INTRODUCTION

BRIEF

Bharat Petroleum Corporation Limited (BPCL) is one of India's

largest PSU companies, with Global Fortune 500 rank of 287 (2008). Its
corporate office is located at Ballard Estate, Mumbai. As the name suggests,
its interests are in petroleum sector. It is involved in the refining and
retailing of petroleum products.
Bharat Petroleum is considered to be a pioneer in Indian petroleum industry
with various path-breaking initiatives such as Pure for Sure campaign, Petro
card, Fleet card etc.
BPCL's growth post-nationalization (in 1976) has been phenomenal. One of
the single digit Indian representatives in the Fortune 500 & Forbes 2000
listings, BPCL is often referred to as an “MNC in PSU garb”. It is
considered a pioneer in marketing initiatives, and employs “Best in Class”
practices.
Bharat Petroleum Corporation Limited (BPCL) specializes in refining,
processing, and distributing petroleum products. It offers petrol, diesel,
aviation fuel, liquefied petroleum gas (LPG) and lubricants. The company
primarily operates in India, where it is headquartered in Mumbai and
employs about13, 968 people.
The company recorded revenues of INR1, 112,431 million (approximately
$27,632.8 million) in the fiscal year ended March 2008, an increase of 13%
over 2007. Its net profit was INR17, 696 million (approximately $439.6
million) in fiscal 2008, a decrease of 17.5% compared to 2007.

HISTORY

The 1860s saw vast industrial development. A lot of petroleum

refineries came up. An important player in the South Asian market then was
the Burmah Oil Company Ltd. Though incorporated in Scotland in 1886, the
company grew out of the enterprises of the Rangoon Oil Company, which
had been formed in 1871 to refine crude oil produced from primitive hand
dug wells in Upper Burma. The search for oil in India began in 1886, when
Mr. Goodenough of McKillop Stewart Company drilled a well near Jaypore
in upper Assam and struck oil. In 1889, the Assam Railway and Trading
Company (ARTC) struck oil at Digboi marking the beginning of oil
production in India.
While discoveries were made and industries expanded, John D Rockefeller
together with his business associates acquired control of numerous refineries
and pipelines to later form the giant Standard Oil Trust. The largest rivals of
Standard Oil - RoyalDutch, Shell, Rothschilds came together to form a
single organization: Asiatic Petroleum Company to market petroleum
products in South Asia.
In 1928, Asiatic Petroleum (India) joined hands with Burmah Oil Company
- an active producer, refiner and distributor of petroleum products,
particularly in Indian and Burmese markets. This alliance led to the
formation of Burmah-Shell Oil Storage and Distributing Company of India
Limited. A pioneer in more ways than one, Burmah Shell began its
operations with import and marketing of Kerosene. This was imported in
bulk and transported in 4 gallon and 1 gallon tins through rail, road and
country craft all over India. With motor cars, came canned Petrol, followed
by service stations. In the 1930s, retail sales points were built with
driveways set back from the road; service stations began to appear and
became accepted as a part of road development. After the war Burmah Shell
established efficient and up-to-date service and filling stations to give the
customers the highest possible standard of service facilities.

FROM BURMA SHELL TO BHARAT PETROLEUM

Burmah Shell Refineries was incorporated as a company in 1952, and

established a refinery in Mahul .On 24 January 1976, the Burmah Shell
Group of Companies was taken over by the Government of India to form
Bharat Refineries Limited. On 1 August 1977, it was renamed Bharat
Petroleum Corporation Limited. It was also the first refinery to process
newly found indigenous crude Bombay High, in the country.

BHARAT PETROLEUM “then and after”

The company installed microprocessor based digital integrated distributed

control systems in catalytic reformers and introduced a new solvent unit to
replace the pneumatic control system in 1993.The company also installed an
advanced control system for its catalytic control unit. The company then
incorporated a joint venture company, Bharat Oman Refineries, in
1994.There after BPCL signed a memorandum of understanding (MOU)
with Bank of Baroda in 1995 to launch the first co-branded credit card in the
country. In 1998, BPCL entered into a joint venture with Petronet (India) for
the construction of a 308 km pipeline from Kochi in Kerala to Karur in
Tamil Nadu. The following are a few achievement achieved by BHARAT
PETROLEUM CORPORATION LTD:
• McDonald's made an agreement with BPCL to open and run
restaurants at selected petrol pumps across the country in 2000. Quicky's,
the global coffee chain, followed suit in 2001, and began ton offer its
services at BPCL stores.

