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AGLOBAL / COUNTRY STUDY AND REPORT
ONOIL AND GAS INDUSTRY OF QATAR
Submitted ToN. R. Institute Of Business Management
IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE
DEGREE OF
MASTER OF BUSINESS ADMINISTRATIONIn
Gujarat Technological UniversityUNDER THE GUIDANCE OF FACULTY
GUIDES
Prof. Amish SoniProf. Deepa VyasProf. Komal Sidhnani
SUBMITTED BYAmit Patel (137350592010)Naineel Desai
(137350592091)Chintan Patel (137350592034)Aadil Rushnaiwala
(137350592001)Musab Pehlari (137350592090)Sailesh Bhavnani
(137350592021)
[Batch: 2013-15]MBA SEMESTER- IV
N.R.INSTITUTE OF BUSINESS MANAGEMENTMBA PROGRAMME Affiliated to
Gujarat Technological University Ahmadabad
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Students Declaration
We, following student hereby declare that the report for Global/
Country Study Reportentitledtitled "Oil and Gas Industry of Qatar"
is a result of our own work and ourindebtedness to other work
publications, references, if any, have been duly acknowledged.
Enrollment no. Name Signature137350592010 Amit Patel137350592091
Naineel Desai137350592034 Chintan Patel137350592001 Aadil
Rushnaiwala137350592090 Musab Pehlari137350592021 Sailesh
Bhavnani
Place: ____________Date: _____________
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INSTITUTES CERTIFICATE
Certified that this Global /Country Study and Report Titled Oil
and Gas Industry of Qatarand India is the bonafide work of
attachment of Mr. Amit Patel (137350592010), Mr.Naineel Desai
(137350592091), Mr. Chintan Patel (137350592034), Mr.
AadilRushnaiwala (137350592001) Mr. Musab Pehlari (137350592090),
and Mr. SaileshBhavnani (137350592021) who carried out the research
under our supervision. We alsocertify further, that to the best of
our knowledge the work reported here in does not form partof any
other project report or dissertation on the basis of which a degree
or award wasconferred on an earlier occasion on this or any other
candidate.
_______________________________ Prof. Amish SoniDr. Hitesh
Ruparel (Project Guide)(Director)
_________________Prof. Komal Sidhnani
(Project Guide)
________________Prof. Deepa Vyas
(Project Guide)
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Plagiarism Report
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Company Certificate
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vi
PREFACE
Knowledge and human power are synonyms, once said the great
philosopher Francis Bacon.However based on the experience within
todays global markets, he would probably say, Theability to
capture, communicate & leverage knowledge to solve problems is
human power.This raises the question how exactly one can best
capture, communicate & leverageknowledge, especially within
world of system engineering.
The answer probably lies in statement itself by communicating
your ideas and devising waysand means to give shape to your plans
in to reality, which requires a long-term planning,investment and
shrewd thinking.
The trust for knowledge and power led us to two years M.B.A.
degree course as part of thislong-term investment. This course not
only enabled me to focus firmly on the current trendbut also helped
to focus on future changes.
As a part of this M.B.A. degree, students have to undergo a
project, which is designed keepingthe prerogative and preferences
of industry in mind. This particular project allows a studentto
implement what he/she has learned within the four walls of
classroom. It is here that thecalibre of student is tested to find
his/her flexibility for rigorous tasks assigned to his/her
infuture.
The country under our purview is Qatar. This project report has
studied the market andbusiness opportunities for Indian companies
as well as Qatar companies. And prepareBusiness model for Qatar and
Indian oil and gas companies.
Finally the report attempts to be helpful to all the readers as
well.
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vii
ACKNOWLEDGEMENT
It gives us the immense pleasure to present this case.
Completing a task is a never a one-maneffort. It is often the
result of valuable contribution of a number of individuals in a
direct orindirect manner that helps on shaping and achieving an
objective.
We wish to express our sincere gratitude to innumerable number
of people who have beenassociated with us throughout this project.
We feel blessed to have the opportunity ofexpressing our hearty
gratitude to the following personalities, without the help of whom
ourproject could not have been hatched.
We express our sincere thanks to Dr. Hitesh Ruparel for giving
us the opportunity to study inthis institute.
We express our sincere thanks to Prof. Amish soni, Prof. deepa
vyas, Prof. Komal Sidhnaniwho guided our group throughout the
project and gave us valuable suggestions andencouragement to
complete project report successfully. We express our sincere
gratitude toher that she gave her valuable time to support us.
We have no words to express our gratitude for the ungrudging and
unfailing cooperation ofour group members. Finally we want to thank
all the friends, colleagues for their constant co-operation,
encouragement, help and support throughout the study without which
this workwould not have been possible.
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viii
IndexChapter Particulars Page No.
Executive summary (sem - lll) 1Executive summary (sem - lV)
10
1 The business plan 16 Description of business 17 Implementation
plan 19
2 Brief of business plan 223 Automatic fuelmatics machines 304
Market analysis and marketing plan 35
4 Ps 36 Market segmentation 37 Target market 38
5 Industry competitive analysis 41 Porters five forces 42 SWOT
analysis 47 PEST analysis 48
6 Import Export 497 Business conditions in Qatar 618 Financial
Analysis 699 Findings and suggestions 7910 Conclusion 82
Bibliography 84
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1EXECUTIVE SUMMARY (SEM-lll)OIL AND GAS INDUSTRY IN QATAR
Qatar is a Middle Eastern peninsula jutting north into the
Persian Gulf. The country shares aborder with Saudi Arabia, and is
located between Bahrain to the northwest and the UnitedArab
Emirates to the southeast; Iran lies north across the water. The
terrain is largely flat,rocky desert with shifting sands, and with
salt flats around the coast. The capital city is Doha;the city is
one of five ports, the others being umm Said, Al Khor, Al Wakrah,
and Ras Laffan.
Qatar has a population of just over 2.04m (as at July 2012,
including expatriates). It isestimated that 40% are Arab, 18%
Indian, 18% Pakistani, and 10% Iranian, with 14% makingup other
ethnic groups. The principal religion is Islam.
Until October 2004, Qatari laws operated on a two-tier system:
Sharia law was administeredat the local level, while the civil
courts operated on the English model, a hangover from aperiod
during which Qatar was a British protectorate. A new unifying law
has since come intoforce, and the Qatari Constitution came into
effect in June 2005; Islamic Sharia is the principalsource of
legislation.
The government of Qatar is based on a traditional monarchy,
whereby the Emir (presentlyAmir Tamim bin Hamad Al-Thani) is head
of state. The Prime Minister is Abdallah bin Nasirbin Khalifa
Al-Thani and the Deputy Prime Minister is Ahmad bin Abdallah
al-Mahmud.
The economy is largely centered on Qatars gas and oil reserves,
with oil productionaccounting for around two-thirds of total
government revenues; Qatars proven gasreserves are the third
largest in the entire world. Liquefied natural gas (LNG) and oil
exportsmake up around 85% of all exports and more than 50% of GDP.
Per capita GDP is also amongthe worlds highest, at US$102,900 in
2012 Qatar has one of the fastest gro wing economieswith the
highest per capita income in the world. Qatars economy is projected
to continueslowing down in 2014 after recording one of the worlds
highest growth rates following thecompletion of major gas projects.
Growth slowed down to an estimated 6.1 percent in 2013and is
expected to continue its downward trend to reach 5.9 percent in
2014, according toIMF estimates.
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2Qatar is currently undergoing massive transformation under the
rubric of the 2030 NationalVision, which aims to establish an
advanced, knowledge-based, and diversified economy, nolonger
reliant on the hydrocarbon sector. The government is heavily
involved in Qatar'seconomy, although it strongly encourages private
investment in many sectors. Investmentsin Various sectors including
health care, education, tourism and financial services,
amongothers, are expected to offer greater opportunities for
foreign investment.
In June 2013 Qatars Amir, Sheikh Hamad bin Khalifa Al Thani,
abdicated to his son SheikhTamim bin Hamad Al Thani. The smooth
transfer of power to Amir Sheikh Tamim bin HamadAl Thani is
unlikely to lead to any major changes to the countrys
implementation of the 2030National Vision. Amir Sheikh Tamim is
expected to continue focusing on infrastructuredevelopment,
economic diversification, education, and healthcare, underwritten
by thenatural resource wealth of country.
Qatar National Vision 2030 rests on 4 pillars Human Development
to facilitate all of Qatarspeople to keep up a well-off society.
Social Development to sustain a just and gentle societybased on
high moral principles and capable of playing a well-known role for
development inglobal partnership. Economic Development to attain an
aggressive and diversified economyable of meeting the needs of, and
secure a high standard of living for, its whole people for
thepresent and for the future.
Environmental Development to guarantee harmony along with
economic growth, socialdevelopment and environmental protection.
Qatars management of its hydrocarbonresources will continue to
secure step up in standards of living, but those development
cannotbe the only aim of society. The National Development Strategy
20112016 thus aims tobalance five major challenges identified in
QNV 2030:
Achievements and the outlook for 20112016
Qatar has built a solid foundation for embarking on the National
Development Strategy 20112016. Speedy growth in the 2000s, the best
ever in the world, has specified Qatar one of theworlds utmost
levels of per capita income. Lofty saving, both private and public,
has beenreproduce in substantial domestic investment and the
buildup of a substantial pool of foreigncurrency assets. To meet
new demands in a more complex economy and to reinforcePerformance,
Qatar has embarked on a diversity of reforms. The reform aspires to
transport
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3together decisions of national implication within an included
framework for makingpremeditated and concerted choices about Qatars
future. At a prepared level the reformshighlight development in
public services and relief of value for money, thereby eye-catching
opportunities and conditions for the country and for individual
citizens. By helpfulnational development main concern and
direction, the reforms provide greater obviousnessfor the private
sector and public society, leading to better position of welfare
across thecountry.
