AGLOBAL / COUNTRY STUDY AND REPORT

ONOIL AND GAS INDUSTRY OF QATAR

Submitted ToN. R. Institute Of Business Management

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATIONIn

Gujarat Technological UniversityUNDER THE GUIDANCE OF FACULTY GUIDES

Prof. Amish SoniProf. Deepa VyasProf. Komal Sidhnani

SUBMITTED BYAmit Patel (137350592010)Naineel Desai (137350592091)Chintan Patel (137350592034)Aadil Rushnaiwala (137350592001)Musab Pehlari (137350592090)Sailesh Bhavnani (137350592021)

[Batch: 2013-15]MBA SEMESTER- IV

N.R.INSTITUTE OF BUSINESS MANAGEMENTMBA PROGRAMME Affiliated to Gujarat Technological University Ahmadabad

Students Declaration

We, following student hereby declare that the report for Global/ Country Study Reportentitledtitled "Oil and Gas Industry of Qatar" is a result of our own work and ourindebtedness to other work publications, references, if any, have been duly acknowledged.

Enrollment no. Name Signature137350592010 Amit Patel137350592091 Naineel Desai137350592034 Chintan Patel137350592001 Aadil Rushnaiwala137350592090 Musab Pehlari137350592021 Sailesh Bhavnani

Place: ____________Date: _____________

INSTITUTES CERTIFICATE

Certified that this Global /Country Study and Report Titled Oil and Gas Industry of Qatarand India is the bonafide work of attachment of Mr. Amit Patel (137350592010), Mr.Naineel Desai (137350592091), Mr. Chintan Patel (137350592034), Mr. AadilRushnaiwala (137350592001) Mr. Musab Pehlari (137350592090), and Mr. SaileshBhavnani (137350592021) who carried out the research under our supervision. We alsocertify further, that to the best of our knowledge the work reported here in does not form partof any other project report or dissertation on the basis of which a degree or award wasconferred on an earlier occasion on this or any other candidate.

_______________________________ Prof. Amish SoniDr. Hitesh Ruparel (Project Guide)(Director)

_________________Prof. Komal Sidhnani

(Project Guide)

________________Prof. Deepa Vyas

(Project Guide)

Plagiarism Report

Company Certificate

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PREFACE

Knowledge and human power are synonyms, once said the great philosopher Francis Bacon.However based on the experience within todays global markets, he would probably say, Theability to capture, communicate & leverage knowledge to solve problems is human power.This raises the question how exactly one can best capture, communicate & leverageknowledge, especially within world of system engineering.

The answer probably lies in statement itself by communicating your ideas and devising waysand means to give shape to your plans in to reality, which requires a long-term planning,investment and shrewd thinking.

The trust for knowledge and power led us to two years M.B.A. degree course as part of thislong-term investment. This course not only enabled me to focus firmly on the current trendbut also helped to focus on future changes.

As a part of this M.B.A. degree, students have to undergo a project, which is designed keepingthe prerogative and preferences of industry in mind. This particular project allows a studentto implement what he/she has learned within the four walls of classroom. It is here that thecalibre of student is tested to find his/her flexibility for rigorous tasks assigned to his/her infuture.

The country under our purview is Qatar. This project report has studied the market andbusiness opportunities for Indian companies as well as Qatar companies. And prepareBusiness model for Qatar and Indian oil and gas companies.

Finally the report attempts to be helpful to all the readers as well.

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ACKNOWLEDGEMENT

It gives us the immense pleasure to present this case. Completing a task is a never a one-maneffort. It is often the result of valuable contribution of a number of individuals in a direct orindirect manner that helps on shaping and achieving an objective.

We wish to express our sincere gratitude to innumerable number of people who have beenassociated with us throughout this project. We feel blessed to have the opportunity ofexpressing our hearty gratitude to the following personalities, without the help of whom ourproject could not have been hatched.

We express our sincere thanks to Dr. Hitesh Ruparel for giving us the opportunity to study inthis institute.

We express our sincere thanks to Prof. Amish soni, Prof. deepa vyas, Prof. Komal Sidhnaniwho guided our group throughout the project and gave us valuable suggestions andencouragement to complete project report successfully. We express our sincere gratitude toher that she gave her valuable time to support us.

We have no words to express our gratitude for the ungrudging and unfailing cooperation ofour group members. Finally we want to thank all the friends, colleagues for their constant co-operation, encouragement, help and support throughout the study without which this workwould not have been possible.

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IndexChapter Particulars Page No.

Executive summary (sem - lll) 1Executive summary (sem - lV) 10

1 The business plan 16 Description of business 17 Implementation plan 19

2 Brief of business plan 223 Automatic fuelmatics machines 304 Market analysis and marketing plan 35

4 Ps 36 Market segmentation 37 Target market 38

5 Industry competitive analysis 41 Porters five forces 42 SWOT analysis 47 PEST analysis 48

6 Import Export 497 Business conditions in Qatar 618 Financial Analysis 699 Findings and suggestions 7910 Conclusion 82

Bibliography 84

1EXECUTIVE SUMMARY (SEM-lll)OIL AND GAS INDUSTRY IN QATAR

Qatar is a Middle Eastern peninsula jutting north into the Persian Gulf. The country shares aborder with Saudi Arabia, and is located between Bahrain to the northwest and the UnitedArab Emirates to the southeast; Iran lies north across the water. The terrain is largely flat,rocky desert with shifting sands, and with salt flats around the coast. The capital city is Doha;the city is one of five ports, the others being umm Said, Al Khor, Al Wakrah, and Ras Laffan.

Qatar has a population of just over 2.04m (as at July 2012, including expatriates). It isestimated that 40% are Arab, 18% Indian, 18% Pakistani, and 10% Iranian, with 14% makingup other ethnic groups. The principal religion is Islam.

Until October 2004, Qatari laws operated on a two-tier system: Sharia law was administeredat the local level, while the civil courts operated on the English model, a hangover from aperiod during which Qatar was a British protectorate. A new unifying law has since come intoforce, and the Qatari Constitution came into effect in June 2005; Islamic Sharia is the principalsource of legislation.

The government of Qatar is based on a traditional monarchy, whereby the Emir (presentlyAmir Tamim bin Hamad Al-Thani) is head of state. The Prime Minister is Abdallah bin Nasirbin Khalifa Al-Thani and the Deputy Prime Minister is Ahmad bin Abdallah al-Mahmud.

The economy is largely centered on Qatars gas and oil reserves, with oil productionaccounting for around two-thirds of total government revenues; Qatars proven gasreserves are the third largest in the entire world. Liquefied natural gas (LNG) and oil exportsmake up around 85% of all exports and more than 50% of GDP. Per capita GDP is also amongthe worlds highest, at US$102,900 in 2012 Qatar has one of the fastest gro wing economieswith the highest per capita income in the world. Qatars economy is projected to continueslowing down in 2014 after recording one of the worlds highest growth rates following thecompletion of major gas projects. Growth slowed down to an estimated 6.1 percent in 2013and is expected to continue its downward trend to reach 5.9 percent in 2014, according toIMF estimates.

2Qatar is currently undergoing massive transformation under the rubric of the 2030 NationalVision, which aims to establish an advanced, knowledge-based, and diversified economy, nolonger reliant on the hydrocarbon sector. The government is heavily involved in Qatar'seconomy, although it strongly encourages private investment in many sectors. Investmentsin Various sectors including health care, education, tourism and financial services, amongothers, are expected to offer greater opportunities for foreign investment.

In June 2013 Qatars Amir, Sheikh Hamad bin Khalifa Al Thani, abdicated to his son SheikhTamim bin Hamad Al Thani. The smooth transfer of power to Amir Sheikh Tamim bin HamadAl Thani is unlikely to lead to any major changes to the countrys implementation of the 2030National Vision. Amir Sheikh Tamim is expected to continue focusing on infrastructuredevelopment, economic diversification, education, and healthcare, underwritten by thenatural resource wealth of country.

Qatar National Vision 2030 rests on 4 pillars Human Development to facilitate all of Qatarspeople to keep up a well-off society. Social Development to sustain a just and gentle societybased on high moral principles and capable of playing a well-known role for development inglobal partnership. Economic Development to attain an aggressive and diversified economyable of meeting the needs of, and secure a high standard of living for, its whole people for thepresent and for the future.

Environmental Development to guarantee harmony along with economic growth, socialdevelopment and environmental protection. Qatars management of its hydrocarbonresources will continue to secure step up in standards of living, but those development cannotbe the only aim of society. The National Development Strategy 20112016 thus aims tobalance five major challenges identified in QNV 2030:

Achievements and the outlook for 20112016

Qatar has built a solid foundation for embarking on the National Development Strategy 20112016. Speedy growth in the 2000s, the best ever in the world, has specified Qatar one of theworlds utmost levels of per capita income. Lofty saving, both private and public, has beenreproduce in substantial domestic investment and the buildup of a substantial pool of foreigncurrency assets. To meet new demands in a more complex economy and to reinforcePerformance, Qatar has embarked on a diversity of reforms. The reform aspires to transport

3together decisions of national implication within an included framework for makingpremeditated and concerted choices about Qatars future. At a prepared level the reformshighlight development in public services and relief of value for money, thereby eye-catching opportunities and conditions for the country and for individual citizens. By helpfulnational development main concern and direction, the reforms provide greater obviousnessfor the private sector and public society, leading to better position of welfare across thecountry.

