PETRO-ECONOMICS - Verbundzentrale des GBV · Evaluation Methodology 216 GPW 216 Landed Cost of...

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PETRO-ECONOMICS Dr. A.N. Sarkar fMGU PfltSS

Transcript of PETRO-ECONOMICS - Verbundzentrale des GBV · Evaluation Methodology 216 GPW 216 Landed Cost of...

Page 1: PETRO-ECONOMICS - Verbundzentrale des GBV · Evaluation Methodology 216 GPW 216 Landed Cost of Crude .. 216 Pecking Order 217 Platts & Argus 217 Trade and Transportation 217 Oil Trade—The

PETRO-ECONOMICS

Dr. A.N. Sarkar

fMGU PfltSS

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Contents

Preface v

1. Introduction to Oil and Natural Gas 1Genesis and Technology Options of Oil Exploration 1

Genesis 1Reserves and Resources 1Origin of Oil 2

A. Biogenic theory 2B. Abiogenic theory of origin of oil 3

History of Oil Production X 3Classification of Oil 5

Types of Crude Oil according to the U.S. Environmental ProtectionAgency 5

A Brief History of Oil and Gas Industry 6History of Oil Prices 8Origin of Petroleum and Processes of Extraction 8

Fault trap 9Anticline 9Salt dome 9

Profile of Petroleum Operations 11The Basic Element of a Product in a System 12Well Completion 12Fluid Separation and Treatment 12Treatment of Emulsion and Contaminants 13Treatment Processes 13Electrical Dehydration 13Crude Oil desalting System 13Fluid Separation and Treatment 14Natural Gas Treatment 15

Prevention of Hydrate 15Dehydration of Natural Gas 15Measurement of Oil and Gas 15

Simple Distillation 17

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Downstream Processing 17Crude Oil Quality 18Other Refinery Inputs 19Production Tests 19Drill Stem Test (DST) • 20Conventional Testing 20Production Logging 20Crude Oil Storage 21EOR/IOR: Artificial Lift 21Positive Displacement Pumps 22

Classification of Wells 22Safety Systems in Oil and Gas well and AssociationSurface Equipment 23Classification 23

1. Subsurface Controlled Subsurface Safety Valves (SCSSV) 232. Surface Safety Systems Surface Safety Valve 23

Natural Gas—The Fuel of the 21st Century 23A Brief History of Oil Companies 24

Evolution of NOCs 25Development of NOCs in Second Half of 12th Century 26Indian Oil Corporation Limited (Indian Oil) 28Indian Downstream Major 28Drivers of Change 29

New Paradigm In Oil Industries 30

2. Global Energy Scene and Contribution of Oil and Natural Gas 35Projection of Global Energy Demand: IEA vs. IEO 35IEA Projections of Global Energy Demand 38Global Energy Demand Perspective 38India's Overall Production, Consumption and Projected Demand ofEnergy: Overview of India's Oil and Gas Sector 40Petroleum ' 41Natural Gas 42Coal 43Electricity 43Carbon Emissions Information 45

Fossil Fuels 45Non-Fossil Fuels 46Nuclear 46Hydro 46

Non-conventional Renewable 46Oil Demand Shock and World Oil Price Trend 47Demographic Demand and Oil prices 47Impact of Oil Shocks on Demographic Demand 48The Real Impact of Higher Oil Prices on Global Economic Growth 48Global Economy Growth is Vital for Future Oil Production 49Oil Demand is Driven by Higher Prices—Demand Shock 50

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Contents xv

Higher Oil prices Change vs. Future Demand Trends 51Demand Shock can Trigger Price Hike 51Future Perspectives 52India's position in Global Primary Energy Consumption 53Energy Distribution between Developed and Developing Countries 53Indian Energy Scenario 53Energy Supply Scenario 54

Coal Supply 54Natural Gas Supply 55Electrical Energy Supply 56Nuclear Power Supply 56Hydro-Power Supply 56