• BPCL launched Speed '93, its own brand of petrol, in 2003.

In the following year, BPCL diversified its operations. The company
entered into a business to business e-commerce arrangement with IDBI
Bank to provide an automated payment and purchase process to BPCL's
corporate and industrial clients. The company also tied up with Tata
Consultancy Services to provide medical advisory and counselling
services at Ghar, the highway retailing initiative of BPCL.

• Bharat Petroleum Corporation Limited and GAIL formed

another joint venture company, Central UP Gas, for implementation of
City Gas Projects in Delhi and Kanpur in 2005.

• In 2006, the Government of the Sultanate of Oman signed an

Exploration and Production Sharing Agreement (EPSA) for the on land
exploration block 56 with the consortium comprising BPCL, Oilex
(Operator), Hindustan Petroleum Corporation Limited, GAIL India and
Videocon Industries. In the same year, the company acquired a 20%
interest in an exploration block in Australia.

• In September 2008, BPCL and Videocon Industries Ltd

acquired 50% stake in Brazil's EnCana Brasil Petroleo Limeade.

• BPCL and GAIL (India) Limited announced to form a joint

venture company, God’s Own Gas Company, for marketing compressed
natural gas (CNG) and piped gas in Kerala and Karnataka, in March
2008.

• In April 2008, BPCL announced the formation of joint

venture Company in consortium with other companies, Shapoorji Pallonji
Co Ltd and Nandan Biomatrix Ltd for establishment of Bio Diesel Value
Chain in Uttar Pradesh, India. In the same month, BPCL and GAIL
 (India) Limited signed an MOU for cooperation in transmission and
distribution of natural gas, LPG pipelines and city gas.

• In August 2008, Punjab Energy Development Agency

(PEDA) signed a MoU with BPCL to setup one M/W Solar Photovoltaic
Power Plants at Lalru in Punjab, India.

MAJOR PRODUCTS AND SERVICES

Bharat Petroleum Corporation Limited (BPCL) refines, stores,

markets and distributes petroleum products. The company’s key products
and services include the following:

PRODUCTS

1. Petrol

2. Diesel

3. LPG

4. Gasoline

5. Kerosene

6. Lubricants

7. Aviation fuel

8. Fuels and solvents

SERVICES

1. Convenience stores

2. ATMs

3. Car washes

4. Free air and water

5. Lubricant top-ups

6. Energy audits

7. E-banking services

8. Consultancy and technical services

9. Online ordering
Bharat Petroleum Corporation Limited (BPCL) is one of India largest
PSU companies, with global fortune 500 rank of 287 (2008). Its corporate
office is located at Ballard Estate, Mumbai.

As the name suggests, its interests are in petroleum sector. It is involved in

then refining andretailing of petroleum products.

Refinery Industry
Indian refineries have in general been able to improve their performance
over the past 5 years despite the challenges of the installation of new energy
intensive processing units at the same time as distillation capacity has
expanded by over 75%. Further gains are possible, as indicated by the large
efficiency gap between the EIL benchmark values for each processing unit
and the range of actual performance found during the 1995/96 survey. In
total, savings of 20% are possible in the process units at public-sector
refineries, while savings of 15-43% are possible in the steam and utilities
systems.

Fundamental Analysis
Fundamental analysis is the examination of the underlying forces that
affect the interests of the economy, industrial sectors, and companies. It tries
to forecast the future movement of the capital market using signals from the
economy, industry and company.
Fundamental analysis requires an examination of the market from a broader
perspective. The presumption behind fundamental analysis is that a thriving
economy fosters industrial growth which leads to development of
companies.
There are two analyses:
1. Economic Analysis.
2. Industry Analysis.

Economic analysis
It implies the examination of GDP, government financing, government
borrowing, consumer durable goods market, non-durable goods and capital
goods market, savings and investment pattern, interest rates, inflation rates,
tax structure, foreign direct investment and money supply.

