23-06-2012, 01:07 PM
COST STRUCTURE ANALYSIS, ALLOCATION OF COST AND PRICE MECHANISM OF CRUDE OIL AND NATURAL GAS
COST STRUCTURE ANALYSIS, ALLOCATION.pdf (Size: 1.2 MB / Downloads: 126)
INRODUCTION TO OIL INDUSTRY
At Independence, India's domestic oil production was just 250,000 tones per annum. The entire
production was from one state-Assam. Most foreign experts had written off India as far as
discovery of new petroleum reserves was concerned. The Government announced, under
Industrial Policy Resolution, 1954, that petroleum would be the core sector industry.
Indian E&P Companies
Most of the Indian companies barring HOEC have been riding piggyback on the foreign
companies for exploration and development ventures in India. In this regard, Reliance Petroleum
Ltd. has taken the first step by joining up with ONGC in bidding for exploration as well as
development ventures in India and abroad. Some of the downstream companies like IOC, GAIL
has entered also upstream in consort with ONGC and OIL.
Economical Environment
India is one of the largest and fastest growing countries in the world right now. India’s
population has already reached over one billion people and continues to grow rapidly. India is a
part of the B.R.I.C., which stands for Brazil, Russia, India and China, which are four of the
fastest emerging and rapidly growing countries. With all these economic developments have also
brought about a huge demand for energy, in which ONGC is the main player in India. This gives
them a great advantage because there is a huge economic demand for oil and gas.
Sociological Environment
Sociologically the environment in India is one of growth and advancing intellectually. As
mentioned before, the country has over one billion people and continues to grow. This creates a
huge pool to pull from. India has been a major country for companies in other countries to
outsource to. This is not only due to cost advantage, but also to an education advantage. The
Indian people are emerging as a learning people and the potential for success in this kind of
environment creates a strong foothold for any company. It’s interesting to note that ONGC
employs approximately 40,000 workers in India. Compared to the amount of people that India
has this number is not staggering. But this is still a large workforce under one company and
could be used for leverage when making decisions with the government.