As Qatar is a member of the Gulf Co-operation Council and so it
contributes to theexecution of amalgamation and strength among GCC
member countries to meet theexpectations of its people in the
important areas such as guard, calmness, business andeconomic
development. Basic Law of Qatar 1970 is applied in the state which
enforces thelocal customs that are been rooted in the traditional
Islamic Heritage of the state. YieldingEmir the finest authority as
they are favorers of following the conventional Islamic rules
andcustoms. The role of Emir is influenced by the religious
teachings and the rules ofconsent and discussion of the Islam
religion where the public in general have the rightto come out of
the Emir openly so that they can face any situation in future.
Majlis as-Shura have a total of 35 members is in the consultative
assembly and is in local way run witha single task only is the
consultative task.
The constitution which was called for 45 members to be elected
for the legislature,which was to be made up to 30 members elected
by representatives and 15members elected by the Emir in the year
2003. The basis for the system of governmentis democracy. The
official language is Arabic and the people of Qatar are part of the
Arabicnation. The country became independent in 1971 and since then
The Advisory Council isconsidered to be the first pioneering
democratic experience to prove successful andwell suited to the
countrys political and social conditions. It received profound
attentionfrom the government under the leadership of the
Emir(H.H.Sheikh Hamad Bin Khalifa Al-Thani) which resulted in the
evident development of the example of the Qatari advisorycouncil
the expansion of its responsibilities and the moral and practical
weight of itsdeliberation in the political practice.
After Qatar confirmed its independence from British ruling, the
country carry on to changeand grow on an almost day by day, it is
remarkable to think the differences to have come
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4about over the past 4 years, never mind 40, and for those who
have onlooker the timeschanging, the current day Doha is different
beyond gratitude in most aspects. QatarNational Vision 2030 (QNV
2030), launched in October 2008, builds a bridge from thepresent to
the future. It intends to convert Qatar into an advanced country,
behind itsgrowth and providing a high standard of living for its
entire people for generations to come.It foresees a vibrant and
prosperous Qatar with economic and social justice for all. It
envisagesall Qataris working together in pursuing this goal, with
strong Islamic and family valuesdirecting their collective
energies.
Qatar National Vision 2030 builds on a society that promotes
justice, benevolence andequality. It exemplifies the principles of
the Permanent establishment, which shelter publicand personal
freedoms, promotes ethical and religious values and customs, and
guaranteessafety, stability & equal opportunities.
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5OIL & GAS INDUSTRY IN INDIA
India has one of the fastest growing economies in the world, and
the demand for oil and gasis rising at a matching rate. Not only is
Indias market potential huge, but in recent years Indiahas emerged
as one of the most prospective regions in the world with major oil
and gasdiscoveries, both onshore and offshore.
India has total reserves (proved & indicated) of 1,201
million metric tonnes (MMT) of crudeoil and 1,437 billion cubic
metres (BCM) of natural gas as on April 1, 2010, according to
thebasic statistics released by the Ministry of Petroleum and
Natural Gas. Against a crude oilproduction of about 37 million
tonnes per annum (MTPA), Indias consumption currentlyexceeds 138
million tonnes. In 2010, 194 MMT of crude oil was refined and
actual natu ral gasproduction was 31.0 BCM. By the end of 2012, the
refinery capacity is expected to reach240.96 million metric tonnes
per annum (MMTPA).
The refining capacity of the oil refineries in India has
undergone nearly a three -fold increasein 2010. The country
exported 50.974 MMT of petroleum products during 2009-10. Toprovide
energy security, the Government of India is seeking private and
foreign investmentsin excess of $250 billion in both the upstream
and the downstream sectors during the next 10years. Indias
petroleum product consumption has grown by 4-5% in last 10 years
and the oildemand in India is likely to rise to 368 MMTPA by 2025.
With widening gap between demandand supply, both for oil and gas,
the outlook for the upstream sector is extrem ely positive.While
oil and gas will continue to play a substantial role in the total
energy mix, the need forharnessing alternate energy sources like
Coal Bed Methane (CBM), Underground CoalGasification (UCG) and
Shale Gas (gas locked in sedimentary rocks) will become vital to
fulfilthe demand and supply of products.
The Government of India approved the New Exploration Licensing
Policy (NELP) on April9,2009, to tackle the increasing demand
supply gap of energy in India. In the eighth round ofthe NELP-VIII,
1.62 km2 areas will be covered comprising of 70 oil and gas blocks
and 10 areasfor the extraction of coal bed methane (CBM) gas from
below the coal fields under CBM-IV.Petroleum & Natural Gas
Ministry launched the ninth round of NELP (NELP-IX) in New Delhion
October 15, 2010. NELP-IX offered 34 exploration blocks comprising
of 8 deepwater blocks,7 shallow water blocks and 19 on land blocks.
Moreover, the government is planning its first
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6ever offer of shale gas exploration permits in 2012. Shale gas
(gas locked in sedimentary rocks)is an emerging area and has become
an important source of energy in a few countries whichhave been
able to commercially exploit this resource.
In this report an attempt has been made to provide the broad
understanding of the oil andgas sector in India across the
industries. The upstream and downstream processing sectors,key
players, key market, transportation and distribution network, fuel
retailing, Indiantaxation systems have been presented. The Western
Australian capability/ level of interest inthe market have also
been described.
Indian oil and gas sector offers a considerable opportunity for
investors and shows healthydevelopment in conformity with the
escalation of the Indian economy. The New ExplorationLicensing
Policy (NELP), which was envisaged to deal with the increasing
demand-supply gapof energy in India, has confirmed to be successful
in attracting the interest of both domesticand some overseas
players. The prosperity of Cairn India and Reliance Industries
Limited intheir Indian operations has emphasized this. Other
sectors such as Refining, LNG, and City GasDistribution etc. are
also getting sufficient attention. India has now an excess refining
capacityand aspires to prove itself as a major refining centre.
This report outlines the oil and gas sector in India and how
companies can go aboutachieving their business goals in the sector.
It aims to provide a basic understanding of theplayers, size, major
developments, and dynamics of India's oil and gas sector across
theindustries. Further, the report includes sections that provide
summary of India's economy, itsenergy sector, the Indian upstream
sector, coal bed methane, refining, gas transportation
anddistribution, LNG, petroleum product pipelines, fuel retailing,
and India's taxation regime. Abrief note on the Western Australian
oil and gas industry has also been presented.Opportunities for
Indian oil and gas sectors have also been described.
India is presently the world's fifth biggest energy consumer in
the world. However, due to itshigh population of roughly 1.2
billion the per-capita consumption of most energy
associatedproducts is exceedingly low. The per capita energy
consumption is assessed to be a very small530 kg of oil equivalent
(kgoe), while the world average is in the order of 1800 kgoe.
TheIndian economy is assumed to display sound growth, which is
evaluated to be in the regionof 6.6 percent in 2009-10. Confidence
regarding the provision of Indias future growth
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7potential arises from its comparatively high levels of internal
need and its advantageousdemographic dividend-the median age stood
at 25.3 years in 2008 with only 5.3 percent ofthe population being
above 65 years of age. This healthy internal need is best exhibited
bythe fact that the months of January and February 2010 saw telecom
wireless subscriberadditions at an amazing 15.41 and 13.44 million
respectively. When equated with othercountries, India's GDP is
expected to continue to grow at rates above 5 percent and higher
inthe short term. As China's development becomes modest, as the
chart below demonstrates,India is expected to develop at a rate in
excess of its eastern neighbor. Also Indias foreignexchange
reserves valued to be around US$250 billion in March 2009.
In 1997-98, the New Exploration Licensing Policy (NELP) was
envisioned to deal with the ever-growing gap between demand and
supply of gas in India. As per a recent report, the oil andgas
industry in India is anticipated to be worth US$ 139,814.7 million
by 2015. With Indiaseconomic growth closely linked to energy
demand, the need for oil and gas is projected togrow further,
rendering the sector a fertile ground for investment.
To cater to the increasing demand, the Government of India has
adopted several policies,including allowing 100 per cent foreign
direct investment (FDI) in many segments of thesector, such as
natural gas, petroleum products, and refineries, among others.
Thegovernments participation has made the oil and gas sector in the
country a better target ofinvestment. Today, it attracts both
domestic and foreign investment, as attested by thepresence of
Reliance Industries Ltd (RIL) and Cairn India.
According to data released by the Department of Industrial
Policy and Promotion (DIPP), thepetroleum and natural gas sector
attracted foreign direct investment (FDI) worth Rs31,501.55 crore
(US$ 5.13 billion) between April 2000 and July 2014.
The following are some of the major investments and developments
in the oil and gas sector.
Reliance Industries Ltd (RIL) plans to invest US$ 2 billion in
its three shale assets in the US. RILhas already invested US $7.3
billion since 2010 towards development of shale gas and oil inthe
US market. The company also, along with its partner British
Petroleum (BP), plans to investabout Rs 800 crore (US$ 130.35
million) for exploratory drilling in an offshore slab of Bay
ofBengal. RIL is the operator of the offshore block CY-DWN-2001/2,
also known as CY- III-D5,
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8with 70 per cent equity, with BP holding the remaining stake.