Projected Demand of Final Energy Consumption 56Energy Needs of Growing Indian Economy 56Plan-wise Outlay 57Future Supply vs. Demand of Conventional Oil 57Tapping Non-conventional Oil Resources 58Competitive Market Position 58Fear of Shortage 59Uncertainty and Price v 60Capacity Issues 60Short-Term Oil Market 61Geo-Politics and Oil 62Long-term Outlook 62Oil Supply Security 63Global scenario in Natural Gas 63Availability and Utilization of Natural Gas in India 63Utilization of Natural Gas 64Natural Gas Allocation and Supply Scenario 64Import of Natural Gas through Transnational Pipelines 65

(a) Iran-Pakistan-India (IPI) Pipeline Project 65(b) Myanmar-Bangladesh-India Gas Pipeline Project 66(c) Turkmenistan-Afghanistan-Pakistan (TAP) pipeline 67

Liquefied Natural Gas (LNG) 67LNG Imports to India 67Gas Pricing 68Regulatory Framework of Gas Industry 69Hydrocarbon Vision-2025 69Objectives for the Hydrocarbon Sector 69Exploration and Production Sector 70Medium Term Objectives 70

Long-Term 71Natural Gas 71

Medium-Term Objective 71Long-Term Strategy 71Tariff and Pricing 72Medium Term 72

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Restructuring and DivestmentNew Exploration Licensing Policy (NELP): The Backdrop

WhyNELP?Salient Achievement under NELPConclusions

$. Oil and Natural Gas Exploration, Drilling and Production(Upstream Sector)

IntroductionRegulated IndustryExploration and ProductionOff-shore Drilling OperationsDrilling for OilTypes of RigsPreparing to DrillSetting the RigDrilling OperationRecovery ProcessesProduction and SalesFuture OutlookExploration and Development in the Ninth Plan: The Indian SceneIncreasing Role of Technology in finding OilSeismic Exploration

Onshore Seismic ExplorationOffshore Seismic Exploration2-D Seismic InterpretationComputer Assisted Exploration3-D Seismic Imaging

Exploration Techniques for PetroleumSurface GeologyDirect IndicationsSurface DataOil SeepsWell CuttingsCoresElectric LogsDrill Stem TestsGeophysical SurveysGeochemical SurveysMaps and Cross-SectionsContour MapsGeologic MapsCross-Sections

Formation EvaluationEnhanced Oil Recovery (EOR)EOR Production by Country

Thermal Methods

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100100100100101101101102102

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Solvent FloodingChemical Methods

Future of OilHistorical Perspective Oil Industry in Indian ContextCrude Oil ReservesStrategy of 10th Plan (2002-07) for E&P ActivitiesTarget and Strategy for Oil Production during 11th PlanFuture Vision and Strategy

Oil and Gas Demand Supply ScenarioEnhancing Oil and Gas ProductionNew Exploration Licensing Policy (NELP)Improved Oil Recovery/Enhanced Oil Recovery ProjectsOil and Gas from AbroadAlternate Sources of Oil and GasCoal-Bed Methane

4. Management and Evaluation of Upstream AssetsScope of Asset ManagementAsset Management Objectives

(a) What are Asset Management Objectives?(b) Why are they Important?(c) Why must we Balance Internal and External Factors in

Setting Objectives?(d) What are the Consequences of not Setting Asset

Management Objectives?Asset Management ProcessesPreparation of Asset Management PlansFactors Affecting Asset ValueAsset Life-CycleKey DecisionsDecision Check Points and Decision Criteria

(a) Strategic Fit(b) Economic Fit(c) Work Quality(d) Technology(e) Reality Check(f) Financial Considerations(g) Risks

Key Tools used in Asset ManagementQuality AssuranceWork Accomplishment between Major DecisionsDecision-making by the Business UnitQuality Assurance ChecksPerformance MeasurementKey Performance IndicatorsExplore Phase Measures

