Project Report On Petroleum Industry Commerce Essay

Project Report On petroleum colour attention Commerce EssayThe MBA programmed provides student with a thorough loss knowledge of air and organizational functions and activities as intumesce as an picture show to st vagabondgic thinking of man timement. As a infract of the curriculum we tackle away prepargond a comprehensive project report on vegetable gross exertion.The theoretical knowledge is utilize only when argon apply in our practical study. This report contains a t be bonkcated about the anele colour attention playing a vital role in the crop of Indian prudence. The only project was accomplished in genuinely musical arrangementatic air starting from collection of instruction with with(predicate) visiting various websites, books, magazines etc and than analyses it in a proper and suitable way.This report aims to provide information regarding the rate of flow position of approximative colour effort in India. Its maturation, challenges and issues in spunkyly war-ridden market by adopting liberalization and globularization polices which atomic number 18 affecting the Indian deliverance particularly in crude atomic number 18na.ACKNOWLEDGEMENTWe would standardized to give give thankss all the people who create helped us for making this project possible. first we would like to appreciate the tradition of our institute, J.H.P.C.M.T which encourages such activities. We would also like to thank Dr. M.R.Pargonkh director of J.H.PATEL COLLEGE OF MANAGEMENT AND TECHNOLOGY for providing help whenever need. We grateful acknowledgments the value coun distributeor and useful suggestion draw outed by our faculty guide Miss Jenita Patel. eventually we also thankful all our friends to helped us directly and indirectly in our project. We pay off also devoted with our best possible effort to go off the project.DeclarationWe Thakkar Nikita, Makwana Snehal hereby decl ar that the COMPREHENSIVE PROJECT REPORT empower Petroleum I ndustry in is a result of our own spring and our indebtedness to other work earthations, references, if any, choose been duly acknowledged.Place (Signature) run into (Name of Student)EXECUTIVE SUMMARYThe project titled as Petroleum Industry has been downstairstaken with an objective of analyzing the frugal result in the india market its role for the organic evolution of the country. It represents Indias push button needs and is the most valuable populace as well as private enterprise.As a collective result of private sector and public sector refinery seatments in the recentpast, India impart suit cognise by 2012 as Asias largest refined wargon exporter, surpassing Singapore. India will check mark one of Asias ii largest refined product exporters for the anticipated future.India is suddenly become a planetary rock vegetable fossil oil color producing center because of having change magnitude the depth of product flows and strengthening supply chains especial ly clean hex send aways and for high-end industrial product. It also scram far-reaching implications for regional product markets.The business of Indias large exfoliation export oriented cultivation sector marks the increase of rate of a basic shift in the de grade of orbicular refine in which growing economies increasingly look to drudgery hubs in Asia and the center of attention East to supply incremental refined product imply.Growth and create of Petroleum Industry in IndiaThe rock oil manufacturing is involve the global processes of extraction, exploration, refining, ext cultivation (often by pipelines and rock oil tankers), and selling oil colour products. The largest volume products of the industry atomic number 18 throttleoline (petrol) and open fire oil. Petroleum (oil) is also the raw material for numerous chemic products, including solvents, pharmaceuticals, pesticides, fertilizers, and p wearics.The origin of the Indian oil bumble industry mess be traced back to the late 19th century, when oil was first struck at Digboi in Assam in 1889.In weigh of the signifi faecal matterce of the foul up oil sector for oerall economic growth, the Government of India announced in1954 that oil color would be the core sector industry.1954, oil exploration production activity was controlled by the presidential term-own National fossil oil Companies (NOCs), namely Oil India Private Ltd (OIL) and Oil vivid spatter Corporation (ONGC).Indias refining capa urban center has more(prenominal)(prenominal) than trebled in the last 13 age. Reliance Industry is the first refinery industry in Jamnagar in 1999, India has an installed capacity of around 193.5 one thousand thousand tpa in April, 2011.The growth is likely to come about with refining capacities expected to touch 255 million tpa by 2012-13 and 302 million tpa by 2017-18, with a slew of projects announced by both the private and public sector. Today, private sector beaks for 76.5 million tpa (around 39.5 per cent) and public sector oil companies account for close to 117 million tpa (around 60.5 per cent).There has been a healthy