BP's contribution to theinvestment would be Rs 240 crore (US$ 39.11
million).
ONGC Videsh Ltd (OVL) has signed Production Sharing Contracts
(PSCs) for two blocks inMyanmar. The contracts were signed between
OVL, Myanmar Oil & Gas Enterprises Ltd(MOGE), National Oil
Company of Myanmar, and Machine & Solutions Co Ltd (M&S).
ONGCwill also invest over Rs 5,700 crore (US$ 928.73 million) to
push up production by 6.9 MT ofcrude oil and 5 billion cubic metres
(bcm) of gas by 2030 from its Mumbai High (North) oil andgas
field.
Steel-to-BPO conglomerate Essar is in talks with Germany's BASF,
the biggest chemicalscompany in the world, for a petrochemicals
joint venture (JV), as per sources.
Larsen & Toubro has won an order worth Kuwaiti Dinar 239.7
million from the Kuwait OilCompany (KOC). L&T arm - L&T
Hydrocarbon will carry out the order that entails
engineer-procure-construct work for a gathering centre for KOC, a
subsidiary of Kuwait PetroleumCorporation.
Indian Oil Corporation Ltd (IOCL) through its wholly owned
affiliate IndOil Montney Ltd,Canada, has signed transaction
agreements with Progress Energy Canada Ltd and PETRONASCarigali
Canada BV for acquiring a 10 per cent interest in Progress Energy
Canadas LNG -destined natural gas reserves in northeast British
Columbia and the proposed PacificNorthwest LNG Ltd (PNW LNG) export
facility in Canadas West Coast.
GAIL (India) Ltd has entered into an agreement with Japan-based
Chubu Electric Power Co forpartnership in the area of joint LNG
procurement. Additionally, the two companies will lookto work
together on shipping optimisation.
India and Azerbaijan have proposed to form a joint working group
in the field ofhydrocarbon. The two countries have agreed to
explore opportunities for partnership inrenewable energy sector,
energy efficiency and numerous upcoming projects in petro
-chemicals, oil and gas, pipelines, etc., in India, Azerbaijan or
other countries, in collaborationor JV.
Mr Kazuyoshi Akaba, State Minister of Economy, Trade and
Industry, Japan, met MrDharmendra Pradhan, Minister of State
(Independent Charge) for Petroleum and Natural Gas,
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9India. Mr Pradhan suggested taking the strong Indo-Japan bond
to a higher level stating thatJapan has inspired India in
manufacturing, technology and philosophy of governance.
The expert appraisal committee of Ministry of Environment and
Forests, Government of India,has given the go ahead to IOCLs Rs
4,320 crore (US$ 703.81 million) liquefied natural gas(LNG)
terminal project at Ennore, near Chennai. The proposed facilitys
capacity will be fivemillion tonnes per annum (MTPA). The terminal
is expandable to 10-15 MTPA. This is part ofthe corporations Rs
56,000 crore (US$ 9.12 billion) investment plan for the 12th
Five-YearPlan (2012-17).
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Executive summary (SEM-lV)The oil and gas sector is one of the
six core industries in India. It is of strategic importance
andplays a pivotal role in influencing decisions across other
important spheres of the economy.
In 199798, the New Exploration Licensing Policy (NELP) was
envisioned to deal with the ever-growing gap between demand and
supply of gas in India. As per a recent report, the oil andgas
industry in India is anticipated to be worth US$ 139,814.7 million
by 2015. With Indiaseconomic growth closely linked to energy
demand, the need for oil and gas is projected togrow further,
rendering the sector a fertile ground for investment.
To cater to the increasing demand, the Government of India has
adopted several policies,including allowing 100 per cent foreign
direct investment (FDI) in many segments of thesector, such as
natural gas, petroleum products, and refineries, among others.
Thegovernments participation has made the oil and gas sector in the
country a better target ofinvestment. Today, it attracts both
domestic and foreign investment, as attested by thepresence of
Reliance Industries Ltd (RIL) and Cairn India.
Backed by new oil fields, domestic oil output is anticipated to
grow to 1 MBPD by FY16. WithIndia developing gas-fired power
stations, consumption is up more than 160 per cent since1995. Gas
consumption is likely to expand at a CAGR of 21 per cent during
FY0817.Domesticproduction accounts for more than three-quarters of
the countrys total gas consumption.
India increasingly relies on imported LNG; the country was the
fifth-largest LNG importer in2013, accounting for 5.5 per cent of
global imports. Indias LNG imports are forecasted toincrease at a
CAGR of 33 per cent during 201217.
State-owned ONGC dominates the upstream segment (exploration and
production),accounting for approximately 60 per cent of the
countrys total oil output (FY13).IOCLoperates 11,214 km network of
crude, gas and product pipelines, with a capacity of 1.6 MBPDof oil
and 10 million metric standard cubic metre per day (MMSCMD) of gas.
This is around30 per cent of the nations total pipeline network.
IOCL is the largest company, operating 10out of 22 Indian
refineries, with a combined capacity of 1.3 MBPD.
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India is the sixth largest consumer of oil in the world and the
ninth largest crude oil importer.Indias oil and gas sector
contributes over 15% to the Gross Domestic Product (GDP).
According to Ministry of Petroleum and Natural Gas, India has a
total reserve of 1201 millionmetric tonnes of crude oil and1437
billion cubic metres of natural gas as on 01 April 2010. Thetotal
number of exploratory and development wells and metreage drilled in
onshore andoffshore areas during 2009-2010 timeframe was 428 and
1019 thousand metres respectively.
Crude oil production during 2009-2010 timeframe was 33.69
million metric tonnes and grossproduction of Natural Gas in the
country was 47.51 billion cubic metres during 2009-2010.The
production of petroleum products during 2009-2010 was 151.898
million metric tonnes(Ministry of Petroleum & Natural Gas).
However, due to huge demand-supply gap in oil and gas in India,
it imports more than 60% ofits crude oil requirement.
Further, oil consumption in India is projected to enhance by
4-5% per annum to 2015,indicating a demand of 4.01 million b/d by
2015.
As per the Business Monitor International (BMI) forecast, India
will account for 12.4% of AsiaPacific regional oil demand by 2015,
while satisfying 11.2% of the supply.
Due to increasing refining capacities, exports of petroleum
products are high in terms of theforeign currency amassed and
accounts for 17% of the total exports. Indias exports of
refinedproducts stood at 0.95 million barrels per day as of June
2011 and US$ 4.6 billion worth ofpetroleum products were exported
during July 2011. Vastness of this sector is corroboratedby the
fact that there were a total of 130,000 people employed in the
petroleum industry in2009-2010.
The oil industry can be divided into three major components:
upstream, midstream anddownstream. The upstream segment comprises
Exploration and Production (E&P) activities.The midstream
segment is involved in storage and transportation of crude oil and
natural gas.The downstream segment is engaged in refining and
production of petroleum products, andprocessing, storage, marketing
and transportation of commodities such as crude oil andnatural
gas.
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12
In India crude oil is produced Onshore and Offshore. Onshore
fields are in Assam/Nagaland,Arunachal Pradesh, Gujarat, and Tamil
Nadu/ Andhra Pradesh. Oil India Limited (OIL) and Oiland Natural
Gas Commission (ONGC) have the onshore field for crude oil
production. Offshoreproduction occurs at Bombay High run by ONGC
and Private/Joint Venture companies. Fornatural gas, onshore fields
are at Assam, Tripura, Gujarat, Tamil Nadu, Andhra Pradesh
andRajasthan. Offshore production of natural gas takes place at the
Western area of BombayHigh.
India has 20 refineries out of which 17 are in the public sector
and three in the privatesector. The total number of retail outlets
of Public Sector Oil Marketing Companies in 2010was 36462. The
total number of LPG consumers of Public Sector Oil Marketing
Companies in2010 were 114.952 million.
Few of the SEZs in this sector are Reliance Petroleum SEZ,
Mangalore SEZ in Karnataka,Gujarat Hydrocarbons and Power SEZ and
Nagarjuna Oil Corporation in Tamil Nadu.
Public sector corporations dominate the Indian exploration and
production sector. In termsof the percentage share in total
production Oil and Natural Gas Corporation (ONGC) accountsfor the
highest share.
The second major player in the sector is also a public sector
undertaking Oil India Limited(OIL). Both of these undertakings
account for about more than 70% of the total market. Theremaining
share of the pie is cluttered with various private players in the
market.
Names of the key players in the oil and gas industry in India
are Oil India Ltd., Oil and NaturalGas Commission, Indian Oil
Corporation, Hindustan Petroleum Corporation Ltd., BharatPetroleum
Corporation Ltd., Gas Authority of India Ltd., Reliance Industries
Ltd., Essar Oil,Adani Gas, Petronet LNG, Cairn Energy, Shell,
British Gas and BP.
Opportunities for Foreign Investments and Technology
Partnerships
Securing supplies is expected to remain on top of Indias energy
agenda for the forseeablefuture. While exploration activity has
taken place on land and in shallow basins across thecountry, it is
believed by many that deep water and ultra-deep water oil and gas
resources
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13
hold the key to substantially increasing domestic production.
This creates a plethora ofopportunities for strategic investors
having relevant technical expertise and financial muscle.
Summary of Oil and Gas Sector India:
96 Trillion Cubic Feet of estimated shale gas reserves.
47 Trillion Cubic Feet of proven natural gas reserves.
800 MMT of proven oil reserves.
4th largest consumer of crude oil and petroleum products in the
world.
2nd largest refiner in Asia.