As Qatar is a member of the Gulf Co-operation Council and so it contributes to theexecution of amalgamation and strength among GCC member countries to meet theexpectations of its people in the important areas such as guard, calmness, business andeconomic development. Basic Law of Qatar 1970 is applied in the state which enforces thelocal customs that are been rooted in the traditional Islamic Heritage of the state. YieldingEmir the finest authority as they are favorers of following the conventional Islamic rules andcustoms. The role of Emir is influenced by the religious teachings and the rules ofconsent and discussion of the Islam religion where the public in general have the rightto come out of the Emir openly so that they can face any situation in future. Majlis as-Shura have a total of 35 members is in the consultative assembly and is in local way run witha single task only is the consultative task.

The constitution which was called for 45 members to be elected for the legislature,which was to be made up to 30 members elected by representatives and 15members elected by the Emir in the year 2003. The basis for the system of governmentis democracy. The official language is Arabic and the people of Qatar are part of the Arabicnation. The country became independent in 1971 and since then The Advisory Council isconsidered to be the first pioneering democratic experience to prove successful andwell suited to the countrys political and social conditions. It received profound attentionfrom the government under the leadership of the Emir(H.H.Sheikh Hamad Bin Khalifa Al-Thani) which resulted in the evident development of the example of the Qatari advisorycouncil the expansion of its responsibilities and the moral and practical weight of itsdeliberation in the political practice.

After Qatar confirmed its independence from British ruling, the country carry on to changeand grow on an almost day by day, it is remarkable to think the differences to have come

4about over the past 4 years, never mind 40, and for those who have onlooker the timeschanging, the current day Doha is different beyond gratitude in most aspects. QatarNational Vision 2030 (QNV 2030), launched in October 2008, builds a bridge from thepresent to the future. It intends to convert Qatar into an advanced country, behind itsgrowth and providing a high standard of living for its entire people for generations to come.It foresees a vibrant and prosperous Qatar with economic and social justice for all. It envisagesall Qataris working together in pursuing this goal, with strong Islamic and family valuesdirecting their collective energies.

Qatar National Vision 2030 builds on a society that promotes justice, benevolence andequality. It exemplifies the principles of the Permanent establishment, which shelter publicand personal freedoms, promotes ethical and religious values and customs, and guaranteessafety, stability & equal opportunities.

5OIL & GAS INDUSTRY IN INDIA

India has one of the fastest growing economies in the world, and the demand for oil and gasis rising at a matching rate. Not only is Indias market potential huge, but in recent years Indiahas emerged as one of the most prospective regions in the world with major oil and gasdiscoveries, both onshore and offshore.

India has total reserves (proved & indicated) of 1,201 million metric tonnes (MMT) of crudeoil and 1,437 billion cubic metres (BCM) of natural gas as on April 1, 2010, according to thebasic statistics released by the Ministry of Petroleum and Natural Gas. Against a crude oilproduction of about 37 million tonnes per annum (MTPA), Indias consumption currentlyexceeds 138 million tonnes. In 2010, 194 MMT of crude oil was refined and actual natu ral gasproduction was 31.0 BCM. By the end of 2012, the refinery capacity is expected to reach240.96 million metric tonnes per annum (MMTPA).

The refining capacity of the oil refineries in India has undergone nearly a three -fold increasein 2010. The country exported 50.974 MMT of petroleum products during 2009-10. Toprovide energy security, the Government of India is seeking private and foreign investmentsin excess of $250 billion in both the upstream and the downstream sectors during the next 10years. Indias petroleum product consumption has grown by 4-5% in last 10 years and the oildemand in India is likely to rise to 368 MMTPA by 2025. With widening gap between demandand supply, both for oil and gas, the outlook for the upstream sector is extrem ely positive.While oil and gas will continue to play a substantial role in the total energy mix, the need forharnessing alternate energy sources like Coal Bed Methane (CBM), Underground CoalGasification (UCG) and Shale Gas (gas locked in sedimentary rocks) will become vital to fulfilthe demand and supply of products.

The Government of India approved the New Exploration Licensing Policy (NELP) on April9,2009, to tackle the increasing demand supply gap of energy in India. In the eighth round ofthe NELP-VIII, 1.62 km2 areas will be covered comprising of 70 oil and gas blocks and 10 areasfor the extraction of coal bed methane (CBM) gas from below the coal fields under CBM-IV.Petroleum & Natural Gas Ministry launched the ninth round of NELP (NELP-IX) in New Delhion October 15, 2010. NELP-IX offered 34 exploration blocks comprising of 8 deepwater blocks,7 shallow water blocks and 19 on land blocks. Moreover, the government is planning its first

6ever offer of shale gas exploration permits in 2012. Shale gas (gas locked in sedimentary rocks)is an emerging area and has become an important source of energy in a few countries whichhave been able to commercially exploit this resource.

In this report an attempt has been made to provide the broad understanding of the oil andgas sector in India across the industries. The upstream and downstream processing sectors,key players, key market, transportation and distribution network, fuel retailing, Indiantaxation systems have been presented. The Western Australian capability/ level of interest inthe market have also been described.

Indian oil and gas sector offers a considerable opportunity for investors and shows healthydevelopment in conformity with the escalation of the Indian economy. The New ExplorationLicensing Policy (NELP), which was envisaged to deal with the increasing demand-supply gapof energy in India, has confirmed to be successful in attracting the interest of both domesticand some overseas players. The prosperity of Cairn India and Reliance Industries Limited intheir Indian operations has emphasized this. Other sectors such as Refining, LNG, and City GasDistribution etc. are also getting sufficient attention. India has now an excess refining capacityand aspires to prove itself as a major refining centre.

This report outlines the oil and gas sector in India and how companies can go aboutachieving their business goals in the sector. It aims to provide a basic understanding of theplayers, size, major developments, and dynamics of India's oil and gas sector across theindustries. Further, the report includes sections that provide summary of India's economy, itsenergy sector, the Indian upstream sector, coal bed methane, refining, gas transportation anddistribution, LNG, petroleum product pipelines, fuel retailing, and India's taxation regime. Abrief note on the Western Australian oil and gas industry has also been presented.Opportunities for Indian oil and gas sectors have also been described.

India is presently the world's fifth biggest energy consumer in the world. However, due to itshigh population of roughly 1.2 billion the per-capita consumption of most energy associatedproducts is exceedingly low. The per capita energy consumption is assessed to be a very small530 kg of oil equivalent (kgoe), while the world average is in the order of 1800 kgoe. TheIndian economy is assumed to display sound growth, which is evaluated to be in the regionof 6.6 percent in 2009-10. Confidence regarding the provision of Indias future growth

7potential arises from its comparatively high levels of internal need and its advantageousdemographic dividend-the median age stood at 25.3 years in 2008 with only 5.3 percent ofthe population being above 65 years of age. This healthy internal need is best exhibited bythe fact that the months of January and February 2010 saw telecom wireless subscriberadditions at an amazing 15.41 and 13.44 million respectively. When equated with othercountries, India's GDP is expected to continue to grow at rates above 5 percent and higher inthe short term. As China's development becomes modest, as the chart below demonstrates,India is expected to develop at a rate in excess of its eastern neighbor. Also Indias foreignexchange reserves valued to be around US$250 billion in March 2009.

In 1997-98, the New Exploration Licensing Policy (NELP) was envisioned to deal with the ever-growing gap between demand and supply of gas in India. As per a recent report, the oil andgas industry in India is anticipated to be worth US$ 139,814.7 million by 2015. With Indiaseconomic growth closely linked to energy demand, the need for oil and gas is projected togrow further, rendering the sector a fertile ground for investment.

To cater to the increasing demand, the Government of India has adopted several policies,including allowing 100 per cent foreign direct investment (FDI) in many segments of thesector, such as natural gas, petroleum products, and refineries, among others. Thegovernments participation has made the oil and gas sector in the country a better target ofinvestment. Today, it attracts both domestic and foreign investment, as attested by thepresence of Reliance Industries Ltd (RIL) and Cairn India.

According to data released by the Department of Industrial Policy and Promotion (DIPP), thepetroleum and natural gas sector attracted foreign direct investment (FDI) worth Rs31,501.55 crore (US$ 5.13 billion) between April 2000 and July 2014.

The following are some of the major investments and developments in the oil and gas sector.

Reliance Industries Ltd (RIL) plans to invest US$ 2 billion in its three shale assets in the US. RILhas already invested US $7.3 billion since 2010 towards development of shale gas and oil inthe US market. The company also, along with its partner British Petroleum (BP), plans to investabout Rs 800 crore (US$ 130.35 million) for exploratory drilling in an offshore slab of Bay ofBengal. RIL is the operator of the offshore block CY-DWN-2001/2, also known as CY- III-D5,

8with 70 per cent equity, with BP holding the remaining stake. BP's contribution to theinvestment would be Rs 240 crore (US$ 39.11 million).