growth in Indias petroleum refining capacity in the last five years, is as described by the given table below-Domestic crude oil production million tpa2005-062006-072007-082008-092009-10(Provisional)Total consumption113.2120.7128.9133.6138.2Products from indigenous crude26.628.428.227.027.2 autochthonal crude processing28.330.230.028.828.9Products from fractionators4.24.04.14.24.4Total indigenous production30.832.432.331.231.6Import habituation (%)72.873.275.076.777.2Self-sufficiency (%)27.227.025.023.322.8The capacity utilization of Indian refiners for the last few years is described in the table. Indian refiners consider also operated at high operating judge or capacity utilization compared to their regional/global peers implying capability in operations.But, entailment of Indias refining industry is growing, as the int erior(prenominal) crude oil production is stable at around 30 million tpa for the last few years.Generally, GDP growth place and petroleum product consumption are linked. But, in our case, factors like availability of break in roads, more fuel efficient vehicles, improvements in mass urban transport modes and increased availability of indispensable plash for industrial sector contri just nowed to more moderate growth in recent sequences. Indian refineries are clock higher Gross Refining Margins compared to regional benchmarks a clear sign for agonisticness in refining operations.If all the planned projects materialize, India will have an exportable surplus petroleum product of around 100 million tpa by 2012 and 140 million.Product profileThis section provides a brief description of the applied science and production process. An deduceing of these issues is critical as it helps understand industry structure.Crude oil is a liquid mixture of hydrocarbons chemical compounds cons isting roughly of six parts of carbon and one of hydrogen, both of which are fuels it generally also carries small quantities of salts sulphur, oxygen, metals and nitrogen.The principal products obtained from the crude oil are-Petrol-Petrol is utilise to fuel internal combustion engines, primarily vehicular. It is early use as a killer of lice and their eggs has completely disappeared.Liquefied petroleum gas (LPG)-LPG is mostly a combination of propane and butane. It is heavier than air, and liquefies under pressure. It is used as a business firmhold cooking fuel, vehicular fuel and refrigerant 4 million vehicles are estimated to be powered by LPG in the world.Kerosene-Kerosene is also known as paraffin, is used as an illuminant and cooking fuel in India and other poor countries, and as a space heating fuel in industrial countries. chiliad fuel-It is used in jet planes, is closely akin to kerosene.Naphtha-Naphtha is used to appoint additives for high-octane petrol, and to make p olymeric plastics and urea, a nitrogenous fertilizer.Lubricating oil-It is consists of greases and viscous oils used to lubricate moving parts in automobiles, industry, railway system engines and carriages and marine engines.Petroleum coke-It is mostly used as fuel, but is also used to make dry cell batteries and electrodes.High-speed diesel motor engine oil-It is used in engines running at 750 revolutions per minute (rpm) or more. It is mostly used in diesel-powered vehicles.Light diesel-It is used in the diesel engines running at lower speed principal(prenominal)ly irrigation pumps and genesis sets.Furnace oil-It is do by diluting residual fuel oil from refining with middle distillates such as diesel oil. It is used in bunkers, boilers, furnaces, heaters, or as fertilizer feed contain.Demand determination of the IndustryPetroleum industry in the country has undergone study transformation in the past some(prenominal) years. The country is now net exporter of petroleum produ cts. Globalization of Indian economy along with high worldwide oil expenditures which are a pass-through in the bulk sector has induced improvement in energy efficiency and shift of take up from liquid to natural gas (LNG).Further, improvement in road infrastructure and better vehicles has had a sobering effect on the hold for road transportation fuels. Low demand in transport fuels like HSD and MS is also repayable to factors like expansion of city gas statistical dispersion interlockings i.e. CNG.Demand determination factors-The Demand determination factors are base on most-valuablely two approaches. Top-down Approach and bottom-up Approach.Top-down Approach Overall energy necessarys with parcel of polar fuels in the primordial commercial energy basket by linking GDP with energy elasticity.Bottom-up Approach End use approach considering the tinct of polar parameters. While assessing the requirements factors like impact of Metro rail, CNG expansion, impact of high oil prices, conservation/efficiency improvement issues, aviation policy of the Government, Railways freight policy, growth of passenger and cargo traffic, fleet expansion plan of airlines, National Highways allowance of India (NHAI) road construction projects, construction of freight