Reasons to Invest
Policies such as the New Exploration Licensing Policy and the
Coal Bed Methane Policyhave been put in place to encourage
investments across the industry value chain.Thirty-four blocks were
put up for bidding in the ninth round of the N.E.L.P.
Demand for primary energy in India is to increase threefold by
2035 to 1,516 MillionTonnes of Oil Equivalent from 563 Million
Tonnes of Oil Equivalent in 2012.
Several industries are increasing consumption of natural gas in
operations.
Several domestic companies such as the Oil and Natural Gas
Corporation, RelianceIndustries Limited and Gujarat State Petroleum
have reportedly found natural gas indeep waters.
As part of pricing reforms for the natural gas sector in 2013,
the government approveda new pricing scheme to further align
domestic prices with international market pricesand to raise
investment for the sector.
Despite being a net importer of crude oil, India has become a
net exporter ofpetroleum products by investing in refineries
designed for export, particularly inGujarat.
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14
Several private companies have emerged as important players in
the past decade.Cairn India, a subsidiary of British company Cairn
Energy, controls more than 20% ofIndias crude oil production
through its operation of major stakes in the Rajasthan andGujarat
regions and the Krishna-Godavari basin.
Private companies such as Reliance Industries Limited and Essar
Oil have becomemajor refiners.
The government is preparing to issue the 10th round of bidding
for the NationalExploration Licensing Policy.
It is a transparent and level playing field for private
investors and national oilcompanies both enjoy the same fiscal and
contract terms.
60% of the prognosticated reserves of 28,000 MMT are yet to be
harnessed.
As per current scenario of global market, oil and natural gas
sector has a huge demand andthey successful in supplying the
relevant products.so we are preparing a business plan for
anautomated petrol station which would be an eye catching services
in India.
The business will be both a full-serve and self-serve automated
facility which will sell gasoline,motor oil, and accessories, as
well as a convenience store selling snack foods, newspapersand
magazines, coffee and cigarettes, and lottery tickets. Ideally,
after gassing up theirvehicle, customers will want to come inside
to use our clean, well-maintained restrooms andto purchase items
from the convenience store.
Free air and water will be available. All major credit cards
will be honoured, and debit cardswill be accepted. A drive-up
telephone station will be available. Frequent customermerchandising
programs and tourist discounts will be developed and offered.
Heightenedsecurity standards will be met.
The business will sell all grades of fuel (diesel, high, medium
and low grades), as well as motoroil, lubricants, tires, batteries,
and car accessories. Customers can choose between full serviceand
self-service. Self-service customers will be able to avoid standing
in line at the cash
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15
register and pay for their fuel purchase at the pumps, using a
gas card, debit card or majorcredit card.
The convenience store will sell snack foods such as candy,
chocolate bars, potato chips andsimilar items. We also plan to sell
pre-made sandwiches and baked goods, which will bebrought in from
TGB. The convenience store will also sell tobacco, coffee, cold
drinks,newspapers and magazines, grocery items such as bread, milk,
toilet paper, and other itemsthat people typically run out of in
between trips to the supermarket, and emergency itemssuch as
Band-Aids, painkillers, batteries, etc. There will be an ATM
machine available in-store,as well as auto car care as semi
workshop.
The location will be comprised of fully automated petrol and gas
filling station withconvenient store semi-automated, and public
restrooms. For the business to be successful,location on a main
highway with steady volumes of through traffic is key. Other
primaryfactors are easy access, plentiful parking, and high
visibility. This location fills all of thoserequirements. These
numbers show that a gas station at this location is feasible.
The main aim behind preparing the business plan as a part of
global country report was tostudy the favourable environment of a
country and turn challenges into opportunitiesthrough
strategies.
The business will begin operations upon receiving funding. An
environmental audit will becompleted as required by law, following
which, the site preparation and construction willcommence. The
Company will install above-ground gas tanks that are in compliance
withapplicable laws. HP will supply the oil and gas to the
facility. The Company will also apply forall necessary permit
license.
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CHAPTER: 1The Business Plan
Description of Business Implementation Plan
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Description of BusinessThe business will be both a full-serve
and self-serve automated facility which will sell gasoline,motor
oil, and accessories, as well as a convenience store selling snack
foods, newspapersand magazines, coffee and cigarettes, and lottery
tickets. Ideally, after gassing up theirvehicle, customers will
want to come inside to use our clean, well-maintained restrooms
andto purchase items from the convenience store.
Free air and water will be available. All major credit cards
will be honoured, and debit cardswill be accepted. A drive-up
telephone station will be available. Frequent customermerchandising
programs and tourist discounts will be developed and offered.
Heightenedsecurity standards will be met.
Fuel & Automotive Products
The business will sell all grades of fuel (diesel, high, medium
and low grades), as well as motoroil, lubricants, tires, batteries,
and car accessories. Customers can choose between full serviceand
self-service. Self-service customers will be able to avoid standing
in line at the cashregister and pay for their fuel purchase at the
pumps, using a gas card, debit card or majorcredit card.
Convenience Store
The convenience store will sell snack foods such as candy,
chocolate bars, potato chips andsimilar items. We also plan to sell
pre-made sandwiches and baked goods, which will bebrought in from
TGB. The convenience store will also sell tobacco, coffee, cold
drinks,newspapers and magazines, grocery items such as bread, milk,
toilet paper, and other itemsthat people typically run out of in
between trips to the supermarket, and emergency itemssuch as
Band-Aids, painkillers, batteries, etc. There will be an ATM
machine available in-store,as well as auto car care as semi
workshop.
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LocationThe location is Ahmadabad on a lot that measures 300 x
150 Sq. feet. The lot size allows forfuture expansion. The site
offers easy access from local city area at 132 feet Ring Road
nearbySP Road. Hours of operation will be 7 days 24*7 hours.
The location will be comprised of fully automated petrol and gas
filling station withconvenient store semi-automated, and public
restrooms. The fuel will be contained in aboveground tanks.
Underground storage tanks usually fail due to rust perforation.
Leaks can occurbecause of tank damage or at piping connections.
Above ground tanks are easier to maintainand inspect, and to repair
and replace if necessary.
For the business to be successful, location on a main highway
with steady volumes of throughtraffic is key. Other primary factors
are easy access, plentiful parking, and high visibility.
Thislocation fills all of those requirements. These numbers show
that a gas station at this locationis feasible.
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Implementation PlanThe business will begin operations upon
receiving funding. An environmental audit will becompleted as
required by law, following which, the site preparation and
construction willcommence. The Company will install above-ground
gas tanks that are in compliance withapplicable laws. HP will
supply the oil and gas to the facility. The Company will also apply
forall necessary permit licenses.
The following table outlines the steps to be taken to start the
business, with projected startand completion dates:
Action Plan Starting Date Ending Date
Land use designation
Environmental audit
Funding application
Fuel sales permits
Tobacco sales license
Contract with supplier
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Order machinery &equipment for fuel sales
Prepare site
Install fuel equipment andcommence
construction
Order store fixtures & officeequipment
Installation of signage
Advertising
Hire staff
Order inventory forconvenience store
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Grand opening
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CHAPTER: 2Brief of Business plan
Details of Business plan What is Petrol Pump? Products Marketed
at Retail Outlets Facilities provided at Retail Outlets Safety
Measures Complaints
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Details about the Business Plan
Petrol station pump business
Finding out more about a Petrol station pump business Petrol
station pump as a business,deals with the manufacturing of petrol
station pumps. It is an industry which manufacturespetrol station
pumps which is a pump in a service station that draws petrol from
undergroundstorage tanks and delivers to the motor vehicles. A fuel
dispenser is a machine at a fillingstation that is used to pump
gasoline, diesel, CNG, CGH2, HCNG, LPG, LH2, ethanol fuel,bio fuels
like biodiesel, kerosene, or other types of fuel into vehicles.
Fuel dispensers are alsoknown as bowers.
1. What is Petrol Pump?
The most common point of contact of customers with Oil Industry
is the Petrol Pump. In OilIndustry parlance, Petrol Pumps are
referred to as Retail Outlets (ROs).
As per the existing Government policy, Petrol Pumps can be set
up by Public Sector OilCompanies as well as Private Sector Oil
Companies dealing in storage and distribution ofpetroleum products
as per guidelines. Presently, the Oil Companies engaged in retail
businessof automotive fuels are IOC, HPC, BPC, NRL, MRPL, ONGC,
RIL, Essar and Shell.
2. Products Marketed at Retail Outlets
Petrol: Petrol, in technical language is called Motor Spirit
(MS). It is mainly used inpassenger vehicles such as 2 / 3 wheelers
and cars. At present, HPCL markets two types ofPetrol across the
country, i.e. normal Petrol and branded Petrol.
Normal Petrol: Normally used as a fuel for spark ignition
internal combustion engines suchas passenger cars, two wheelers,
three wheelers, etc.
Branded Petrol: This is preferred by new generation vehicles. It
is slightly costlier thannormal Petrol. It has additives for
optimizing performance of vehicles. It is sold under thebrand name
PetroD.
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PetroD provides benefits like cleaning and prevention of carbon
deposits, reduced smoke /emissions, better acceleration & pick
up and smooth driving experience.
Ethanol Blended Petrol: The Ministry of Petroleum & Natural
Gas has notified marketingof Ethanol Blended Petrol (EBP). The
Practice of labelling on the pump is recommended forethanol
marketing. To ensure presence of ethanol, EBMS field test is
recommended in thespecification of EBMS and also under MDG. The
customer can detect ethanol by mixing 100ml of EMBS with 30 ml of
water and by following field test procedure as described
inspecification / MDG.
