Oil And Gas The engine of world economy

India is the fourth largest consumer of energy, oil and

petroleum products.
India is the sixth largest LNG Importer.
Indias energy demand is expected to double by 2035.
100% FDI is available in upstream and private projects.
India imports 80% of the total oil demand.
Government has enacted various policies to encourage
investments across the industry.
In India oil and gas is dominated by state owned entities.
Indias exports have not seen a significant rise in the oil
sector.
Demand and supply of Oil &
Gas -

The Indian oil and gas sector is one of the six core
industries in India.
The Indian oil and gas sector is of strategic
importance and plays a predominantly pivotal role in
influencing decisions in all other spheres of the
economy.
Spread
of Natural
Resources
Sedimentary
Area-3.14
Million -Sq. Km (four per
cent of the
worlds sedimentary area)
Sedimentary Basins - 26 ( Exploration initiated
in 15 )
Prognosticated Resources 205 Billion Barrels
(For 15 Basins only; needs up-gradation)
Established reserves- 65 Billion Barrels (as of
Consumption
April 1,2008)
and
production
over 30 years
-

1. Oil and Natural Gas Corporation (ONGC)

First on this list is Oil and Natural Gas Corporation
(ONGC) Limited, a leading oil and gas company
founded in the year 1956 and accounts for the major
share of oil and gas production in India. ONGC Limited
is a premier Public Sector Undertaking (PSU)
Enterprise, which since its inception has transformed
this sector by continuously increasing production of oil
and gas.
2. Indian Oil Corporation Limited (IOCL)
Incorporated in the year 1964, IOCL presently
stands among the largest enterprises in the
country and its product line consist of Petrol,
Diesel, Natural Gas, Petrochemicals, etc.
Another Fortune 500 Company in the list, IOCL
operates 10 Oil Refineries in the country and has
a workforce of more than 30,000 employees.
Some of the services offered by the company are
Refining, Technology Licensing and Marketing.

3. Bharat Petroleum Corporation Limited

(BPCL)
Bharat Petroleum Corporation Limited (BPCL) is
next on this list, which is a leading oil and gas
company in India and a Fortune 500 Company.
BPCL product line includes Petrol, Diesel,
Kerosene, LPG, lubricants, etc.

5. GAIL (India) Limited

Incorporated in the year 1984, GAIL
(India) Limited is engaged in the
production and transmission of
Natural Gas, LPG, Petrochemicals and
Liquid Hydrocarbons.

HHI Index
The HerfindahlHirschman Index
is a measure of the size of firms in
relation to the industry and an
indicator of the amount of
competition among them.

Year 2011-12
Firm

Market Share

ONGC

7%

BPCL

22%

IOC

41%

GAIL

5%

HII INDEX - 2239

Year 2012-13
Firm

Market Share

IOCL

41%

BPCL

23%

HPCL

19%

ONGC

8%

HHI INDEX - 2290

Year 2013-14
Firm

Market Share

ONGC

7%

BPCL

21%

IOC

45%

GAIL

4%

HHI INDEX - 2531

4-Firm Concentration
Year 2011-12

77

Year 2012-13

4-Firm
Concentratio
n
Others

76

Year 2013-14

75

4-Firm
Concentratio
n
Others

4-Firm
Concentratio
n
Others

The Market Structure is Oligopoly

The HII Indexes determine the nature of market.
There are few sellers in the market.
Though the 4-firm play a major role contributing 77,76,75
percentages, there are other firms which are contributing.
Barriers to entry High technology, Government Licensing, High
investment etc.
Long term profits.
Product differentiation is one of the reason for difference in sales.
Interdependence- where ones final or by-product is others raw
material.
Non Price Competition - Dependence on advertisement, product
differentiation , etc.
- Level of competition generally refers to the life cycle of the Indian
Petroleum and Gas Industry.
- Out of four stages, namely initiation, growth, maturity and stagnation,
Indian Oil and natural Gas Industry is in its growing phase.
Growth Drivers for Oil and Natural Gas in India Growing Demand,
Rise in population, Supportive FDI policies, Huge Investments, Robust
Domestic Market, abundant raw materials, give us the idea about the
scope of improvement in the Sector.

Five forces of Oil & Natural Gas

Industry relating to SCP

Entr
y

Input
Supplie
rs
Growth
&
Profits
Industr
y&
Rivalry

Substitut
es

Powe
r of
Buyer
s

Y-Values
4
3
Y-Values

2
1
0
0.5

1.5

2.5