Role of Oil and Natural Gas Industry in India GDPHighlights

India is the 6th largest consumer of petroleum .By the year 2010, India is
expected to rank 4th in terms of consumption of energy.
• The contribution of the Indian Oil and Natural Gas Industry is nearly
US$ 13.58 billion.
• All of the oil refineries in India, apart from two are operated by the
states.
• The total refinery output in the period 2005-06 was 130.11 million
tones.
• The growth rate of the refinery output was increased by 2.1 % in the
year 2005-06.
• The crude oil output at the end of 2006-07 was 33.98 million tones.
• The growth rate of the crude oil output was increased by 5.6% in the
year 2006-07.
• The production of natural gas in the year 2006-07 was 31.55 billion
cubic meters.
• Indian petroleum demand depends highly on import of oil and natural
gas. Around 70% of the demands are fed by the imports of oil and
natural gas.
• The security pertaining to energy has become one of the primary
concerns of the Central Government.
• Presently India is trying to grab a share of the oil and gas fields from
Central Asia to Myanmar and Africa.
• The area of interest for the Indian Oil and Natural Gas Industry is to
search for petroleum in both offshore and onshore blocks.

Government expenditure
From a modest beginning with the capacity of 0.25 million tonnes per
annum when planning began, the Indian petroleum-refining industry has
come of age with an annual capacity of 45.55 million tonnes at the end of
the sixth Five-Year Plan. The rapid expansion of refining capacity has
enabled the country to achieve a considerable degree of self-sufficiency in
petroleum products and has encouraged the creation of fertilizer,
petrochemical, and tertiary downstream industries.

FDI’s role in industry

The government has taken several progressive steps to attract investment
into the industry. Among other measures, it is allowing 100% foreign direct
investment (FDI) in private companies and 26% in government-owned
companies. 100% FDI is also possible in exploration, gas pipelines,
petroleum products, and marketing, thus effectively offering investment
opportunities in various avenues.
India’s energy industry will provide investment opportunities of around
$150 billion over the next five years. This will happen when FDI, s will
investment in India.

Revenues
The latest India Oil & Gas Report from BMI forecasts that the country will
account for 11.23% of Asia Pacific regional oil demand by 2013, while
providing 10.85% of supply. Asia Pacific regional oil use of 21.40mn barrels
per day (b/d) in 2001 reached 25.68mn b/d in 2007. It should average
26.32mn b/d in 2008, and then rise to around 29.65mn b/d by 2013. In terms
of natural gas, in 2007 the region consumed 421bn cubic meters (bum), with
demand of 595bcm targeted for 2013. Production of 336bcm in 2007 should
reach 483bcm in 2013, but implies net imports rising from 85bcm per
annum in 2007 to 111bcm in 2012. This is in spite of many Asian gas
producers being major exporters. India's share of gas consumption in 2007
was 9.55%, while its share of production was 8.98%. By 2013, its share of
gas consumption is forecast to be 10.22%, with the country accounting for
10.34% of supply. The country sits well ahead of the Philippines and
Pakistan, and just three points behind Vietnam. The country is still second
behind China in the league table in BMI's updated Downstream Business
Environment rating, reflecting its status as a high-growth energy market with
strongly positive population and demand trends, plus a low level of retail
site intensity. It is just ahead of Singapore, with scope to pull away from the
more mature Asian energy economy.
Industry analysis

Refining capacity, as measured by primary distillation capacity, has

expanded rapidly in recent years. At the end of the 1998/99 fiscal year,
refining capacity stood at 67.5 million tons (met), compared to 119 met at
the beginning of the 2003/04 fiscal year, a rise of over 75% in five years.
Many existing refineries were expanded over this period, but more than half
the increase was accounted for by the commissioning of the 27 met Reliance
grassroots refineries at Jamnagar in 1999. India now has 19 refineries,
owned among five major corporate groups, the largest of which is Indian Oil
Corporation. Since 2001, a number of smaller refining companies have been
consolidated into the Indian Oil Group and Bharat Petroleum Corporation.
In 2003, the Oil and Natural Gas Corporation, India’s major upstream oil
and gas producer, entered the downstream market though the acquisition of
the majority shares of the 9.7 met Mangalore refinery. India’s refineries are
relatively simple. Comparing the ratio of primary upgrading capacity to
crude distillation (“cracking to distillation ratio”), most large Indian
refineries have a cracking-to distillation ratio of less than 40%; only the new
large Reliance refinery meets the average of the U.S. refining industry
(56%).
Porter five forces model:

Michael Porter has identified five forces which determine the long-run
attractiveness of a market
segment. Hence this model can be studied keeping the BPCL in mind.

1. Threat of intense segment rivalry-

This BPCL has got many strong competitors such as Hindustan petroleum,
Indian oil etc. So it faces stiff competition from them but regardless of this it
is in the growth stage.

