analysis oil and gas sector

7/29/2019 analysis oil and gas sector

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OIL & NATURALGAS SECTOR

Presented by :- Abhishek Jain (75102)Kritika Taneja(75127)Lakshay Kalra(75128)

Class : BFIA 2A


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ACKNOWLEDGEMENT

Our deep sense of gratitude to Dr Kumar Bijoy

the Guide of the project for supporting,mentoring and helping us in the various stagesof project .


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CONTENTS

INTRODUCTIONSECTOR OVERVIEW

SWOT ANALYSISBCG MATRIXMICHAEL PORTER 5 FORCES MODEL

RATIOSBIBLIOGRAPHY


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INTRODUCTION

The petroleum industy includes the globalprocess of exploration, extraction, refining,transporting (often by oil tankers and pipelines)and marketing petroleum products.

After the Indian Independence, the Oil Industryin India was a very small one in size and Oil wasproduced mainly from Assam and the totalamount of Oil production was not more than250,000 tonnes per year.


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HISTORY

The Oil Industry started off more than fivethousand years back. Oil sipping up from theground were used to make the boats waterproof in the Middle East and also used as medicating

as well as for painting different things.The demand for Oil was much higher than whatit actually produced and this brought forward the

concept of making oil production companieswhich is collectively known as the Oil Industry.


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ORIGIN IN INDIA

The origin of oil & gas industry in India can be traced back to1867 when oil was struck at Makum near Margherita in Assam.

At the time of Independence in 1947, the Oil & Gas industrywas controlled by international companies. India's domestic oilproduction was just 250,000 tonnes per annum and the entireproduction was from one state - Assam.

The foundation of the Oil & Gas Industry in India was laidby the Industrial Policy Resolution, 1954, when thegovernment announced that petroleum would be the coresector industry. In pursuance of the Industrial PolicyResolution, 1954, Government-owned National OilCompanies ONGC (Oil & Natural Gas Commission), IOC(Indian Oil Corporation), and OIL (Oil India Ltd.) wereformed.


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Petroleum is vital to many industries, and is of importance to the maintenance of industrialcivilization itself, and thus is a critical concern for many nations. Oil accounts for a large percentageof the worlds energy consumption, ranging from aslow of 32% for Europe and Asia, up to a high of 53% for the Middle East.

Government of India declared the Oil industry inIndia as the core sector industry under theIndustrial Policy Resolution bill in the year 1954,which helped the Oil Industry in India vastly.

Why we have chosen Oil & Gas

sector?


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COMPANIES ANALYSED


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SWOT ANALYSIS


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INDIAN OIL CORPORATIONSTRENGTHS

1.India's largest commercial enrise with a strongbrand name2.Has around 50% petroleum products3.Operates 10 refineries in India4.Huge distribution network through retailing

5.Accounts for a 47% share in the petroleumproducts market, 34.8% share in refining capacityand 67% downstream sector pipelines capacity inIndia6.Has over 35,000 employees7. Loyalty programs like XTRAPOWER Fleet CardProgram is aimed at Large Fleet Operators

WEAKNESSES

1.Legal issues2.Employee management3.Bureaucracy4.Volatility in the crude market & subsidy burden

OPPORTUNITIES

1.Increasing fuel/oil prices2.Increasing natural gas market3.More oil well discoveries4.Expand export market

THREATS

1.Government regulations2.High Competition

Competition :1. Bharat Petroleum

2. Hindustan Petroleum3. Reliance Industries
http://www.mbaskool.com/brandguide/energy/351-bharat-petroleum.htmlhttp://www.mbaskool.com/brandguide/energy/349-hindustan-petroleum.htmlhttp://www.mbaskool.com/brandguide/energy/407-reliance-industries-limited.htmlhttp://www.mbaskool.com/brandguide/energy/348-ongc.htmlhttp://www.mbaskool.com/brandguide/energy/407-reliance-industries-limited.htmlhttp://www.mbaskool.com/brandguide/energy/407-reliance-industries-limited.htmlhttp://www.mbaskool.com/brandguide/energy/349-hindustan-petroleum.htmlhttp://www.mbaskool.com/brandguide/energy/349-hindustan-petroleum.htmlhttp://www.mbaskool.com/brandguide/energy/351-bharat-petroleum.htmlhttp://www.mbaskool.com/brandguide/energy/351-bharat-petroleum.html


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RELIANCE INDIA LIMITEDSTRENGTHS

1.India's one of the biggest players2.Strong brand name3.Excellent financial position4.One of the few Indian companies to befeatured in Forbes5.Employs over 25,000 people

WEAKNESSES

1.Long term debt2.Legal issues3.KG D6 gas controversy4.Accusations of being favored by thegovernment

OPPORTUNITIES

1.Growing demand for petroleum products2.Buyout of competition

THREATS

1.Government regulations2.High Competition3.Environmental laws4.Economic instability


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ONGC

STRENGTHS

1.Indias largest crude oil and natural gasproducer 2.Strong brand name3.High profit making4.Has over 40,000 employees5.It produces about 30% of India's crude oilrequirement6.Contributes 77% of India's crude oilproduction and 81% of India's natural gas

production7.Commemorative Coin set was released tomark 50 Years of ONGC

WEAKNESSES

1.Legal issues2.Employee management3.Bureaucracy

4.Human rights and rehabilitation issues

OPPORTUNITIES

1.Increasing fuel/oil prices

2.Increasing natural gas market3.More oil well discoveries

THREATS

1.Government regulations

2.HighCompetition3.Alternative Energy Sources


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HPCL

STRENGTHS

1.India's major oil and gas company2.Operates largest Lube refiniery in India3.Large product portfolio4.Owns and operates the largest LubeRefinery in India producing Lube Base Oils of international standards5.Produces over 300+ grades of Lubes,Specialities and Greases