Key Performance IndicatorsDevelop Phase Measures

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Quality Indicators 131Operating Indicators 131Key Performance Indicators 131Disposal Phase Measures 131

Portfolio Management 132Risk Profile of Portfolio 134Limitations to Portfolio Matrix and Way to Overcome 134Knowledge Management Perspective of Asset Management 135Role of Technology in Asset Management 135Oil and Gas Properties 136Operating Costs 138Discounted Cash-flow Analysis 139

Discount Rate Components 140Master Limited Partnerships 143Pipelines and Natural Gas 146

Rate Determination 147Revenue Requirement 147Cost of Service 148Rate Base 148Deferred Taxes and the Cost of Capital 148Test Year 149Rate Design 149Book Value Multiples 149Cash-Flow Multiples 149

Foreign Operations 150Country Risk Factor 150Valuation of Foreign Oil and Gas Reserves 150Foreign Exchange Laws 151

Optimization of Upstream Technologies for Upgrading andImplementation 151

Continuous Improvement through Post-Audi ting 155Summary 155

5. Mid-Stream Sector: Pipelines 158Pipeline Transportation 158Perspectives in Indian Pipeline Systems Development 159

Cairn India Initiative in Rajasthan-Gujarat Pipeline 159Petronet Initiative 160

Other Issues of Pipeline Transportation 161Pipeline Route Selection 161

Design Optimization 161Clearances Required 162Agencies According Approval 162Governance Issues 162Processing Facilities Required at the Oil Field for Oil 163

A. Well Treatment 163B. Gathering Systems 163

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C. Gas-Plant Processing 163Sulfur Removal 164Pipeline Transportation 164Oil and Gas Pipelines: Comparison 164Pipeline Transportation Operations 165Configuration of Cross-Country Pipeline 165Import Through Pipelines: pros and cons 169The Future Role of Cross-Border Pipelines 169

The Size of Gas Reserves 170The Problems of Negotiating Export Contracts 170Security of Supply . 170The Problems of Long-distance Transportation 171The Problems of Cross-Border Pipelines 172

CASE STUDY 172Crude Oil and Product Pipelines in India 173IOC's Petroleum Pipelines under Operation in the Country 173Pipelines Operations 175Offshore Terminals 176Tank Farms 176Pump Stations 176

Pipeline Maintenance 176Stations Maintenance 176Mainline Maintenance . 176Corrosion Monitoring 176Online Inspection 177Pipeline Repairs and Rehabilitation 177

Pipeline Materials Management 177New Pipeline Project Implementation 177Tank Wagons 178Tank Trucks 178Product Tankers 178

6. Transportation of Oil and Natural Gas 179Introduction 179A. Supply Plan Management in Oil Industry 181

Oil Industry Supply Chain Management 181Supply Plan Management ' 182

B. Transportation of Petroleum Products 183Integrated Transport operation 184Players in Petroleum Transportation 184Transportation in Oil Industry : A Multi-Modal Operation 184Modes of Transportation 185

Transportation by Railways 185Transportation by Roads 186Ocean transportation 186Handling at Ports 187

Crude Oil and Gas Shipping 187

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A. Terminal Management 187B. Shipping 190

Size of Vessels 190Types of Ship 191Dry Trade 191Wet Trade 191Tonnage 191Tanker Chartering - 192

Voyage Charter 192Time Charter 192Bareboat Charter v 192Trip-Time Charter 193Contract of Affreightment (COA) 193

Freight Market 193INCHOE Terms 193Bill of Lading 194World Scale 194Shipping of Liquefied Natural Gas 194Trade in LNG 194Natural Gas Pipelines in India 196Pipeline Transportation 197LPG Transportation by Road and Rail 198Transportation of LPG by Pipeline: Jamnaar-Loni Pipeline 199CNG Marketing 199Sectoral Use of Petroleum Products 199Market Segments and Transportation Legs 199Marketing of Transportation Fuels in India 200Structural Shifts Envisaged in Transportation of Petroleum Products 201Import through Pipelines: pros and cons 201

