Impact of Oil Price Crash on Different Industries and Overall Indian Economy

 Published On: Mar, 2015 |    No of Pages: 151 |  Published By: Infrainsights | Format: PDF
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The steep fall in crude prices has caught the global economy by surprise, not to miss the existing & emerging potential oil exporting nations. On one hand the downward trend is highly detrimental to the nations with major revenue chunk linked to oil exports and those who have invested heavily on the alternate energy sources such as renewable, shale, etc., on the other hand the major net oil importers such as the Asian nations led by India are looking overjoyed on account of anticipated national fiscal savings on buying of cheaper crude oil and drop in fuel prices at consumer end.

On the surface, one may claim that falling crude oil prices are oil importing nation's moment of delight and oil exporting nation's worst nightmare. But is it really all good and great for a crude oil import dependent nation such as India? There is a need to go beyond pre-conceived notions and understand that the reverse of the common phrase, "Every cloud has a silver lining" is also true, especially for a country like India. For a nation like India, there is a need to identify the cloud under the silver lining.

While it may be assumed that India will be able to reduce fiscal deficit, reduce inflation, lower interest rates and recover from oil subsidy on account of lower oil import bill. But the steep decline in crude oil price is expected to leave a bitter taste on the government's tax revenues, translate into lower growth of both exports & imports and impact the GDP growth of the country. It is worth to note that the government has increased the excise duty on petrol and diesel twice in a move to aid the tax revenues. For E&P companies such as ONGC, the price drop is expected to impact negatively due to lower realization, although reduced subsidy burden may have some healing effect.

"Impact of Oil Price Crash on Different Industries and Overall Indian Economy" is aimed to demystify the impact of the current down-fall in global crude oil prices on the business across the different sectors in the public and private space. The report will also form the basis of an elaborate discussion on how the price trend will be crucial for the incumbent government in bringing out vital economic and policy reforms in India.

Key Questions Answered:

How is the domestic E&P sector going to be impacted due to a drop in imported crude oil prices?
Whether the benefits of a lower imported crude oil price will be passed on to the end-users and large industrial consumers which will improve their business margins?
What will be impact on petroleum subsidies in the country? Whether the government will de-regulate LPG and Kerosene if the crude oil prices remain subdued for a longer period?
Whether the drop in crude oil prices going to aid the POL business in India?
Whether the subdued crude oil prices translate into a favorable market growth in the POL market in India?
What will be the impact on the global LNG prices? Whether projects with oil indexed LNG prices stand to loose?
What will be the impact on the LNG and Natural Gas business from competitive petroleum prices?

Who needs this report and why?

Target audience

Oil & Gas E&P Companies
NOCs/OMCs
Suppliers & Marketers of Petroleum Oil and Lubricants (POL)
Major End-Users of POL/Industries/Manufacturing Companies
Importers & Traders of POL
Entities engaged in bulk storage and bulk transportation of POL
Government Agencies/Policy Makers
Banks/Financing Institutions/ Investors

Reason to buy

The report will go deeper into the pros and cons of the global crude oil price decline on realization of E&P companies in India and the near term implications on domestic E&P activities in India.

The report will be crucial for the OMCs to evaluate the impact of subdued imported crude oil prices on the top & bottom line. The change in the competitive equation from Natural Gas across Industrial, Transportation, Residential and Commercial segment will also be analyzed.

The report will be helpful to the private sector players who majorly rely on imports and face severe competition from the PSUs who operate in a completely integrated business environment.

The report will enable the major end-users to identify and quantify the likely upsides in the business margins due to a downward revision in the POL prices.

On the backdrop of reduced crude oil prices the business for imports looks favorable. Taking into account the prospects of an economic recovery and growth in manufacturing the market for POL is expected to increase in the times to come. This throws a lot of opportunities for the importers, traders and entities engaged in bulk storage and transportation of POL

The report will demystify the risk-gain profile of the sectors that will be influenced by the price decline. The analysis will enable the policy makers in coming out with reforms that favor the growth of the Oil & Gas sector in India while ensuring economic gains to the nation.

The report provides an independent analysis of the prospects and underlying challenges associated with different sectors and the overall regulatory & policy framework, which will aid in investment decision making.

1. Executive Summary

2. Background

3. Analysis of global crude oil & natural gas pricing trends:
WTI Crude Oil, Brent Crude Oil, JCC, Henry Hub, NBP and APAC Region LNG Prices

4. Analysis of the possible reasons for the fall in crude oil prices, role of OPEC and most importantly Saudi Arabia

5. High-level understanding of the likely future trend in global crude oil prices based on industry voices & speculations

6. High-level understanding of the impact of falling crude oil prices on different economies, such as:
a. Russia
b. USA
c. Canada
d. Venezuela
e. Australia
f. India

7. Understanding the likely impact of crude oil price decline on Natural Gas Sector and RLNG Market growth in India
a. Price Competitiveness of Natural Gas vis-ŕ-vis Petroleum Fuel in Industrial, Commercial, Automobile and Residential segment
b. Impact on growth of RLNG market in India based on existing & evolving RLNG Terminals
c. Impact on Gas Pipelines and CGD Projects in India

8. Understanding the impact of crude oil price decline on the Oil & Gas E&P Industry in India
a. Impact on revenue realization of major E&P companies: ONGC, OIL, RIL and Cairn
b. Re-rating/De-rating of stocks of the major E&P companies in India
c. Impact on future E&P projects and E&P bidding in India

9. Understanding the impact of crude oil price decline on PSU & Private Oil Refineries and Oil Marketing Companies in India
a. Impact on Crude Oil import mix in India
b. Impact on growth of domestic refineries in India
c. Impact on the GRM of Refineries in India
d. Impact on the Top & Bottom-line of the Oil Marketing Companies in India

10. Understanding the impact of crude oil price decline on Suppliers & Marketers of Petroleum, Oil and Lubricants (POL) in India
a. Understanding the overall POL industry structure
b. Understanding of major players and their market share in POL
c. Financial analysis of select leading Suppliers & Marketers of POL
d. Change in competitive landscape of private vs. government companies
e. Impact of subdued crude oil prices on POL prices
f. Existing market size of POL in terms of volume and revenue
g. Outlook on likely surge in POL market size based on competitive POL prices

11. Understanding the impact of crude oil price decline on bulk POL storage & transportation business in India
a. Understanding of the overall industry structure of bulk storage and transportation of POL
b. Understanding of major players and their market share
c. Financial analysis of select leading Players
d. Outlook on existing infrastructure in bulk storage and transportation of POL
e. Outlining the possible drivers for growth in bulk storage and transportation of POL
f. Outlining the possible drivers for growth in bulk storage and transportation of POL

12. Understanding the impact of crude oil price decline on the manufacturing and industrial growth in India

13. Understanding the impact of crude oil price decline on the Mining and Transportation Sector growth in India

14. Understand the likely impact of crude oil price decline on:
a. National Oil Import Bill,
b. Petroleum Subsidy Structure
c. Government Revenues from Oil,
d. GDP Growth and overall economy of India

15. Summary of analysis of the positive and negative impact of crude oil price decline on different segments, policy and economic landscape in India

16. Conclusion

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