The document discusses the oil and gas industry in India, focusing on the upstream sector. It covers key areas like industry sectors, Porter's 5 forces analysis, market overview, value chain, regulatory framework, and recommendations. The upstream sector deals with exploration and production and faces high threats of new entrants due to risks and capital requirements. Competition is moderate to high and bargaining power of suppliers and buyers is generally low. The industry shows steady growth driven by growing demand and investments.

1. OIL and GAS Industry
( UPSTREAM )
1

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. 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. Threat of New
Entrants
• High capital requirements
• Risk and uncertainties
• Price volatility
• Access to reserves
• Political interference
4

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. 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. 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. 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. Industry Life Cycle
9

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. Crude oil production
(Region wise)
11

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. Value Chain
13

14. Value Chain
14

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
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
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
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
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
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
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. 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. Upstream Industry
23

24. Midstream Industry
24

25. Downstream Industry
25

26. Model Summary
Upstream
Midstream
Downstrea
m
26

27. Analysis
FACTORS/
SEGMENT
GDP Crude Oil
Price
FDI Exchange
Rate
UPSTREAM - - ++ ++ ++
MIDSTREA
M
- + + +
DOWNSTR
EAM
- - - +++ +++ +++
27

28. Anova Table
Upstream
Midstream
Downstrea
m
28

29. Regulatory
Framework
– New Exploration License Policy (NELP)
– Coal Bed Methane Policy
– Underground Coal Gasification
– Gas Hydrate
– Shale gas
29

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. Expense Analysis
Upstream
Employee expense
Raw material expenses
Depreciation
Power, fuel and water charges
31

32. Expense Analysis
Midstream
Employee expense
Raw material expenses
Depreciation
Power, fuel and water charges
Fiancial services expenses
32

33. Expense Analysis
Downstream
Employee expense
Raw material expenses
Depreciation
Power, fuel and water charges
33

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. Predicted Risk and
Concerns
I.Financials
II.Compliance
III.Strategic
IV.Operations
35

36. Financials
 Price volatility (High)
 Worsening fiscal conditions
(Low)
 Cost of fund raising (High)
36

37. Compliance
 Climate change concerns
(Low)
 Uncertain energy policy (Low)
 Environmental risk (High)
37

38. Strategic
 Access to reserves (Medium)
 Political constraints (High)
 Competition for proven
reserves (High)
 Competition for new
technologies (High)
38

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. BCG Matrix
Downstream Midstream
Relative Market share
Market growth
High Low
Upstream
40

41. Demand – Supply
Gap
• Marginal increase in crude oil
production
• Refining capacity increase at
CAGR of 7%
• Increase in imports
41

42. Growth Drivers
• Growing Demand
• Huge Investments
• Skilled labor
• Natural gas discoveries
42

43. India’s Market
Dynamics
43

44. India’s Market
Dynamics
44

45. Recommendations
• Alternative energy sources
• Developing midstream
infrastructure
• Partnership and joint ventures
with foreign players
• Development of Storage
facilities
45

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. Thank You !
Presented by:
- Akhil Goyal
- Ankur Bhargava
- Rajesh Kumar
- Shivangi
Chaudhary
47
- Sweta Kumari