ONGC Videsh Ltd (OVL) has signed Production Sharing Contracts (PSCs) for two blocks inMyanmar. The contracts were signed between OVL, Myanmar Oil & Gas Enterprises Ltd(MOGE), National Oil Company of Myanmar, and Machine & Solutions Co Ltd (M&S). ONGCwill also invest over Rs 5,700 crore (US$ 928.73 million) to push up production by 6.9 MT ofcrude oil and 5 billion cubic metres (bcm) of gas by 2030 from its Mumbai High (North) oil andgas field.

Steel-to-BPO conglomerate Essar is in talks with Germany's BASF, the biggest chemicalscompany in the world, for a petrochemicals joint venture (JV), as per sources.

Larsen & Toubro has won an order worth Kuwaiti Dinar 239.7 million from the Kuwait OilCompany (KOC). L&T arm - L&T Hydrocarbon will carry out the order that entails engineer-procure-construct work for a gathering centre for KOC, a subsidiary of Kuwait PetroleumCorporation.

Indian Oil Corporation Ltd (IOCL) through its wholly owned affiliate IndOil Montney Ltd,Canada, has signed transaction agreements with Progress Energy Canada Ltd and PETRONASCarigali Canada BV for acquiring a 10 per cent interest in Progress Energy Canadas LNG -destined natural gas reserves in northeast British Columbia and the proposed PacificNorthwest LNG Ltd (PNW LNG) export facility in Canadas West Coast.

GAIL (India) Ltd has entered into an agreement with Japan-based Chubu Electric Power Co forpartnership in the area of joint LNG procurement. Additionally, the two companies will lookto work together on shipping optimisation.

India and Azerbaijan have proposed to form a joint working group in the field ofhydrocarbon. The two countries have agreed to explore opportunities for partnership inrenewable energy sector, energy efficiency and numerous upcoming projects in petro -chemicals, oil and gas, pipelines, etc., in India, Azerbaijan or other countries, in collaborationor JV.

Mr Kazuyoshi Akaba, State Minister of Economy, Trade and Industry, Japan, met MrDharmendra Pradhan, Minister of State (Independent Charge) for Petroleum and Natural Gas,

9India. Mr Pradhan suggested taking the strong Indo-Japan bond to a higher level stating thatJapan has inspired India in manufacturing, technology and philosophy of governance.

The expert appraisal committee of Ministry of Environment and Forests, Government of India,has given the go ahead to IOCLs Rs 4,320 crore (US$ 703.81 million) liquefied natural gas(LNG) terminal project at Ennore, near Chennai. The proposed facilitys capacity will be fivemillion tonnes per annum (MTPA). The terminal is expandable to 10-15 MTPA. This is part ofthe corporations Rs 56,000 crore (US$ 9.12 billion) investment plan for the 12th Five-YearPlan (2012-17).

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Executive summary (SEM-lV)The oil and gas sector is one of the six core industries in India. It is of strategic importance andplays a pivotal role in influencing decisions across other important spheres of the economy.

In 199798, the New Exploration Licensing Policy (NELP) was envisioned to deal with the ever-growing gap between demand and supply of gas in India. As per a recent report, the oil andgas industry in India is anticipated to be worth US$ 139,814.7 million by 2015. With Indiaseconomic growth closely linked to energy demand, the need for oil and gas is projected togrow further, rendering the sector a fertile ground for investment.

To cater to the increasing demand, the Government of India has adopted several policies,including allowing 100 per cent foreign direct investment (FDI) in many segments of thesector, such as natural gas, petroleum products, and refineries, among others. Thegovernments participation has made the oil and gas sector in the country a better target ofinvestment. Today, it attracts both domestic and foreign investment, as attested by thepresence of Reliance Industries Ltd (RIL) and Cairn India.

Backed by new oil fields, domestic oil output is anticipated to grow to 1 MBPD by FY16. WithIndia developing gas-fired power stations, consumption is up more than 160 per cent since1995. Gas consumption is likely to expand at a CAGR of 21 per cent during FY0817.Domesticproduction accounts for more than three-quarters of the countrys total gas consumption.

India increasingly relies on imported LNG; the country was the fifth-largest LNG importer in2013, accounting for 5.5 per cent of global imports. Indias LNG imports are forecasted toincrease at a CAGR of 33 per cent during 201217.

State-owned ONGC dominates the upstream segment (exploration and production),accounting for approximately 60 per cent of the countrys total oil output (FY13).IOCLoperates 11,214 km network of crude, gas and product pipelines, with a capacity of 1.6 MBPDof oil and 10 million metric standard cubic metre per day (MMSCMD) of gas. This is around30 per cent of the nations total pipeline network. IOCL is the largest company, operating 10out of 22 Indian refineries, with a combined capacity of 1.3 MBPD.

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India is the sixth largest consumer of oil in the world and the ninth largest crude oil importer.Indias oil and gas sector contributes over 15% to the Gross Domestic Product (GDP).

According to Ministry of Petroleum and Natural Gas, India has a total reserve of 1201 millionmetric tonnes of crude oil and1437 billion cubic metres of natural gas as on 01 April 2010. Thetotal number of exploratory and development wells and metreage drilled in onshore andoffshore areas during 2009-2010 timeframe was 428 and 1019 thousand metres respectively.

Crude oil production during 2009-2010 timeframe was 33.69 million metric tonnes and grossproduction of Natural Gas in the country was 47.51 billion cubic metres during 2009-2010.The production of petroleum products during 2009-2010 was 151.898 million metric tonnes(Ministry of Petroleum & Natural Gas).

However, due to huge demand-supply gap in oil and gas in India, it imports more than 60% ofits crude oil requirement.

Further, oil consumption in India is projected to enhance by 4-5% per annum to 2015,indicating a demand of 4.01 million b/d by 2015.

As per the Business Monitor International (BMI) forecast, India will account for 12.4% of AsiaPacific regional oil demand by 2015, while satisfying 11.2% of the supply.

Due to increasing refining capacities, exports of petroleum products are high in terms of theforeign currency amassed and accounts for 17% of the total exports. Indias exports of refinedproducts stood at 0.95 million barrels per day as of June 2011 and US$ 4.6 billion worth ofpetroleum products were exported during July 2011. Vastness of this sector is corroboratedby the fact that there were a total of 130,000 people employed in the petroleum industry in2009-2010.

The oil industry can be divided into three major components: upstream, midstream anddownstream. The upstream segment comprises Exploration and Production (E&P) activities.The midstream segment is involved in storage and transportation of crude oil and natural gas.The downstream segment is engaged in refining and production of petroleum products, andprocessing, storage, marketing and transportation of commodities such as crude oil andnatural gas.

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In India crude oil is produced Onshore and Offshore. Onshore fields are in Assam/Nagaland,Arunachal Pradesh, Gujarat, and Tamil Nadu/ Andhra Pradesh. Oil India Limited (OIL) and Oiland Natural Gas Commission (ONGC) have the onshore field for crude oil production. Offshoreproduction occurs at Bombay High run by ONGC and Private/Joint Venture companies. Fornatural gas, onshore fields are at Assam, Tripura, Gujarat, Tamil Nadu, Andhra Pradesh andRajasthan. Offshore production of natural gas takes place at the Western area of BombayHigh.

India has 20 refineries out of which 17 are in the public sector and three in the privatesector. The total number of retail outlets of Public Sector Oil Marketing Companies in 2010was 36462. The total number of LPG consumers of Public Sector Oil Marketing Companies in2010 were 114.952 million.

Few of the SEZs in this sector are Reliance Petroleum SEZ, Mangalore SEZ in Karnataka,Gujarat Hydrocarbons and Power SEZ and Nagarjuna Oil Corporation in Tamil Nadu.

Public sector corporations dominate the Indian exploration and production sector. In termsof the percentage share in total production Oil and Natural Gas Corporation (ONGC) accountsfor the highest share.

The second major player in the sector is also a public sector undertaking Oil India Limited(OIL). Both of these undertakings account for about more than 70% of the total market. Theremaining share of the pie is cluttered with various private players in the market.

Names of the key players in the oil and gas industry in India are Oil India Ltd., Oil and NaturalGas Commission, Indian Oil Corporation, Hindustan Petroleum Corporation Ltd., BharatPetroleum Corporation Ltd., Gas Authority of India Ltd., Reliance Industries Ltd., Essar Oil,Adani Gas, Petronet LNG, Cairn Energy, Shell, British Gas and BP.

Opportunities for Foreign Investments and Technology Partnerships

Securing supplies is expected to remain on top of Indias energy agenda for the forseeablefuture. While exploration activity has taken place on land and in shallow basins across thecountry, it is believed by many that deep water and ultra-deep water oil and gas resources

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hold the key to substantially increasing domestic production. This creates a plethora ofopportunities for strategic investors having relevant technical expertise and financial muscle.

Summary of Oil and Gas Sector India:

96 Trillion Cubic Feet of estimated shale gas reserves.

47 Trillion Cubic Feet of proven natural gas reserves.

800 MMT of proven oil reserves.

4th largest consumer of crude oil and petroleum products in the world.

2nd largest refiner in Asia.

