A

GLOBAL / COUNTRY STUDY AND REPORT

ON
OIL AND GAS INDUSTRY OF QATAR
Submitted To
N. R. Institute Of Business Management
IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

In
Gujarat Technological University
UNDER THE GUIDANCE OF FACULTY GUIDES
Prof. Amish Soni
Prof. Deepa Vyas
Prof. Komal Sidhnani

SUBMITTED BY
Amit 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 MANAGEMENT

MBA PROGRAMME Affiliated to Gujarat Technological University Ahmadabad

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

Enrollment no.

Name

137350592010

Amit Patel

137350592091

Naineel Desai

137350592034

Chintan Patel

137350592001

Aadil Rushnaiwala

137350592090

Musab Pehlari

137350592021

Sailesh Bhavnani

Place: ____________
Date: _____________

Signature

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

________________

_______________
Dr. Hitesh Ruparel

Prof. Amish Soni

(Project Guide)

(Director)

_________________
Prof. Komal Sidhnani
(Project Guide)

________________
Prof. Deepa Vyas
(Project Guide)

Plagiarism Report

Company Certificate

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, The
ability to capture, communicate & leverage knowledge to solve problems is human power.
This raises the question how exactly one can best capture, communicate & leverage
knowledge, especially within world of system engineering.
The answer probably lies in statement itself by communicating your ideas and devising ways
and 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 this
long-term investment. This course not only enabled me to focus firmly on the current trend
but 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 keeping
the prerogative and preferences of industry in mind. This particular project allows a student
to implement what he/she has learned within the four walls of classroom. It is here that the
calibre of student is tested to find his/her flexibility for rigorous tasks assigned to his/her in
future.
The country under our purview is Qatar. This project report has studied the market and
business opportunities for Indian companies as well as Qatar companies. And prepare
Business model for Qatar and Indian oil and gas companies.
Finally the report attempts to be helpful to all the readers as well.

vi

ACKNOWLEDGEMENT

It gives us the immense pleasure to present this case. Completing a task is a never a one-man
effort. It is often the result of valuable contribution of a number of individuals in a direct or
indirect manner that helps on shaping and achieving an objective.
We wish to express our sincere gratitude to innumerable number of people who have been
associated with us throughout this project. We feel blessed to have the opportunity of
expressing our hearty gratitude to the following personalities, without the help of whom our
project could not have been hatched.
We express our sincere thanks to Dr. Hitesh Ruparel for giving us the opportunity to study in
this institute.
We express our sincere thanks to Prof. Amish soni, Prof. deepa vyas, Prof. Komal Sidhnani
who guided our group throughout the project and gave us valuable suggestions and
encouragement to complete project report successfully. We express our sincere gratitude to
her that she gave her valuable time to support us.
We have no words to express our gratitude for the ungrudging and unfailing cooperation of
our group members. Finally we want to thank all the friends, colleagues for their constant cooperation, encouragement, help and support throughout the study without which this work
would not have been possible.

vii

Index
Chapter

Particulars

Page No.

Executive summary (sem - lll)

Executive summary (sem - lV)

10

The business plan

16

Description of business

17

Implementation plan

19

Brief of business plan

22

Automatic fuelmatics machines

30

Market analysis and marketing plan

35

4 Ps

36

Market segmentation

37

Target market

38

Industry competitive analysis

41

Porters five forces

42

SWOT analysis

47

PEST analysis

48

Import Export

49

Business conditions in Qatar

61

Financial Analysis

69

Findings and suggestions

79

10

Conclusion

82

Bibliography

84

viii

EXECUTIVE SUMMARY (SEM-lll)

OIL AND GAS INDUSTRY IN QATAR
Qatar is a Middle Eastern peninsula jutting north into the Persian Gulf. The country shares a
border with Saudi Arabia, and is located between Bahrain to the northwest and the United
Arab 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 is
estimated that 40% are Arab, 18% Indian, 18% Pakistani, and 10% Iranian, with 14% making
up other ethnic groups. The principal religion is Islam.
Until October 2004, Qatari laws operated on a two-tier system: Sharia law was administered
at the local level, while the civil courts operated on the English model, a hangover from a
period during which Qatar was a British protectorate. A new unifying law has since come into
force, and the Qatari Constitution came into effect in June 2005; Islamic Sharia is the principal
source of legislation.
The government of Qatar is based on a traditional monarchy, whereby the Emir (presently
Amir Tamim bin Hamad Al-Thani) is head of state. The Prime Minister is Abdallah bin Nasir
bin 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 production
accounting for around two-thirds of total government revenues; Qatars proven gas
reserves are the third largest in the entire world. Liquefied natural gas (LNG) and oil exports
make up around 85% of all exports and more than 50% of GDP. Per capita GDP is also among
the worlds highest, at US$102,900 in 2012 Qatar has one of the fastest gro wing economies
with the highest per capita income in the world. Qatars economy is projected to continue
slowing down in 2014 after recording one of the worlds highest growth rates following the
completion of major gas projects. Growth slowed down to an estimated 6.1 percent in 2013
and is expected to continue its downward trend to reach 5.9 percent in 2014, according to
IMF estimates.

Qatar is currently undergoing massive transformation under the rubric of the 2030 National
Vision, which aims to establish an advanced, knowledge-based, and diversified economy, no
longer reliant on the hydrocarbon sector. The government is heavily involved in Qatar's
economy, although it strongly encourages private investment in many sectors. Investments
in Various sectors including health care, education, tourism and financial services, among
others, are expected to offer greater opportunities for foreign investment.
In June 2013 Qatars Amir, Sheikh Hamad bin Khalifa Al Thani, abdicated to his son Sheikh
Tamim bin Hamad Al Thani. The smooth transfer of power to Amir Sheikh Tamim bin Hamad
Al Thani is unlikely to lead to any major changes to the countrys implementation of the 2030
National Vision. Amir Sheikh Tamim is expected to continue focusing on infrastructure
development, economic diversification, education, and healthcare, underwritten by the
natural resource wealth of country.
Qatar National Vision 2030 rests on 4 pillars Human Development to facilitate all of Qatars
people to keep up a well-off society. Social Development to sustain a just and gentle society
based on high moral principles and capable of playing a well-known role for development in
global partnership. Economic Development to attain an aggressive and diversified economy
able of meeting the needs of, and secure a high standard of living for, its whole people for the
present and for the future.
Environmental Development to guarantee harmony along with economic growth, social
development and environmental protection. Qatars management of its hydrocarbon
resources will continue to secure step up in standards of living, but those development cannot
be the only aim of society. The National Development Strategy 20112016 thus aims to
balance 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 2011
2016. Speedy growth in the 2000s, the best ever in the world, has specified Qatar one of the
worlds utmost levels of per capita income. Lofty saving, both private and public, has been
reproduce in substantial domestic investment and the buildup of a substantial pool of foreign
currency assets. To meet new demands in a more complex economy and to reinforce
Performance, Qatar has embarked on a diversity of reforms. The reform aspires to transport
2

together decisions of national implication within an included framework for making

premeditated and concerted choices about Qatars future. At a prepared level the reforms
highlight development in public services and relief of value for money, thereby eyecatching opportunities and conditions for the country and for individual citizens. By helpful
national development main concern and direction, the reforms provide greater obviousness
for the private sector and public society, leading to better position of welfare across the
country.
As Qatar is a member of the Gulf Co-operation Council and so it contributes to the
execution of amalgamation and strength among GCC member countries to meet

the

expectations of its people in the important areas such as guard, calmness, business and
economic development. Basic Law of Qatar 1970 is applied in the state which enforces the
local customs that are been rooted in the traditional Islamic Heritage of the state. Yielding
Emir the finest authority as they are favorers of following the conventional Islamic rules and
customs. The role of Emir is influenced by the religious teachings and the rules of
consent and discussion of the Islam religion where the public in general have the right
to come out of the Emir openly so that they can face any situation in future. Majlis asShura have a total of 35 members is in the consultative assembly and is in local way run with
a 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 15
members elected by the Emir in the year 2003. The basis for the system of government
is democracy. The official language is Arabic and the people of Qatar are part of the Arabic
nation. The country became independent in 1971 and since then The Advisory Council is
considered to be the first pioneering democratic experience to

prove successful and

well suited to the countrys political and social conditions. It received profound attention
from the government under the leadership of the Emir(H.H.Sheikh Hamad Bin Khalifa AlThani) which resulted in the evident development of the example of the Qatari advisory
council the expansion of its responsibilities and the moral and practical weight of its
deliberation in the political practice.
After Qatar confirmed its independence from British ruling, the country carry on to change
and grow on an almost day by day, it is remarkable to think the differences to have come
3

about over the past 4 years, never mind 40, and for those who have onlooker the times
changing, the current day Doha is different beyond gratitude in most aspects. Qatar
National Vision 2030 (QNV 2030), launched in October 2008, builds a bridge from the
present to the future. It intends to convert Qatar into an advanced country, behind its
growth 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 envisages
all Qataris working together in pursuing this goal, with strong Islamic and family values
directing their collective energies.
Qatar National Vision 2030 builds on a society that promotes justice, benevolence and
equality. It exemplifies the principles of the Permanent establishment, which shelter public
and personal freedoms, promotes ethical and religious values and customs, and guarantees
safety, stability & equal opportunities.

