 RIL 23% ONGC 52% OIL 6% GSPC 5% Others 14% 10
  11. 11. Crude oil production (Region wise) 11
  12. 12. Market Overview • India imports around 84% of total oil needs. • The Indian Oil industry consumption was around 3.57 mn barrels per day (b/d) in 2012 compared to around 3.27 mn b/d in 2011 and is expected to reach 4.20 mn b/d by 2017. • Indian Natural Gas consumption was approx 69.1 billion cubic meter (BCM) during 2011. It is expected to grow to 160 BCM by 2022. • India imports 23% of total gas 12
  13. 13. Value Chain 13
  14. 14. Value Chain 14
  15. 15. Opportunity Realization Process* Shell uses the Opportunity Realization Process (ORP) for any project worth USD 100 Milllion or more. The ORP is split into six phases punctuated by decision gates 15 * Courtesy Shell Global Solutions International B.V.
  16. 16. 16 Identify Acquiring New Acreage • Gather data available in public domain, Buy data from govt. • Analyze all data to make a first estimate of Value of the opportunity • Decision Gate (DG) 1 • How much to Bid for? • Do we understand what we are starting? • What is the Success/Failure rate in Bidding Round ?
  17. 17. 17 Assess • Acquire Seismic Data (2D, 3D, 4D ) and Analog Data – Seismic Survey and mapping – Interpretation of Wave attributes – Seismic Qualitative Analysis: Subsurface structure map – Seismic Quantitative Analysis: Subsurface Rock Properties – Porosity(fractional %), Permeability(flow) and Fluid Saturation
  18. 18. 18 Assess • Exploratory Drilling – Fluid fill (Oil/Water/Gas) and Reservoir properties – Extensive logging • (Porosity/Density/Resistivity Log, Gamma Ray Log,NMR Log) – Formation Dynamics Tester – Fluid Sampling
  19. 19. 19 Assess • Appraisal Drilling – delineation wells might be drilled to determine the size of the oil or gas field and how to develop it most efficiently. – Static and Dynamic Reservoir Modeling – Dynamic Reservoir Modeling • Decision Gate (DG) 2 • Have we looked wide enough?
  20. 20. 20 Select • Evaluation of all the options – TECOP (Technically, Economically, Commercially, Operationally and Politically viable) • Decision Gate (DG) 3 • Have we selected the optimal solution?
  21. 21. 21 Execute and Operate • Execute • Decision Gate (DG) 4 • Is everything in place to ensure success? • Operate – Production operations , surface facilities development etc. • Decision Gate (DG) 5 • Are we ready to operate
  22. 22. Analysis of constraints • Linear Regression Technique • Dependent variable: Industry Sales • Independent Variables: – Foreign Direct Investment – Exchange rate – Gross Domestic Product – Crude Oil Price (USD/Barrel) 22
  23. 23. Upstream Industry 23
  24. 24. Midstream Industry 24
  25. 25. Downstream Industry 25
  26. 26. Model Summary Upstream Midstream Downstrea m 26
  27. 27. Analysis FACTORS/ SEGMENT GDP Crude Oil Price FDI Exchange Rate UPSTREAM - - ++ ++ ++ MIDSTREA M - + + + DOWNSTR EAM - - - +++ +++ +++ 27
  28. 28. Anova Table Upstream Midstream Downstrea m 28
  29. 29. Regulatory Framework – New Exploration License Policy (NELP) – Coal Bed Methane Policy – Underground Coal Gasification – Gas Hydrate – Shale gas 29
  30. 30. Profit Pool Analysis Upstrea m Explorati on Production Midstrea m Equipme nt provider s Transporta tion Downstr eam Refining and distributi on Retail 30
  31. 31. Expense Analysis Upstream Employee expense Raw material expenses Depreciation Power, fuel and water charges 31
  32. 32. Expense Analysis Midstream Employee expense Raw material expenses Depreciation Power, fuel and water charges Fiancial services expenses 32
  33. 33. Expense Analysis Downstream Employee expense Raw material expenses Depreciation Power, fuel and water charges 33
  34. 34. Du-pont Analysis Factor Upstream Midstream Downstrea m Financial Leverage 2.12 2.53 2.78 Asset turnover 0.4 0.365 0.44 Operating margin 0.396 0.299 0.286 Interest burden 0.99 0.50 0.589 Tax Burden 0.66 0.628 0.590 34
  35. 35. Predicted Risk and Concerns I.Financials II.Compliance III.Strategic IV.Operations 35
  36. 36. Financials  Price volatility (High)  Worsening fiscal conditions (Low)  Cost of fund raising (High) 36
  37. 37. Compliance  Climate change concerns (Low)  Uncertain energy policy (Low)  Environmental risk (High) 37
  38. 38. Strategic  Access to reserves (Medium)  Political constraints (High)  Competition for proven reserves (High)  Competition for new technologies (High) 38
  39. 39. Operations  Cost containment (same)  Health/Safety/Environmental risks (same)  Human capital deficit (High)  Uncertainty in production (High)  Operation challenges in E&P and refining (High) 39
  40. 40. BCG Matrix Downstream Midstream Relative Market share Market growth High Low Upstream 40
  41. 41. Demand – Supply Gap • Marginal increase in crude oil production • Refining capacity increase at CAGR of 7% • Increase in imports 41
  42. 42. Growth Drivers • Growing Demand • Huge Investments • Skilled labor • Natural gas discoveries 42
  43. 43. India’s Market Dynamics 43
  44. 44. India’s Market Dynamics 44
  45. 45. Recommendations • Alternative energy sources • Developing midstream infrastructure • Partnership and joint ventures with foreign players • Development of Storage facilities 45
  46. 46. References • http://www.ibef.org • https://www.crisilresearch.com • www.prowess.com • www.ril.com • www.api.org • www.ongcindia.com • www.petroleum.nic.in • www.planningcommission.nic.in 46
  47. 47. Thank You ! Presented by: - Akhil Goyal - Ankur Bhargava - Rajesh Kumar - Shivangi Chaudhary 47 - Sweta Kumari

×