Reasons to Invest

Policies such as the New Exploration Licensing Policy and the Coal Bed Methane Policyhave been put in place to encourage investments across the industry value chain.Thirty-four blocks were put up for bidding in the ninth round of the N.E.L.P.

Demand for primary energy in India is to increase threefold by 2035 to 1,516 MillionTonnes of Oil Equivalent from 563 Million Tonnes of Oil Equivalent in 2012.

Several industries are increasing consumption of natural gas in operations.

Several domestic companies such as the Oil and Natural Gas Corporation, RelianceIndustries Limited and Gujarat State Petroleum have reportedly found natural gas indeep waters.

As part of pricing reforms for the natural gas sector in 2013, the government approveda new pricing scheme to further align domestic prices with international market pricesand to raise investment for the sector.

Despite being a net importer of crude oil, India has become a net exporter ofpetroleum products by investing in refineries designed for export, particularly inGujarat.

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Several private companies have emerged as important players in the past decade.Cairn India, a subsidiary of British company Cairn Energy, controls more than 20% ofIndias crude oil production through its operation of major stakes in the Rajasthan andGujarat regions and the Krishna-Godavari basin.

Private companies such as Reliance Industries Limited and Essar Oil have becomemajor refiners.

The government is preparing to issue the 10th round of bidding for the NationalExploration Licensing Policy.

It is a transparent and level playing field for private investors and national oilcompanies both enjoy the same fiscal and contract terms.

60% of the prognosticated reserves of 28,000 MMT are yet to be harnessed.

As per current scenario of global market, oil and natural gas sector has a huge demand andthey successful in supplying the relevant products.so we are preparing a business plan for anautomated petrol station which would be an eye catching services in India.

The business will be both a full-serve and self-serve automated facility which will sell gasoline,motor oil, and accessories, as well as a convenience store selling snack foods, newspapersand magazines, coffee and cigarettes, and lottery tickets. Ideally, after gassing up theirvehicle, customers will want to come inside to use our clean, well-maintained restrooms andto purchase items from the convenience store.

Free air and water will be available. All major credit cards will be honoured, and debit cardswill be accepted. A drive-up telephone station will be available. Frequent customermerchandising programs and tourist discounts will be developed and offered. Heightenedsecurity standards will be met.

The business will sell all grades of fuel (diesel, high, medium and low grades), as well as motoroil, lubricants, tires, batteries, and car accessories. Customers can choose between full serviceand self-service. Self-service customers will be able to avoid standing in line at the cash

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register and pay for their fuel purchase at the pumps, using a gas card, debit card or majorcredit card.

The convenience store will sell snack foods such as candy, chocolate bars, potato chips andsimilar items. We also plan to sell pre-made sandwiches and baked goods, which will bebrought in from TGB. The convenience store will also sell tobacco, coffee, cold drinks,newspapers and magazines, grocery items such as bread, milk, toilet paper, and other itemsthat people typically run out of in between trips to the supermarket, and emergency itemssuch as Band-Aids, painkillers, batteries, etc. There will be an ATM machine available in-store,as well as auto car care as semi workshop.

The location will be comprised of fully automated petrol and gas filling station withconvenient store semi-automated, and public restrooms. For the business to be successful,location on a main highway with steady volumes of through traffic is key. Other primaryfactors are easy access, plentiful parking, and high visibility. This location fills all of thoserequirements. These numbers show that a gas station at this location is feasible.

The main aim behind preparing the business plan as a part of global country report was tostudy the favourable environment of a country and turn challenges into opportunitiesthrough strategies.

The business will begin operations upon receiving funding. An environmental audit will becompleted as required by law, following which, the site preparation and construction willcommence. The Company will install above-ground gas tanks that are in compliance withapplicable laws. HP will supply the oil and gas to the facility. The Company will also apply forall necessary permit license.

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CHAPTER: 1The Business Plan

Description of Business Implementation Plan

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Description of BusinessThe business will be both a full-serve and self-serve automated facility which will sell gasoline,motor oil, and accessories, as well as a convenience store selling snack foods, newspapersand magazines, coffee and cigarettes, and lottery tickets. Ideally, after gassing up theirvehicle, customers will want to come inside to use our clean, well-maintained restrooms andto purchase items from the convenience store.

Free air and water will be available. All major credit cards will be honoured, and debit cardswill be accepted. A drive-up telephone station will be available. Frequent customermerchandising programs and tourist discounts will be developed and offered. Heightenedsecurity standards will be met.

Fuel & Automotive Products

The business will sell all grades of fuel (diesel, high, medium and low grades), as well as motoroil, lubricants, tires, batteries, and car accessories. Customers can choose between full serviceand self-service. Self-service customers will be able to avoid standing in line at the cashregister and pay for their fuel purchase at the pumps, using a gas card, debit card or majorcredit card.

Convenience Store

The convenience store will sell snack foods such as candy, chocolate bars, potato chips andsimilar items. We also plan to sell pre-made sandwiches and baked goods, which will bebrought in from TGB. The convenience store will also sell tobacco, coffee, cold drinks,newspapers and magazines, grocery items such as bread, milk, toilet paper, and other itemsthat people typically run out of in between trips to the supermarket, and emergency itemssuch as Band-Aids, painkillers, batteries, etc. There will be an ATM machine available in-store,as well as auto car care as semi workshop.

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LocationThe location is Ahmadabad on a lot that measures 300 x 150 Sq. feet. The lot size allows forfuture expansion. The site offers easy access from local city area at 132 feet Ring Road nearbySP Road. Hours of operation will be 7 days 24*7 hours.

The location will be comprised of fully automated petrol and gas filling station withconvenient store semi-automated, and public restrooms. The fuel will be contained in aboveground tanks. Underground storage tanks usually fail due to rust perforation. Leaks can occurbecause of tank damage or at piping connections. Above ground tanks are easier to maintainand inspect, and to repair and replace if necessary.

For the business to be successful, location on a main highway with steady volumes of throughtraffic is key. Other primary factors are easy access, plentiful parking, and high visibility. Thislocation fills all of those requirements. These numbers show that a gas station at this locationis feasible.

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Implementation PlanThe business will begin operations upon receiving funding. An environmental audit will becompleted as required by law, following which, the site preparation and construction willcommence. The Company will install above-ground gas tanks that are in compliance withapplicable laws. HP will supply the oil and gas to the facility. The Company will also apply forall necessary permit licenses.

The following table outlines the steps to be taken to start the business, with projected startand completion dates:

Action Plan Starting Date Ending Date

Land use designation

Environmental audit

Funding application

Fuel sales permits

Tobacco sales license

Contract with supplier

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Order machinery &equipment for fuel sales

Prepare site

Install fuel equipment andcommence

construction

Order store fixtures & officeequipment

Installation of signage

Advertising

Hire staff

Order inventory forconvenience store

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Grand opening

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CHAPTER: 2Brief of Business plan

Details of Business plan What is Petrol Pump? Products Marketed at Retail Outlets Facilities provided at Retail Outlets Safety Measures Complaints

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Details about the Business Plan

Petrol station pump business

Finding out more about a Petrol station pump business Petrol station pump as a business,deals with the manufacturing of petrol station pumps. It is an industry which manufacturespetrol station pumps which is a pump in a service station that draws petrol from undergroundstorage tanks and delivers to the motor vehicles. A fuel dispenser is a machine at a fillingstation that is used to pump gasoline, diesel, CNG, CGH2, HCNG, LPG, LH2, ethanol fuel,bio fuels like biodiesel, kerosene, or other types of fuel into vehicles. Fuel dispensers are alsoknown as bowers.

1. What is Petrol Pump?

The most common point of contact of customers with Oil Industry is the Petrol Pump. In OilIndustry parlance, Petrol Pumps are referred to as Retail Outlets (ROs).

As per the existing Government policy, Petrol Pumps can be set up by Public Sector OilCompanies as well as Private Sector Oil Companies dealing in storage and distribution ofpetroleum products as per guidelines. Presently, the Oil Companies engaged in retail businessof automotive fuels are IOC, HPC, BPC, NRL, MRPL, ONGC, RIL, Essar and Shell.

2. Products Marketed at Retail Outlets

Petrol: Petrol, in technical language is called Motor Spirit (MS). It is mainly used inpassenger vehicles such as 2 / 3 wheelers and cars. At present, HPCL markets two types ofPetrol across the country, i.e. normal Petrol and branded Petrol.

Normal Petrol: Normally used as a fuel for spark ignition internal combustion engines suchas passenger cars, two wheelers, three wheelers, etc.

Branded Petrol: This is preferred by new generation vehicles. It is slightly costlier thannormal Petrol. It has additives for optimizing performance of vehicles. It is sold under thebrand name PetroD.

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PetroD provides benefits like cleaning and prevention of carbon deposits, reduced smoke /emissions, better acceleration & pick up and smooth driving experience.

Ethanol Blended Petrol: The Ministry of Petroleum & Natural Gas has notified marketingof Ethanol Blended Petrol (EBP). The Practice of labelling on the pump is recommended forethanol marketing. To ensure presence of ethanol, EBMS field test is recommended in thespecification of EBMS and also under MDG. The customer can detect ethanol by mixing 100ml of EMBS with 30 ml of water and by following field test procedure as described inspecification / MDG.