OIL & GAS INDUSTRY IN INDIA

India has one of the fastest growing economies in the world, and the demand for oil and gas
is rising at a matching rate. Not only is Indias market potential huge, but in recent years India
has emerged as one of the most prospective regions in the world with major oil and gas
discoveries, both onshore and offshore.
India has total reserves (proved & indicated) of 1,201 million metric tonnes (MMT) of crude
oil and 1,437 billion cubic metres (BCM) of natural gas as on April 1, 2010, according to the
basic statistics released by the Ministry of Petroleum and Natural Gas. Against a crude oil
production of about 37 million tonnes per annum (MTPA), Indias consumption currently
exceeds 138 million tonnes. In 2010, 194 MMT of crude oil was refined and actual natu ral gas
production was 31.0 BCM. By the end of 2012, the refinery capacity is expected to reach
240.96 million metric tonnes per annum (MMTPA).
The refining capacity of the oil refineries in India has undergone nearly a three -fold increase
in 2010. The country exported 50.974 MMT of petroleum products during 2009-10. To
provide energy security, the Government of India is seeking private and foreign investments
in excess of $250 billion in both the upstream and the downstream sectors during the next 10
years. Indias petroleum product consumption has grown by 4-5% in last 10 years and the oil
demand in India is likely to rise to 368 MMTPA by 2025. With widening gap between demand
and 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 for
harnessing alternate energy sources like Coal Bed Methane (CBM), Underground Coal
Gasification (UCG) and Shale Gas (gas locked in sedimentary rocks) will become vital to fulfil
the demand and supply of products.
The Government of India approved the New Exploration Licensing Policy (NELP) on April
9,2009, to tackle the increasing demand supply gap of energy in India. In the eighth round of
the NELP-VIII, 1.62 km2 areas will be covered comprising of 70 oil and gas blocks and 10 areas
for 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 Delhi
on 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
5

ever 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 which
have been able to commercially exploit this resource.
In this report an attempt has been made to provide the broad understanding of the oil and
gas sector in India across the industries. The upstream and downstream processing sectors,
key players, key market, transportation and distribution network, fuel retailing, Indian
taxation systems have been presented. The Western Australian capability/ level of interest in
the market have also been described.
Indian oil and gas sector offers a considerable opportunity for investors and shows healthy
development in conformity with the escalation of the Indian economy. The New Exploration
Licensing Policy (NELP), which was envisaged to deal with the increasing demand-supply gap
of energy in India, has confirmed to be successful in attracting the interest of both domestic
and some overseas players. The prosperity of Cairn India and Reliance Industries Limited in
their Indian operations has emphasized this. Other sectors such as Refining, LNG, and City Gas
Distribution etc. are also getting sufficient attention. India has now an excess refining capacity
and aspires to prove itself as a major refining centre.
This report outlines the oil and gas sector in India and how companies can go about
achieving their business goals in the sector. It aims to provide a basic understanding of the
players, size, major developments, and dynamics of India's oil and gas sector across the
industries. Further, the report includes sections that provide summary of India's economy, its
energy sector, the Indian upstream sector, coal bed methane, refining, gas transportation and
distribution, LNG, petroleum product pipelines, fuel retailing, and India's taxation regime. A
brief 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 its
high population of roughly 1.2 billion the per-capita consumption of most energy associated
products is exceedingly low. The per capita energy consumption is assessed to be a very small
530 kg of oil equivalent (kgoe), while the world average is in the order of 1800 kgoe. The
Indian economy is assumed to display sound growth, which is evaluated to be in the region
of 6.6 percent in 2009-10. Confidence regarding the provision of Indias future growth
6

potential arises from its comparatively high levels of internal need and its advantageous
demographic dividend-the median age stood at 25.3 years in 2008 with only 5.3 percent of
the population being above 65 years of age. This healthy internal need is best exhibited by
the fact that the months of January and February 2010 saw telecom wireless subscriber
additions at an amazing 15.41 and 13.44 million respectively. When equated with other
countries, India's GDP is expected to continue to grow at rates above 5 percent and higher in
the 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 foreign
exchange reserves valued to be around US$250 billion in March 2009.
In 1997-98, the New Exploration Licensing Policy (NELP) was envisioned to deal with the evergrowing gap between demand and supply of gas in India. As per a recent report, the oil and
gas industry in India is anticipated to be worth US$ 139,814.7 million by 2015. With Indias
economic growth closely linked to energy demand, the need for oil and gas is projected to
grow 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 the
sector, such as natural gas, petroleum products, and refineries, among others. The
governments participation has made the oil and gas sector in the country a better target of
investment. Today, it attracts both domestic and foreign investment, as attested by the
presence of Reliance Industries Ltd (RIL) and Cairn India.
According to data released by the Department of Industrial Policy and Promotion (DIPP), the
petroleum and natural gas sector attracted foreign direct investment (FDI) worth Rs
31,501.55 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. RIL
has already invested US $7.3 billion since 2010 towards development of shale gas and oil in
the US market. The company also, along with its partner British Petroleum (BP), plans to invest
about Rs 800 crore (US$ 130.35 million) for exploratory drilling in an offshore slab of Bay of
Bengal. RIL is the operator of the offshore block CY-DWN-2001/2, also known as CY- III-D5,

with 70 per cent equity, with BP holding the remaining stake. BP's contribution to the
investment would be Rs 240 crore (US$ 39.11 million).
ONGC Videsh Ltd (OVL) has signed Production Sharing Contracts (PSCs) for two blocks in
Myanmar. The contracts were signed between OVL, Myanmar Oil & Gas Enterprises Ltd
(MOGE), National Oil Company of Myanmar, and Machine & Solutions Co Ltd (M&S). ONGC
will also invest over Rs 5,700 crore (US$ 928.73 million) to push up production by 6.9 MT of
crude oil and 5 billion cubic metres (bcm) of gas by 2030 from its Mumbai High (North) oil and
gas field.
Steel-to-BPO conglomerate Essar is in talks with Germany's BASF, the biggest chemicals
company 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 Oil
Company (KOC). L&T arm - L&T Hydrocarbon will carry out the order that entails engineerprocure-construct work for a gathering centre for KOC, a subsidiary of Kuwait Petroleum
Corporation.
Indian Oil Corporation Ltd (IOCL) through its wholly owned affiliate IndOil Montney Ltd,
Canada, has signed transaction agreements with Progress Energy Canada Ltd and PETRONAS
Carigali 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 Pacific
Northwest 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 for
partnership in the area of joint LNG procurement. Additionally, the two companies will look
to work together on shipping optimisation.
India and Azerbaijan have proposed to form a joint working group in the field of
hydrocarbon. The two countries have agreed to explore opportunities for partnership in
renewable energy sector, energy efficiency and numerous upcoming projects in petro chemicals, oil and gas, pipelines, etc., in India, Azerbaijan or other countries, in collaboration
or JV.
Mr Kazuyoshi Akaba, State Minister of Economy, Trade and Industry, Japan, met Mr
Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum and Natural Gas,
8

India. Mr Pradhan suggested taking the strong Indo-Japan bond to a higher level stating that
Japan 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 five
million tonnes per annum (MTPA). The terminal is expandable to 10-15 MTPA. This is part of
the corporations Rs 56,000 crore (US$ 9.12 billion) investment plan for the 12th Five-Year
Plan (2012-17).

Executive summary (SEM-lV)

The oil and gas sector is one of the six core industries in India. It is of strategic importance and
plays 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 evergrowing gap between demand and supply of gas in India. As per a recent report, the oil and
gas industry in India is anticipated to be worth US$ 139,814.7 million by 2015. With Indias
economic growth closely linked to energy demand, the need for oil and gas is projected to
grow 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 the
sector, such as natural gas, petroleum products, and refineries, among others. The
governments participation has made the oil and gas sector in the country a better target of
investment. Today, it attracts both domestic and foreign investment, as attested by the
presence 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. With
India developing gas-fired power stations, consumption is up more than 160 per cent since
1995. Gas consumption is likely to expand at a CAGR of 21 per cent during FY0817.Domestic
production 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 in
2013, accounting for 5.5 per cent of global imports. Indias LNG imports are forecasted to
increase 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).IOCL
operates 11,214 km network of crude, gas and product pipelines, with a capacity of 1.6 MBPD
of oil and 10 million metric standard cubic metre per day (MMSCMD) of gas. This is around
30 per cent of the nations total pipeline network. IOCL is the largest company, operating 10
out of 22 Indian refineries, with a combined capacity of 1.3 MBPD.

