OIL AND GAS

ASSIGNMENT

ON

PESTLIED ANALYSIS FOR

SKN HARYANA CITY GAS DISTRIBUTION LTD

Submitted By: QUINTET

Priya Singh (19020344034)
Balaji M (19020344012)
Prashant Kumar Agrawal (19020344032)
Rishabh Sindhu (19020344035)
Chitransh Bandhewal(19020344014)
INTRODUCTION

PESTLIED ANALYSIS

Pestlied analysis is done for analyzing the business atmosphere of a company or a corporation
and allows to seek out the varied aspects.

The PESTLIED model is used for

o Identifying a broad perspective and not just look inwards when making decisions
o Helps to cover as many angles as possible.

PESTLIED stands for Political, Economical, Socio-Cultural, Technological, legal, International,

Environmental and Demographic.

1. Political comprises of local, national or in some cases international government exertions

that effects the business and how it operates. This can be beneficial or against the
industry
2. Economic consists of factors like interest rates and taxation or any other pecuniary
related items that has an affect directly on your firm
3. Social factors comprises of pattern that includes peoples tendency towards the
organization and how much inclined they are towards the company and it is one factor
that affects the company in a positive or negative way.
4. Technology contains whatever changes the manner in which the organization works , or
things that impact the interest for a company’s product
5. Legal events can impact how a company operates in a positive or in detrimental way (in
some cases). Through laws and court ruling
6. International factors might include things like changes in exchange rates, and sometimes
war between countries like disagreement or disputes or instability in other parts of the
world that can affect how an organization runs
7. Demographic factors can influence how a business operates. In addition to the
availability of staff to work for you, there are also phenomena such as the ‘Grey Pound’ –
the fact that people are living longer and having more money to spend
8. Environmental concern may determine if they are in control or not and what a
organization can do cannot do about it
SKN- Haryana City Gas Distribution Pvt. Ltd.

SKN- Haryana City Gas Distribution Pvt. Ltd. (HCG) is a company registered under
company act 1956. Having considered the popularity of city gas distribution, SKN- Haryana City
Gas Distribution Pvt. Ltd. has visualized and undertaken the project of natural gas supply for
Domestic, Commercial, Industrial and transport sector of Haryana State.

SKN- Haryana City Gas Distribution Pvt. Ltd. has got the approval from State
Government of Haryana to distribute natural gas in Gurgaon & Jhajjar districts of Haryana state
and for Neemrana & Bhiwadi area of Rajasthan state from state government of Rajsthan.
Presently the company is in a process of creating network for the distribution of natural gas to
consumers for domestic, transport, and commercial and industrial sectors in Gurgaon Bhiwadi.

SKN-HCG’s main business of natural gas distribution is divided in two segments:-

PNG Direct supply of PNG to domestic, commercial and industrial consumers.
CNG to compress the gas at CNG retail outlets for filling in onboard installed natural gas
cylinders in vehicles for using as transport fuel.

In PNG segment, the company is having 12000 household gas consumers in domestic sector and
80 no’s of Industrial & Commercial Customers. The Company has laid 160 Km of Pipeline to
cater various customers.

In CNG segment, the company has 13 CNG stations at different locations in Gurgaon and many
more yet to come

The company is selling around 12000 standard cubic meter gas to its Commercial and Industrial
customers.

Business Objectives

To convert SKN Haryana City Gas Distribution Pvt. Ltd. into a leading player in City Gas
Distribution.