High Speed Diesel (HSD): PetroD Pvt. Ltd markets two types of Diesel across the countryi.e. Normal diesel and Branded diesel with coloration with HP.

Normal Diesel: These are used in heavy commercial vehicles, buses, tractors, motor cars,pump sets and in various other diesel engine driven applications.

Branded Diesel: This is preferred by new generation vehicles and is sold by HPCL under thebrand Name Turbojet, which contains multi-functional additive that enhances theperformance of new generation vehicles and ensures peak engine performance.

Lubricants: This is a vital product for healthy life of an engine. A lubricant is a viscousproduct used in the engine for its smooth functioning. Different grades of lubricants areneeded for different engines, gear box and other components. The RO dealer can guide onthe recommended grade of lubricant for the vehicle. HPCL regularly develops new productsto cater to different needs of the customers.

Compressed Natural Gas (CNG): CNG is an environment friendly fuel and available inmajor towns where it has been introduced depending on availability of Grid and Gas.

CNG is available at select outlets of the Company in some cities. There are alsostand-alone ROs for CNG in select cities.

CNG can be used in vehicles which are fitted with a special kit meant for the purpose. Thevehicle needs mechanical change for its use.

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Its availability is being gradually increased in more cities / ROs.

Auto LPG:

ALPG meets BIS standard IS: 14861 which have Octane Number of 88 (minimum).

ALPG is a clean and environment friendly fuel.

3. Facilities provided at Retail Outlets

Facilities

A Retail Outlet is not just a place for meeting fuel needs. It offers a range of services whichcan be classified as under:

Mandatory Facilities:These are the facilities which every retail outlet must provide. Theseinclude free air, display of working hours and display of name and telephone number of oilcompany personnel for the convenience of customers. First Aid Box, toilet and safetyequipment as per statutory requirements such as fire extinguishers and sand buckets etc. arealso available at retail outlets.

Other Facilities: For the convenience of customers these additional facilities may beprovided by dealers at the retail outlet premises. These include water-coolers, conveniencestores, snack bars, restaurant and rest-rooms, bathing and washing space for truckers,telephone facility- PCO/STD, ATM, servicing / repair shop, tyre shop, loyalty card program etc.

Quality

The term quality implies that the product you are buying is meeting the prescribedspecifications and is free from any contamination or adulteration. The customers can ensurequality by carrying out specific checks for different products as listed below:

Filter Paper Test (for Petrol)

a) Clean the mouth of the dispensing nozzle to remove stains.

b) Put a drop of petrol on the filter paper from the nozzle.

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c) It should evaporate in about 2 minutes without leaving a stain on the filter paper. (If thearea of the filter paper where the drop of MS was put remains pinkish, it is the colour of theMS and not any stain). If a stain is left on the filter paper then there is a possibility ofadulteration.

Customer should immediately lodge a complaint if Filter paper is not available at the RetailOutlet for testing of Petrol. It is the duty of the Dealer to provide filter paper on demand bythe customer.

Density Check (for Petrol and Diesel, including branded fuels)

a) A 500 ml jar, calibrated hydrometer, thermometer and ASTM (American Society for Testingof Materials) conversion charts are required to carry out density test. Hydrometer is a verysimple instrument for measuring density of any liquid, which is different for petrol and diesel.

b) Fill about 3/4th of the jar with the product taken through nozzle of the Dispensing unit.

c) Dip the thermometer and hydrometer in the jar and record the temperature and density.

d) The actual density observed is then converted to density at 15 degree centigrade with thehelp of conversion chart. This converted density is then compared with the reference densitytaken from the density register maintained by the Retail Outlet.

Checks for Lubricants: Please check the seal of container, date of manufacture and name ofthe manufacturer. For the convenience of 2/3 wheeler segment, Retail Outlets generallyprovide self-mixing (petrol-oil mix) dispensers, 2T dispensers and they also keep tamper proof2T/4T pouches.

Quantity:

It is mandatory for each retail outlet to keep a calibrated 5 litre measure, stamped byWeights and Measures Department every year, to verify quantity.

Quantity can be checked with 5 liters measure. The permissible variation due to anyunforeseen malfunctioning of the dispensing unit is 25 ml in 5 liters which is to be rectifiedimmediately.

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Price: The selling prices of products are displayed prominently at the outlet. Customers mustensure to take cash memo for every purchase.

Other useful tips for customers: Meter to be set to zero before starting delivery and finalreading to be checked after delivery.

Malpractices / Unauthorized Activities: In case a citizen comes across any of the followingpossible malpractices, he/she may contact Companys Officer whose name & contact numberis displayed at the Retail Outlet.

Adulteration: There is a Possibility of adulteration, by mixing cheaper homogeneousproducts in petrol or diesel. Adulterated product will definitely affect the performance ofvehicle. In such case, one should carry out the filter paper / density check as explained above.

Short Delivery: Although all dispensing units (Machines delivering petrol / diesel) areannually calibrated and sealed/stamped by Weights & Measure Department and alsoperiodically checked by the Company Officer, there could be a possibility of tampering ormachine malfunctioning. As mentioned earlier, a citizen has the right to check the quantitydelivered with a duly calibrated and stamped 5-litremeasure available at petrol pump.

Overcharging: The dealer is not allowed to overcharge for the product sold. The prices ofproducts are always displayed at the retail outlets. One must ensure to take a cash memo forevery purchase.

4. Safety Measures

Most concern:

Petroleum products are highly inflammable and are, therefore, dangerous if not handledproperly. Their handling is strictly governed by Petroleum & Explosives Safety Organization(PESO) Rules. A Petrol Pump is a licensed premise and all activities are carried out with strictadherence to PESO Rules.

For the safety of all concerned, the following precautions must be observed:

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Switch off the engine before taking delivery of fuel (to avoid possible fire caused by spillageof fuel)

PleaseDO NOT smoke within the Petrol Pump premises.

never light a match stick within the Petrol Pump premises.

SWITCHOFF the Mobile Phones within Petrol Pump premises.

It is advisable to get off the vehicle while refuelling.

It is not advisable to carry petrol / diesel in plastic / glass bottles.

Types of services and products a Petrol station pump business provides

Providing your customers and clients with services and products as a Petrol station pumpbusiness Now that you are familiar with what a Petrol station pump business does, it isalso very important that you understand the services and products provided by aPetrol station pump business. Offering your clients or customers the best services or productswill lead you in the right direction of making a success in being a well sort after Petrol stationpump business. Here is a list of Services / Products associated with a Petrol station pumpbusiness manufactures and sells petrol station pumps

PetroD consciously looks to minimize its effect on the environment and will continue to investin technologies to improve in this area.

An example of these environments includes:

Recycling of water

The car wash machines on new service stations include water-recycling systems enabling thereuse of 90% of the water used cleaning cars.

Leak detection systems

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Underground storage tanks are double skinned and have leak detection systems fitted. Alarmsystems are automatically activated if there is any leakage through the inner wall of the tanksso avoiding any chance of soil pollution.

Vapour recovery systems

Road tankers are designed to take gasoline vapours from storage tanks at the same time asthey are filling the tanks. These vapours are returned to the fuels depot where a recyclingsystem returns the two liquid gasolines so avoiding the venting of vapours to the air.

5. Complaints:

For any unsatisfactory service or product, customer may please bring it to the notice of thedealer immediately or in his absence, the Manager. However, if the explanation given by theDealer or Manager is not satisfactory, customer can record the complaint in the Complaintand Suggestion Book available at each petrol pump or contact Companys Sales Officer onphone.

A written complaint can also be sent to Companys Sales Officer, Regional Office or acomplaint can be lodged through helpline - 1800 99773300 Contact details are displayed ateach Retail Outlet. Complaint can also be lodged through Website - www.hpretail.in orhindustanpetroleum.com.

Each complaint received by letter, through the website or entered into the Complaint /Suggestion book is investigated by Company Officer and suitable action is taken to resolve thecomplaint.

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CHAPTER: 3Automatic Fuelmatics Machines

Fuelmatics Benefits Technology

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Automatic Fuelmatics Machines:-

Fuelmatics offers a fuelling process without any spill or vapour. Its the most efficient andenvironmental friendly concept on the globe. It allows the driver to remain in the car duringthe entire refuelling process, thus providing a Drive-Thru fill up.

The Automatic Refuelling System, ARS, represents a paradigm shift for oil companies and fuelretailers in the quest to attract and retain customer loyalty, and to increase volume andprofits.

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It is also much more environmental friendly as it fills your car without spill and without anyvapour. The system, including the cistern, is completely closed, so there are no vapours at all.

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Benefits:-Retailer benefits:-The ARS cuts time before and after pumping, which means that therefuelling cycle from stop to go is reduced by 50 %.The effect is that a retailer can: Attractmore customers to your station Servemore customers per hour Reduce the que to the pumps

The smaller format means you: Reduce the need of land Locate stations closer to roadsadditionally you can: Serve disabled drivers Sell ad-space on the screen

Driver BenefitsThe Fuelmatics Automatic Refuelling System offers a number of advantages to you as a driver.Faster, about half the time for a fill up, which saves time of Cleaner, as you do not have totouch the cap or the nozzle Safer, as you do not have to step out of the car more convenient?