7. Economics of Crude Oil 203Introduction 203Basic Petroleum Supply Chain Economics 203Crude Oil is a Composite Product 203Crude Oil is Quality-Specific 204How Crude Oil is converted in the Refinery Process? 204Separation: Heavy on the Bottom, Light on the Top 205Conversion: Cracking and Rearranging Molecules to add Value 205

Sources and Availability 206Crude Oil Pricing and Evaluation 208

Pricing 208Physical Market 208Players in the Physical Market 209Paper Market 211Fundaments of Physical Market 211Tradable and non-tradable Crude 212Formula Price 213

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Benchmark Crude 214OSPofNOCs 214Crude Oil Evaluation 215Value of Crude 215Price of Crude 215Price of Products 216Gross Refinery Margin (GRM) 216

Drivers of High Refining Margin 216Evaluation Methodology 216GPW 216Landed Cost of Crude .. 216Pecking Order 217Platts & Argus 217Trade and Transportation 217

Oil Trade—The Balancing Flow 217Tanker—The Most Economic Transport Mode 218Taxation 218OPEC's Role in Price Structuring 219

OPEC vis-a-vis World Oil Market , 219World Oil Production and Exportable Surplus 220

OPEC Reserves 221OPEC's Oil Policy 221OPEC's Production Cut and Compliance 223The Impacts of OPEC Policy 224India's OPEC Policy 225Policy Direction for India 227Areas of Action for Indian Refineries 227Crude Oil of Indian Origin 228Summary 229

8. Refinery Economics 230Introduction 230Historic Backdrop of Refining: Global Scene 232Refining Techniques and Processes 232The Product Lines 233

Crude oil 233Gases . 233

-, Light Gasoline 233Naphtha 233Middle Distillates 234Residual Fuel Oils 234

Changing Patterns of Demand and Consumption 234Refinery Process and Technology 236Primary Separation 236Atmospheric Distillation 237

CDU Process Objective 238Vacuum Distillation 240

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Conversion ProcessConversion for Upgradation of Product QualityCatalytic ReformingFeed Naphtha Quality and Pre-treatment

Chemistry of Naphtha Hydro TreatmentPre-Process Disposition of the Pre-treatment Process

Platforming ProcessReactions In Catalytic Reforming

Types of Process ConfigurationsIsomerizationIsomerization Process Objective

Main ReactionsAdvanced Recycle TechnologiesIpsorbDeisopentanizerHexorb

Reactor-Regenerator SectionFluidic Catalytic Cracking Process (FCC)Reactor-RiserReactorRegenerator

Fractionation SectionHydrocracking

Process PrinciplesProcess ConfigurationsReaction ChemistryCatalystsCatalytic Reforming ProcessLube Oil ManufactureSulphur Recovery UnitReaction ChemistrySour Water StrippingProduct Specifications

Process Control BasicsProcess DefinitionProcess ParametersControl FunctionsProcess Control

Control of ParametersRefining Capacity and Capacity UtilisationExpansion of Existing RefineriesGuidelines for Laying Petroleum Product Pipelines

Auto Fuel PolicySchedule for Introducing Improved Quality Fuels as perAuto Fuel Policy

Refining Capacity Additions during Tenth Plan

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Refining Capacity Addition during the Eleventh/Twelfth Plan 270Market share and Infrastructure 271Liberalization in Indian Oil Industries 272Paradigm Shift in Business Process 274Crude Oil Pipelines in India 275Product Pipelines . 275Refinery Cost Elements 276Elements of Crude Costs 276Crude Cost Elements: 277Operating Cost Elements 278Crude Freight Cost . 278Elements of Refining Cost 281Refinery Profitability/Margins 281Refining Profitability under APM 282Need and Importance of Refining Margin 282Pooling Mechanism 282Special Products . 283Fixation of Retention Price per Ton of Crude Throughput' for

each Refinery 283Refinery Profitability/Margins under Free Market Scenario 283Crude Distilation Unit (CDU) 285Measures for Improving Refinery Profitability 288