To design, construct and operate CNG filling stations considering the best convenient of CNG
consumers to motivate highest conversion on CNG. This will help in reduction of vehicular
pollution and provide cleaner environment.
PESTLIED ANALYSIS

POLITICAL

The oil and gas sector is among the six core industries in India In 1997–98, the New
Exploration Licensing Policy (NELP) was envisaged to fill the ever-increasing gap between
India’s gas- demand and supply.The Indian oil and gas is a $ 140 billion industry. India’s
economic growth is closely associated with energy demand. Therefore, the necessity for oil and
gas is projected to grow more, making the sector quite conducive for investment

Last 5 year Natural Gas Import Chart

The Government of India has adopted many policies to satisfy the increasing demand. The
government has allowed 100 per cent foreign direct investment (FDI) in several segments of the
sector, including natural gas, petroleum products, and refineries, among others. Today, it attracts
both domestic and foreign investment, as documented by the presence of Reliance Industries Ltd
(RIL) and Cairn India.
  The Government of India is planning to set up around 5,000 compressed bio gas (CBG)
plants by 2023.
 Government of India is planning to invest Rs 70,000 crore (US$ 9.97 billion) to expand
the gas pipeline network across the country.
 In September 2018, Government of India approved fiscal incentives to attract investments
and technology to improve recovery from oil fields which is expected to lead to
hydrocarbon production worth Rs 50 lakh crore (US$ 745.82 billion) in the next twenty
years.
 State-run oil firms are planning investments worth Rs 723 crore (US$ 111.30 million) in
Uttar Pradesh to improve the liquefied petroleum gas (LPG) infrastructure in a bid to
promote clean energy and generate employment, according to Mr Dharmendra Pradhan,
Minister of Petroleum and Natural Gas, Government of India.
 A gas exchange is planned in order to bring market-driven pricing in the energy market
of India and the proposal for the same is ready to be taken to the Union Cabinet,
according to Mr Dharmendra Pradhan, Minister of Petroleum and Natural Gas,
Government of India.
 The Oil Ministry plans to set up bio-CNG (compressed natural gas) plants and allied
infrastructure at a cost of Rs 7,000 crore (US$ 1.10 billion) to promote the use of clean
fuel.

There are many factors that influence the prices including:

Technology to extend production, storage of crude oil by richer nations. Changes in tax
policy, Political problems etc.

Fluctuations in the prices have both direct and indirect impact on the world economy.
The price variation impacts the sentiments and hence volatility in stock markets all over the
world. Higher prices may mean higher energy prices, which can cause a ripple effect on virtually
all business aspects that are dependent on energy directly or indirectly

According to the U.S. Energy Information Administration, there are seven key factors
which have an influence on the spot prices of Natural Gas globally:
 Production, Supply, Natural causes, Inventory, demand, Non-OECD demand, financial
markets and Spot market

Production: A large part of hydrocarbon is explorated within India and 45.3% of natural
gas/LNG is being imported. The production of natural gas was 31.73 billion cubic meters in
2017-18, growing by 2.86% over the previous year. India accounted for 0.77% of world natural
gas production in 2016-17. ONGC is developing the KG-DWN-98/2 block in Krishna-Godavari
(KG) Basin with capex of about USD 5,076 million (approximately INR 340,000 million)
leading to Peak oil production from the field to the extent of 78,000 bpd (4.1 million tons per
year) and natural gas @16 million metric standard cubic meter per day or 5.84 million tons oil
equivalent (MMTOE) per year. The capex works out to nearly USD 14.5 per barrel only for 5
years production period. ONGC has already developed from the proved oil and gas reserves to
the extent of 462.12 MMTOE at very low capex comparable with that of OPEC countries. Oil
fields in Rajasthan state are emerging as a major oil and gas producer.

India has deployed 159 rigs and drilled 545 production wells during 2017-18 which
stands globally fifth but the oil and gas production is not commensurate with the wells drilled
 Supply: In the year 2019, US is going to become net exporter of LNG, LPG, crude oil
and its products from its shale oil production boom. Shale oil production cost would be the lower
ceiling price for the crude oil in international trade as its substantial production is consumed
internally in US.

Natural Causes: In the recent past, we have seen many events driving volatility in the
crude oil prices.Events like a hurricane hitting the oil producing areas in the U.S have driven the
crude oil prices in the global markets.

Demand: During winter, the cold temperatures increases the use of energy for heating in
many cold countries.During summer months, supply generally exceeds demand and petroleum
inventories build up.Hence the prices drop. The OECD which is made up of the United States,
most of Europe, Japan and other advanced countries is responsible for 53 percent of the world’s
demand for oil. While they consume more oil than non-OECD countries, their rate of growth is
much slower.During 2000 to 2010, OECD demand actually went down, while non-OECD
demand exploded by 40 percent.