2. Threat of new entrants-

This refinery industry requires a huge investment and therefore not many
entrants jump into this market. After reliance there is not too much
companies are looking forward to jump in this sector so company has an
advantage in it.

3. Threat of substitute products-

There is a many substitute product available in market. Like HP, Indian oil
etc. So the company has to take many careful steps to manufacturing the
product.
4. Threat of buyer’s growing bargaining power-
The price of petroleum products is generally decided by government due to
the expenditure and subsidies provided by government. So consumer will
only attract towards the special products such as speed, power etc. so
company has to do innovations to have a brand loyalty but no bargaining
problem will be there.

5. Threat of supplier’s growing bargaining power-

Role of supplier is very crucial. We can take the example when crude oil
prices were 124$ per barrel. In India the price was about to make Rs100/liter
but due to government subsidies it was available at Rs55/liter. So bargaining
power is very impotent in this sector.
 Strategic Analysis of sector
The research service provides a comprehensive overview of the oil and gas
sector in India, covering the entire value chain of the industry. The upstream
sector and the downstream sectors for petroleum and natural gas have been
profiled individually. The service gives a detailed analysis of the investment
climate in each segment, highlighting growth potential, competitive activity
and the impact of government policies and regulations.

Research Overview
Strategic Analysis of Oil and Gas Sector in India provides a comprehensive
overview of the oil and gas sector in India, covering its entire value chain. In
this research, we examine the following segments of the industry: oil and
gas upstream, petroleum downstream, and natural gas downstream.
This comprehensive, objective information allows your company to mitigate
risk, identify new opportunities, and drive effective strategies for growth.

Market Overview

Sizeable Refining Capacity Additions Turning India into a Global Refining

Hub. Oil and gas accounts for 41 percent of India’s energy consumption and
there is unlikely to be any significant scaling down of dependence on these
fuels in the next five to ten years. The sustained economic growth in the
country over the last five years has led to concurrent growth in energy
demand across industrial, transportation, commercial, and residential sectors.
“To meet this considerable demand, the oil and gas sector is expanding its
refining capacity to drive output and export of petroleum products,” says the
analyst of this research. “However, this could widen the gap between
domestic demand and supply of crude oil.” A substantial increase in the
domestic supply of natural gas and reduced prices of liquefied natural gas
(LNG) are likely to encourage gas consumption in power, fertilizer, city gas
distribution, and other industrial segments. Owing to the rising consumption
of oil and gas, the Government has framed favorable policies to promote
exploration and production. This move has caused a quantum leap in
domestic natural gas supply. Government policies have also supported the
growth of export-oriented refining capacity in the country.

The natural and technological limitations in enhancing global oil production

are likely to restrain supply from keeping pace with demand in the long
term. This, in turn, could lead to a continued increase in the base-level prices
of crude oil. “In India, the pricing of petroleum products and natural gas
continues to be regulated by the government,”. “Though international crude
oil prices have come down in the short term, they are expected to rebound
and rise in a sustained fashion in the long term.” The oil and gas sector will
have to strategize to deal with volatile prices on the supply side and
government-regulated product prices in the coming years.

With margins under pressure, Indian refiners have begun to integrate with
value-added products such as petrochemicals, and invest in methods to
improve distillate yields. Moreover, in response to the regulated product
prices in the domestic market, the private sector refiners have moved to sell
major shares of their products in the export market. “As crude prices have
increased, the spotlight is on widening the gross refining margins by up-
grading heavy gas oils and vacuum residue to fuel products,”. To gain
additional revenue, Indian refineries are also integrating horizontally to
venture into the production of more value-added products.

Industry
The Indian petrochemicals industry is finally discarding its nascent stage tag
and the companies are now vying for a major chunk of the global pie of the
petrochemicals market. Indian major Reliance has recently acquired a
German polyester major Trevira GmbH and this marks the private sector
giant's entry into the European markets in a big way. At the same time,
ONGC and IOC are planning entry into the business in a major way as this
is in line with their forward integration plans.

The petrochemicals cycle is currently on a global uptrend thanks to growing

demand from China and other developing nations. In the domestic markets,
growing activity in infrastructure and construction segments coupled with
strong growth in the auto sector on the back of lower interest rates have
actually boosted the performance of the petrochemicals sector. Major
beneficiaries of this uptrend are the integrated players such as Reliance
Industries, GAIL and IPCL .