10

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 million
metric tonnes of crude oil and1437 billion cubic metres of natural gas as on 01 April 2010. The
total number of exploratory and development wells and metreage drilled in onshore and
offshore 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 gross
production 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% of
its 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 Asia
Pacific 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 the
foreign currency amassed and accounts for 17% of the total exports. Indias exports of refined
products stood at 0.95 million barrels per day as of June 2011 and US$ 4.6 billion worth of
petroleum products were exported during July 2011. Vastness of this sector is corroborated
by the fact that there were a total of 130,000 people employed in the petroleum industry in
2009-2010.
The oil industry can be divided into three major components: upstream, midstream and
downstream. 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, and
processing, storage, marketing and transportation of commodities such as crude oil and
natural gas.
11

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 Oil
and Natural Gas Commission (ONGC) have the onshore field for crude oil production. Offshore
production occurs at Bombay High run by ONGC and Private/Joint Venture companies. For
natural gas, onshore fields are at Assam, Tripura, Gujarat, Tamil Nadu, Andhra Pradesh and
Rajasthan. Offshore production of natural gas takes place at the Western area of Bombay
High.
India has 20 refineries out of which 17 are in the public sector and three in the private
sector. The total number of retail outlets of Public Sector Oil Marketing Companies in 2010
was 36462. The total number of LPG consumers of Public Sector Oil Marketing Companies in
2010 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 terms
of the percentage share in total production Oil and Natural Gas Corporation (ONGC) accounts
for 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. The
remaining 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 Natural
Gas Commission, Indian Oil Corporation, Hindustan Petroleum Corporation Ltd., Bharat
Petroleum 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 forseeable
future. While exploration activity has taken place on land and in shallow basins across the
country, it is believed by many that deep water and ultra-deep water oil and gas resources

12

hold the key to substantially increasing domestic production. This creates a plethora of
opportunities 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 Policy
have 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 Million
Tonnes 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, Reliance
Industries Limited and Gujarat State Petroleum have reportedly found natural gas in
deep waters.

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

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

13

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% of
Indias crude oil production through its operation of major stakes in the Rajasthan and
Gujarat regions and the Krishna-Godavari basin.

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

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

It is a transparent and level playing field for private investors and national oil
companies 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 and
they successful in supplying the relevant products.so we are preparing a business plan for an
automated 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, newspapers
and magazines, coffee and cigarettes, and lottery tickets. Ideally, after gassing up their
vehicle, customers will want to come inside to use our clean, well-maintained restrooms and
to purchase items from the convenience store.
Free air and water will be available. All major credit cards will be honoured, and debit cards
will be accepted. A drive-up telephone station will be available. Frequent customer
merchandising programs and tourist discounts will be developed and offered. Heightened
security standards will be met.
The business will sell all grades of fuel (diesel, high, medium and low grades), as well as motor
oil, lubricants, tires, batteries, and car accessories. Customers can choose between full service
and self-service. Self-service customers will be able to avoid standing in line at the cash

14

register and pay for their fuel purchase at the pumps, using a gas card, debit card or major
credit card.
The convenience store will sell snack foods such as candy, chocolate bars, potato chips and
similar items. We also plan to sell pre-made sandwiches and baked goods, which will be
brought 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 items
that people typically run out of in between trips to the supermarket, and emergency items
such 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 with
convenient 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 primary
factors are easy access, plentiful parking, and high visibility. This location fills all of those
requirements. 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 to
study the favourable environment of a country and turn challenges into opportunities
through strategies.
The business will begin operations upon receiving funding. An environmental audit will be
completed as required by law, following which, the site preparation and construction will
commence. The Company will install above-ground gas tanks that are in compliance with
applicable laws. HP will supply the oil and gas to the facility. The Company will also apply for
all necessary permit license.

15

CHAPTER: 1
The Business Plan

Description of Business

Implementation Plan

16

Description of Business
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, newspapers
and magazines, coffee and cigarettes, and lottery tickets. Ideally, after gassing up their
vehicle, customers will want to come inside to use our clean, well-maintained restrooms and
to purchase items from the convenience store.
Free air and water will be available. All major credit cards will be honoured, and debit cards
will be accepted. A drive-up telephone station will be available. Frequent customer
merchandising programs and tourist discounts will be developed and offered. Heightened
security standards will be met.

Fuel & Automotive Products

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

Convenience Store
The convenience store will sell snack foods such as candy, chocolate bars, potato chips and
similar items. We also plan to sell pre-made sandwiches and baked goods, which will be
brought 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 items
that people typically run out of in between trips to the supermarket, and emergency items
such as Band-Aids, painkillers, batteries, etc. There will be an ATM machine available in-store,
as well as auto car care as semi workshop.

17

Location
The location is Ahmadabad on a lot that measures 300 x 150 Sq. feet. The lot size allows for
future expansion. The site offers easy access from local city area at 132 feet Ring Road nearby
SP Road. Hours of operation will be 7 days 24*7 hours.
The location will be comprised of fully automated petrol and gas filling station with
convenient store semi-automated, and public restrooms. The fuel will be contained in above
ground tanks. Underground storage tanks usually fail due to rust perforation. Leaks can occur
because of tank damage or at piping connections. Above ground tanks are easier to maintain
and inspect, and to repair and replace if necessary.
For the business to be successful, location on a main highway with steady volumes of through
traffic is key. Other primary factors are easy access, plentiful parking, and high visibility. This
location fills all of those requirements. These numbers show that a gas station at this location
is feasible.

18

Implementation Plan
The business will begin operations upon receiving funding. An environmental audit will be
completed as required by law, following which, the site preparation and construction will
commence. The Company will install above-ground gas tanks that are in compliance with
applicable laws. HP will supply the oil and gas to the facility. The Company will also apply for
all necessary permit licenses.
The following table outlines the steps to be taken to start the business, with projected start
and completion dates:

Action Plan

Starting Date

Land use designation

Environmental audit

Funding application

Fuel sales permits

Tobacco sales license

Contract with supplier

19

Ending Date

Order

machinery

&

equipment for fuel sales

Prepare site

Install fuel equipment and

commence

construction

Order store fixtures & office

equipment

Installation of signage

Advertising

Hire staff

Order

inventory

for

convenience store

20

Grand opening

21

CHAPTER: 2
Brief of Business plan

Details of Business plan

What is Petrol Pump?

Products Marketed at Retail Outlets

Facilities provided at Retail Outlets

Safety Measures

Complaints

22

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 manufactures
petrol station pumps which is a pump in a service station that draws petrol from underground
storage tanks and delivers to the motor vehicles. A fuel dispenser is a machine at a filling
station 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 also
known as bowers.

1. What is Petrol Pump?

The most common point of contact of customers with Oil Industry is the Petrol Pump. In Oil
Industry 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 Oil
Companies as well as Private Sector Oil Companies dealing in storage and distribution of
petroleum products as per guidelines. Presently, the Oil Companies engaged in retail business
of 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 in
passenger vehicles such as 2 / 3 wheelers and cars. At present, HPCL markets two types of
Petrol across the country, i.e. normal Petrol and branded Petrol.
Normal Petrol: Normally used as a fuel for spark ignition internal combustion engines such
as passenger cars, two wheelers, three wheelers, etc.
Branded Petrol: This is preferred by new generation vehicles. It is slightly costlier than
normal Petrol. It has additives for optimizing performance of vehicles. It is sold under the
brand name PetroD.

23

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 marketing
of Ethanol Blended Petrol (EBP). The Practice of labelling on the pump is recommended for
ethanol marketing. To ensure presence of ethanol, EBMS field test is recommended in the
specification of EBMS and also under MDG. The customer can detect ethanol by mixing 100
ml of EMBS with 30 ml of water and by following field test procedure as described in
specification / MDG.

High Speed Diesel (HSD): PetroD Pvt. Ltd markets two types of Diesel across the country
i.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 the
brand Name Turbojet, which contains multi-functional additive that enhances the
performance 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 viscous
product used in the engine for its smooth functioning. Different grades of lubricants are
needed for different engines, gear box and other components. The RO dealer can guide on
the recommended grade of lubricant for the vehicle. HPCL regularly develops new products
to cater to different needs of the customers.
Compressed Natural Gas (CNG): CNG is an environment friendly fuel and available in
major 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 alsostandalone ROs for CNG in select cities.
CNG can be used in vehicles which are fitted with a special kit meant for the purpose. The
vehicle needs mechanical change for its use.