Considering all the above mentioned political factors SKN Haryana City Gas Distribution
will be affected on various levels . At the same time these are the political changes which makes
it a huge scope for growth and investment with various government initiatives coming in. Oil and
Gas is the only sector where the companies are highly depended on international market and
political changes and obviously SKN Haryana City Gas will be affected by it.

Economic

When oil prices go up, so does inflation. Once inflation goes up.Central Banks respond
by raising interest rates to keep prices under control.Rising interest rates in China and India are a
clear signal that these economies are growing at unsustainable pace. Triple digit oil costs can
finish the lofty economic hopes of India and China which are looking to achieve the same sort of
sustained growth that North America and Europe enjoyed in the post-war era.There is an
inevitable obstacle that puts such ambitions out of reach.
 According to CSO’s advanced estimates dated 7th January, 2019, Indian economy is
estimated to grow 7.2% in FY 2018-19 as compared to 6.7% in FY 2017-18. The expansion in
the economy has triggered energy demand. On domestic front this sturdy growth is due to robust
private consumption, expectation of larger stability in GST and public investment as well as
ongoing structural reforms. It may be mentioned here that global tension on trade front and
volatile global oil market has hardened the crude oil prices. Oil and Gas being the necessary
import for our economy, several initiatives are taken by the Ministry for increasing production
and exploitation of all domestic petroleum resources to address the priorities like Energy Access,
Energy Efficiency, Energy Sustainability and Energy Security.

As a commitment to provide clean energy in the eastern part of the country, the
Government has approved a capital grant of ` 5,176 crore (40 per cent of the estimated capital
cost of `12,940 crore) under Pradhan Mantri Urja Ganga.

In order to develop the national gas grid, the Government has taken a decision to provide
a capital grant of ` 5,176 crore (i.e. 40% of the estimated capital cost of ` 12,940 crore) to GAIL
for development of a 2,655 km long Jagdishpur-Haldia/Bokaro-Dhamra Gas Pipeline (JHBDPL)
project, popularly known as the “Pradhan Mantri Urja Ganga’ of Eastern India. It will pass
through 50 districts in the State of Uttar Pradesh, Bihar, Jharkhand, Odisha & West Bengal. The
construction work on the pipeline is under progress and it is scheduled to be completed by 2020.

SOCIAL

SKN Haryana City Gas Distribution should deal with various kinds of ever changing
social factors in and around it. Sub divisions are made accordingly and listed below
Consumer Preference

Although SKN Haryana City Gas end product is a cheap and safer fuel, some customers
do not opt for PNG connections for several attributable reasons. Most of the time, the person
staying in a house are staying in a rented accommodation, and they prefer to use bottled gas, as
their jobs are transferable in nature. Change of PNG connection to a new house has a mandate
that the new house should be within a similar geographical area, which is designated as charge
area. Some households do not opt for PNG connections in first round, but progressively register
for a connection at a later stage.

Customer Base

As City gas distribution is a growing sector, attracting new customers is a massive

challenge. Companies have a hard time convincing customers to switch from conventional LPG
cylinders to piped gas. In India, it is difficult to convince customers about the benefits of PNG
over LPG. LPG is usually available at subsidised rates and is a preferable choice for many
customers. However, PNG offers several advantages such as uninterrupted supply of gas, ease of
handling, easy billing, and easy detection of leaks because of periodic maintenance activities.
Innovative advertising strategies are being looked upon by new players to attract new customers.