WEAKNESSES

1.Legalissues2.Employeemanagement3.Human right issues, rehabilitation issues4.Environmental hazards from wastes

OPPORTUNITIES

1.Increasing fuel/oil prices2.Increasing natural gas market3.More oil well discoveries

4.Expand export market

THREATS

1.Governmentregulations2.High Competition from other players


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BPCL

STRENGTHS

1.One of India's largest state owned oiland gas company2.Has brand presence

3.Refining and retailing of petroleum

WEAKNESSES

1.Legalissues2.Employee management

OPPORTUNITIES

1.Increasing fuel/oil prices2.Increasing natural gas market3.More oil well discoveries4.Expand export market

THREATS

1.Governmentregulations2.High Competition


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EXXONSTRENGTHS

1.One of the strongest brands , in operationsfor over 100 years .2.R&D and diverse operations3.Growing financial performance

4.Has over 83,000 employees5.37 oil refineries in 21 countries6.Better Cash flows in terms of Revenue andprofit.

WEAKNESSES

1.Employee management across the world2.Negative Publicity from Exxon Valdes Spill3.Environmental hazards and oil spills4.Involved in illegal Trade with few countries.

OPPORTUNITIES

1.Increasing demand for LPG and CNG2.High investments3.Increasing prices of fuels across the world4. Market Development in oil demandingmarkets like Indonesia , korea .

THREATS

1.Government regulations and policies.2.High Competition3. Slowdown in economy due to recession.4.Alternative energy sources5. Increasing resistance from environment and

social groups.


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BCG MATRIX


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IOC

ONGC BPCL EXXON

HPCL

STAR ?

DOGCASHCOW


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MICHAEL PORTER 5 FORCES MODELTHREAT OF NEW ENTRANTS

LOWRequires high capital investment Economies of scale is vital Access to distribution channelcritical

THREAT OF SUBSTITUTES MEDIUM

Threat of substitutes is very smallfor now Renewable energy may pose athreat over the years

COMPETITIVE RIVALRY MEDIUM

Limited number of companiesowing to the nature of theindustry Foreign and private playersbeginning to enter the scene

BARGAINING POWER OFSUPPLIERS LOW

Oil industry has small sub-suppliers from various industries,so the bargaining power of suppliers is low

BARGAINING POWER OFCUSTOMERS LOW

Traded at global prices, socustomers have no bargainingpowers.


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RATIOSDebt-equity ratioTotal asset to debt ratio

Current RatioQuick RatioInterest coverage ratio


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DEBT EQUITY RATIO

A measure of a company's financial leveragecalculated by dividing its total liabilities bystockholders' equity. It indicates whatproportion of equity and debt the company isusing to finance its assets.

Debt Equity Ratio =Debt

Equity


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DEBT EQUITY RATIO

Source:ca italine

0

0.5

1

1.5

2

2.5

2012201120102009200820072006200520042003

BPCL

HPCL

IOC

EXXON

ONGC

RIL


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TOTAL ASSET TO DEBT RATIO

A metric used to measure a company'sfinancial risk by determining how much of thecompany's assets have been financed bydebt

=


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Total Asset To Debt Ratio

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2012201120102009200820072006200520042003

BPCL

HPCL

IOC

RIL


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0

5

10

15

20

25

30

35

40

45

2012201120102009200820072006200520042003

EXXON

EXXON


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0

5

10

15

20

25

30

35

40

2012201120102009200820072006200520042003

ONGC

ONGC


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INTEREST COVERAGE RATIO

A ratio used to determine how easily acompany can pay interest on outstanding debt.The interest coverage ratio is calculated bydividing a company's earnings before interestand taxes (EBIT) of one period by thecompany's interest expenses of the same

period.Interest Coverage

Ratio =EBIT

InterestExpense


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INTEREST COVERAGERATIO

0

5

10

15

20

25

30

2012201120102009200820072006200520042003

BPCL

HPCL

IOC

RIL


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0

50

100

150

200

250

2012201120102009200820072006200520042003

EXXON

EXXON


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0

50

100

150

200

250

300

2012201120102009200820072006200520042003

ONGC

ONGC


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CURRENT RATIO

The current ratio is a financial ratio thatmeasures whether or not a firm has enoughresources to pay its debts over the next 12months. It compares a firm's currentassets to its current liabilities. It isexpressed as follows:


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Source:www.capitaline.co

0

0.5

1

1.5

2

2.5

2012201120102009200820072006200520042003

BPCL

HPCL

IOC

EXXON

ONGC

RIL


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QUICK RATIO

The Acid-test or quick ratio or liquidratio measures the ability of a company touse its n e ar c as h or quick assets to

extinguish or retire its current liabilitiesimmediately. Quick assets includethose current assets that presumably canbe quickly converted to cash at close totheir book values. A company with a QuickRatio of less than 1 cannot currently payback its current liabilities.


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0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2012201120102009200820072006200520042003

BPCL

HPCL

IOC

EXXON

ONGC

RIL


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BIBLIOGRAPHY

CapitalineInvestopediaWikipediaYahoo Finance

Money controlProfessor Google


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Documents

analysis oil and gas sector