The petroleum industry includes
the glob and marketing of petroleum
products. The largest volume products of
the industry are fuel oil and gasoline (petrol).
Petroleum (oil) is also the raw material for many chemical products,
including pharmaceuticals, solvents, fertilizers, pesticides, synthetic
fragrances, and plastics. Oil
accounts for a large percentage of the world’s energy
consumption, ranging from a low of 32%
for Europe and Asia, to a high
of 53% for the Middle East.
The oil and
gas sector is among the six core industries in India and plays a major role in
influencing decision making for all the other important sections of the economy.
The Government of India has adopted several policies to fulfil the increasing
demand. The government has allowed 100 per cent Foreign Direct Investment (FDI)
in many segments of the sector, including natural gas, petroleum products, and
refineries, among others.
India is expected to be one of the
largest contributors to non-OECD petroleum consumption growth globally. Total
oil imports rose 4.24 per cent year-on-year to US$ 86.45 billion in 2016-17.
India’s oil consumption grew 8.3 per cent year-on-year to 212.7 million tonnes
in 2016, as against the global growth of 1.5 per cent, thereby making it the
third-largest oil consuming nation in the world. The demand of Petroleum Oil
and Lubricants grew at a Compound Annual Growth Rate (CAGR) of 5.6 per cent
under the 12th Five Year Plan (2012-17)
The strength of their supplier power and conversely
the weakness of the buyer power are inextricably linked. The threat to this
industry are varied. Geo-political events, political instability and the rise
of terrorism in the Middle East directly affect the global markets as they
relate to petroleum. This potential volatility might spur consumers to start
pivoting to other energy markets that are more stable. Generally, there are
more consumers of petroleum than there are suppliers. This creates an
environment where the petroleum industry and countries that have an outsized
share of them. In conclusion, it is clear that the industry forces in petroleum
present both problems and opportunities. Without question, substitutes will
present the most enduring challenge as nations move toward renewable sources of
energy. Finally, because rivalry in the emerging energy sector that is
renewable energy will be fierce, a third order effect of deliberately pivoting
towards the field allows the sector to be a dominant competitive force able to
sustain a barrage from their competition that would lead to the destruction of
a less established competitor.