Billing Cycle

The billing cycle for domestic customers is bimonthly based on the reading taken on the
meter placed within the household. Many times the houses are occupied by tenants who don’t
allow meter reading within the stipulated time window. Provision exists for the customers to take
their own reading and inform it to the entity. If no such event happens, averaging of six past
monthly bills is done and the value is corrected on the basis of actual reading when the house is
open for the same. However, this provision may not be exercisable and notice for termination of
gas connectivity is given to the customer 15 days prior to the actual disconnection.
Disconnection in many of the households is not possible even after months of notice, because of
political and state pressure over the entities; and in the process, this aspect also remains a
challenge for the entities who are working in the sector with no or marginal profit.
Delay in Payment

As far as domestic gas connections are concerned, SKN Haryana City Gas often face a
challenge in payment. It has been inferred that often customers show negligence towards correct
and timely payment. In some cases, the CGD companies have to send notices and officials to
retrieve payment from customers. This creates a problem in the smooth functioning of the billing
operation.

Security Deposit

By the regulation of PNGRB, every household will get a connection at a single under Rs.
5000 security, and if the burner should be at a maximum distance of 5 m from the Suraksha hose
pipe. The second additional connection is provided based on the actual cost required to make the
set-up and the metering is done through a separate meter. Many of times, customers use
fraudulent methods using additional pipelines and make supplementary connections. They also
tamper the meters or slow it down with the help of needles. This way the SKN Haryana City Gas
lose gas which is unmetered and not recorded in the billing. A identical practice is observed in
commercial and industrial sector, wherever illegal points are made up by users.

TECHNOLOGY

Companies like SKN Haryana City Gas Distribution make use of technologies for
effective results. Some of them are listed below which help them in transportation procurement
exploration and even during bidding.

2D Seismic Survey

The Government has taken up programme of undertaking 2D seismic survey of entire

unappraised areas. National Seismic Programme was launched on 12th October, 2016. Under the
programme, Government has approved the proposal for conducting 2D seismic survey for data
Acquisition, Processing and Interpretation (API) of 48,243 Line Kilo Metres (LKM). The
estimated cost of the project is `2932.99 crore and the project is proposed to be completed by FY
2019-20. As on 31st November, 2018, surface coverage of 29,707 LKM, out of 48,243 LKM has
been achieved under 2D Seismic data acquisition under National Seismic Programme.
National Data Repository

National Data Repository (NDR) set up at DGH and launched on 28th June, 2017 to
make the entire Exploration and Production (E&P) data available for commercial exploration,
research and development and academic purposes.

Some of the New Technologies which can be used by SKN Haryana City gas Distribution are -

a) Development of methodologies for oil to oil correlation using compound specific isotopic
analysis of biomarkers (CSIB) and Total Scanning Fluorescence Spectrophotometry (TSF).

b) Development of methodology for estimation of thermal maturity of organic matter through

Fourier Transform Infra-Red spectroscopy

c) Geo Cellular Modelling (GCM) through Landmark.

d) Broadband Processing has been established in OMEGA System by inducting Adaptive

Deghosting (AD) Technology on marine data to broaden the spectrum and improve the
resolution by removing the source and receiver end ghosts.

e) Profile modifications and water shut-off jobs using in house chemical formulations in different
fields

f) Chemical Tracer test used to Estimate Remaining Oil Saturation to see the effect of Low
salinity water flooding.

g) Gas Tracer used for better understanding of migration of flue gases in reservoir.

Pipeline Integrity Management In pipeline integrity management, remote monitoring of

Pipeline RoU through high resolution satellite images was continued in GAIL Bhuvan portal
which was successfully launched during last year. In addition, the pilot testing of Wireless
Sensor Network based Data transfer is being continued at selected terminal.
LEGAL

Some of the legal aspects necessary for SKN Haryana City Gas Distribution are listed below and
it is quite crucial to follow them and make use of various beneficial policies especially for new
entrants in exploration

Hydrocarbon Exploration Licensing Policy

The new Hydrocarbon Exploration Licensing Policy (HELP) for award of Hydrocarbon
Acreages in the Upstream Sector of India was notified on 30th March, 2016 and formally
launched w.e.f 1st July, 2017. Open Acreage Licensing Policy (OALP) is one of the key features
of HELP which has been notified on 30th June, 2017. Under OALP Bid Round I, 55 Blocks
having area of 59,282 square kilometres (sq. km) have been awarded on 1st October, 2018.
OALP Bid Round II with 14 blocks with approx. 30,000 sq. km was recently launched for
bidding to the investor community on 07th January, 2019.