24

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 which
can be classified as under:
Mandatory Facilities:These are the facilities which every retail outlet must provide. These
include free air, display of working hours and display of name and telephone number of oil
company personnel for the convenience of customers. First Aid Box, toilet and safety
equipment as per statutory requirements such as fire extinguishers and sand buckets etc. are
also available at retail outlets.
Other Facilities: For the convenience of customers these additional facilities may be
provided by dealers at the retail outlet premises. These include water-coolers, convenience
stores, 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 prescribed
specifications and is free from any contamination or adulteration. The customers can ensure
quality 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.
25

c) It should evaporate in about 2 minutes without leaving a stain on the filter paper. (If the
area of the filter paper where the drop of MS was put remains pinkish, it is the colour of the
MS and not any stain). If a stain is left on the filter paper then there is a possibility of
adulteration.
Customer should immediately lodge a complaint if Filter paper is not available at the Retail
Outlet for testing of Petrol. It is the duty of the Dealer to provide filter paper on demand by
the customer.
Density Check (for Petrol and Diesel, including branded fuels)
a) A 500 ml jar, calibrated hydrometer, thermometer and ASTM (American Society for Testing
of Materials) conversion charts are required to carry out density test. Hydrometer is a very
simple 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 the
help of conversion chart. This converted density is then compared with the reference density
taken from the density register maintained by the Retail Outlet.
Checks for Lubricants: Please check the seal of container, date of manufacture and name of
the manufacturer. For the convenience of 2/3 wheeler segment, Retail Outlets generally
provide self-mixing (petrol-oil mix) dispensers, 2T dispensers and they also keep tamper proof
2T/4T pouches.

Quantity:
It is mandatory for each retail outlet to keep a calibrated 5 litre measure, stamped by
Weights and Measures Department every year, to verify quantity.
Quantity can be checked with 5 liters measure. The permissible variation due to any
unforeseen malfunctioning of the dispensing unit is 25 ml in 5 liters which is to be rectified
immediately.
26

Price: The selling prices of products are displayed prominently at the outlet. Customers must
ensure to take cash memo for every purchase.
Other useful tips for customers: Meter to be set to zero before starting delivery and final
reading to be checked after delivery.
Malpractices / Unauthorized Activities: In case a citizen comes across any of the following
possible malpractices, he/she may contact Companys Officer whose name & contact number
is displayed at the Retail Outlet.
Adulteration: There is a Possibility of adulteration, by mixing cheaper homogeneous
products in petrol or diesel. Adulterated product will definitely affect the performance of
vehicle. 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) are
annually calibrated and sealed/stamped by Weights & Measure Department and also
periodically checked by the Company Officer, there could be a possibility of tampering or
machine malfunctioning. As mentioned earlier, a citizen has the right to check the quantity
delivered 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 of
products are always displayed at the retail outlets. One must ensure to take a cash memo for
every purchase.

4. Safety Measures
Most concern:
Petroleum products are highly inflammable and are, therefore, dangerous if not handled
properly. 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 strict
adherence to PESO Rules.
For the safety of all concerned, the following precautions must be observed:

27

Switch off the engine before taking delivery of fuel (to avoid possible fire caused by spillage
of 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 pump
business Now that you are familiar with what a Petrol station pump business does, it is
also very important that you understand the services and products provided by a
Petrol station pump business. Offering your clients or customers the best services or products
will lead you in the right direction of making a success in being a well sort after Petrol station
pump business. Here is a list of Services / Products associated with a Petrol station pump
business manufactures and sells petrol station pumps
PetroD consciously looks to minimize its effect on the environment and will continue to invest
in 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 the
reuse of 90% of the water used cleaning cars.
Leak detection systems

28

Underground storage tanks are double skinned and have leak detection systems fitted. Alarm
systems are automatically activated if there is any leakage through the inner wall of the tanks
so avoiding any chance of soil pollution.
Vapour recovery systems
Road tankers are designed to take gasoline vapours from storage tanks at the same time as
they are filling the tanks. These vapours are returned to the fuels depot where a recycling
system 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 the
dealer immediately or in his absence, the Manager. However, if the explanation given by the
Dealer or Manager is not satisfactory, customer can record the complaint in the Complaint
and Suggestion Book available at each petrol pump or contact Companys Sales Officer on
phone.
A written complaint can also be sent to Companys Sales Officer, Regional Office or a
complaint can be lodged through helpline - 1800 99773300 Contact details are displayed at
each Retail Outlet. Complaint can also be lodged through Website - www.hpretail.in or
hindustanpetroleum.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 the
complaint.

29

CHAPTER: 3
Automatic Fuelmatics Machines

Fuelmatics
Benefits
Technology

30

Automatic Fuelmatics Machines:-

Fuelmatics offers a fuelling process without any spill or vapour. Its the most efficient and
environmental friendly concept on the globe. It allows the driver to remain in the car during
the entire refuelling process, thus providing a Drive-Thru fill up.
The Automatic Refuelling System, ARS, represents a paradigm shift for oil companies and fuel
retailers in the quest to attract and retain customer loyalty, and to increase volume and
profits.

31

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

32

Benefits:Retailer benefits:-The ARS cuts time before and after pumping, which means that the
refuelling cycle from stop to go is reduced by 50 %.The effect is that a retailer can: Attract
more customers to your station Serve more customers per hour Reduce the que to the pumps
The smaller format means you: Reduce the need of land Locate stations closer to roads
additionally you can: Serve disabled drivers Sell ad-space on the screen
Driver

Benefits

The 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 to
touch 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 utility
vehicles with a fuel door on either the right or left side of the car, which represents
approximately 95 percent of all vehicles. The FM 3003 unit is equipped with three nozzles and
can thus serve petrol, diesel and a new fuel like ethanol or natural gas from one and the same
unit. A stream lined fast solution. Talk about retail efficiency! Fuelmatics envisions that
hydrogen together with automatic dispensing will become the long-term global solution for
vehicles. 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 few
seconds. 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. Just
push the nozzle through the built in flapper. No need to take the cap off.

33

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

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

34

CHAPTER: 4
Market Analysis and Marketing plan

4Ps of PetroD Pvt. Ltd

Market Segmentation
Target Market

35

Market Analysis and Marketing Plan

4Ps of PetroD Pvt. Ltd
How does PetroD Pvt Ltd marketing strategy follow the 4Ps? Ahmadabad oil industry has
some 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 to
offer customers a point of difference with fuels. However, PetroD does so by selling petrol
and diesel that is better for the environment. As we offer high quality petrol and diesel to
customer 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 in
the oil industry, prices between competitors are easily matched, which means its difficult to
differentiate our product based on price. If our competitors undercut us on price, we see
significant losses in volumes sold. A one cent per litre price reduction requires retailers to
achieve a 25% increase in volume to break even on site. Price place important role but it
mainly depend on the oil and gas industry market price as they are changing day by day so
that price doesnt make any further difference but it may change on time.

Place:

36

As the place is very important role in selecting petrol station for any customers. Customer
selects their choice of gas filling station by their convenient. So we have selected place by
market research that give us more opportunity to attract new customer. So we have some of
the best locations in Ahmadabad for the service we provide. And research shows customers
mainly choose fuel retailers based on their location. We have a significant investment in
ensuring 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 Rewards
programme ,loyalty cards, price drop skim on special occasions and other convenient services
like convenient store, auto car care etc. Loyalty programmes are a valuable point of
differentiation; we use them to drive sales volumes and counter our competitors activity. As
time comes more promotion activities will be done by company such as gift coupons, discount
on 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 component
of price added by the refining company to cover its costs and profit margin. Refinery margins
average 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 single
component, averaging 10 % of the pump price.
There is virtually no difference between the various brands of gasoline. If competing gas
stations are similar in service, convenience and cleanliness, many customers will switch
stations based on price. This means competition between stations is based almost exclusively
on price, and the best way to attract customers is to sell for less. As a result, gasoline retailers
must keep their mark-ups as low as possible.
Mark-ups are generally less than 10%, and must cover land costs, salaries, fuel delivery, site
maintenance, overhead, and profits.
37

According to the Petroleum Communication Foundation, profits realized on fuel sales are
marginal. 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 so
thing 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, to
increase profits through the sale of food items, tobacco, soft drinks, maps, magazines, and
similar items.
Nationally, there are approximately 60 petrol retailers in Ahmadabad district. In the
Prahladnagar area there are currently 2 petrol stations. But although competition has
increased over the past few years, fuel sales continue to increase annually. The highest level
of competition is in the larger urban centres, where major supermarkets with gas bars take
the lead. This creates an opportunity for independent stations in smaller centres where there
is less competition.

Target Market
Prahladnagar Area
Taluka Name: Ahmadabad
District: Ahmadabad
State: Gujarat
Language: Gujarati and Hindi, English
Time zone: IST (UTC+5:30)
Elevation / Altitude: 52 meters. Above
Sealevel
Telephone Code / Std Code: 079
Pin Code : 380015

38

Prahlad Nagar current

Prahlad Nagar Weather Forecast for Next 3

Weather

Months

Current Temperature is

March

April

clear

partly cloudy clear

26C to 43C

26C to 43C

35 C

May
27C to 42C

Humidity: 30%
Wind : From North at 6
kph

About Prahlad Nagar

Prahlad Nagar is a Locality in Ahmadabad City in Gujarat State, India. Prahlad Nagar
Pin code is 380015 and postal head office is S A C.
Vejalpur ( 1 KM ) , Bagodara ( 1 KM ) , Makarba ( 1 KM ) , Juhapura ( 2 KM ) , Jodhpur
Village ( 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.

Segmentation
The business will target two major market segments,
(1) The general population of Ahmadabad city and the surrounding area, and

39

(2) Travellers to the area.

