history of oil industry in pakistan

8/3/2019 History of Oil Industry in Pakistan

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HISTORY OF OIL INDUSTRY IN PAKISTAN

1947

At the time of independence there were no more than few companies, it was the case with oil industry. There was no oil

refinery in Pakistan except a very small at Rawalpindi. At that time the total requirement of Pakistan was 0.4 million tons.

There were four foreign and one local company in Pakistan these were:

BURMAH OIL Market petroleum products.

BURMAH OIL Oil extracting company.

CALTEX Market petroleum.

ESSO Marketing.

ATTOCK OIL Oil exploration company.

1952

Burmah discovered natural gas at Sui in Baluchistan named as Sui gas. Before partition Railways was on coal, but at thetime of partition India refused to provide coal, so railways has to convert on diesel oil.

1955

The consumption of oil shot up by 3 million tons.

1960

Consumption in East and West Pakistan shot up by 4.2 million tons OGDC was established. Government asked the foreign

companies to set up a refinery, they agreed with following conditions:

Ø Refinery should in Karachi

Ø Capability will be 1.5 million tons.

Ø They will provide crude to refinery only.

Government also permitted a Pakistani company, Pakistan National Oil.

1962

Pakistani refinery came into being. It only produced petroleum but not lubricant. So PNO established a plant at Korangi(Karachi) for lubricating oil with a capacity of 0.5 million tons.

1964

Dawood petroleum was established.

1965

On September 1965 India attacked Pakistan so the oil reserves came to lowest and government asked the foreign

companies to bring crude refined and provide the army but they refused. PNO was asked to do so, it brought the oil and the

need of army was fulfilled. These companies annoyed the government and it turned against them.

1970

In 1970, when 51% of the shareholding was transferred to Pakistani invertors. The name of the company changed to

Pakistan Burmah shell (PBS) limited. The shell and Burmah groups of retained the remaining 49% in equal proportions.ed

Pakistan so the oil reserves came to lowest and government asked the foreign companies to bring crude refined and provide

the army but they refused. PNO was asked to do so, it brought the oil and the need of army was fulfilled. These companiesannoyed the government and it turned against them.

1970


Pakistan Burmah shell (PBS) limited. The shell and Burmah groups of retained the remaining 49% in equal proportions.

1971

Again the war broke between Pakistan and India. All crude oil was imported from other countries and its storage was

concentrated at Kemari Terminal Karachi. The enemy blasted whole storage point. So the need to spread the storage points



in the whole country was felt. The 5 foreign companies were asked to do so but they refused because of cost, then

government decided to establish storage places itself.

1973

There were energy crises through the world. Almost all of the countries nationalized the oil companies. Everyone realized

that petroleum products were very essential.

1974

Pakistan storage Development Corporation was established.

1976

PSO was found in December 1976 as a result of merger of here oil companies:

1. Pakistan National Oil.

2. Premier Oil Company.

3. ESSO.

1993

In February of 1993, as a result of a decision by Burmah oil to divest in Pakistan and the deregulation policy of the

government, the shell petroleum company bought the shares of Burmah Oil Company and 2% shares from the market and

become the major shareholder in the shell Pakistan limited (SPL).

INTRODUCTION OF SHELL PAKISTAN Ltd.

HISTORY

Shell is a multinational company and in Pakistan it is operating as a public limited company by the name “Shell Pakistan Ltd.

Shell is a superior brand name with a 100 year history in this region, infect the company is still in possession of a fuel

storage tank from 1899. However, the documented history of the Royal Dutch/shell group the Indo-Pak subcontinent dates

back to 1903 when a partnership was struck between the shell transport and trading company and the Royal Dutch

petroleum company to supply petroleum products in Asia.In 1928 to enhance their distribution capabilities, the marketing interests of the Royal Dutch/shell group and Burmah Oil

Company by limited in India were merged and the Burmah shell oil storage distribution and storage company of India was

born. After the independence of Pakistan in 1947, the name was changed to the Burmah shell oil distribution company of

Pakistan.


Pakistan Burmah shell (PBS) limited. The shell and Burmah groups of retained the remaining 49% in equal proportions. In

February of 1993, as a result of a decision by Burmah oil to divest in Pakistan and the deregulation policy of the

government, the shell petroleum company bought the shares of Burmah Oil Company and 2% shares from the market and

become the major shareholder in the shell Pakistan limited (SPL).