(A) Optimising Existing Operations 288(B) Technological Upgradations 290(C) Planning for Economics of Scale 290(D) Optimization of Refinery Configuration 290(E) Backward and Forward Integration 290(F) Human Resource Development 290

Refining Strategy and Operations 292How to Run an Individual Refinery 293

9. Strategy for Petroleum and Natural Gas Trading 296Crude Oil Marketing 296OPEC's Role In International Oil Trading 297Trading Petroleum Products 298Natural Gas Marketing 302LPG Marketing by Public Sector Oil Marketing Companies (OMCs) 303

* Marketing of Mini-LPG Cylinders by OMCs 303Promoting LPG as Auto-Fuel 303Parallel Marketing of LPG 304Marketing of Transportation Fuels 304Refined and Petro-chemical Product Marketing 305Trading of Oil and Natural Gas 305Import and Export of Petroleum 306Supply Strategy 308Demand Profile 309Transportation: Mechanism of Pipeline Nominations 311

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Pipeline Economics 313LNG Transportation Policy of GOI (FOB) 313LNG Transportation Policy 314Rationale for FOB 314LNG Carriage Cost—Indian Flag vs. Foreign Flag 314

TERI Report 315Asian Gas Market Overview 316Importance of Natural Gas in Asia's Energy Supply Chain 316Asia's Natural Gas Supply and Demand 316Global and Regional Lng Supplies Continue to Expand 317Downward Pressure on Lng Prices: A Feature of the Next Decade? 318OTC Energy and Oil Derivative Markets 319The OTC Oil Derivatives Market 320Futures and Options Contracts and Markets 321Commodity Futures and Options 323

Contracts and Markets 323Comparison of Forward and Futures Contracts 325

Commodity Futures Exchanges 325Electronic Trading 327Regulations 327

Foreign Direct Investment 328Policies and Procedures 329Natural Gas Futures Market: A Case Study

"The SMC Report—Natural Gas Futures Advisory Report" 329SMC Reports: Natural Gas Price Forecasting and Advisory Services 330Navigating the Natural Gas Futures Market 330

10. Petro-Retailing 331Understanding Petroleum Retail Business 331Retailing Concept 332Strength of Retailing 332Retailing is Selling 333Retail Function Involves 333The Effect of Retailing 333Social Consequences 333Economic Consequences 333Establishing a New Retail Outlet 334Site Selection Criteria 334Market Intelligence (MI) 335Franchising Models in the Petroleum Industry 335The Wheel of Retailing 338Commodity vs. Brand Retailing 338Basic difference between Brand and Product 340Special Nature of Petro-retail , 341A.T. Kearney Report on Petro-retailing 342

Research Findings 342Linked Retailing 343

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Convenience Stores 343Food Services 343Ancillary Services 343

Indian Experience in Petro-Retailing 344• Petro-Retailing: A Chronology of the Evolution of Concept 345

Oil Industrial Structure in India 346A Deregulation Overview of Petro-retail Business 346Strong Brands Drive Revenue Growth 347

Findings of A.T. Kearney Report 347Know your Consumer 347The Petroleum Shopper in India 349

Routine Chore Doer 349Time Poor 349Trust Seeker 349Prestige Seeker 350

Build the Offer 3511. Fuel-based Differentiation 3512̂ Value-added Products and Services-based Differentiation 352

BPCL's Additional Value Propositions 3533. Price-based Differentiation 355

Key Success Factors for Price-based Differentiation Strategies 3554. Consumer Experience-based Differentiation 356