TECHNOLOGY

The Automatic Refuelling Systems ARS

The Fuelmatics Refuelling System is designed for use on all passenger cars and sport utilityvehicles with a fuel door on either the right or left side of the car, which representsapproximately 95 percent of all vehicles. The FM 3003 unit is equipped with three nozzles andcan thus serve petrol, diesel and a new fuel like ethanol or natural gas from one and the sameunit. A stream lined fast solution. Talk about retail efficiency! Fuelmatics envisions thathydrogen together with automatic dispensing will become the long-term global solution forvehicles. Fuelmatics FM4000 unit will be ready to do the job.

The fuel cap

The only preparation needed is to swap the fuel cap, which will be done by the driver in a fewseconds. The Fuelmatics cap is a loyalty binder as well as an introduction gift to the customer.The retailers logo can be placed on the cap, which also is good for manual refuelling. Justpush the nozzle through the built in flapper. No need to take the cap off.

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There is a general trend among car manufacturers to implement the same flapper solution inthe filler pipe in the car. That means the car is ready for automatic refuelling already from thefactory.

Payment solutions

The ARS can work with any payment system on the market as the ARS unit basically just needsa start signal to start a fill up. Interfacing is made via Ethernet or via a serial line. Fuelmaticshas developed a phone payment system which offers a simple operation directly via thephones key pad. On line diagnostics is available for efficient service and maintenance.

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CHAPTER: 4Market Analysis and Marketing plan

4Ps of PetroD Pvt. Ltd Market Segmentation Target Market

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Market Analysis and Marketing Plan

4Ps of PetroD Pvt. Ltd

How does PetroD Pvt Ltd marketing strategy follow the 4Ps? Ahmadabad oil industry hassome unique characteristics that influence how we follow the 4Ps of marketing product,price, place and promotion.

Product

Fuel is a commodity product offered by all the oil companies in Ahmadabad. It is difficult tooffer customers a point of difference with fuels. However, PetroD does so by selling petroland diesel that is better for the environment. As we offer high quality petrol and diesel tocustomer so that will be our product.

Petrol Diesel CNG Lubricants Convenient Store Auto car care

Price:

As the price will be decided by the petroleum ministry of India so with common products inthe oil industry, prices between competitors are easily matched, which means its difficult todifferentiate our product based on price. If our competitors undercut us on price, we seesignificant losses in volumes sold. A one cent per litre price reduction requires retailers toachieve a 25% increase in volume to break even on site. Price place important role but itmainly depend on the oil and gas industry market price as they are changing day by day sothat price doesnt make any further difference but it may change on time.

Place:

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As the place is very important role in selecting petrol station for any customers. Customerselects their choice of gas filling station by their convenient. So we have selected place bymarket research that give us more opportunity to attract new customer. So we have some ofthe best locations in Ahmadabad for the service we provide. And research shows customersmainly choose fuel retailers based on their location. We have a significant investment inensuring we have the right number and quality of locations for our customers.

Promotion:

Research shows that customers respond well to promotion campaigns, such as the Rewardsprogramme ,loyalty cards, price drop skim on special occasions and other convenient serviceslike convenient store, auto car care etc. Loyalty programmes are a valuable point ofdifferentiation; we use them to drive sales volumes and counter our competitors activity. Astime comes more promotion activities will be done by company such as gift coupons, discounton convenient store and attractive decoration of petrol station on special occasions.

Market Segmentation:

Industry Analysis

As of now, the world price for crude oil was 2900-3000 Rs. Refining costs are the componentof price added by the refining company to cover its costs and profit margin. Refinery marginsaverage 10-15% of the total pump price. This pays for refinery capital costs, refinery fuel,wages and salaries, profits and corporate taxes. Taxes are usually the largest singlecomponent, averaging 10 % of the pump price.

There is virtually no difference between the various brands of gasoline. If competing gasstations are similar in service, convenience and cleanliness, many customers will switchstations based on price. This means competition between stations is based almost exclusivelyon price, and the best way to attract customers is to sell for less. As a result, gasoline retailersmust keep their mark-ups as low as possible.

Mark-ups are generally less than 10%, and must cover land costs, salaries, fuel delivery, sitemaintenance, overhead, and profits.

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According to the Petroleum Communication Foundation, profits realized on fuel sales aremarginal. With such small mark-ups, the best way to stay in business is to sell in large volume.The best way to do this is to reduce retail margins. Despite huge volume sales, margins are sothing that almost all gas stations rely on non-fuel products to increase revenues and margins.This is why gas stations usually run in concert with convenience stores and/or restaurants, toincrease profits through the sale of food items, tobacco, soft drinks, maps, magazines, andsimilar items.

Nationally, there are approximately 60 petrol retailers in Ahmadabad district. In thePrahladnagar area there are currently 2 petrol stations. But although competition hasincreased over the past few years, fuel sales continue to increase annually. The highest levelof competition is in the larger urban centres, where major supermarkets with gas bars takethe lead. This creates an opportunity for independent stations in smaller centres where thereis less competition.

Target Market

Prahladnagar Area

Taluka Name: AhmadabadDistrict: AhmadabadState: GujaratLanguage: Gujarati and Hindi, EnglishTime zone: IST (UTC+5:30)Elevation / Altitude: 52 meters. AboveSealevelTelephone Code / Std Code: 079Pin Code : 380015

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Prahlad Nagar currentWeather

Current Temperature is

35 C

Humidity: 30%Wind : From North at 6kph

Prahlad Nagar Weather Forecast for Next 3Months

Marchclear26C to 43C

Aprilpartly cloudy26C to 43C

Mayclear27C to 42C

About Prahlad Nagar

Prahlad Nagar is a Locality in Ahmadabad City in Gujarat State, India. Prahlad NagarPin code is 380015 and postal head office is S A C.

Vejalpur ( 1 KM ) , Bagodara ( 1 KM ) , Makarba ( 1 KM ) , Juhapura ( 2 KM ) , JodhpurVillage ( 2 KM ) are the nearby Localities to Prahlad Nagar.

Ahmadabad, Sanand, Kalol, Gandhinagar are the nearby Cities to Ahmadabad.

Demographics of Prahlad Nagar

Gujarati is the Local Language here.

SegmentationThe business will target two major market segments,

(1) The general population of Ahmadabad city and the surrounding area, and

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(2) Travellers to the area.

In terms of market segmentation advantages, the Company will use the fact that were open24 hours 7 days, have quality products, provide a means for customers to pay at the pump,and have competitive prices, to leverage our position.

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CHAPTER: 5Industry Competitive Analysis

Porters Five Forces SWOT Analysis PEST Analysis

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Industry Competitive Analysis

Porters Five Forces Analysis

Porters Five Forces framework points out that the state of competition in any industrydepends on five competitive forces:

Threat of entrants Threat of substitutes Power of suppliers Power of buyers Rivalry among industrys firms.

However, a companys success in an industry depends on how it is related to that industryand how the industry is structured.

Industry structure (manifested in the five competitive forces) drives competition andprofitability. In order to reveal the roots of an industrys current profitability and anticipatefuture trends, a company has to understand the underlying causes of the five competitiveforces.

Assessment of the Five Forces

1. Threat of potential entrants:

Porter indicates that new entrants bring with them new capacity and the desire to gain marketshare. This desire, Porter suggests, puts pressure on costs, prices and the rate of investmentthat is necessary to compete. As he indicates, threat of entry depends on two factors: theheight of entry barriers and the incumbents reaction to new entrants.

The major barriers to entry in the oil and gas industry are:

1. Patents

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2. Large capital requirements

3. Economies of scale

4. Governments regulations

5. Product differentiation

6. Predatory behaviour by cartels

7. Ownership of resources

Patents of technology and innovation work as driving forces of cost reduction anddifferentiation For example, in early 2010, Exxon Mobile introduced advanced technology toreduce cost while increasing production capacity, enabling the company to boost itsproduction capacity by 5.8 million barrels of oil and extend the life of its oil and gas fields.(Data monitor 2010) However, in refining, technical patent barriers are minimized as thetechnology involved in refinerys construction is widely known. The barriers for entry risingfrom large capital requirements and economy of scale are also minimized and sometimes donot serve as barriers to entry in efficient oil and gas markets such as the U.S. market. Forinstance, if an industry cartel sought to monopolize the refinery sector, it has to restrictrefinery input and output until the cartel marginal cost equals the marginal revenue. At thispoint, the refinery outputs would exceed marginal cost allowing a potential entrant to earngreater profit. Economies of scale do not prevent entry from occurring in an efficient oilmarket. For example, it is possible for an industry with large economies of scale to experiencea limit-pricing situation. In this case, a potential entrant must achieve a high level of outputto operate in an efficient scale. This is going to lower market price below the break-even levelof costs if the existing rivals maintained their level of output.

In the marketing sector, barriers to entry arising from government regulation have influencedthe competitive strategies of the oil and gas companies. For example, the U.S. oil and gascompanies have always succeeded in product differentiation because of many years ofadvertising and development. However, this success did not prevent independent marketsfrom selling similar products at lower cost. Nonetheless, government regulations have shutout such independent markets.