corridor, electrification plans of railway tracks vehicle people growth, impact of gas, technological improvements in engine designs, improved fuel efficiency, impact of auto LPG etc. have been measured.The demand of gas is continues to be influenced by the hail economics vis--vis substitute fuels pertaining to each of the end use sectors in India.The power and fertilizer is also the dynamics of these sectors. Currently the consumption of natural gas is shared by the fertilizer and power sector to the occupation of 29% and 40% respectively.The power sector is one of the continuous major consumer of natural gas. There has set target of 70,000 generation s forecasted by he ministry of power for the next 5 year period ending 2012.The industry like Petrochemicals/Refineries and Internal Consumption sectors are estimates that the annual economic growth rate of about 7%.Similarly, the iron/steel sector is also estimates same rate for economic growth.Currently the demand for petroleum product is 131.8 MMT in 2011-12 which will increased by 160.2 in 2016-17.The demand for petroleum product is also look on the availability of the different products like petrol diesel kerosene naphtha etc.Their prices are the main factor of determining demand of these products.The petroleum refineries must considered the price mirror symmetry and export parity which considered the change in price of petroleum products which depend on the past experience.Players in the IndustryThe various competitors are unattached in the petroleum industry which including the government and private sector. most of the petroleum companies are huge operations and with billion dollar balance sheet. The oil and gas pr oduction and distribution is dominated by government owned companies which are heavily regulated excepting for Reliance Industries. After liberalizing the operations of the companies like Indian Oil Corporation Ltd (IOCL), Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) run billions of dollars in losses as they are forced to sell petroleum products at below their cost.The polices of government are mostly informal compensating these companies through currency transfers and bonds. some government companies like OIL India, ONGC and GAIL which operates in the production and have to bear less of the subsidy burden have grown and performed very well. In the private sector companies like Aban Great Offshore, Essar and Reliance have managed to grow apace as well with changeable degrees of success.Here is the advert of the major petroleum Companies in India-Indian Oil Corporation Ltd (IOCL)-The IOCL covers the whole hydrocarbon value chain from, pipeline transpo rtation, marketing of petroleum products to exploration production of crude oil gas, marketing of natural gas, petrochemicals and refining. The sales turn over of Indian oil was Rs 271,074 corer and profits of Rs. 10,221 corer in 2009-10. Indian oils cross-country network of crude oil and product pipelines across 10,899 km and the largest in the country, meets the life-and-death energy needs of the consumers in an economical, environment and efficient manner.GAIL India-GAIL (India) Limited, is Indias infixed Gas company, integrating all aspects of the Natural Gas value chain unspoilt from discovery to marketing. It emphasizes on clean fuel industrialization, creating a square of viridity energy corridors that connect major consumption centers with major gas field in India. GAIL is growing its business to become a player in the International market. The companys revenue earned in 2009-10 was Rs 24,000 corer with net profit of 11%. It is a well managed fast growing company with high competitive barriers in India.RelianceIndustries-It is Indias largest private petroleum company. The company achieving the remarkable growth in the last decade and is diversifying into Retail. In market top more than $30 billion it is Indias most valued company. It is also highly petroleum exporting company of India. The company is one of the largest oil refining and petrochemical complexes in the world at Jamnagar.Bharat Petroleum Corp. Ltd (BPCL)-it is the major distribution of petroleum, cooking gas and diesel in the Indian market. The companys revenue of Rs 36,000 corer and net profit of 0.5%. referable to the government control The company suffer low permissivenesss and terrible stock price performance. Which forces the company to sell the product at below the cost? Even after the liberalization with increased global crude prices increasing the losses very much. The company produces a various range of products, from petrochemicals and solvents to aircraft fuel and specia lty lubricants and markets them to several international and domestic airlines and hundreds of industries.Hindustan Petroleum Corp. Ltd (HPCL)-The company operates the largest refinery in the country producing Oils of international standards. This Refinery accounts for 40% of the Indias total Oil production. The company has two major refineries producing a large variety of petroleum fuels specialties. one in Mumbai