High Speed Diesel (HSD): PetroD Pvt. Ltd markets two types of
Diesel across the countryi.e. Normal diesel and Branded diesel with
coloration with HP.
Normal Diesel: These are used in heavy commercial vehicles,
buses, tractors, motor cars,pump sets and in various other diesel
engine driven applications.
Branded Diesel: This is preferred by new generation vehicles and
is sold by HPCL under thebrand Name Turbojet, which contains
multi-functional additive that enhances theperformance of new
generation vehicles and ensures peak engine performance.
Lubricants: This is a vital product for healthy life of an
engine. A lubricant is a viscousproduct used in the engine for its
smooth functioning. Different grades of lubricants areneeded for
different engines, gear box and other components. The RO dealer can
guide onthe recommended grade of lubricant for the vehicle. HPCL
regularly develops new productsto cater to different needs of the
customers.
Compressed Natural Gas (CNG): CNG is an environment friendly
fuel and available inmajor towns where it has been introduced
depending on availability of Grid and Gas.
CNG is available at select outlets of the Company in some
cities. There are alsostand-alone ROs for CNG in select cities.
CNG can be used in vehicles which are fitted with a special kit
meant for the purpose. Thevehicle needs mechanical change for its
use.
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Its availability is being gradually increased in more cities /
ROs.
Auto LPG:
ALPG meets BIS standard IS: 14861 which have Octane Number of 88
(minimum).
ALPG is a clean and environment friendly fuel.
3. Facilities provided at Retail Outlets
Facilities
A Retail Outlet is not just a place for meeting fuel needs. It
offers a range of services whichcan be classified as under:
Mandatory Facilities:These are the facilities which every retail
outlet must provide. Theseinclude free air, display of working
hours and display of name and telephone number of oilcompany
personnel for the convenience of customers. First Aid Box, toilet
and safetyequipment as per statutory requirements such as fire
extinguishers and sand buckets etc. arealso available at retail
outlets.
Other Facilities: For the convenience of customers these
additional facilities may beprovided by dealers at the retail
outlet premises. These include water-coolers, conveniencestores,
snack bars, restaurant and rest-rooms, bathing and washing space
for truckers,telephone facility- PCO/STD, ATM, servicing / repair
shop, tyre shop, loyalty card program etc.
Quality
The term quality implies that the product you are buying is
meeting the prescribedspecifications and is free from any
contamination or adulteration. The customers can ensurequality by
carrying out specific checks for different products as listed
below:
Filter Paper Test (for Petrol)
a) Clean the mouth of the dispensing nozzle to remove
stains.
b) Put a drop of petrol on the filter paper from the nozzle.
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c) It should evaporate in about 2 minutes without leaving a
stain on the filter paper. (If thearea of the filter paper where
the drop of MS was put remains pinkish, it is the colour of theMS
and not any stain). If a stain is left on the filter paper then
there is a possibility ofadulteration.
Customer should immediately lodge a complaint if Filter paper is
not available at the RetailOutlet for testing of Petrol. It is the
duty of the Dealer to provide filter paper on demand bythe
customer.
Density Check (for Petrol and Diesel, including branded
fuels)
a) A 500 ml jar, calibrated hydrometer, thermometer and ASTM
(American Society for Testingof Materials) conversion charts are
required to carry out density test. Hydrometer is a verysimple
instrument for measuring density of any liquid, which is different
for petrol and diesel.
b) Fill about 3/4th of the jar with the product taken through
nozzle of the Dispensing unit.
c) Dip the thermometer and hydrometer in the jar and record the
temperature and density.
d) The actual density observed is then converted to density at
15 degree centigrade with thehelp of conversion chart. This
converted density is then compared with the reference densitytaken
from the density register maintained by the Retail Outlet.
Checks for Lubricants: Please check the seal of container, date
of manufacture and name ofthe manufacturer. For the convenience of
2/3 wheeler segment, Retail Outlets generallyprovide self-mixing
(petrol-oil mix) dispensers, 2T dispensers and they also keep
tamper proof2T/4T pouches.
Quantity:
It is mandatory for each retail outlet to keep a calibrated 5
litre measure, stamped byWeights and Measures Department every
year, to verify quantity.
Quantity can be checked with 5 liters measure. The permissible
variation due to anyunforeseen malfunctioning of the dispensing
unit is 25 ml in 5 liters which is to be rectifiedimmediately.
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Price: The selling prices of products are displayed prominently
at the outlet. Customers mustensure to take cash memo for every
purchase.
Other useful tips for customers: Meter to be set to zero before
starting delivery and finalreading to be checked after
delivery.
Malpractices / Unauthorized Activities: In case a citizen comes
across any of the followingpossible malpractices, he/she may
contact Companys Officer whose name & contact numberis
displayed at the Retail Outlet.
Adulteration: There is a Possibility of adulteration, by mixing
cheaper homogeneousproducts in petrol or diesel. Adulterated
product will definitely affect the performance ofvehicle. In such
case, one should carry out the filter paper / density check as
explained above.
Short Delivery: Although all dispensing units (Machines
delivering petrol / diesel) areannually calibrated and
sealed/stamped by Weights & Measure Department and
alsoperiodically checked by the Company Officer, there could be a
possibility of tampering ormachine malfunctioning. As mentioned
earlier, a citizen has the right to check the quantitydelivered
with a duly calibrated and stamped 5-litremeasure available at
petrol pump.
Overcharging: The dealer is not allowed to overcharge for the
product sold. The prices ofproducts are always displayed at the
retail outlets. One must ensure to take a cash memo forevery
purchase.
4. Safety Measures
Most concern:
Petroleum products are highly inflammable and are, therefore,
dangerous if not handledproperly. Their handling is strictly
governed by Petroleum & Explosives Safety Organization(PESO)
Rules. A Petrol Pump is a licensed premise and all activities are
carried out with strictadherence to PESO Rules.
For the safety of all concerned, the following precautions must
be observed:
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Switch off the engine before taking delivery of fuel (to avoid
possible fire caused by spillageof fuel)
PleaseDO NOT smoke within the Petrol Pump premises.
never light a match stick within the Petrol Pump premises.
SWITCHOFF the Mobile Phones within Petrol Pump premises.
It is advisable to get off the vehicle while refuelling.
It is not advisable to carry petrol / diesel in plastic / glass
bottles.
Types of services and products a Petrol station pump business
provides
Providing your customers and clients with services and products
as a Petrol station pumpbusiness Now that you are familiar with
what a Petrol station pump business does, it isalso very important
that you understand the services and products provided by aPetrol
station pump business. Offering your clients or customers the best
services or productswill lead you in the right direction of making
a success in being a well sort after Petrol stationpump business.
Here is a list of Services / Products associated with a Petrol
station pumpbusiness manufactures and sells petrol station
pumps
PetroD consciously looks to minimize its effect on the
environment and will continue to investin technologies to improve
in this area.
An example of these environments includes:
Recycling of water
The car wash machines on new service stations include
water-recycling systems enabling thereuse of 90% of the water used
cleaning cars.
Leak detection systems
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Underground storage tanks are double skinned and have leak
detection systems fitted. Alarmsystems are automatically activated
if there is any leakage through the inner wall of the tanksso
avoiding any chance of soil pollution.
Vapour recovery systems
Road tankers are designed to take gasoline vapours from storage
tanks at the same time asthey are filling the tanks. These vapours
are returned to the fuels depot where a recyclingsystem returns the
two liquid gasolines so avoiding the venting of vapours to the
air.
5. Complaints:
For any unsatisfactory service or product, customer may please
bring it to the notice of thedealer immediately or in his absence,
the Manager. However, if the explanation given by theDealer or
Manager is not satisfactory, customer can record the complaint in
the Complaintand Suggestion Book available at each petrol pump or
contact Companys Sales Officer onphone.
A written complaint can also be sent to Companys Sales Officer,
Regional Office or acomplaint can be lodged through helpline - 1800
99773300 Contact details are displayed ateach Retail Outlet.
Complaint can also be lodged through Website - www.hpretail.in
orhindustanpetroleum.com.
Each complaint received by letter, through the website or
entered into the Complaint /Suggestion book is investigated by
Company Officer and suitable action is taken to resolve
thecomplaint.
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CHAPTER: 3Automatic Fuelmatics Machines
Fuelmatics Benefits Technology
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Automatic Fuelmatics Machines:-
Fuelmatics offers a fuelling process without any spill or
vapour. Its the most efficient andenvironmental friendly concept on
the globe. It allows the driver to remain in the car duringthe
entire refuelling process, thus providing a Drive-Thru fill up.
The Automatic Refuelling System, ARS, represents a paradigm
shift for oil companies and fuelretailers in the quest to attract
and retain customer loyalty, and to increase volume andprofits.
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It is also much more environmental friendly as it fills your car
without spill and without anyvapour. The system, including the
cistern, is completely closed, so there are no vapours at all.
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Benefits:-Retailer benefits:-The ARS cuts time before and after
pumping, which means that therefuelling cycle from stop to go is
reduced by 50 %.The effect is that a retailer can: Attractmore
customers to your station Servemore customers per hour Reduce the
que to the pumps
The smaller format means you: Reduce the need of land Locate
stations closer to roadsadditionally you can: Serve disabled
drivers Sell ad-space on the screen
Driver BenefitsThe Fuelmatics Automatic Refuelling System offers
a number of advantages to you as a driver.Faster, about half the
time for a fill up, which saves time of Cleaner, as you do not have
totouch the cap or the nozzle Safer, as you do not have to step out
of the car more convenient?