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

40

CHAPTER: 5
Industry Competitive Analysis

Porters Five Forces

SWOT Analysis
PEST Analysis

41

Industry Competitive Analysis

Porters Five Forces Analysis
Porters Five Forces framework points out that the state of competition in any industry
depends 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 industry

and how the industry is structured.
Industry structure (manifested in the five competitive forces) drives competition and
profitability. In order to reveal the roots of an industrys current profitability and anticipate
future trends, a company has to understand the underlying causes of the five competitive
forces.

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 market
share. This desire, Porter suggests, puts pressure on costs, prices and the rate of investment
that is necessary to compete. As he indicates, threat of entry depends on two factors: the
height of entry barriers and the incumbents reaction to new entrants.
The major barriers to entry in the oil and gas industry are:
1. Patents

42

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 and
differentiation For example, in early 2010, Exxon Mobile introduced advanced technology to
reduce cost while increasing production capacity, enabling the company to boost its
production 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 the
technology involved in refinerys construction is widely known. The barriers for entry rising
from large capital requirements and economy of scale are also minimized and sometimes do
not serve as barriers to entry in efficient oil and gas markets such as the U.S. market. For
instance, if an industry cartel sought to monopolize the refinery sector, it has to restrict
refinery input and output until the cartel marginal cost equals the marginal revenue. At this
point, the refinery outputs would exceed marginal cost allowing a potential entrant to earn
greater profit. Economies of scale do not prevent entry from occurring in an efficient oil
market. For example, it is possible for an industry with large economies of scale to experience
a limit-pricing situation. In this case, a potential entrant must achieve a high level of output
to operate in an efficient scale. This is going to lower market price below the break-even level
of costs if the existing rivals maintained their level of output.
In the marketing sector, barriers to entry arising from government regulation have influenced
the competitive strategies of the oil and gas companies. For example, the U.S. oil and gas
companies have always succeeded in product differentiation because of many years of
advertising and development. However, this success did not prevent independent markets
from selling similar products at lower cost. Nonetheless, government regulations have shut
out such independent markets.
43

Governments have conferred upon themselves some form of cartel power over the industry
due to their regulations. This supports Am archer (1976) who points out that OPECs success
in 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 the
OPEC countries produce 40% of the worlds oil supply Consequently, these governmental
policies and regulations work as a barrier for new firms to enter the industry Natural resources
obviously play the biggest barrier to entry as new entrants must have the secure and
competitive resource to risk entry into the industry as rivals have to acquire a comparable
amount 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). The
term rivalry describes competition between companies that provide similar products while
substitution refers to products that are not in direct competition. Substitutes affect the
industry 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 alternative
sources of energy as possible substitutes. For example, in April 2009, TOTAL formed a
partnership with Gevo, a US company developing transportation bio fuels and chemical
products. (Data monitor 2010) Porter indicates that a substitutes threat is high when it offers
an attractive price trade-off to the industrys products or when the buyers cost of switching
to substitute is low. For instance, the Chinese government aims to have bio fuels account for
15% of its total transportation fuel consumption by 2020, and in comparison, the European
Union has set a target of 20% for the same period. China National Petroleum Corporation is
already taking steps to leverage this expected increase in demand in China and Europe. (Data
monitor 2010) If bio fuels offer an attractive price trade-off, it would provide competitive
substitutes, 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 the
70s when embargos by the oil producing counties led to reducing the worlds oil production
44

and this oil supply shortage led to a dramatic increase in the nominal price of a barrel of oil
from $2.7 to $11.2 during the period from 1973 to 1974 .This reveals the power oil and gas
suppliers have over the industry. Any move by a competitor to influence prices will be
followed by changes in competitors strategies. For example, the move of Esso (Exxon Mobile
today) in 1959 to influence Middle East oil prices led to the creation of OPEC, whose decisions
play a part in oil prices today. (Library of Congress 2010).
As suppliers, oil and gas companies bring power to the recipient countries through
international vertical integration. Cash can be injected into the refining industry to foster
competition and enhance supply security to consumers. For example, Petroleum de
Venezuela S. A. controls its refining and marketing operations in the U.S. through CITGO
Corporation, in which it owns 100 percent through PDV America. (Data monitor 2009) Vertical
integration reduces risk and maximizes profitability at every stage of the chain from wellhead
to gasoline station. It helps the oil companies balance their operations and protect themselves
from markets instability. For instance, when crude oil price goes down, the refining and
marketing 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 expense
of industry profitability. Major oil companies outsource much of their field operations to oil
and gas service companies. As buyers, oil companies are in a powerful position to bargain
prices, demand better quality or additional service.
Oil and gas companies seek to obtain rights to invest in exploration and production areas
internationally. These rights are acquired through buying a percentage of another companys
right or through participating in licensing rounds. In this highly competitive environment, oil
and 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
45

3. Acquire or share information

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

5. Rivalry amongst competitors:

High rivalry between existing competitors can limit industry profitability depending on the
competition 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 a
price war if a competitor tries to influence.
According to Porter, slowdown in production such as experienced by oil and gas companies
combined with declining net liquids production and reserves could increase the intensity of
rivalry in this industry.

Rivalry in any industry is intense if rivals have goals that go beyond economic performance
According to Bernstein et alone purpose of Joint Venture in the oil and gas industry is to
46

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

SWOT Analysis
*

47

PEST Analysis

48

CHAPTER: 6
Import 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)

49

Import-Export

THE
PETROLEUM ACT, 1934
An 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 in
the 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 any
inflammable mixture (liquid, viscous or solid) containing any liquid hydrocarbon:
(b) "Dangerous petroleum" means petroleum having its flashing point below seventy-six
degrees Fahrenheit;
(c) flashing-point" of any petroleum means the lowest temperature at which it yields a vapour
which will give a momentary flash when ignited, determined in accordance with the
provisions of Chapter II and the rules made there under;
50

[(d) "To transport" means to move petroleum from one place to another within Pakistan, by
land, sea or air, and includes moving from one place to another in Pakistan across territory
which is not part of Pakistan.]
(e) "To import" petroleum means to bring it into Pakistan by land, sea or air, otherwise than
during the course of transport!
(f) "To store" petroleum means to keep it in anyone place, but does not include any detention
happening during the ordinary course of transport;
(g) "motor conveyance" means any vehicle, vessel or aircraft for the conveyance of human
beings, animals or goods, by land, water or air, in which petroleum is used to generate the
motive 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 made
under section 4.
(2) Save in accordance with the conditions of any licence for the purpose which he may be
required to obtain by rules made under section 4, no one shall import any dangerous
petroleum, and no one shall transport or store any petroleum.
4. Rules for the Import, Transport and Storage of petroleum. The Federal Government may
make rules.
(a) Prescribing places where petroleum may be imported and prohibiting its import
elsewhere;
(b) Regulating the import of petroleum elsewhere;
(c) Prescribing the periods within which licences for the import of dangerous petroleum shall
be applied for, and providing for the disposal, by confiscation or otherwise, of any dangerous
petroleum in respect of which a licence has not been applied for within the prescribed period
or has been refused and which has not been exported.
51

(d) Regulating the transport of petroleum;

(e) Specifying the nature and condition of all receptacles and pipelines in which petroleum
may be transported;
(f) Regulating the places at which and prescribing the conditions subject to which petroleum
may be stored;
(g) Specifying the nature, situation and condition of all receptacles in which petroleum may
be 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 such
licences shall be made, the authorities which may grant such licences and the fees which may
be charged for such licences;
(i) Determining in any class of cases whether a licences for the transport of petroleum shall
be obtained by the consignor, consignee or carrier;
(j) Providing for the grant of combined licence for the import, transport and storage of
petroleum, or for any two of such purposes;
(k) Prescribing the prop oration in which any specific poisonous substance may be added to
petroleum, and prohibiting the import, transport or storage of petroleum in which the
proportion 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 over
the 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 made
under sub-section (2).
(2) The Federal Government may make rules.

52

a) Prescribing the conditions subject to which petroleum may be produced, refined or

blended; and
(b) Regulating the removal of petroleum from places where it is produced, refined or blended
and preventing the storage
Therein and removal there from, except as dangerous petroleum, of any petroleum which has
not satisfied the prescribed tests
6. Receptacles of dangerous petroleum to show a warning
All receptacles containing dangerous petroleum shall have a stamped, embossed, painted or
printed warning, either .on the receptacle itself Of, where that is impracticable, displayed
near 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 capacity
containing dangerous petroleum which is not for sale, or
(b) A tank incorporated in a" motor conveyance, or attached to an internal combustion
engine, and containing petroleum intended to be used to generate motive power for the
motor 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 official
Gazette, exempt from the operation of this section.
7. No licence needed for small stocks of non-dangerous petroleum not in bulk.