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Governments have conferred upon themselves some form of cartel power over the industrydue to their regulations. This supports Am archer (1976) who points out that OPECs successin influencing oil prices demonstrates the power such cartels have on primarily commodities.Although OPEC does not set oil prices, its decisions play a major part in pricing, because theOPEC countries produce 40% of the worlds oil supply Consequently, these governmentalpolicies and regulations work as a barrier for new firms to enter the industry Natural resourcesobviously play the biggest barrier to entry as new entrants must have the secure andcompetitive resource to risk entry into the industry as rivals have to acquire a comparableamount of secured resources (oil and/or gas) to compete .

2. Threat of substitutes:

Porter distinguishes between rivalry (the fifth force) and substitution (the third force). Theterm rivalry describes competition between companies that provide similar products whilesubstitution refers to products that are not in direct competition. Substitutes affect theindustry through limiting its anticipated profit by placing a ceiling on price.

With the use of advanced technology, major oil and gas companies are looking for alternativesources of energy as possible substitutes. For example, in April 2009, TOTAL formed apartnership with Gevo, a US company developing transportation bio fuels and chemicalproducts. (Data monitor 2010) Porter indicates that a substitutes threat is high when it offersan attractive price trade-off to the industrys products or when the buyers cost of switchingto substitute is low. For instance, the Chinese government aims to have bio fuels account for15% of its total transportation fuel consumption by 2020, and in comparison, the EuropeanUnion has set a target of 20% for the same period. China National Petroleum Corporation isalready taking steps to leverage this expected increase in demand in China and Europe. (Datamonitor 2010) If bio fuels offer an attractive price trade-off, it would provide competitivesubstitutes, thus threatening crude oil products.

3. Power of suppliers:

Porter illustrates that powerful suppliers affect the market through charging higher prices,limiting production, and/or integration. The first two elements were made obvious during the70s when embargos by the oil producing counties led to reducing the worlds oil production

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and this oil supply shortage led to a dramatic increase in the nominal price of a barrel of oilfrom $2.7 to $11.2 during the period from 1973 to 1974 .This reveals the power oil and gassuppliers have over the industry. Any move by a competitor to influence prices will befollowed by changes in competitors strategies. For example, the move of Esso (Exxon Mobiletoday) in 1959 to influence Middle East oil prices led to the creation of OPEC, whose decisionsplay a part in oil prices today. (Library of Congress 2010).

As suppliers, oil and gas companies bring power to the recipient countries throughinternational vertical integration. Cash can be injected into the refining industry to fostercompetition and enhance supply security to consumers. For example, Petroleum deVenezuela S. A. controls its refining and marketing operations in the U.S. through CITGOCorporation, in which it owns 100 percent through PDV America. (Data monitor 2009) Verticalintegration reduces risk and maximizes profitability at every stage of the chain from wellheadto gasoline station. It helps the oil companies balance their operations and protect themselvesfrom markets instability. For instance, when crude oil price goes down, the refining andmarketing margins would generally be expected to be positive.

4. Power of buyers:

Powerful buyers have the ability to reduce prices, demand better quality or more service(thereby increasing costs) and play industry participants off against each other, at the expenseof industry profitability. Major oil companies outsource much of their field operations to oiland gas service companies. As buyers, oil companies are in a powerful position to bargainprices, demand better quality or additional service.

Oil and gas companies seek to obtain rights to invest in exploration and production areasinternationally. These rights are acquired through buying a percentage of another companysright or through participating in licensing rounds. In this highly competitive environment, oiland gas companies join together and form a Joint Venture.

Joint Ventures are formed primarily for three reasons:

1. Gain more market power (buyer)

2. Reduce or share risk

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3. Acquire or share information

Moreover, oil and gas companies form Joint Ventures to overcome political and/or legalimpediments or to meet host country requirements .ConocoPhillips for example, has 50%equity investment in Joint Venture with Spectra Energy a natural gas infrastructure companyin North America .A 50:50 Joint Venture between Shell and Exxon Mobil manufactures andmarkets high-quality additives used in fuel, lubricants, and specialty additives This, assuggests, increases the buyers negotiating leverage relative to competitors which leads toincreasing the buyers power.

5. Rivalry amongst competitors:

High rivalry between existing competitors can limit industry profitability depending on thecompetition intensity and basis .Major oil and gas companies are relatively equal in size,power and capabilities .This increases the intensity of rivalry which can manifest itself in aprice war if a competitor tries to influence.

According to Porter, slowdown in production such as experienced by oil and gas companiescombined with declining net liquids production and reserves could increase the intensity ofrivalry in this industry.

Rivalry in any industry is intense if rivals have goals that go beyond economic performanceAccording to Bernstein et alone purpose of Joint Venture in the oil and gas industry is to

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manage rivalry through turning potential competitors into allies. This is particularly critical inthe oil and gas industry where there is little to distinguish rivals Five Forces.

SWOT Analysis*

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PEST Analysis

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CHAPTER: 6Import Export

The Petroleum Act 1934 (13 Preliminary) Conditions or requirements to open petrol pump station License Fees Online Applications Fuel Stations on National Highway Export- Import Policy (1997-2002)

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Import-Export

THE

PETROLEUM ACT, 1934An Act to consolidate and amend the law relating to the import, transport, storage,production, refining and blending of petroleum and other inflammable substances.

WHEREAS it is expedient to consolidate and amend the law relating to the import, transport,storage, Production, refining and blending of petroleum and other inflammable substances;

PRELIMINARY

1. Short title, Extent & Commencement.

(I) This Act may be called the petroleum Act, 1934.

[(2) It extends to the whole of Pakistan.]

(3) It shall come into force on such date as the Federal Government] may by notification inthe official Gazelle, appoint.

2. Definitions .

In this Act, unless there is anything repugnant in the subject or context,-

(a) "Petroleum" means any liquid hydrocarbon or mixture of hydrocarbons and anyinflammable mixture (liquid, viscous or solid) containing any liquid hydrocarbon:

(b) "Dangerous petroleum" means petroleum having its flashing point below seventy-sixdegrees Fahrenheit;

(c) flashing-point" of any petroleum means the lowest temperature at which it yields a vapourwhich will give a momentary flash when ignited, determined in accordance with theprovisions of Chapter II and the rules made there under;

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[(d) "To transport" means to move petroleum from one place to another within Pakistan, byland, sea or air, and includes moving from one place to another in Pakistan across territorywhich is not part of Pakistan.]

(e) "To import" petroleum means to bring it into Pakistan by land, sea or air, otherwise thanduring the course of transport!

(f) "To store" petroleum means to keep it in anyone place, but does not include any detentionhappening during the ordinary course of transport;

(g) "motor conveyance" means any vehicle, vessel or aircraft for the conveyance of humanbeings, animals or goods, by land, water or air, in which petroleum is used to generate themotive power;

(h) "Prescribed" means prescribed by rules made under this Act.

3. Import, transport and storage of petroleum

(1) No one shall import, transport or store any petroleum save in accordance with rules madeunder section 4.

(2) Save in accordance with the conditions of any licence for the purpose which he may berequired to obtain by rules made under section 4, no one shall import any dangerouspetroleum, and no one shall transport or store any petroleum.

4. Rules for the Import, Transport and Storage of petroleum. The Federal Government maymake rules.

(a) Prescribing places where petroleum may be imported and prohibiting its importelsewhere;

(b) Regulating the import of petroleum elsewhere;

(c) Prescribing the periods within which licences for the import of dangerous petroleum shallbe applied for, and providing for the disposal, by confiscation or otherwise, of any dangerouspetroleum in respect of which a licence has not been applied for within the prescribed periodor has been refused and which has not been exported.

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(d) Regulating the transport of petroleum;

(e) Specifying the nature and condition of all receptacles and pipelines in which petroleummay be transported;

(f) Regulating the places at which and prescribing the conditions subject to which petroleummay be stored;

(g) Specifying the nature, situation and condition of all receptacles in which petroleum maybe stored;

(b) Prescribing the form and conditions of licences for the import of dangerous petroleum,and for the transport or storage of any petroleum, the manner in which applications for suchlicences shall be made, the authorities which may grant such licences and the fees which maybe charged for such licences;

(i) Determining in any class of cases whether a licences for the transport of petroleum shallbe obtained by the consignor, consignee or carrier;

(j) Providing for the grant of combined licence for the import, transport and storage ofpetroleum, or for any two of such purposes;

(k) Prescribing the prop oration in which any specific poisonous substance may be added topetroleum, and prohibiting the import, transport or storage of petroleum in which theproportion of any specified poisonous substance exceeds the prescribed proportion; and

(1) Generally, providing for any miller which in its opinion is expedient for proper control overthe import, transport and storage of petroleum.

5. Production refining and blending of petroleum.

(I) No one shall produce, refine or blend petroleum save in accordance with the rules madeunder sub-section (2).

(2) The Federal Government may make rules.

