Ia final presentation
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Transcript of Ia final presentation
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OIL and GAS Industry
( UPSTREAM )
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Sectors
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Porter’s 5 forces model
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Threat of New Entrants
• High capital requirements• Risk and uncertainties• Price volatility• Access to reserves• Political interference
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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
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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
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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
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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.
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Industry Life Cycle
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Market Overview
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Crude oil production (Region wise)
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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
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Value Chain
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Value Chain
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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.
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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 ?
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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
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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
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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?
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Select
• Evaluation of all the options
– TECOP (Technically, Economically, Commercially, Operationally and Politically viable)
• Decision Gate (DG) 3•Have we selected the optimal
solution?
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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
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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)
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Upstream Industry
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Midstream Industry
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Downstream Industry
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Model Summary
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AnalysisFACTORS/SEGMENT
GDP Crude Oil
Price
FDI Exchange Rate
UPSTREAM
- - ++ ++ ++
MIDSTREAM
- + + +
DOWNSTREAM
- - - +++ +++ +++27
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Anova Table
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Regulatory
Framework– New Exploration License Policy
(NELP) – Coal Bed Methane Policy – Underground Coal Gasification – Gas Hydrate – Shale gas
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Profit Pool Analysis
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Expense Analysis
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Expense Analysis
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Expense Analysis
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Du-pont AnalysisFactor Upstrea
mMidstre
amDownstr
eamFinancial 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
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I.FinancialsII.ComplianceIII.StrategicIV.Operations
Predicted Risk and Concerns
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Financials
Price volatility (High) Worsening fiscal conditions
(Low) Cost of fund raising (High)
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Compliance
Climate change concerns (Low)
Uncertain energy policy (Low)
Environmental risk (High)
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Strategic
Access to reserves (Medium)
Political constraints (High) Competition for proven
reserves (High) Competition for new
technologies (High)38
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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)
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BCG Matrix
Relative Market share
Mar
ket
gro
wth
Hig
hL
ow
Upstream
Downstream Midstream
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Demand – Supply Gap
• Marginal increase in crude oil production
• Refining capacity increase at CAGR of 7%
• Increase in imports
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Growth Drivers
• Growing Demand• Huge Investments• Skilled labor• Natural gas discoveries
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India’s Market Dynamics
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India’s Market Dynamics
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Recommendations
• Alternative energy sources• Developing midstream
infrastructure • Partnership and joint
ventures with foreign players• Development of Storage
facilities45
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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
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Thank You !
Presented by:- Akhil Goyal- Ankur Bhargava- Rajesh Kumar- Shivangi Chaudhary- Sweta Kumari
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