53

Notwithstanding anything contained in this Chapter, a person need not obtain a licence for
the transport or storage of non-dangerous petroleum if the total quantity in his possession at
anyone place does not exceed five hundred gallons and none of it is contained in a receptacle
exceeding 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 in
section 3 of the Railways Act, 1890. Need not obtain any licence for the import or transport
of 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 below
two 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 officer
by 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 petroleum
found 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
54

The Federal Government may authorise any officer by name or by virtue of office to test
petroleum of which samples have been taken under this Act, or which may have been
submitted 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 of
which there is a valid certificate under section 16, shall have due regard to any correction
specified in that certificate, and shall be carried out in accordance with rules made under
section 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 there
under, 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 placed
by the holder of such licence in control or in charge of any place where petroleum is being
imported or stored, or is under transport, contravenes any condition of such licence or suffers
any 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 being
imported, stored, produced, refined or blended or is under transport refuses or neglects to
show to any officer authorised under section 13 any receptacle, plant or appliance used in
such place in connection with petroleum, or in any way obstructs or fails to render reasonable
assistance to such officer during an inspection, or
(e) being for the time being in control or in charge of any place where petroleum is being
imported, transported, stored, produced, refined or blended, refuses or neglects to show to
any officer authorised under section 14 any petroleum in such place, or to give him such
assistance as he may require for the inspection of such petroleum, or refuses to allow him to
take samples of the petroleum, or.
55

(f) being required, under section 27, to give information of an accident fails to give such
information as so required by that section, shall be punishable with fine which may extend to
five 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 for
every such subsequent offence with fine which may extend to two thousand rupees.

Conditions or requirements to open petrol pump station

Following 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 under
CC2 category).

Minimum educational qualification required for rural ROs is 10+2 examination

conducted by a Board/University and Graduation/ Chartered Accountant/ Company
Secretary/ Cost Accountant/ Diploma in Engineering for regular ROs. For candidates
belonging to CC1 and CC2 category, minimum education required is Class 10th and
Class 10+2 examination conducted by a Board/University for rural ROs and regular ROs
respectively. However, this norm of minimum education is not applicable to freedom
Fighters under CC2 category.

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

56

All applicants must possess suitable piece of land in the area mentioned in
advertisement. You may either own it or have it on long term lease for minimum time
period 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 in
the 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 one
location. 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 is
required to be paid for rural ROs and Rs. 15,00,000 is required to be paid for regular ROs. In
case 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 ROs
respectively.

How to apply online for retail outlet of HPCL/ BPCL/ IOCL

First of all, you will have to look or wait for the release of an open advertisement by the oil
company. Advertisements are published in newspapers and on official websites of concerned
company. These advertisements or notifications inform the location/s where the company
proposes to set up a retail outlet (which we generally call as a petrol pump). Interested
candidates 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. Applications
must be submitted before said last date of submission. Hard copies must also be submitted
along with all relevant documents within seven days of expiry of last date of online
application. 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
57

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 for

installation of new Fuel Station along National Highways
1. 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 showing
details of Right of Way (ROW) of National Highway, access roads to private properties, existing
public roads and other developments falling within a reach of 1.5 km in each side of the Fuel
Station 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 to
applicable figures enclosed with these Norms.
4. Certified copy of sectional view showing elevation of Fuel Station with respect to National
Highway and slopes to be provided for adequate drainage and preventing water logging on
National Highway.
5. Drainage plan of the Fuel Station.
6. Details of the material for pavement composition for deceleration lane, service road and
acceleration lane.
7. Inspection report of the officer inspecting the site of proposed Fuel Station and certificate
that all standard conditions have been specified.
8. Detailed explanation for reasons for recommending the exemption from stipulated norms
(if required).

58

9. Undertaking from the oil company/owner that the oil company/owner would pay
necessary fee for the use of the National Highway land whenever the fee is asked by the
Highway Authorities in future.
10. Undertaking from Oil Company that necessary alteration including complete
removal/shifting of the approach roads at its own cost if so required by Ministry, for the
development 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 Appendix
I 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 instructions
related to the import and export of goods. The Government of India notifies the Exim Policy
for a period of five years (1997-2002) under Section 5 of the Foreign Trade (Development and
Regulation Act), 1992. The current policy covers the period 2002-2007. The Export Import
Policy is updated every year on the 31st of March and the modifications, improvements and
new schemes became effective from 1st April of every year. All types of changes or
modifications related to the Exim Policy is normally announced by the Union Minister of
Commerce and Industry who co-ordinates with the Ministry of Finance, the Directorate
General

of

Foreign

Trade

and

its

network

of

regional

offices.

Canalization is an important feature of Exim Policy under which certain goods can be imported
only by designated agencies. For an example, canalised import items like gold, in bulk, can be
imported only by specified banks like SBI (State Bank of India) and some foreign banks or
designated agencies.
The exports and imports activities contribute significantly towards the healthy growth of any
economy. Imports imply bringing of goods into the country to fulfil the domestic need and
when the country supplies surplus goods to foreign countries, it is termed as exports. When
a wide gap between the exports and imports rate arises then serious economic problems like
inflation and BOP (Balance of Payments) weakens the integrity of the existing economy. Thus
to maintaining appropriate balances between exports and imports the state authority has
forged various types of legal frameworks in terms of different Acts and policies.
59

In India, there are several Acts and policies enacted to have a uniform practice in export &
import trade practices. Among those Acts, Imports and Exports (Control) Act, 1947, Foreign
Trade (Development and Regulation) Act, 1992 and Import-Export (EXIM) Policy 1997-2002
are few significant Acts and policies. The Imports and Exports (Control) Act, 1947 has been
replaced by Foreign Trade (Development and Regulation) Act, 1992 to empower the central
government

to

have

more

control

on

exports

and

imports

activities.

The Foreign Trade (Development and Regulation) Act, 1992 has empowered the
Government to:
Enact provisions related to development and regulation of trades for domestic as well as
international market.
Restrict and regulate all forms of exports and imports in case of requirements and declare
tariff exemption by accessing special needs.
Announce an EXIM policy and its episodic amendment by notification.
Authorize the concerned officials to issue 'Importer Exporter Code Number' (IEC) to the
exporters and importers.
The Import-Export (EXIM) Policy 1997-2002 underlines on the following points for the smooth
functioning of import and export activities in India

60

CHAPTER: 7
Business Conditions in Qatar
Rules of Business in Qatar
Qatar: Oil & Gas Equipment Opportunities and Trends

61

Business Conditions in Qatar

There is great optimism and excitement among the business community in Qatar. By
transforming hydrocarbon wealth into modern health facilities, tourism infrastructure, and
western-style education institutions, the Qatari Government aims to engender a forwardlooking and highly-skilled population.
The Qatari Government has established credibility among the population and the business
community. When plans and projects are announced, they are usually realized, and contracts
are awarded in a generally efficient and transparent manner. Qatar is very amenable to
western visitors, and security experts consider Qatar to have one of the lowest crime
countries on earth. The threat for transnational terrorism in Qatar is rated high (on a scale
from low to critical), though this is due to the nature of the region in general, and security
experts here admire the capabilities of Qatars internal security forces. Americans who have
lived here for 10 years report little or no anti-American sentiment from locals. A car bomb
attack in March 2005 of a British theatre has been the only incident of terrorism against
Westerners that has taken place in Doha.
In the last five years, Qatar has improved its trade and investment climate in line with its
WTO obligations by reducing tariffs, removing unnecessary restrictions and barriers to trade,
and providing foreign investors more opportunities. As Qatars largest trading partner, the
United States is in discussions with the Qatari Government to explore the possibility of a Free
Trade Agreement.
There are many positive aspects to Qatars business framework. U.S. companies report that
the customs clearing process is generally problem-free. Qatari companies and customers are
highly interested in working with Americans and buying U.S. products and services.
Companies do not complain here about overly burdensome bureaucratic procedures. Doing
business with Qatar Petroleum and the public sector is in general transparent and efficient.
U.S. firms report that hiring labour is not overly problematic, though there are currently
restrictions on hiring South Asian labour. It is possible to resolve commercial disputes in Qatari
courts, though the process is more time-consuming than in the United States.

62

U.S. firms also report that industrial standards that are applied in Qatar are favourable to U.S.
exports. Also, Qatar has a stable currency and the country imposes no foreign exchange
controls. There are well-capitalized financial institutions in Qatar, most notably Qatar
National Bank. Furthermore, Qatar allows up to 100% of foreign ownership in agriculture,
manufacturing, health, education, tourism, power, and projects involved in the development
and exploitation of natural resources, pending approval from the Qatari Government

Rules of Business in Qatar

Just like any market, Qatar has its own specific guidelines and requirements concerning
foreign companies operating in this country. The following summarizes the major issues. U.S.
firms should note that adequate services exist in Qatar for legal, financial, and tax matters,
business counselling, company background checks, and feasibility studies. Consult an expert
for professional advice in these matters. Many notable business service providers in Qatar are
represented.

