PEST ANALYSIS 9 million ton oil refinery in

Bandar Abbas Iran

Presented By - Vinod K N -1421005Divyansh Jain -1421002Ligin Varghese -1421003

PEST

Political

Technology

Social

Economical

Political Risk OPEC Politica

l

Political Risk Availing in Iran:

• Sanctions• Inflation• Protectionism• War• Bonyads• The IRGC

Foreign direct investment in Iran increased 14-17% since 2011, about 70% of which went to Iran’s oil and gas industries.

During the last three years, as a result of intensified sanctions and failed domestic financial policies, especially subsidy reforms, Iranian currency lost about two-thirds of its value. Iran’s “flexible exchange rate.

Because of their potential willingness to flaunt sanctions, Iran has increasingly approached Russia, China, and India to increase foreign investment.

Role of FDI

Global Balance Summary

It can be recommended to the Iranian government to maintain a fixed exchange rate and at the same time control inflation to create a safe and predictable environment for foreign investors.

Increase efforts to improve their relationship with the West, particularly with the US, to facilitate the lifting of sanctions.

Advisable that Iran starts enforcing international courts’ decisions and laws to provide a sense of security for foreign investors.

Restrict the IRGC and Bonyads’ involvement in economic affairs to establish an environment of equal opportunity for all investors.

Political Recommendations*

OPEC is facing internal strains due to U.S. shale boom

U.S. shale oil will continue to cut into the OPEC’s share of global oil production, which will reflect primarily through the decreased exports to the United States and additional downward pressure on oil prices.

In addition, Iranian and Iraqi plans to scale-up their oil production could produce a significant stir within the organisation and escalate tensions with Saudi Arabia. Iran’s recent pledge to increase its production for more than 1mb/d, regardless of the potential for the oil prices to plunge significantly did not go well with the cartel’s informal leader

?? Heading

Iran has 157.01 billion barrels of proven oil reserves - that is about 10% of world proven reserves

Domestic consumption in Iran has risen dramatically since 1980 when extensive subsidies for fuel were introduced. In 2010 domestic fuel consumption stood at 1.845 million barrels of Oil a day, however, recent measures to reform the subsidy system begun to reverse this trend. Notably as of October 2011 fuel consumption is recorded to have fallen by between 4% and 19%.

Economical

The Bandar Abbas Refinery produces 19 percent of Iran’s total oil products, according to an industry publication.

Bandar Abbas had a total daily refining capacity of 320,000 bpd, according to Iran’s Shana.

Bandar Abbas Refinery planned to use from crude oil from the Soroush and Noruz offshore oil fields in the Persian Gulf, according to the Tehran Times.[6] The crude oil is taken from Khark Island by tanker to the refinery, according to the Iranian Pasargadoil Company

Availability

OIEC reports that the Bandar Abbas Refinery is designed to meet the demands of Southern Iran and Iran’s central regions via the 450 kilometer Bandar-Rafsanjan pipeline and be used for export

Competitors -

• ABB Lummus ( Germany )• Axens ( France )• Bandar Abbas oil refinery corporation ( Baorco, Iran )• Cortem Group ( Italy )• Chiyoda Corporation ( Japan )• Daelim Industrial Corporation ( South Korea )

OIEC – Oil industries engineering & construction.

Heading ??

The region typically produces two grades - the National Iranian Oil Co's (NIOC) straight-run 280-CentiStokes (cst), mainly used as feedstock in refineries, and the cracked 380-cst as bunkering fuel (any type of fuel used aboard ships). Iranian cargoes are in high demand in Asia because their low-density, low-water specs allow blenders to extract more value from the oil.

Crude Oil Qualities

Iran began in 2006 with plans to create a global strategic petroleum reserve with the construction of 15 crude oil storage tanks with a planned capacity of 10 million barrels (1,600,000 m3).

The storage capacity of oil products in the country is around 11.5 billion liters (2011), but it will reach 16.7 billion liters by the end of the Fifth Five Year Development Plan (2010-2015).

As of 2012, Iran is capable of storing crude oil in the Persian Gulf for a period of 10–12 days. The figure should hit 30–40 days after the construction of new storage facilities are completed

Storage Strategies

Iran has held observer status at the World Trade Organization (WTO) since 2005. Although the United States has consistently blocked its bid to join the organization, observer status came in a goodwill gesture to ease nuclear negotiations between Iran and the international community

. The UN Security Council imposed sanctions against select companies linked to the nuclear program, thus furthering the country's economic isolation

The IEA estimated that Iranian exports fell to a record of 860,000 bpd in September 2012 from 2.2 million bpd at the end of 2011. lead to drop in revenues and clashes on the streets of Tehran when the local currency, the rial, collapsed. September 2012 output was Iran's lowest since 1988

Heading ??

SocialAlthough Iran does not offer universal social protection, in 1996, the Iranian Center for Statistics estimated that more than 73% of the Iranian population was covered by social security.[Membership of the social security system for all employees is compulsory.

Social security ensures employee protection against unemployment, disease, old age and occupational accidents.[In 2003, the government began to consolidate its welfare organizations to eliminate redundancy and inefficiency

Iran Govt. Structure

Employees between the age of 18 and 65 years are covered by the social security system with financing shared between the employee (7% of salary), the employer (20–23%) and the state, which in turn supplements the employer contribution up to 3%.

Social security applies to self-employed workers, who voluntarily contribute between 12% and 18% of income depending on the protection sought.Civil servants, the regular military, law enforcement agencies, and IRGC have their own pension systems

Heading ??

Topics left outBank rates of banks in Iran

Cost of production

Cost of capital

Technological changes

Technology brought from which country ?

References at last page

Energy – Imp-

Iranian Rial Devaluation

In " Future 20-years Prospect" National Act and Economical Planning of Oil Industry, the essential strategy of the Government has been based on the development of economical activities related to oil, gas and petrochemical industries. Meanwhile, energy saving subject to optimum energy consumption in oil industry has been emphasized. Comprehensive operational improvement of productivity and efficiency, especially for optimum energy consumption and minimum environmental pollution, is a key positive attitude.

Phase one : feasibility study and data gathering Phase two: energy consumption audit Phase three: analysis and solutions along with economical evaluations

Energy

The state government has started the process of acquiring about 926 hectare for the proposed 9 mtpa refinery project near the Barmer oil fields of Cairn India. It may also take equity in the project besides giving fiscal concessions to make it viable.

land