and the other in Vishakhapatnam. Its huge marketing network consists of its zonal regional offices facilitated by a supply distribution infrastructure comprising terminals, aviation process put ups, sell outlets, pipeline networks and LPG distributorships. The companys market share accounts for about 20% and 10% of the nations refining capacity. The company revenue earned was Rs 34,000 corer and net profit margin of 0.65% in 2010.ONGC Corporation-The company ranks 3rd in petroleum exploration Production industry. It produces 803 Million Metric Tones of crude and 48 5 Billion Cubic Meters of Natural Gas from 111 fields. It is the biggest multinational company with 40 oil and gas projects in 15 countries. The company earned Rs. 20,000 corer with net profit margin of 34% in 2010. NGC holds the largest share of hydrocarbon in India contributes over 79% of Indians oil and gas production.Distribution transmission channel of the industryThe petroleum distribution segment is rapidly adopting different kinds of supply chain solution. From crude oil selection to petroleum product distribution at the retail outlet it is chain with galore(postnominal) links. The refining margins, the lead time associated with fundamental functions like product employment and crude buying unpredictability in oil prices make the correct process challenging. Implementation of these solution on a wide permeateing installations, however, is what the world is watching, as vast petroleum companies fight to chain the business. The petroleum industry has a vital need for bo th integration and carrying into action skills for taking the best value out of the differ distribution channel available.Underground, the gas station is quite modern. The tanks for super unleaded and for regular (the midgrade fuel) are larger than the normal tanks. Each tank is equipped with an electronic take check that conveys real time information about its status through a cable to the stations management system and then to the main inventory management system for the oil company whose products the gas station markets.The travels from the distribution channel push to demand pull is taking ordinate in the section, where once the challenge was in getting the best deals on buying crude, the counselling is shifting to give customer what he wants.The petroleum business is separated into refining and distribution segments. The focuses more on the distribution segment.There is a specific change to focus in the industry toward the distribution segment. The big oil companies have st arted monitoring the inventories of crude oil or any other petroleum products. The issues at the refining aim are which products to make in what quantity? Which crude to use? Which units to run? While the issues at the customer facing end or at the gas station are basic, namely run outs refines.The important functions at heart the distribution channel are optimization across alternative essence of transportation, demand forecasting, replenishment method to avoid retains/run outs finally scheduling, which sequences the dispatch.merchandising and Distribution of Petroleum Products in India-The public sector oil marketing companies (OMCs) which include Hindustan Petroleum Corporation Ltd. (HPCL), Indian Oil Corporation Ltd. (IOCL) and Bharat Petroleum Corporation Ltd. (BPCL) are primarily responsible for the marketing and distribution of petroleum products in India.With the opening of retail sector for the private players, Shell, Essar and Reliance Industries Ltd. (RIL) have also entered the retail marketing related to petroleum products.The marketing and distribution infrastructure in the petroleum sector include liquefied petroleum gas (LPG) distributorships, petrol/diesel stations, lubricants and greases outletsIOCL is the market leader in call of marketing and distribution of petroleum products.Retail outlets in India-The number of retail outlets (ROs) in India has increased from 31,650 in April 2006 to 40,819 in January 2011.IOCL has the widest network of ROs across India with 19,057 ROs as in January 2011.The number of LPG distributors in India has increased to 9,686 as in 2010 from 6,477 in 20011.Indias Navratna oil marketing companies Indian Oil, BPCL and HPCL- are set to report other quarter of heavy losses as they have failed to get recompense from the government for selling fuels below cost.The three oil marketing companies (OMCs) sell diesel, LPG for domestic use and kerosene through public distribution system at prices that are substantially below their cost, in accordance with the authority of their majority shareholder.In return, a small part of their losses is made good by discounts from upstream like ONGC and Oil India. The larger share of losses is made good by the government. During the June 12 quarter, the three oil marketers together had posted an unique net loss of .Rs40,536 corer as the dues from government did not arrive.The company is expecting most of the demand for Piped natural gas to come from domestic and commercial consumer sector. Limitation on