1. Taxes. Some companies come to Qatar thinking it is a tax-free zone its not! While
there is no personal income tax in Qatar, foreign-owned firms must pay a tax on corporate
income. The rate is a sliding scale ranging from 0% on less than 100,000 QR to 35% on more
than 5 million QR. (Since U.S. firms also pay U.S. taxes on corporate income, companies
considering the Qatari market should be aware that this requirement essentially results in
double taxation.) Certain tax exemptions are allowed in Qatar depending on whether the
activities of the foreign firm are directly benefiting Qatar; incorporating modern technology;
and/or fulfilling a strategic goal of the government.

2. Documentation. Original copies of documentation on goods shipped into Qatar are

required. Commercial invoices, shipping document, packing lists, and certificates of origin
must accompany goods entering Qatar. You must legalize commercial invoices at the Qatari
Embassy.

3. Exporting.

The customs duty for general cargo entering Qatar is 5%. Temporary

imports into Qatar require permission from the General Director of Qatari Customs, as well
as a check or bank guarantee to the Customs Department for the amount of the duty to
63

permanently ship the goods to Qatar. This is refunded upon proof of export from Qatar.
Normal customs clearance by air is 1-2 days and by sea is 2-4 days.

4. Banking. There are 15 banks in Qatar. There are no exchange control regulations. There
is great confidence in Qatars banking system. (Foreign investors need permission from the
Qatari Government to invest in the banking and insurance sectors.)

5. Labour. On-Qataris must possess a valid work permit issued by the Department of
Labour to work in Qatar. The new Labour Law of Qatar (Law 14 of 2004) aims to balance the
rights of employer and employee, institutes hiring priority to Qatari nationals, and specifies a
number of obligations for firms vis--vis their employees. These obligations include the
requirement that the employment contract must be in writing, the recognition of the concept
of end-of-service benefits, and limitations on the maximum number of hours worked per
week. More details are available in the Country Commercial Guide. U.S. firms seeking to hire
non-Qataris should note that Qatari visa regulations and procedures frequently change
without warning.

6. Driving. You can get a six-month temporary drivers license in Qatar from the Driving
License Section at Madinat Khalifa Traffic Department. It is open Sun-Thurs from6:30AM to
12 noon, 1:30 - 7PM, and it can be reached by phone in Qatar at 489-0666. Bring photocopies
of your US drivers license and passport as well as your original license and passport, and 2
passport-sized photos. The license costs QR150 - about $40. Ideally you should bring your
Qatari sponsor to the Department. If that is not possible, a letter signed by your sponsor giving
you the permission to drive will suffice. You have to take an eye exam at the department.

7. Ways to do business. In this part of the world, foreign companies are generally
required to appoint a service agent/sponsor in order to be able to do business. Experts believe
that the requirement for a service agent/sponsor in Qatar is getting more and more lenient,
and may be abolished outright in the years to come. (As this is a rather complex topic, please
refer to the Country Commercial Guide for more details.)
U.S. companies wishing to do businesses with Qatar need to appoint a representative
agent? It is very important to distinguish between two types of agents:
64

(a) Commercial Agent: If you simply want to export your products to Qatar, you will need a
commercial agent to act as your distributor or sales representative - note that commercial
agency agreements in Qatar are exclusive.
(b) Service Agent: If you intend to execute a project for Qatari private entities and leave the
country upon completion, a service agent or sponsor is required to take care of all of your
administrative paperwork with the Qatari Government (visas, permits etc.). However, if your
company intends to fulfil a government contract or provide a public service or utility, the
Qatari Government waives the service agent/sponsor requirement.
If you want to do business in Qatar, the most common practice is for U.S. firms to establish a
Limited Liability Company. In this case U.S. ownership cannot exceed 49% of the capital with
a Qatari partner owning 51%. New Qatari law allows foreigners to earn up to 80% or more of
the companys profits if the foreign entity is the main player in the joint venture. The joint
venture company does not require a service agent/sponsor in order to conduct business.
US companies wishing to invest in agriculture; manufacturing; health; education; tourism;
power; and mining sectors are allowed to establish up to a 100% U.S.-owned branch office or
new company and, pending approval from the government, are not required to have a
sponsor.

8. Land. Foreigners cannot own land in Qatar outside of certain real estate development
projects such as the Pearl of the Gulf. But U.S. firms may rent land long-term up to 50 years
in order to complete specific projects.

65

Qatar: Oil & Gas Equipment Opportunities and Trends

Qatars wealth of hydrocarbon resources is the driving force behind the countrys tremendous
economic growth in recent years. About $115 billion has been invested in Qatars energy
sector in the last 10 years. There are currently 19 oil and natural gas rigs operating in Qatari
waters.

Natural Gas: Qatar is clearly determined to develop this key resource. State-owned Qatar
Petroleum is the majority shareholder in Qatars two LNG companies, Qatar gas and Rasgas.
ExxonMobil has stakes in both companies, while Total and ConocoPhillips have shares in
Qatar gas. About $70 billion mostly in natural gas will be invested in Qatars hydrocarbon
sector over the next seven years.
Qatar is building the largest LNG trains and is ordering the worlds largest LNG tankers. Qatar
Gas Transportation Company (Q-Gas) expects to procure around 57 LNG vessels altogether.
The country is investing $20 billion in new gas-to-liquids (GTL) projects in Ras Laffan Industrial
City. It is expected that Qatar will become a 400,000 barrel-per day (bpd) producer of GTL in
six years.

Oil: Qatars largest oil reserves are found in the offshore Dukhan field. Maydan Mahzam
and Bul Hanine are other significant fields. Over 120 new wells will be drilled in these two
fields to help boost Qatars oil production. With two refineries, the country also aims to
increase its oil refining capacity to 280,000 bpd by 2006.
Exxon Mobil, Royal Dutch/Shell, Total, Conoco-Philips, Chevron Texaco, Sasol, Anadarko,
Occidental, Talisman, and Maersk Oil are among the major players here. They are supported
by many oil field services and drilling companies, many of which are American. International
energy experts predict that high oil prices, Americas unmatched thirst for fuel and potential
for increased consumption of gas, and Qatars vast natural gas wealth will combine to bind
the U.S.-Qatari energy relationship closer together in the coming years.

Petrochemicals:

Qatar also aims to increase production of petrochemicals. Qatar

Petrochemical Company (QAPCO), one of the largest low-density polyethylene (LDPE)

66

producers in the Middle East, plans to increase its ethylene production capacity to 720,000
tons per year by 2006. QAPCO also produces LDPE and sulphur from ethane feedstock. The
QATOFIN project encompasses a plant that would produce 450,000 tons of low-density
polyethylene. Qatars numerous energy projects listed below will generate a huge demand
over the next five years in hundreds of millions of dollars for top of the line products and
supplies. These products will include: drilling equipment; casing; pipes; pipe fittings; valves;
power generation equipment; drilling chemicals; pumps; heat exchangers; gas compressors;
tower coolers; instruments and controls; anti-corrosion systems; laboratory equipment;
marine equipment and services; offshore platforms; filtration systems; pressure vessels;
storage systems; treatment systems; injection equipment and services;
production equipment and services; well control systems; packing; seals; gaskets; bearings;
rope; wire rope and chain; safety and environmental protection services; pollution and spill
control services; tools; flexible pipe; valves & actuators; wellhead valves; and thousands of
other items related to the oil and gas industry.
Below are the current oil and gas sector projects in Qatar with capacity, scope, value and
end-users. The Commercial Service is closely monitoring these projects and can provide your
company with the latest details upon request.

1. Liquefied Natural Gas (LNG):

Train 4 and 5: 7.8 million tons/year; $1.1 billion; Qatar Gas II
Sulphur Handling Facility: 11,000 tons/day; $150 million, Qatar Gas II
Train 6 & 7: 7.8 million tons/year each; $2.2 billion; Qatar Gas II

2. Gas to Liquid (GTL):

Integrated GTL Plant: 140,000 barrels/day; $5 billion; Pearl GTL (Shell)
Integrated GTL Plant: 154,000 barrels/day; $7 billion; ExxonMobil
Integrated GTL Plant: 240,000 barrels/day; Value TDB; ConocoPhillips

67

 Integrated GTL Plant: 90 to 120,000 barrels/day; Value TBD; Marathon

Phase 2 plant expansion: 66,000 barrels/day, Value TBD; Oryx GTL
Integrated GTL Project: 130,000 barrels/day; Value TBD; SASOL/Chevron

3. Gas Pipeline:
Qatar/Bahrain/Kuwait pipeline (Al-Khaleej): 1,000 million cubic feet/day of gas; Value TBD;
Qatar Petroleum/ExxonMobil/Kuwait Petroleum Company
Ras Laffan Messaieed ethylene pipeline: 130 km of 16 inch pipeline; $120 million; Qatar
Chemical Company (Q-Chem II)
Doha urban relocation pipeline: decommissioning of existing and construction of new
pipelines; $70 million; Qatar Petroleum