National Data Repository

National Data Repository (NDR) set up at DGH and launched on 28th June, 2017 to
make the entire Exploration and Production (E&P) data available for commercial exploration,
research and development and academic purposes. .SKN Haryana City Gas Distribution can
make use of it to bid for new exploration.

Discovered Small Field Policy

Discovered Small Field Policy (DSF) is aimed at monetizing hydrocarbon resources

locked-in for years in a time bound manner to boost domestic production of Oil and Gas. The
first bidding round under the DSF Policy was launched on 25th May, 2016 thereby offering 67
discovered small fields in 46 contract areas of ONGC and OIL for international bidding. Total 30
contracts for 43 discovered small fields were signed with 20 companies in March, 2017. It is
expected that in-place locked hydrocarbons .SKN Haryana City Gas Distribution were a
successful bidders in this round.

National Policy on Biofuels 2018

The Government has notified National Policy on Biofuels 2018 on 8th June, 2018 which
envisages a target of 20% blending of ethanol in petrol by 2030. The policy has widened the
scope of raw material for ethanol procurement and thereby is expected to give boost to the
Biofuel programme of the country.

INTERNATIONAL

City Gas Distribution (CGD) market in India is forecast to reach 20,700 MMSCM by
2030. Growth within the market is anticipated on account of skyrocketing natural gas demand
from domestic, commercial, industrial as well as automotive end user segments. With an
increasing range of favorable initiatives taken within the CGD sector by the Government of
India, an increasing range of companies are being authorized to operate in CGD industry in
numerous geographies across the country.

With all these growth in market SKN Haryana City Gas Distribution will be at the
advantage as they have set their foot well in a region specific and gives scope to expand to other
regions of the country. But at the same time all of these depends on the international market as
only around 50% is produced in India and with a huge demand in future it is very likely that our
dependency on international market will also increase rapidly in near future. In the year
2019, US is going to become net exporter of LNG, LPG, crude oil and its merchandise from
its shale oil production boom Shale oil production cost would be the lower ceiling price for the
crude oil in international trade as its substantial production is consumed internally in US. And
there is a good scope of having a tie up with US based companies so as to expand rapidly and at
the same time vigilantly.

ENVIRONMENTAL

SKN Haryana City Gas Distribution Company should consider its environmental issues very
seriously because of the level of risk and hazard involved is very high. Below listed measures are
some of the environmental standards -

 Compliance with all applicable legislation, regulations & other requirements.

 Continual improvement in health, safety & atmosphere performance.

 To Avoid work related ill health, incidents & accidents.

 Minimize environmental emissions, waste & energy use.

 Reduce carbon footprint.

 Enhance awareness, skills & competencey of the staff, business associates & contractors
to effectively involve them in guarantying safety of everyone.

 Ensure a contributary work atmosphere that supports all concerned in their efforts to
attain zero loss time injury.

 To improve work place surroundings through regular coaching, development &

involvement of employees, associates & concerned statutory bodies.

 Coastal and marine ecology.

 Climate change.

 Climate change impacts on the sector.

 Revenue transparency.

 Use of Natural Gas is clean

 Natural Gas is 30% less polluting than coal and 50% less polluting than oil

DEMOGRAPHIC-

Currently SKN Haryana City Gas Distribution Company operates to distribute natural gas in
Gurgaon, Rewari & Jhajjar districts of Haryana state and for Neemrana & Bhiwadi area of
Rajasthan state from state government of Rajsthan.

We can see that it is too region specific and even the companies name itself suggests that.
With a huge growth in city gas distribution and government also pushing, it is wise to expand
among other regions also. Moving towards region near Gas basins will decrease the
transportation cost and will be viable and profitable in long run.
References

Article - Challenges & Issues in Natural Gas Distribution Industry 2017

www.ceicdata.com

http://petroleum.nic.in

www.ibef.org

http://haryanacitygas.com/

http://www.hcgonline.co.in/