TECHNOLOGY
The Automatic Refuelling Systems ARS
The Fuelmatics Refuelling System is designed for use on all
passenger cars and sport utilityvehicles with a fuel door on either
the right or left side of the car, which representsapproximately 95
percent of all vehicles. The FM 3003 unit is equipped with three
nozzles andcan thus serve petrol, diesel and a new fuel like
ethanol or natural gas from one and the sameunit. A stream lined
fast solution. Talk about retail efficiency! Fuelmatics envisions
thathydrogen together with automatic dispensing will become the
long-term global solution forvehicles. Fuelmatics FM4000 unit will
be ready to do the job.
The fuel cap
The only preparation needed is to swap the fuel cap, which will
be done by the driver in a fewseconds. The Fuelmatics cap is a
loyalty binder as well as an introduction gift to the customer.The
retailers logo can be placed on the cap, which also is good for
manual refuelling. Justpush the nozzle through the built in
flapper. No need to take the cap off.
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There is a general trend among car manufacturers to implement
the same flapper solution inthe filler pipe in the car. That means
the car is ready for automatic refuelling already from
thefactory.
Payment solutions
The ARS can work with any payment system on the market as the
ARS unit basically just needsa start signal to start a fill up.
Interfacing is made via Ethernet or via a serial line.
Fuelmaticshas developed a phone payment system which offers a
simple operation directly via thephones key pad. On line
diagnostics is available for efficient service and maintenance.
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CHAPTER: 4Market Analysis and Marketing plan
4Ps of PetroD Pvt. Ltd Market Segmentation Target Market
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Market Analysis and Marketing Plan
4Ps of PetroD Pvt. Ltd
How does PetroD Pvt Ltd marketing strategy follow the 4Ps?
Ahmadabad oil industry hassome unique characteristics that
influence how we follow the 4Ps of marketing product,price, place
and promotion.
Product
Fuel is a commodity product offered by all the oil companies in
Ahmadabad. It is difficult tooffer customers a point of difference
with fuels. However, PetroD does so by selling petroland diesel
that is better for the environment. As we offer high quality petrol
and diesel tocustomer so that will be our product.
Petrol Diesel CNG Lubricants Convenient Store Auto car care
Price:
As the price will be decided by the petroleum ministry of India
so with common products inthe oil industry, prices between
competitors are easily matched, which means its difficult
todifferentiate our product based on price. If our competitors
undercut us on price, we seesignificant losses in volumes sold. A
one cent per litre price reduction requires retailers toachieve a
25% increase in volume to break even on site. Price place important
role but itmainly depend on the oil and gas industry market price
as they are changing day by day sothat price doesnt make any
further difference but it may change on time.
Place:
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As the place is very important role in selecting petrol station
for any customers. Customerselects their choice of gas filling
station by their convenient. So we have selected place bymarket
research that give us more opportunity to attract new customer. So
we have some ofthe best locations in Ahmadabad for the service we
provide. And research shows customersmainly choose fuel retailers
based on their location. We have a significant investment
inensuring we have the right number and quality of locations for
our customers.
Promotion:
Research shows that customers respond well to promotion
campaigns, such as the Rewardsprogramme ,loyalty cards, price drop
skim on special occasions and other convenient serviceslike
convenient store, auto car care etc. Loyalty programmes are a
valuable point ofdifferentiation; we use them to drive sales
volumes and counter our competitors activity. Astime comes more
promotion activities will be done by company such as gift coupons,
discounton convenient store and attractive decoration of petrol
station on special occasions.
Market Segmentation:
Industry Analysis
As of now, the world price for crude oil was 2900-3000 Rs.
Refining costs are the componentof price added by the refining
company to cover its costs and profit margin. Refinery
marginsaverage 10-15% of the total pump price. This pays for
refinery capital costs, refinery fuel,wages and salaries, profits
and corporate taxes. Taxes are usually the largest singlecomponent,
averaging 10 % of the pump price.
There is virtually no difference between the various brands of
gasoline. If competing gasstations are similar in service,
convenience and cleanliness, many customers will switchstations
based on price. This means competition between stations is based
almost exclusivelyon price, and the best way to attract customers
is to sell for less. As a result, gasoline retailersmust keep their
mark-ups as low as possible.
Mark-ups are generally less than 10%, and must cover land costs,
salaries, fuel delivery, sitemaintenance, overhead, and
profits.
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According to the Petroleum Communication Foundation, profits
realized on fuel sales aremarginal. With such small mark-ups, the
best way to stay in business is to sell in large volume.The best
way to do this is to reduce retail margins. Despite huge volume
sales, margins are sothing that almost all gas stations rely on
non-fuel products to increase revenues and margins.This is why gas
stations usually run in concert with convenience stores and/or
restaurants, toincrease profits through the sale of food items,
tobacco, soft drinks, maps, magazines, andsimilar items.
Nationally, there are approximately 60 petrol retailers in
Ahmadabad district. In thePrahladnagar area there are currently 2
petrol stations. But although competition hasincreased over the
past few years, fuel sales continue to increase annually. The
highest levelof competition is in the larger urban centres, where
major supermarkets with gas bars takethe lead. This creates an
opportunity for independent stations in smaller centres where
thereis less competition.
Target Market
Prahladnagar Area
Taluka Name: AhmadabadDistrict: AhmadabadState: GujaratLanguage:
Gujarati and Hindi, EnglishTime zone: IST (UTC+5:30)Elevation /
Altitude: 52 meters. AboveSealevelTelephone Code / Std Code: 079Pin
Code : 380015
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Prahlad Nagar currentWeather
Current Temperature is
35 C
Humidity: 30%Wind : From North at 6kph
Prahlad Nagar Weather Forecast for Next 3Months
Marchclear26C to 43C
Aprilpartly cloudy26C to 43C
Mayclear27C to 42C
About Prahlad Nagar
Prahlad Nagar is a Locality in Ahmadabad City in Gujarat State,
India. Prahlad NagarPin code is 380015 and postal head office is S
A C.
Vejalpur ( 1 KM ) , Bagodara ( 1 KM ) , Makarba ( 1 KM ) ,
Juhapura ( 2 KM ) , JodhpurVillage ( 2 KM ) are the nearby
Localities to Prahlad Nagar.
Ahmadabad, Sanand, Kalol, Gandhinagar are the nearby Cities to
Ahmadabad.
Demographics of Prahlad Nagar
Gujarati is the Local Language here.
SegmentationThe business will target two major market
segments,
(1) The general population of Ahmadabad city and the surrounding
area, and
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(2) Travellers to the area.
In terms of market segmentation advantages, the Company will use
the fact that were open24 hours 7 days, have quality products,
provide a means for customers to pay at the pump,and have
competitive prices, to leverage our position.
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CHAPTER: 5Industry Competitive Analysis
Porters Five Forces SWOT Analysis PEST Analysis
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Industry Competitive Analysis
Porters Five Forces Analysis
Porters Five Forces framework points out that the state of
competition in any industrydepends on five competitive forces:
Threat of entrants Threat of substitutes Power of suppliers
Power of buyers Rivalry among industrys firms.
However, a companys success in an industry depends on how it is
related to that industryand how the industry is structured.
Industry structure (manifested in the five competitive forces)
drives competition andprofitability. In order to reveal the roots
of an industrys current profitability and anticipatefuture trends,
a company has to understand the underlying causes of the five
competitiveforces.
Assessment of the Five Forces
1. Threat of potential entrants:
Porter indicates that new entrants bring with them new capacity
and the desire to gain marketshare. This desire, Porter suggests,
puts pressure on costs, prices and the rate of investmentthat is
necessary to compete. As he indicates, threat of entry depends on
two factors: theheight of entry barriers and the incumbents
reaction to new entrants.
The major barriers to entry in the oil and gas industry are:
1. Patents
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2. Large capital requirements
3. Economies of scale
4. Governments regulations
5. Product differentiation
6. Predatory behaviour by cartels
7. Ownership of resources
Patents of technology and innovation work as driving forces of
cost reduction anddifferentiation For example, in early 2010, Exxon
Mobile introduced advanced technology toreduce cost while
increasing production capacity, enabling the company to boost
itsproduction capacity by 5.8 million barrels of oil and extend the
life of its oil and gas fields.(Data monitor 2010) However, in
refining, technical patent barriers are minimized as thetechnology
involved in refinerys construction is widely known. The barriers
for entry risingfrom large capital requirements and economy of
scale are also minimized and sometimes donot serve as barriers to
entry in efficient oil and gas markets such as the U.S. market.
Forinstance, if an industry cartel sought to monopolize the
refinery sector, it has to restrictrefinery input and output until
the cartel marginal cost equals the marginal revenue. At thispoint,
the refinery outputs would exceed marginal cost allowing a
potential entrant to earngreater profit. Economies of scale do not
prevent entry from occurring in an efficient oilmarket. For
example, it is possible for an industry with large economies of
scale to experiencea limit-pricing situation. In this case, a
potential entrant must achieve a high level of outputto operate in
an efficient scale. This is going to lower market price below the
break-even levelof costs if the existing rivals maintained their
level of output.
In the marketing sector, barriers to entry arising from
government regulation have influencedthe competitive strategies of
the oil and gas companies. For example, the U.S. oil and
gascompanies have always succeeded in product differentiation
because of many years ofadvertising and development. However, this
success did not prevent independent marketsfrom selling similar
products at lower cost. Nonetheless, government regulations have
shutout such independent markets.