A low per capita consumption of 4 Kgs of plastic as compared to a global

average of 20 Kgs leaves enough scope for capacity expansion resulting in
ONGC and IOC venturing into the business.
Swot analysis
Strengths:

 Consolidation: The Indian petrochemicals industry has witnessed

consolidation over the last few years and nearly 85% of the polymer
capacity in the domestic market is with the top three participants
(Reliance, IPCL and Haldia Petrochemicals (HPL)). Of the three
companies mentioned, IPCL forms a part of the Reliance stable while
GAIL is set to pick up stake in HPL. Such high concentration is likely
to benefit these players, as this would help reduce duplication of
production.

 Synergies: Most of the petrochemical players have integrated

facilities, thereby reducing external dependence to a large extent. To
put things in perspective, Reliance Industries uses naphtha from its
own Jamnagar refinery as a feedstock for the petrochemicals
production. IPCL uses Reliance's vast and widespread marketing
network to reach out to global consumers. On the other hand, GAIL
utilizes natural gas for its petrochemicals capacity. Rich natural gas is
evacuated into the pipelines and after separation of the hydrocarbons
such as ethane, propane and butane, the lean gas is transmitted to
consumers such as power and fertilizer industry. Further,
petrochemicals business being a high value add, would add further to
the profitability of these integrated companies.

Weaknesses:

 Low bargaining power vis-à-vis the suppliers: Input costs form

nearly 50% to 60% of the raw material costs. Further, gas prices are
regulated but in short supply, while naphtha is an expensive source of
feedstock. Refineries realize the import parity prices on naphtha
produced and in case of high feedstock prices, petrochemical players
have little bargaining power against the suppliers. These players are
therefore vulnerable to raw material prices.

 Low Bargaining power vis-à-vis customers: In case of increase in

input costs, the companies might not be able to pass on the rise to the
consumers as the prices of products is highly influenced by factors
such as international prices and supply.
Opportunities:

 Low per capita consumption: Currently, domestic per capita

polymer consumption is nearly 4 kgs while the global average is
nearly 20 kgs. This underlines the fact that there is immense scope of
capacity expansion in the country as the market to be tapped is huge.
Further, spending on R&D activities is around 2% of sales as
compared to an international average of 18%. This leaves enough
room for product development. Also, currently, India has a chemicals
trade deficit of about US$ 1.5 bn a year, which leaves enough
investment opportunities in the industry.

 Increased economic activity:The government has set aside nearly Rs

400 bn for infrastructure projects such as roadways, airports and
convention centers and also towards rural housing augur well for the
petrochemicals industry as this is likely to increase demand for
various products (high density polyethylene, low density polyethylene
among others) for the purpose of road development, packaging, cables
and wiring. Also sustained growth in the auto sector is likely to keep
the demand for petrochemical products high. As per our estimates, the
auto sector is likely to grow at nearly 12% over the next few years.

Threats:

 Customs duties: Historically, the domestic industry has been

protected from overseas competition by high import duties imposed
by the government. However, of late, Import duty on polymers has
been steadily reduced and is currently at 20%. As part of its
commitment to various multilateral and bilateral trade agreements, the
government is likely to reduce duties going forward and this is likely
to reduce the cushion enjoyed by the domestic players as against the
landed cost of imported products.

 Growing competition: The domestic industry is likely to witness

immense competition going forward with IOC all set to enter the
segment with its Rs 64 bn project in FY06. Further, ONGC is also
venturing into petrochemicals business. With commitments to reduce
and eliminate tariff and non-tariff barriers, India, with huge market
potential, might witness entry of global majors such as ExxonMobil,
Dow Chemicals and Shell into the business. These global majors with
 deep pockets can actually lead into a pricing war, which could result
in squeezing margins.