Indian Oil's Initiatives 356Conclusions 357Gas Station Canopy 358Project Overview 359

11. Financial and Accounting Systems for Oil and Natural Gas(Petro-Accounting) 363

Generally Accepted Accounting Principles 363Accounting Concepts: The Basic Elements 364Accrual vs. Cash 365Reserve Recognition Accounting 367Full-Cost and Successful Efforts Accounting 368Successful Efforts Accounting 368Ceiling Test , 369Cost Depletion and Percentage Depletion 372Oil and Natural Gas Accounting: Broad Principles 373

SE vs. FC 374Financial Statements 375Income Statements 375The Historical Development of Accounting Standards on

Deferred Tax 377Methods of Computation 377Bases of Calculation 378

Introduction to Full-cost Accounting 378Drilling Costs 378

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Exploratory Drilling Costs 379Development Drilling Costs 380

Stratigraphic Test Wells' 381Full-Cost Accounting 382Measurement and Sale of Oil and Gas 383Oil Measurement and Sale 383Gas Measurement and Sale 383Recording Oil Revenue 385ISI-Developed Integrated Oil and Gas Accounting Software 385Crude Oil Exchanges 386Crude Oil Pricing 387Pricing of Physical Crude Oil Trades 388Crude Oil as an Input Cost to Refiners 388Oil and Gas Revenue: A Case of ATP Oil and Gas Corporation 388Results of Operations 389

Capital Resources and Liquidity 390Recording Gas Revenue 391Natural Gas Processing 391Timing of Revenue Recognition 392

Revenue from Oil 392Allocation of Oil and Gas 392Gross Refining Margin 393Internal Factors 393External Factors 393

Operating Cost of the Refinery 393Net Margin 394

Components of Gross Refining Margin 394Attachment 1: Gross Margin 395Attachment 2: Sample Working of Netback Calculations 395

Accounting for International Operations 396Petroleum Fiscal Systems 396Contractual Systems 397Government Involvement in Operations 398Production Sharing Contracts 398Signature and Production Bonuses 399Payment of Royalties 399Sliding Scale Royalty . 400Government Participation 400Cost Recovery 400Profit Oil 401Service Contracts 401Joint Operating Agreements 402Recoverable versus Non-recoverable Costs 402Financial Accounting Issues 403

Financial Accounting versus Contract Accounting 403International Accounting Standards 403Comparing Financial Statements 404

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Reserve Ratios 405Reserve Replacement Ratio 405

Reserve Cost Ratios 406Finding Costs Ratios 406

Reserve Value Ratios 407Gas Pipeline Accounting 409General Regulations 409Transportation Services 410Revenue Accounting 411Kelkar Committee on Price Structure and Pricing Policy 411Sankar Committee on Gas Pricing _ 413Domestic Price Structure of Natural Gas 414Producer Price of Gas 414Components of Producer Price 414

Consumer Price 414Gas Purchase from JVCs 414Gas Pool Account 415Price Build-up for Gas Transporter 415Price Build-up for End Consumers 415Consumer Price 415Transmission Charges 416

Panna-Mukta and Tapti 417Price Applicable for Gas Produced under pre-NELPExploratory Fields 417Price Applicable for Gas Produced under NELP Blocks 418Increase in Gas Costs 418LNG Pricing 418Planning and Measuring Financial Performance 420Internal Rate of Return/Return on Investment 420Tracking of Sales 421Gap Analysis 421Sales Maximization vs. Profit Maximization 424Petroleum Accounting Management System (PAMS) 425PAMS Module 425

Financial Modules 425Accounts Payable 426Accounts Receivable 426

12. International Hydrocarbon Economic Environment 430Global Oil Production 430Global Oil Consumption 431The Future of Oil 432

E-Commerce—The Impact on Both Upstream and DownStream Industries 432

The Upstream Industry 433Electronic Trading 435Downstream Industry—Refining and Marketing 435