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Governments have conferred upon themselves some form of cartel
power over the industrydue to their regulations. This supports Am
archer (1976) who points out that OPECs successin influencing oil
prices demonstrates the power such cartels have on primarily
commodities.Although OPEC does not set oil prices, its decisions
play a major part in pricing, because theOPEC countries produce 40%
of the worlds oil supply Consequently, these governmentalpolicies
and regulations work as a barrier for new firms to enter the
industry Natural resourcesobviously play the biggest barrier to
entry as new entrants must have the secure andcompetitive resource
to risk entry into the industry as rivals have to acquire a
comparableamount of secured resources (oil and/or gas) to compete
.
2. Threat of substitutes:
Porter distinguishes between rivalry (the fifth force) and
substitution (the third force). Theterm rivalry describes
competition between companies that provide similar products
whilesubstitution refers to products that are not in direct
competition. Substitutes affect theindustry through limiting its
anticipated profit by placing a ceiling on price.
With the use of advanced technology, major oil and gas companies
are looking for alternativesources of energy as possible
substitutes. For example, in April 2009, TOTAL formed apartnership
with Gevo, a US company developing transportation bio fuels and
chemicalproducts. (Data monitor 2010) Porter indicates that a
substitutes threat is high when it offersan attractive price
trade-off to the industrys products or when the buyers cost of
switchingto substitute is low. For instance, the Chinese government
aims to have bio fuels account for15% of its total transportation
fuel consumption by 2020, and in comparison, the EuropeanUnion has
set a target of 20% for the same period. China National Petroleum
Corporation isalready taking steps to leverage this expected
increase in demand in China and Europe. (Datamonitor 2010) If bio
fuels offer an attractive price trade-off, it would provide
competitivesubstitutes, thus threatening crude oil products.
3. Power of suppliers:
Porter illustrates that powerful suppliers affect the market
through charging higher prices,limiting production, and/or
integration. The first two elements were made obvious during the70s
when embargos by the oil producing counties led to reducing the
worlds oil production
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and this oil supply shortage led to a dramatic increase in the
nominal price of a barrel of oilfrom $2.7 to $11.2 during the
period from 1973 to 1974 .This reveals the power oil and
gassuppliers have over the industry. Any move by a competitor to
influence prices will befollowed by changes in competitors
strategies. For example, the move of Esso (Exxon Mobiletoday) in
1959 to influence Middle East oil prices led to the creation of
OPEC, whose decisionsplay a part in oil prices today. (Library of
Congress 2010).
As suppliers, oil and gas companies bring power to the recipient
countries throughinternational vertical integration. Cash can be
injected into the refining industry to fostercompetition and
enhance supply security to consumers. For example, Petroleum
deVenezuela S. A. controls its refining and marketing operations in
the U.S. through CITGOCorporation, in which it owns 100 percent
through PDV America. (Data monitor 2009) Verticalintegration
reduces risk and maximizes profitability at every stage of the
chain from wellheadto gasoline station. It helps the oil companies
balance their operations and protect themselvesfrom markets
instability. For instance, when crude oil price goes down, the
refining andmarketing margins would generally be expected to be
positive.
4. Power of buyers:
Powerful buyers have the ability to reduce prices, demand better
quality or more service(thereby increasing costs) and play industry
participants off against each other, at the expenseof industry
profitability. Major oil companies outsource much of their field
operations to oiland gas service companies. As buyers, oil
companies are in a powerful position to bargainprices, demand
better quality or additional service.
Oil and gas companies seek to obtain rights to invest in
exploration and production areasinternationally. These rights are
acquired through buying a percentage of another companysright or
through participating in licensing rounds. In this highly
competitive environment, oiland gas companies join together and
form a Joint Venture.
Joint Ventures are formed primarily for three reasons:
1. Gain more market power (buyer)
2. Reduce or share risk
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3. Acquire or share information
Moreover, oil and gas companies form Joint Ventures to overcome
political and/or legalimpediments or to meet host country
requirements .ConocoPhillips for example, has 50%equity investment
in Joint Venture with Spectra Energy a natural gas infrastructure
companyin North America .A 50:50 Joint Venture between Shell and
Exxon Mobil manufactures andmarkets high-quality additives used in
fuel, lubricants, and specialty additives This, assuggests,
increases the buyers negotiating leverage relative to competitors
which leads toincreasing the buyers power.
5. Rivalry amongst competitors:
High rivalry between existing competitors can limit industry
profitability depending on thecompetition intensity and basis
.Major oil and gas companies are relatively equal in size,power and
capabilities .This increases the intensity of rivalry which can
manifest itself in aprice war if a competitor tries to
influence.
According to Porter, slowdown in production such as experienced
by oil and gas companiescombined with declining net liquids
production and reserves could increase the intensity ofrivalry in
this industry.
Rivalry in any industry is intense if rivals have goals that go
beyond economic performanceAccording to Bernstein et alone purpose
of Joint Venture in the oil and gas industry is to
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manage rivalry through turning potential competitors into
allies. This is particularly critical inthe oil and gas industry
where there is little to distinguish rivals Five Forces.
SWOT Analysis*
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PEST Analysis
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CHAPTER: 6Import Export
The Petroleum Act 1934 (13 Preliminary) Conditions or
requirements to open petrol pump station License Fees Online
Applications Fuel Stations on National Highway Export- Import
Policy (1997-2002)
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Import-Export
THE
PETROLEUM ACT, 1934An Act to consolidate and amend the law
relating to the import, transport, storage,production, refining and
blending of petroleum and other inflammable substances.
WHEREAS it is expedient to consolidate and amend the law
relating to the import, transport,storage, Production, refining and
blending of petroleum and other inflammable substances;
PRELIMINARY
1. Short title, Extent & Commencement.
(I) This Act may be called the petroleum Act, 1934.
[(2) It extends to the whole of Pakistan.]
(3) It shall come into force on such date as the Federal
Government] may by notification inthe official Gazelle,
appoint.
2. Definitions .
In this Act, unless there is anything repugnant in the subject
or context,-
(a) "Petroleum" means any liquid hydrocarbon or mixture of
hydrocarbons and anyinflammable mixture (liquid, viscous or solid)
containing any liquid hydrocarbon:
(b) "Dangerous petroleum" means petroleum having its flashing
point below seventy-sixdegrees Fahrenheit;
(c) flashing-point" of any petroleum means the lowest
temperature at which it yields a vapourwhich will give a momentary
flash when ignited, determined in accordance with theprovisions of
Chapter II and the rules made there under;
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[(d) "To transport" means to move petroleum from one place to
another within Pakistan, byland, sea or air, and includes moving
from one place to another in Pakistan across territorywhich is not
part of Pakistan.]
(e) "To import" petroleum means to bring it into Pakistan by
land, sea or air, otherwise thanduring the course of transport!
(f) "To store" petroleum means to keep it in anyone place, but
does not include any detentionhappening during the ordinary course
of transport;
(g) "motor conveyance" means any vehicle, vessel or aircraft for
the conveyance of humanbeings, animals or goods, by land, water or
air, in which petroleum is used to generate themotive power;
(h) "Prescribed" means prescribed by rules made under this
Act.
3. Import, transport and storage of petroleum
(1) No one shall import, transport or store any petroleum save
in accordance with rules madeunder section 4.
(2) Save in accordance with the conditions of any licence for
the purpose which he may berequired to obtain by rules made under
section 4, no one shall import any dangerouspetroleum, and no one
shall transport or store any petroleum.
4. Rules for the Import, Transport and Storage of petroleum. The
Federal Government maymake rules.
(a) Prescribing places where petroleum may be imported and
prohibiting its importelsewhere;
(b) Regulating the import of petroleum elsewhere;
(c) Prescribing the periods within which licences for the import
of dangerous petroleum shallbe applied for, and providing for the
disposal, by confiscation or otherwise, of any dangerouspetroleum
in respect of which a licence has not been applied for within the
prescribed periodor has been refused and which has not been
exported.
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(d) Regulating the transport of petroleum;
(e) Specifying the nature and condition of all receptacles and
pipelines in which petroleummay be transported;
(f) Regulating the places at which and prescribing the
conditions subject to which petroleummay be stored;
(g) Specifying the nature, situation and condition of all
receptacles in which petroleum maybe stored;
(b) Prescribing the form and conditions of licences for the
import of dangerous petroleum,and for the transport or storage of
any petroleum, the manner in which applications for suchlicences
shall be made, the authorities which may grant such licences and
the fees which maybe charged for such licences;
(i) Determining in any class of cases whether a licences for the
transport of petroleum shallbe obtained by the consignor, consignee
or carrier;
(j) Providing for the grant of combined licence for the import,
transport and storage ofpetroleum, or for any two of such
purposes;
(k) Prescribing the prop oration in which any specific poisonous
substance may be added topetroleum, and prohibiting the import,
transport or storage of petroleum in which theproportion of any
specified poisonous substance exceeds the prescribed proportion;
and
(1) Generally, providing for any miller which in its opinion is
expedient for proper control overthe import, transport and storage
of petroleum.
5. Production refining and blending of petroleum.
(I) No one shall produce, refine or blend petroleum save in
accordance with the rules madeunder sub-section (2).
(2) The Federal Government may make rules.
