It deals with exploration and production of the crude
oil and natural gas
It deals with the transportation of crude oil and
natural gas to refineries
It deals with the refining and marketing of the refined
and processed petroleum products
Porter’s 5 forces
Threat of New
• High capital requirements
• Risk and uncertainties
• Price volatility
• Access to reserves
• Political interference
• Dominated by 3‐4 players
• Midstream and downstream also have
moderate competition as there is no any
• India is a growing economy, which can
lead to increase in market share for all
• High exit barriers makes difficult for firm to
leave the industry
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
Bargaining power of
• Bargaining power of buyers is low in the
• In downstream sector, it lies with few
• No bargaining power in midstream sector
due to no differentiation
Bargaining power of
• 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
• Downstream is fully dependent on the
import of the crude oil and natural gas, so
the bargaining power of suppliers is high.
• 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
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
* Courtesy Shell Global Solutions International B.V.
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 ?
• Acquire Seismic Data (2D, 3D, 4D )
and Analog Data
– Seismic Survey and mapping
– Interpretation of Wave attributes
– Seismic Qualitative Analysis: Subsurface
– Seismic Quantitative Analysis: Subsurface
– Porosity(fractional %), Permeability(flow)
and Fluid Saturation
• Exploratory Drilling
– Fluid fill (Oil/Water/Gas) and Reservoir
– Extensive logging
• (Porosity/Density/Resistivity Log, Gamma Ray
– Formation Dynamics Tester
– Fluid Sampling
• 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?
• Evaluation of all the options
– TECOP (Technically, Economically,
Commercially, Operationally and Politically
• Decision Gate (DG) 3
• Have we selected the optimal solution?
Execute and Operate
• Decision Gate (DG) 4
• Is everything in place to ensure success?
– Production operations , surface facilities
• Decision Gate (DG) 5
• Are we ready to operate
• Linear Regression Technique
• Dependent variable: Industry
• Independent Variables:
– Foreign Direct Investment
– Exchange rate
– Gross Domestic Product
– Crude Oil Price (USD/Barrel) 22
Access to reserves (Medium)
Political constraints (High)
Competition for proven
Competition for new
Cost containment (same)
Human capital deficit (High)
Uncertainty in production
Operation challenges in E&P
and refining (High)