subsidized LPG cylinders is expected to be a boon for its Piped natural gas business.Consumers might come in come about to get a Piped natural gas connection as its rates would be economical compared to LPG cylinders. The running cost of Piped natural gas would be about 10 percent less than the cost of LPG. Piped natural gas is safer and more eco-friendly fuel for the user.As oil marketing companies move relegate forcefully to decrease their distribution c hannels for LPG cylinders, the next few months will certainly prove trying for consumers.Currently, oil companies in India are going through a tough task of maintaining positive margins in a very unstable market of crude prices and increasing distribution cost. Oil companies also need to be prepared for active pricing scenarios for the overture future.Hence, the immediate need is to have a complete real time visibility of sales and inventory for perfect demand forecasts. Integration of different systems and different data to provide single consistent view and information to the oil company management thus forming a strong base for effective decision making.Key issues and current trendsIssues in petroleum industries-The global economy is a dynamic and ever-growing one in spite of the high cost of energy. This in turn is forging the demand for petrochemicals. The strong growth in demand is not backed by a enough supply so the cost is still to come down. Operating rates of major pet rochemical product segments are very high presently.Problems faced by the India petrochemical industry-The manufacturing units mostly use outdated format of technology and are not able to produce optimallyThere is a requirement for the modernization of equipmentsExcise duty on synthetic fiber should be rationalizedAnticipation of reservation on Small Scale UnitsPlastic mishandle to be recycled and the littering habits to be discouragedIndia requires advantage on feedstock, so the import cost has to be brought downThe industry should have access to the primary amenities of infrastructureOne of the big issues is the difficulty in predicting the advance price, which will succeed in the market in the future months. almost indications are of course available with the futures prices prevailing in the exchanges. Some companies hedge their margins or crude prices by doing paper trading. The forward price is a vital input in the optimization process and can in reality make the model for a particular product maximization based on its price.Current trends in petroleum industryPetroleum has prove to be the most flexible fuel source ever discovered, dictated at the core of the modern industrial economy. While the industry is strong, it is bailiwick to some very portentous stresses- Industry consolidation (24 mergers and acquisitions since 1997) Global industrial expansion resulting in increased petroleum demand Tight supplies of economically extractable oil semipolitical instability and terrorism High per-barrel price that accelerates development of alternative energies Safety and the need to protect workers in contradictory environments Speed required to establish a presence in unseasoned markets Need to spread infrastructure risk among competitorsThese stressors are causing oil companies to change the way they do business. From their cooperation with competitors to their massive chargements in technology, from a regenerate focus on safety and the environment to serious investigation of alternative fuels, these firms are reshaping the industry. How they manage these changes also influences how they view their real estate holdings and how they house the scientists and engineers who play a vital role in this transformation.The challenges oil and gas companies face are having a significant impact on how they view their real estate holdings and what kind of workplaces they provide their employees. These are important issues since many another(prenominal) companies in this sector have vast real estate holdings. more and more these companies are managing these holdings from an enterprise-wide perspective, running their facilities like any other part of the business. They are realizing that facilities and furnishings can be a strategic tool for achieving the organizations business goals. That focus has several implications for the workplace.Petroleum includes all petroleum-based products, such as gasoline, oil, diesel fuel, kerosene, refined cleaners, and solvents. Organizations involved in upstream (exploring and extracting) and downstream activities (refining and marketing) for these petroleum products are among some of the most profitable companies in the world.Whether they are involved in upstream or downstream activities, whether they are public corporations or state-owned companies, players in the oil industry must operate within the context of significant issues and major trends that are shaping the long-term outlook for oil.Oil companies public corporations and state and non-state-owned enterprises are faced with increasing demand for petroleum products due to global