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Environmental Issues 435Exploring Alternative Fuels 435Domestic Hydrocarbon Economic Environment 436

Structure of Indian Oil and Gas Economy 436Indian Oil Industry in a Growing Economy 437Importance of Oil and Gas for National Economy 438Oil and Gas in Meeting Energy Requirement 438

Global Facet of Indian Oil Industry 438Reforms in Indian Economy 439Oil Securities for India: Issues and Concerns 441Phased Deregulation of India's Hydrocarbon. Sector 441Mergers and Consolidation in Indian Oil and Gas Sector 442Trend and Structure of Oil and Gas Economy 443

Structure of Oil and Gas Economy 443Oil Majors 443Other Integrated Companies 443Independents 443

Emerging Forces for Change during the 1990s 444Structure and Forces Prior to the 1990s 4441. Developing Strategic Assets 4512. Technology Leadership Approach 451S.^eputation and Goodwill 4524. Evolving new Industrial Architecture 452

Trends of Oil and Gas Economy 4521. Globalization 4532. Economic Development 4533. Factors that Shape Decisions of Sellers and Buyers 454

Evolving Phases in Indian Oil Industries 4551. Indian Oil Industries—Its Global Facet 4552. Reform in Oil Industry—A Historical Perspective 4553. Phased Deregulation of India's Hydrocarbon Sector 4564. Self-Reliance 457

Conclusions 458

13. Geo-Politics of Oil Trading: Scanning the Global BusinessScene 459

Global energy in Perspective 459" World Oil Production and Consumption 460

OPECand Non-OPEC Fact Sheet 463Oil dependence and National Security 465Developing Natural Gas Resources 466Peak Oil: An Overview 466Developing World Energy Use 467Geopolitics: The Great Unknown 468The Seven Sisters 469OPEC 469Context 469

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The First Major Oil-Shock 469The Second Oil-Shock 470Oil Counter-Shock 470The Middle-East in the Global Oil Balance 471The Iraq Episode 472Energy Dominates Growth Debate in South Africa 473Geo-Politics of Oil and Natural Gas 473Geopolitics of EU Energy Supply 474The Geopolitics of Oil in Central Asia 475Russia and the Caspian Basin 476Africa 476North America " 477Venezuela 477Saudi Arabia and the Gulf Producers 478Energy Scenario in South Asia 478The World Oil Crisis: Implications for Global Security and the

Middle-East 480China's Middle-East Strategy 481India Joins the Scramble for Oil and Natural Gas 482India's Energy Security Pact with Russia 483Diplomacy over Oil-bids with Iran and Pakistan 483A Hemisphere of Energy Security Environment in NAFTA Region 484Transferring the World's Wealth 484How Oil Shapes Foreign Policy? 485Role of IEA 486Geopolitics of Natural Gas 488Conclusions 489

14. E-Commerce Applications in Oil and Natural Gas Industries(Petro-Informatics) 492

Principles of E-Business 492Emerging Technology Related E-Business 494Model of E-business 499E-Business in Oil and Gas 500

A. Upstream Sector Impact and E-business Opportunity 500B. Downstream Sector Impact and E-business Opportunities 502

E-Markets 504^E-Markets in Oil and Gas 505E-Market Outlook 506

Winners are VAC's 506Losers are VAC's 506

Trade/Exchange 506E-Trading in Oil and Gas 507

External trends that push E-Trading 507Internal trends that push E-Trading: . 507

Trading Outlook 509Market Trends 509

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Sun and Cyberonix eGasStation Architecture 509The e-GasStation Architecture 510Sun's Role in e-GasStation Implementations 511Business Models/Benefits 511Unique Features of the e-GasStation Architecture 512Next-Generation Services 512E-Business Applications used by Oil Giants 513BP Amoco Experience in E-Business in Oil Trading 517ERP and E-Business 519E-Business by a Lead Oil Company 519Future Trends 520Conclusions 521

Index 525