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a) Prescribing the conditions subject to which petroleum may be produced, refined orblended; and

(b) Regulating the removal of petroleum from places where it is produced, refined or blendedand preventing the storage

Therein and removal there from, except as dangerous petroleum, of any petroleum which hasnot satisfied the prescribed tests

6. Receptacles of dangerous petroleum to show a warning

All receptacles containing dangerous petroleum shall have a stamped, embossed, painted orprinted warning, either .on the receptacle itself Of, where that is impracticable, displayednear the receptacle, exhibiting in conspicuous characters the words "petrol" or "Motor Spirit",or an equivalent warning of the

Dangerous nature of the petroleum:-

Provided that this section shall not apply to:-

(a) Any securely stopper glass, stoneware or metal receptacle of less than two gallons capacitycontaining dangerous petroleum which is not for sale, or

(b) A tank incorporated in a" motor conveyance, or attached to an internal combustionengine, and containing petroleum intended to be used to generate motive power for themotor conveyance or engine, or

(c) A pipe line for the transport of petroleum, or

(d) Any tank which is wholly underground, or

(e) Any class of receptacles which the Federal Government may, by notification in the officialGazette, exempt from the operation of this section.

7. No licence needed for small stocks of non-dangerous petroleum not in bulk.

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Notwithstanding anything contained in this Chapter, a person need not obtain a licence forthe transport or storage of non-dangerous petroleum if the total quantity in his possession atanyone place does not exceed five hundred gallons and none of it is contained in a receptacleexceeding two hundred gallons capacity.

8. No licence needed by railway administration acting as carrier

Notwithstanding anything contained in this Chapter, a railway administration, as defined insection 3 of the Railways Act, 1890. Need not obtain any licence for the import or transportof any petroleum in its possession in its capacity as carrier.

9. Exemption of heavy oils.

Nothing in this Chapter shall apply to any petroleum which has its flashing point not belowtwo hundred degrees Fahrenheit.

CHAPTER II

THE TESTING ON PETROLEUM

10. Inspection and sampling of petroleum

(I) The Federal Government may, by notification in: the official Gazette, authorise any officerby name or by virtue of office to enter any place where petroleum is being imported, stored,produced refined or blended and to inspect any take samples for testing of any petroleumfound therein.

(2) The Central Government may make rules:

(a) Regulating the taking of samples of petroleum for testing,

(b) Determining the cases in which payment shall be made for the value of samples taken,and the mode of payment, and

(c) Generally, regulating the procedure of officers exercising powers under this section.

11. Testing officers

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The Federal Government may authorise any officer by name or by virtue of office to testpetroleum of which samples have been taken under this Act, or which may have beensubmitted to him for test by any person, and to grant certificates ofthe results of such tests.

12. Manner of test.

All tests of petroleum made under this Act shall be made with a test apparatus in respect ofwhich there is a valid certificate under section 16, shall have due regard to any correctionspecified in that certificate, and shall be carried out in accordance with rules made undersection 21.

13. General penalty for offences under this Act.

(I) Whoever-

(a) in contravention of any of the provisions of Chapter 1 or of any of the rules made thereunder, imports, transports, stores produces, refines or blends any petroleum, or

(b) Contravenes any rule under made section 4 or section 5, or

(c) being the holder of a licence issued under section 4 or a person for the time being placedby the holder of such licence in control or in charge of any place where petroleum is beingimported or stored, or is under transport, contravenes any condition of such licence or suffersany condition of such licence to be contravened, or

(d) being for the time being in control or in charge of any place where petroleum is beingimported, stored, produced, refined or blended or is under transport refuses or neglects toshow to any officer authorised under section 13 any receptacle, plant or appliance used insuch place in connection with petroleum, or in any way obstructs or fails to render reasonableassistance to such officer during an inspection, or

(e) being for the time being in control or in charge of any place where petroleum is beingimported, transported, stored, produced, refined or blended, refuses or neglects to show toany officer authorised under section 14 any petroleum in such place, or to give him suchassistance as he may require for the inspection of such petroleum, or refuses to allow him totake samples of the petroleum, or.

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(f) being required, under section 27, to give information of an accident fails to give suchinformation as so required by that section, shall be punishable with fine which may extend tofive hundred rupees.

(2) If any person have been convicted of any offence punishable under sub-section

(I) is again guilty of any offence punishable under that sub-section, he shall be punishable forevery such subsequent offence with fine which may extend to two thousand rupees.

Conditions or requirements to open petrol pump stationFollowing are the eligibility requirements for individual applicants:

You must be an Indian citizen and Resident of India as on date of affidavit.

Age of individual applicant must be 21-55 years (except for Freedom Fighter underCC2 category).

Minimum educational qualification required for rural ROs is 10+2 examinationconducted by a Board/University and Graduation/ Chartered Accountant/ CompanySecretary/ Cost Accountant/ Diploma in Engineering for regular ROs. For candidatesbelonging to CC1 and CC2 category, minimum education required is Class 10th andClass 10+2 examination conducted by a Board/University for rural ROs and regular ROsrespectively. However, this norm of minimum education is not applicable to freedomFighters under CC2 category.

Minimum fund requirement is Rs. 12,00,000 and Rs. 25,00,000 respectively for ruralROs and regular ROs. This fund can be in the form of savings accounts, deposits withbank/registered companies/postal schemes OR bonds OR shares of listed companiesin Demat form OR mutual funds OR National Savings Certificates, etc. Please note thatonly 60% of the certified value of Shares, Mutual funds & Bonds will be taken intoconsideration for eligibility purpose.

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All applicants must possess suitable piece of land in the area mentioned inadvertisement. You may either own it or have it on long term lease for minimum timeperiod as specified in notification.

What are license fees and application fees for petrol pump station?At present, license fees is Rs. 18/KL for MS and Rs. 16/KL for HSD for dealer owned "B" / "DC"site ROs, while license fees is Rs. 48/KL for MS and Rs. 41/KL for HSD for corporation owned"A" / "CC" site ROs.

Application fees are Rs. 100 in case of rural ROs and Rs. 1000 in case of regular ROs. 50%concession is available for candidates belonging to SC/ ST. Application fees must be paid inthe form of Demand Draft (DD) of schedule bank drawn in favour of concerned Oil Company.Fees is non-refundable. Please note that one applicant cannot apply for more than onelocation. In other words one application for one applicant for the location.In case of Dealer Owned / Company leased sites, non-refundable fixed fees of Rs. 5,00,000 isrequired to be paid for rural ROs and Rs. 15,00,000 is required to be paid for regular ROs. Incase of Corporation owned sites (other than CFS) which involves bidding for allotment,bidding amount of Rs. 10,00,000 and Rs. 30,00,000 is applicable for rural ROs and regular ROsrespectively.How to apply online for retail outlet of HPCL/ BPCL/ IOCLFirst of all, you will have to look or wait for the release of an open advertisement by the oilcompany. Advertisements are published in newspapers and on official websites of concernedcompany. These advertisements or notifications inform the location/s where the companyproposes to set up a retail outlet (which we generally call as a petrol pump). Interestedcandidates can apply for license for opening petrol pump in desires state/ city/ town/ area.

Online applications can also be submitted at official websites of oil companies. Applicationsmust be submitted before said last date of submission. Hard copies must also be submittedalong with all relevant documents within seven days of expiry of last date of onlineapplication. Applications must be submitted in a sealed envelope mentioning the name &serial number of the location (as per the advertisement). Envelop must also be super scribed

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as "Application for Regular RO / Rural RO dealership at _________________ (location),______________(District) of____________(Name of Oil Company)".

List of documents to be submitted for getting approval forinstallation of new Fuel Station along National Highways1. Signed copy of license deed. The draft is at Annex III.

2. Certified copy of location plan of the Fuel Station along the National Highway showingdetails of Right of Way (ROW) of National Highway, access roads to private properties, existingpublic roads and other developments falling within a reach of 1.5 km in each side of the FuelStation and carriageway.

3. Certified copy of plan of the proposed Fuel Station showing details of deceleration,acceleration lanes, service road (if provided), buffer strip, fuel pump, office, kiosk,lubritorium, air and water supply, drainage details, signs and markings conforming toapplicable figures enclosed with these Norms.

4. Certified copy of sectional view showing elevation of Fuel Station with respect to NationalHighway and slopes to be provided for adequate drainage and preventing water logging onNational Highway.

5. Drainage plan of the Fuel Station.

6. Details of the material for pavement composition for deceleration lane, service road andacceleration lane.

7. Inspection report of the officer inspecting the site of proposed Fuel Station and certificatethat all standard conditions have been specified.

8. Detailed explanation for reasons for recommending the exemption from stipulated norms(if required).

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9. Undertaking from the oil company/owner that the oil company/owner would paynecessary fee for the use of the National Highway land whenever the fee is asked by theHighway Authorities in future.

10. Undertaking from Oil Company that necessary alteration including completeremoval/shifting of the approach roads at its own cost if so required by Ministry, for thedevelopment of National Highway or in the interest of safety in this section.

11. Undertaking from Oil Company that they shall take all the action as prescribed in AppendixI to ensure conformity of these Norms.

Export- Import Policy (1997-2002)Export Import Policy or better known as Exim Policy is a set of guidelines and instructionsrelated to the import and export of goods. The Government of India notifies the Exim Policyfor a period of five years (1997-2002) under Section 5 of the Foreign Trade (Development andRegulation Act), 1