industrial expansion.On the one hand, labors to get the conservative oil (produced from underground hydrocarbon reservoirs by means of production wells) have prompted oil companies to invest ever more heavily in technology and equipment. On the other, these firms have increased investments in producing unusual oil, including oil sands, shale oil, an d extra heavy crude oil, some of which require additional processing to produce artificial crude.To spread the risk of investing in costly technology, equipment, and processes firms are entering into joint-venture relationships knowing to spread infrastructure risk among competitors in order for the entire industry to remain healthy. In some cases, firms have required mergers or acquisitions in order to expand resources for highly technical exploration and advanced production..former(a) changes on the energy scene, particularly increasing prices for both oil and gas, are prompting several companies to take a broader view of their business. They are transforming themselves through investments in alternative energy sources, including solar, wind, biomass, geothermal energy, and fuel cell technology.The credit that alternative fuels and renewable energy technologies will play an increasingly important role as a bridge between the current focus on hydrocarbons and the clean, cheap pro mise of hydrogen has prompted many oil companies to invest heavily in these areas.Using technology to boost productivityThe technology that oil companies provide their employees is principal perimeter, especially where operational efficiencies can be obtained. Management requires solid standard metrics in order to confirm investing in technology.India has steadily established itself in the core of the international production of petrochemical and petrochemical related products in the present state of affairs. With the economic growth cycle slowing down in the United States, the Asian developing nations, especially India, would preferably stand in the global petrochemical market as a producer of these products. This is one of the major challenges facing India petrochemical industry.PESTEL psycho digestPESTEL analysis stands for Political, economic, amicable, Technological, Environmental and well-grounded analysis and describes a framework of macro-environmental factors used in the environmental component ofstrategic management. It is a part of the external analysis when conducting strategic analysis and gives an overview of the different macro environmental factors that the company has to take into consideration.Political-Political factors are degree to government intervenes in the economy. Specifically, political factors include areas such as tax policy, labor law, law, trade, tariffs, and political stability. Political factors may also consist of goods and services which the government wants to provide or be provided and those that the government does not want to be provided. Besides, governments have long authority on the health education, and infrastructure of a nation.Economical-Economic factors include growth, interest, exchangeand the inflation. These factors have major impacts on how businesses run and make decisions. For example, interest rates affect a firmscost ofcapital and thusly to what degree a business grows and expands. Exchange rates af fect the costs of exporting goods and the supply and price of imported goods in an economy.Social-Social factors include the cultural aspects and include health consciousness,population growth rate, age distribution, career attitudes and emphasis on safety. Trends in amicable factors affect the demand for a companys products and how that company operates. For example, an old population may imply a smaller and less willing workforce (thus increasing the cost of labor). only companies may change a variety of management strategies to adapt to these social trends (such as recruiting older workers).Technological-Technological factors include ecological and environmental aspects, such as RD activity, automation, technology incentives and the rate oftechnological change. They can husking outbarriers to entry, minimum efficient production level and influence outsourcing decisions. In addition, technological shifts can affect costs, quality, and lead to innovation.Environmental-Environmen tal factors include weather, climate. Additionally, increasing awareness to climate change is affecting how companies operate and the products they offer it is both creating new markets and diminishing or destroying existing ones.Legal-Legal factors include discrimination, consumer, antitrust, employment law, and health. These factors can affect how a company operates, its costs, and the demand for its products.ConclusionCrude oil is one of the most necessitated worldwide required commodities. Any smallest amount fluctuation in crude oil prices can have both direct and indirect pressure on the economy of the countries. The instability of crude oil prices group many companies away. Therefore, prices have been regularly and closely monito