Taking a cue from their global counterparts, Indian majors such as IOC and
ONGC are entering into this value add business in a huge way and this is
likely to change the entire business dynamics of the companies, not only in
India but Asia as Asia is fast becoming the largest petrochemicals
manufacturing hub. Going forward, investors need to be aware of this reality
and make informed investment decisions in the energy sector.
 BRIEF ABOUT THE COMPETITORS
THE FOLLOWING ARE THE TOP FIVE COMPETITORS OF
BHARAT PETROLEUM CORPORATTION LIMITED:

INDIAN OIL CORPORATION LIMITED

Indian Oil Corporation is an Indian public-sector petroleum
company. It is India’s largest commercial enterprise, ranking 116th on the
Fortune Global 500 listing (2008). It began operation in 1959 as Indian Oil
Company Ltd. The Indian Oil Corporation was formed in 1964, with the
merger of Indian Refineries Ltd. Indian Oil and its subsidiaries account for a
47% share in the petroleum products market, 40% share in refining capacity
and 67% downstream sector pipelines capacity in India. The Indian Oil
Group of Companies owns and operates 10 of India's 19 refineries with a
combined refining capacity of 60.2 million metric tons per year. On 30th
June 2009 Indian Oil will complete 50 years of its existence and a series of
events are being planned to celebrate its Golden Jubilee Year.

Overview Indian Oil operates the largest and the widest network of
fuel stations in the country, numbering about 17606 (15557 regular ROs &
2049 Kissan Sewa Kendra). It has also started Auto LPG Dispensing
Stations (ALDS). It reaches Indane cooking gas to over 47.5 million
households through a network of 4,990 Indian distributors. In addition,
Indian Oil's Research and Development Centre (R&D) at Faridabad
supports, develops and provides the necessary technology solutions to the
operating divisions of the corporation and its customers within the country
and abroad. Subsequently, Indian Oil Technologies Limited - a wholly
owned subsidiary, was set up in 2003, with a vision to market the
technologies developed at Indian Oil’s Research and Development Centre. It
has been modelled on the R&D marketing arms of Royal Dutch Shell and
British Petroleum.

HINDUSTAN PETROLEUM CORPORATION LIMITED

HPCL (Hindustan Petroleum Corporation Limited) is a Fortune
500 company, with an annual turnover of over Rs 1,03,837 Crores ($ 25,142
Millions) during FY 2007-08, 16% Refining & Marketing share in India and
a strong market infrastructure. Corresponding figures for FY 2006-07 are:
Rs 91,448 crores ($20,892 Million).
 The Corporation operates 2 major refineries producing a wide
variety of petroleum fuels & specialties, one in Mumbai (West Coast) of 5.5
MMTPA capacity and the other in Vishakhapatnam, (East Coast) with a
capacity of 7.5 MMTPA. HPCL holds an equity stake of 16.95% in
Mangalore Refinery & Petrochemicals Limited, a state-of-the-art refinery at
Mangalore with a capacity of 9 MMTPA. In addition, HPCL is progressing
towards setting up of a refinery in the state of Punjab in the joint sector.

HPCL also owns and operates the largest Lube Refinery in the country
producing Lube Base Oils of international standards. With a capacity of 335
TMT. This Lube Refinery accounts for over 40% of the India's total Lube
Base Oil production.

The vast marketing network of the Corporation consists of Zonal

offices in major cities and over 91 Regional offices facilitated by a Supply &
Distribution infrastructure comprising Terminals, Aviation Service Stations,
LPG Bottling Plants, and Inland Relay Depots & Retail Outlets. The
Corporation over the years has moved from strength to strength on all fronts.
The refining capacity steadily increased from 5.5 million tonnes in 1984/85
to 13.70 million metric tonnes (MMT) presently. On the financial front, the
turnover grew from Rs. 2687 crores in 1984-85 to an impressive Rs 1,03,837
Crores in FY 2007-08. HPCL also owns and operates the country’s largest
Lube Refinery, producing Lube Base Oils of international standards. With a
capacity of 335,000 Metric Tonnes. This refinery accounts for over 40% of
the country’s total Lube Base Oil production.

The vast marketing network of the Corporation consists of Zonal

offices in the 4 metro cities and over 85 Regional offices facilitated by a
Supply & Distribution infrastructure comprising Terminals, Aviation
Service Stations, LPG Bottling Plants, and Inland Relay Depots & Retail
Outlets.
 SWOT analysis of BPCL

Strength

• Decline in under recoveries for downstream oil companies.

• Drop in borrowings in a credit squeezed market.
• Reducing fiscal deficit on account of subsidies for import dependent
countries.

Weakness

• Low prices leading to low refining margins- low revenue growth.

• Economic slowdown – low demand.
• Huge inventory losses experienced.

Opportunity

• Drop in community prices will reduce new projects cost.

• Lower prices – lower working capital requirement.
• SPR – good time to construct and fill SPR.

Threat

• Investments a new projects suspended – setting stage for another price

expolsion.
• Customs duty may be reintroduced affecting already depressed
margins.