4. Refining:
Ras Laffan Condensate Refinery: 140,000 barrels/day, $400 million; Qatar
Petroleum/ExxonMobil/Total

5. Petrochemicals:
Ras Laffan Ethylene Cracker: 1.3 million ton/ year, $500 million; Ras Laffan Ethylene
Company
Messaieed downstream units: 350,000 tons/year of HDPE and 350,000 tons/year of Alpha
Olefins; $600 million, Q-Chem II
Messaieed downstream units: 450,000 tons/yr of LLDPE; $550 million; Qatofin
New Methanol Train: 6,750 tons/day; $500 million, QAFAC
Ras Laffan Methanol: 12-15,000 tons/day; Value TBD; Qatar Petroleum
Olefins complex: On-going feasibility study; Qatar Petroleum/ ExxonMobil
68

CHAPTER: 8
Financial Analysis

69

Financial Analysis
Projected Financial Statements for next 3 years

Pro Forma Cash Flow

Year 1

Year 2

Year 3

Cash Sales

503384000

534534000

566930000

Subtotal Cash from Operations

503384000

534534000

566930000

Subtotal Cash Received

503384000

534534000

566930000

Expenditures

Year 1

Year 2

Year 3

Expenditures from Operations

Cash Spending

73264800

77875000

82236000

Bill Payments

397115152

424360811

437038238

Subtotal Spent on Operations

470379952

502235811

519274238

Long-term Liabilities Principal Repayment

18690000

18690000

18690000

70

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

Sales

503384000

534534000

566930000

Direct Cost of Sales

362087600

380653000

390309500

Total Cost of Sales

362087600

380653000

390309500

Gross Margin

141296400

153881000

176620500

Gross Margin %

2.807

2.879

3.115

Expenses

Payroll

73264800

77875000

82236000

Depreciation

7117152

7117152

7117152

Utilities

2242800

2242800

2242800

Insurance

2242800

2242800

2242800

Rent

8099000

8099000

8099000

Payroll Taxes

10989720

11681250

12335400

Total Operating Expenses

103956272

109258002

114273152

Profit Before Interest and Taxes

37340128

44622998

62347348

EBITDA

44457280

51740150

69464500

Interest Expense

8332625

6541500

4672500

Taxes Incurred

8702064

11424574

17302579

71

Net Profit

20305439

26656924

40372269

Net Profit/Sales

0.0403

0.0499

0.0712

72

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Cash

25839548

39447737

68413499

Inventory

35224420

37030497

37969981

Total Current Assets

61063968

76478234

106383480

Long-term Assets

49840000

49840000

49840000

Accumulated Depreciation

7117152

14234304

21351456

Total Long-term Assets

42722848

35605696

28488544

Total Assets

103786816

112083930

134872024

Liabilities and Capital

Year 1

Year 2

Year 3

Accounts Payable

34576500

34906067

36011892

Subtotal Current Liabilities

34576500

34906067

36011892

Long-term Liabilities

74760000

56070000

37380000

Total Liabilities

109336500

90976067

73391892

Paid-in Capital

37380000

37380000

37380000

Retained Earnings

-63234500

-42929061

-16272137

Earnings

20305439

26656924

40372269

Total Capital

-5549061

21107863

61480132

TOTAL LIABILITIES AND CAPITAL

103786816

112083930

134872024

73

Net Worth

-5549061

74

21107863

61480132

start-up Requirements
Start-up Expenses
Legal

623000

Insurance

623000

Rent

934500

State Permits

1869000

Gas Station Setup

43610000

Store Setup

12460000

Promotional Sign

3115000

Total Start-up Expenses

63234500

Cash Required

11525500

Start-up Inventory

6230000

Long-term Assets

49840000

Total Assets

67595500

Total Requirements

130830000

75

Start-up Funding
Start-up Expenses to Fund

63234500

Start-up Assets to Fund

67595500

Total Funding Required

130830000

Assets
Non-cash Assets from Start-up

56070000

Cash Requirements from Start-up

11525500

Cash Balance on Starting Date

11525500

Total Assets

67595500

Liabilities and Capital

Liabilities
Long-term Liabilities

93450000

Total Liabilities

93450000

Capital
Planned Investment
owners

37380000

Total Planned Investment

37380000

Loss at Start-up (Start-up Expenses)

-63234500

Total Capital

-25854500

76

Total Capital and Liabilities

67595500

Total Funding

130830000

77

Personnel Plan
Year 1

Year 2

Year 3

owners

20932800 23051000 24920000

Store/Deli Staff

26166000 27412000 28658000

Gas Attendants

26166000 27412000 28658000

Total People

312

Total Payroll

73264800 77875000 82236000

312

312

Break-even Analysis
Monthly Revenue Break-even

30862790

Assumptions:
Average Percent Variable Cost

0.72

Estimated Monthly Fixed Cost

8662810

78

CHAPTER: 9
Findings & suggestions

79

Findings & suggestions

The pages that above will introduce Indias open market that warmly welcomes
foreign investors.

There is a considerable scope for increasing our imports of resources and technology,
from country namely Qatar.

There are many oppurtunities in the indian market for this business due to following
reason:

Strong market position

Wide geographical area
Alternative sources of energy
Joint ventures and collaborations

As we would be taking products froms HP we have founded some oppurtunities for it

in Qatar.
Hindustan Petroleum has lots of products and Focus on Alternate Energy.
Hindustan Petroleum Corporation Limited is a very strong Retail Network. And
Manufactures raw materials (LOBS) for lubricants and thus can have control on
margins.
And also have Cost advantage, Effective communication, High R&D, Loyal
customers, Market share leadership, and Strong management team.
Maersk oil petroleum has the largest container ship operator and supply vessel
operator in the world.
Maersk oil petroleum Operates in more than 130 countries and have a workforce
of over 100,000 employees
Apart from shipping, company engages in energy, transportation, offshore, retail,
and manufacturing businesses.
Hp is a global group of energy and petrochemicals companies. Its products include oils, fuels,
and card services as well as exploration, production, and refining of petroleum products .As
like other organizations Hp has its own Mission, Vision, ways of carrying out the all the
marketing functions. It has its own structure and hierarchy as well as leadership style. It
80

functions as a complete organization having its braches worldwide carrying out different
strategies and techniques to reach its goals and mission. It has positioned well in customers
mind and has created good brand image. All of its marketing strategies are very effective and
are helping Hp reach the heights. Hp Pakistan has maintains its image in this fast moving world
with its core values and giving more importance to its customers. With the research and
development that its departments carry puts the results into time-to-time changes and
innovations that lead the organization to better performance and achievement of goals.

81

CHAPTER: 10
Conclusion

82

Conclusion
There should be proper shades and proper sitting arrangements at the filling stations.
Lubricants should be disposed in a proper way to protect the environment from being
polluted. Hp should provide small incentive to its customers. Schemes like buy 50 liters of
super and get a cola drink free, should be kept introducing time to time. Hp should make
company operation site in every city to capture the new market. There is only one thing that
is constant that is change; hp should invest on research& development to cope with dynamic
environment. Company should establish new regional office to control the activities of
company operations. The company should provide the facility of free oil change on all its
outlets. Hp should develop modern retail outlets. These outlets should have all possible
facilities for customers because one of the reasons behind decrease market share is
modernization of competitors. Hp should develop effective marketing programs that help the
company to increase sales that will lead to increase the market share. In these market
programs emphasis should be given to advertising, which is the most effective and efficient
tools of promotion for such type of business.

83

Bibliography
http://makeinindia.com/sector/oil-and-gas/
http://www.mrpl.co.in/activities-itd
http://www.gizmag.com/fuelmatics/29569/
http://fuelmatics.com/
http://www.howtoexportimport.com/Process-to-import-waxes-oils-mineral-fuels-and-bit-1020.aspx
http://www.bloomberg.com/bw/articles/2014-01-02/innovation-robotic-gas-station-pump-byfuelmatics-and-husky
http://www.newindianexpress.com/cities/thiruvananthapuram/Automated-Petrol-PumpOpened/2014/08/21/article2390518.ece
http://www.hindustanpetroleum.com/EfuelStations
http://www.rediff.com/money/report/coming-soon-automated-petrol-pumps-inindia/20110809.htm
http://ppqs.gov.in/IpmImport_Cont.htm
http://www.howtoexportimport.com/Export-customs-clearance-procedures-and-formalitie146.aspx
http://www.india-briefing.com/news/import-export-licensing-procedures-india-6804.html/

http://www.nafadvisors.org/pdf/2009-conference-key-scholarships.pdf
http://www.indianembassy.org/UserFiles/India-Review/2010/Aug2010.pdf
http://www.lohana.info/Issue13.pdf
http://www.aitworldwide.com/NewsEvents/eNewsletter/2010Issues/December201
0.pdf
http://www.airports.org/aci/aci/file/ADN-Momberger/2 10/ACI-Febr10.pdf
http://www.abyaar.com/Euro.pdf
Embassy of India. (n.d.). Retrieved from http://indembkwt.org:
http://indembkwt.org/DispNews.aspx?ID=246
EMBASSY OF THE REPUBLIC OF CYPRUS IN DOHA. (n.d.). Retrieved from

84