Post on 04-Apr-2018
7/29/2019 Oil Industry Presentation
1/22
Oil IndustryGlobal Business Dynamics Project
Team Members
Chinmay
Gulshan
Sanjay
Swapnil
Vaibhav
7/29/2019 Oil Industry Presentation
2/22
Agenda
1. Countries Consumptions and history
2. Supply of oil through OPEC & Non OPEC countries
3. Price & Output (stock) fluctuations.
4. Dollar , Gold and Oil correlation
5. Price impact on retail user in the Indian context
6. World prices affecting BOP of India.
7/29/2019 Oil Industry Presentation
3/22
BLACK GOLD .OIL
Oil , Black Gold has fascinated humankind for long.
Played a significant role in the growth of civilization and influence of social development.
History of Oil began over 5000 years ago in the form of Crude Oil.
The current era started in August 1859 when first oil well was drilled by Edwin L Drake inPennsylvania.
Today without Oil, mans ability to adapt to the dynamics of life will be almost nothing.
It is estimated that 40% of the worlds total primary energy demand is fulfilled by oil.
7/29/2019 Oil Industry Presentation
4/22
WORLD OIL RESERVES
As per estimations, the world contains 4 Trillion barrels and approximately half of its
recoverable.
World has already consumed 465 billion barrels and by current rate of 22 billions/year
the world has about 40 years left to enjoy the luxuries of Oil.
Biggest Reserves are with Saudi Arabia 23.5% , Iraq 9.5%, Kuwait 8.5%, UAE 9%, Iran 9%,
Libya 4.5%, Nigeria 3.5%, Qatar 2.5%, Venezuela 7%, Mexico 5%, Canada 5%, Southeast
Asia 5% and Central Asia 5%.
7/29/2019 Oil Industry Presentation
5/22
WORLD OIL CONSUMPTION
The world increased its daily oil consumption from 63 million barrels (10,000,000 m3) (Mbbl)
in 1980 to 85 million barrels (13,500,000 m3) in 2006
Between 1995 and 2005, U.S. consumption grew from 17,700,000 bpd to 20,700,000 bpd.
Chinas consumption increased from 3,400,000 bpd in 1995 to 7,000,000 bpd in 2006.
Indiasconsumption increased from 1,200,000 bpd in 1995 to 3,100,000 bpd in 2006.
7/29/2019 Oil Industry Presentation
6/22
INDIAS OIL CONSUMPTION
Indias economy is expected to grow at a
rate of 7% per annum over the next five
years, meaning its demand for energy will
also increase.
Indias domestic oil production, though,
only covers around 22% of consumption
and this share will probably drop in the
coming years
India is likely to become in the next five
years more dependent on oil imports.
Major part of Oil requirement is for the
Automotive Sector
7/29/2019 Oil Industry Presentation
7/22
OPEC
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent,
intergovernmental Organization, created at the Baghdad Conference on September 1014,
1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Present HQs at Vienna.
Present Members:
Algeria Libya
Angola Nigeria
Ecuador QatarIran Saudi Arabia
Iraq United Arab Emirates
Kuwait Venezuela
The mission of the Organization of the Petroleum Exporting Countries (OPEC) is to coordinate
and unify the petroleum policies of its Member Countries and ensure the stabilization of oil
markets in order to secure an efficient, economic and regular supply of petroleum to
consumers, a steady income to producers and a fair return on capital for those investing in the
petroleum industry.
7/29/2019 Oil Industry Presentation
8/22
OPEC produces only an agreed quota of Oil to keep prices moderate and profits good.
Though presently OPEC does not have high influence in OIL economy because new reserves
discovered.
7/29/2019 Oil Industry Presentation
9/22
INDIAS OIL Production and Imports
INDIAS Dependence on OPEC
7/29/2019 Oil Industry Presentation
10/22
Price and Output Fluctuations
7/29/2019 Oil Industry Presentation
11/22
Price and Output Fluctuations
Impact Of Geopolitical events
Demand Supply factors
Demand factors
1) Cyclical demand
2) Prices of substitutes
Supply factors1) Profit motive
2) Spare capacity
Production shocks
Peak oil factor and declining production
Speculation
7/29/2019 Oil Industry Presentation
12/22
Price and Output Fluctuations
7/29/2019 Oil Industry Presentation
13/22
Dollar, Oil and Gold Correlation
7/29/2019 Oil Industry Presentation
14/22
Imported Items likeoil, gold cost more
dollars
Items India Exports
earn more dollars
Increase in Trade
Deficit
(Export - Imports)
Hits the currency value of the country
Affects the money circulations in the economy
INFLATION
Dollar Weakens against the rupee
Increase in import bill
Higher Trade Deficit
Oil, gold and commodities have traditionallybeen priced in US dollars since 1970s when
OPEC decided to sell its oil exclusively for
US dollars.
What if Dollar looses value?
Dollar, Oil and Gold Correlation
7/29/2019 Oil Industry Presentation
15/22
An increase in oil price results in increasing inflation,negatively impacting the economy of any country .
Gold is a traditional inflation hedge.
Countries have got Foreign Reserves and these
reserves are in form of Dollars.
India boasts about 140 Billion Dollars of reserves.
Dollar, Oil and Gold Correlation
7/29/2019 Oil Industry Presentation
16/22
Last Decade Analysis
7/29/2019 Oil Industry Presentation
17/22
Price impact on Retail user in the Indian Context
i i il i h di
7/29/2019 Oil Industry Presentation
18/22
Price impact on Retail user in the Indian Context
Prices of essentials like kerosene, LPG & diesel are regulated and subsidized.
India has shown significant elasticity of petrol consumption vs. petrol prices.
India's oil consumption as a % of GDP is 6.5% & we import 3/4 of our oil requirement.
India spent USD 79.55 billion on oil import last year
Every 10% increase in oil prices reduces our GDP growth by 0.47 bps
With rising oil prices, Government acts as a buffer, the oil subsidy bill further increases fiscal
deficit
This directly increases inflation
Higher Inflation attracts monetary tightening by RBI
Thus through Inflation, oil prices have a cascading effect on Indian consumers
7/29/2019 Oil Industry Presentation
19/22
World OIL price affecting Indias BOP
7/29/2019 Oil Industry Presentation
20/22
World Crude Prices affecting Indias BOP
Increase of US$1/bbl increases import bill by US $700mn.
Widening of Current Account Deficit. ($43.9 billion as on Sep 2011)
Issue of Bonds by the Indian Government.
High Inflation rate.
Weakening of the Indian Rupee.
Imports becomes more expensive & exports less valuable.
Drop in real national income.
Increase governments budget deficit.
7/29/2019 Oil Industry Presentation
21/22
Conclusion
Crude oil - Lifeline to the world's economy.
Increased oil prices have definite impact on world economy.
Formulate policies to bring alternative energies into the market.
Encourage the producers by providing carbon free energy credit.
7/29/2019 Oil Industry Presentation
22/22