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a) Prescribing the conditions subject to which petroleum may be
produced, refined orblended; and
(b) Regulating the removal of petroleum from places where it is
produced, refined or blendedand preventing the storage
Therein and removal there from, except as dangerous petroleum,
of any petroleum which hasnot satisfied the prescribed tests
6. Receptacles of dangerous petroleum to show a warning
All receptacles containing dangerous petroleum shall have a
stamped, embossed, painted orprinted warning, either .on the
receptacle itself Of, where that is impracticable, displayednear
the receptacle, exhibiting in conspicuous characters the words
"petrol" or "Motor Spirit",or an equivalent warning of the
Dangerous nature of the petroleum:-
Provided that this section shall not apply to:-
(a) Any securely stopper glass, stoneware or metal receptacle of
less than two gallons capacitycontaining dangerous petroleum which
is not for sale, or
(b) A tank incorporated in a" motor conveyance, or attached to
an internal combustionengine, and containing petroleum intended to
be used to generate motive power for themotor conveyance or engine,
or
(c) A pipe line for the transport of petroleum, or
(d) Any tank which is wholly underground, or
(e) Any class of receptacles which the Federal Government may,
by notification in the officialGazette, exempt from the operation
of this section.
7. No licence needed for small stocks of non-dangerous petroleum
not in bulk.
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Notwithstanding anything contained in this Chapter, a person
need not obtain a licence forthe transport or storage of
non-dangerous petroleum if the total quantity in his possession
atanyone place does not exceed five hundred gallons and none of it
is contained in a receptacleexceeding two hundred gallons
capacity.
8. No licence needed by railway administration acting as
carrier
Notwithstanding anything contained in this Chapter, a railway
administration, as defined insection 3 of the Railways Act, 1890.
Need not obtain any licence for the import or transportof any
petroleum in its possession in its capacity as carrier.
9. Exemption of heavy oils.
Nothing in this Chapter shall apply to any petroleum which has
its flashing point not belowtwo hundred degrees Fahrenheit.
CHAPTER II
THE TESTING ON PETROLEUM
10. Inspection and sampling of petroleum
(I) The Federal Government may, by notification in: the official
Gazette, authorise any officerby name or by virtue of office to
enter any place where petroleum is being imported, stored,produced
refined or blended and to inspect any take samples for testing of
any petroleumfound therein.
(2) The Central Government may make rules:
(a) Regulating the taking of samples of petroleum for
testing,
(b) Determining the cases in which payment shall be made for the
value of samples taken,and the mode of payment, and
(c) Generally, regulating the procedure of officers exercising
powers under this section.
11. Testing officers
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The Federal Government may authorise any officer by name or by
virtue of office to testpetroleum of which samples have been taken
under this Act, or which may have beensubmitted to him for test by
any person, and to grant certificates ofthe results of such
tests.
12. Manner of test.
All tests of petroleum made under this Act shall be made with a
test apparatus in respect ofwhich there is a valid certificate
under section 16, shall have due regard to any correctionspecified
in that certificate, and shall be carried out in accordance with
rules made undersection 21.
13. General penalty for offences under this Act.
(I) Whoever-
(a) in contravention of any of the provisions of Chapter 1 or of
any of the rules made thereunder, imports, transports, stores
produces, refines or blends any petroleum, or
(b) Contravenes any rule under made section 4 or section 5,
or
(c) being the holder of a licence issued under section 4 or a
person for the time being placedby the holder of such licence in
control or in charge of any place where petroleum is beingimported
or stored, or is under transport, contravenes any condition of such
licence or suffersany condition of such licence to be contravened,
or
(d) being for the time being in control or in charge of any
place where petroleum is beingimported, stored, produced, refined
or blended or is under transport refuses or neglects toshow to any
officer authorised under section 13 any receptacle, plant or
appliance used insuch place in connection with petroleum, or in any
way obstructs or fails to render reasonableassistance to such
officer during an inspection, or
(e) being for the time being in control or in charge of any
place where petroleum is beingimported, transported, stored,
produced, refined or blended, refuses or neglects to show toany
officer authorised under section 14 any petroleum in such place, or
to give him suchassistance as he may require for the inspection of
such petroleum, or refuses to allow him totake samples of the
petroleum, or.
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(f) being required, under section 27, to give information of an
accident fails to give suchinformation as so required by that
section, shall be punishable with fine which may extend tofive
hundred rupees.
(2) If any person have been convicted of any offence punishable
under sub-section
(I) is again guilty of any offence punishable under that
sub-section, he shall be punishable forevery such subsequent
offence with fine which may extend to two thousand rupees.
Conditions or requirements to open petrol pump stationFollowing
are the eligibility requirements for individual applicants:
You must be an Indian citizen and Resident of India as on date
of affidavit.
Age of individual applicant must be 21-55 years (except for
Freedom Fighter underCC2 category).
Minimum educational qualification required for rural ROs is 10+2
examinationconducted by a Board/University and Graduation/
Chartered Accountant/ CompanySecretary/ Cost Accountant/ Diploma in
Engineering for regular ROs. For candidatesbelonging to CC1 and CC2
category, minimum education required is Class 10th andClass 10+2
examination conducted by a Board/University for rural ROs and
regular ROsrespectively. However, this norm of minimum education is
not applicable to freedomFighters under CC2 category.
Minimum fund requirement is Rs. 12,00,000 and Rs. 25,00,000
respectively for ruralROs and regular ROs. This fund can be in the
form of savings accounts, deposits withbank/registered
companies/postal schemes OR bonds OR shares of listed companiesin
Demat form OR mutual funds OR National Savings Certificates, etc.
Please note thatonly 60% of the certified value of Shares, Mutual
funds & Bonds will be taken intoconsideration for eligibility
purpose.
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All applicants must possess suitable piece of land in the area
mentioned inadvertisement. You may either own it or have it on long
term lease for minimum timeperiod as specified in notification.
What are license fees and application fees for petrol pump
station?At present, license fees is Rs. 18/KL for MS and Rs. 16/KL
for HSD for dealer owned "B" / "DC"site ROs, while license fees is
Rs. 48/KL for MS and Rs. 41/KL for HSD for corporation owned"A" /
"CC" site ROs.
Application fees are Rs. 100 in case of rural ROs and Rs. 1000
in case of regular ROs. 50%concession is available for candidates
belonging to SC/ ST. Application fees must be paid inthe form of
Demand Draft (DD) of schedule bank drawn in favour of concerned Oil
Company.Fees is non-refundable. Please note that one applicant
cannot apply for more than onelocation. In other words one
application for one applicant for the location.In case of Dealer
Owned / Company leased sites, non-refundable fixed fees of Rs.
5,00,000 isrequired to be paid for rural ROs and Rs. 15,00,000 is
required to be paid for regular ROs. Incase of Corporation owned
sites (other than CFS) which involves bidding for allotment,bidding
amount of Rs. 10,00,000 and Rs. 30,00,000 is applicable for rural
ROs and regular ROsrespectively.How to apply online for retail
outlet of HPCL/ BPCL/ IOCLFirst of all, you will have to look or
wait for the release of an open advertisement by the oilcompany.
Advertisements are published in newspapers and on official websites
of concernedcompany. These advertisements or notifications inform
the location/s where the companyproposes to set up a retail outlet
(which we generally call as a petrol pump). Interestedcandidates
can apply for license for opening petrol pump in desires state/
city/ town/ area.
Online applications can also be submitted at official websites
of oil companies. Applicationsmust be submitted before said last
date of submission. Hard copies must also be submittedalong with
all relevant documents within seven days of expiry of last date of
onlineapplication. Applications must be submitted in a sealed
envelope mentioning the name &serial number of the location (as
per the advertisement). Envelop must also be super scribed
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as "Application for Regular RO / Rural RO dealership at
_________________ (location),______________(District)
of____________(Name of Oil Company)".
List of documents to be submitted for getting approval
forinstallation of new Fuel Station along National Highways1.
Signed copy of license deed. The draft is at Annex III.
2. Certified copy of location plan of the Fuel Station along the
National Highway showingdetails of Right of Way (ROW) of National
Highway, access roads to private properties, existingpublic roads
and other developments falling within a reach of 1.5 km in each
side of the FuelStation and carriageway.
3. Certified copy of plan of the proposed Fuel Station showing
details of deceleration,acceleration lanes, service road (if
provided), buffer strip, fuel pump, office, kiosk,lubritorium, air
and water supply, drainage details, signs and markings conforming
toapplicable figures enclosed with these Norms.
4. Certified copy of sectional view showing elevation of Fuel
Station with respect to NationalHighway and slopes to be provided
for adequate drainage and preventing water logging onNational
Highway.
5. Drainage plan of the Fuel Station.
6. Details of the material for pavement composition for
deceleration lane, service road andacceleration lane.
7. Inspection report of the officer inspecting the site of
proposed Fuel Station and certificatethat all standard conditions
have been specified.
8. Detailed explanation for reasons for recommending the
exemption from stipulated norms(if required).
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9. Undertaking from the oil company/owner that the oil
company/owner would paynecessary fee for the use of the National
Highway land whenever the fee is asked by theHighway Authorities in
future.
10. Undertaking from Oil Company that necessary alteration
including completeremoval/shifting of the approach roads at its own
cost if so required by Ministry, for thedevelopment of National
Highway or in the interest of safety in this section.
11. Undertaking from Oil Company that they shall take all the
action as prescribed in AppendixI to ensure conformity of these
Norms.
Export- Import Policy (1997-2002)Export Import Policy or better
known as Exim Policy is a set of guidelines and instructionsrelated
to the import and export of goods. The Government of India notifies
the Exim Policyfor a period of five years (1997-2002) under Section
5 of the Foreign Trade (Development andRegulation Act), 1