Shell launched a change programme, which will transform the company by the turn of the century, with major implications for

the petroleum industry in Pakistan.

More subtle, but equally uncompromising, has been the change in the company’s culture to reflect the values which shellinternationally believes will bring commercial success through a greater focus on the customers.



STRATEGIC INTENTION

COMPANY’S SLOGAN/MISSION

“You can be sure of Shell.”

COMPANY’S OBJECTIVE

Shell is focusing on retailing, providing better facilities to customers, clean petrol pumps constructing international standard

petrol filling stations, good advertising campaigns and mini markets (select).

VISION OF SHELL

To Be The Top Performer Of First Choice.

AIM OF SHELL

Creating a secure business environment, minimizing economic losses, and business disruptions safeguarding the group’s

integrity and reputations.

GOAL OF SHELL

The goal of the company is to position itself as the preferred oil company in Pakistan, leading the field in its commitment to

safety, customer service, quality and environmental protection.

STRATEGIES OF SHELL

A strategy of corporation forms a comprehensive master plan stating how the corporation will achieve its mission and

objectives. It maximizes competitive advantage and minimizes competitive disadvantage.

The strategy of Shell is to grow internally by expanding its operations through acquisition and strategic alliances.

Shell focuses to differentiate its products from competitors in the area of quality and services.

POLICIES

A policy is a broad guideline for decision-making that links the formulation of strategy with its implementation

The policy of Shell is to make sure that the employees throughout the firm make decisions and take actions that support the

corporation’s mission, objectives, and strategies.

STRATEGIC MANAGEMENT

There is a strong case of linkage “good management “to how well managers craft and execute strategy. Some managers

design shrewd strategies but fail to carry them out well. Others design mediocre strategies but execute them competently.

Both situation performance despite unforeseeable events, potent competition, and internal problems.

THE FIVE TASKS OF STRATEGIC MANAGEMENT

The strategy making, strategy-implementing process consists of five interrelated managerial tasks.

1. Deciding what business the company will be in and forming a strategy vision of where the organization needs to be

headed.

2. Converting the strategic vision and mission into measurable objective and performance targets.

3. Crafting a strategy to achieve the desire results.

4. Implementing and executing the chosen strategy efficiently and effectively.

5. Evaluating performance reviewing new developments, and initiating corrective adjustments in long-term direction

objectives.



WHY COMPANY STRATEGIES EVOLVE

Frequently fine tuning and tweaking of a company strategy. First in one department or functional area and then in another,

are quite normal. On occasion, quantum changes in strategy are called for when a competitor makes a dramatic move,

when technological breakthroughs occur or when crises strikes and managers are forced to makes a radical strategy

alteration very quickly. Because strategy move and new action approaches are ongoing across the business.

An organization’s strategy forms over a period of time and then reform the number of changes begins to mount. Current

strategy is typically a blend of holdover approaches fresh actions and reactions, and potential moves in the planning stage.

Except for crises situations (where many strategy moves are often made quickly to produce a substantially new strategy

almost overnight) and new company starts - ups (where strategy exists mostly in the form of plans and intended actions), it

is common for key elements of company to emerge in bits and pieces as the business develops.

WHAT DOES A COMPANY’S STRATEGY CONSIST OF?

Company’s strategies concern how: how to grow the business, how to satisfy customers, how to auto compete rivals, how to

response to changing market conditions, how to manage each functional piece of business, how to achieve strategic and

financial objectives.

STRATEGY AND STRATEGIC PLANS

Developing a strategic vision and mission, establishing objectives, and deciding on a strategy are basic direction-setting

tasks. They map out where the organization is headed, its short range and long-range performance targets, and the

competitive moves and internal action approaches to be used in achieving the targeted results. Together, they constitute a

strategic plan.

Annual strategic plan seldom anticipate all the strategically relevant events that will transpire in the next 12 months.

Unforeseen events, unexpected opportunities or threats, plus the constant bubbling up of new proposal encourages

managers to modify planned actions forge “unplanned” reactions postponing the redrafting of strategy until its time to work

on next year’s strategic plan is both foolish and unnecessary.

STRATEGY IMLEMENTATIONAL EXECUTION

The administrative is to create “fits” between the way things are done and what it takes for effective strategy execution. The

stronger the fits the better the execution strategy. The most important fits are between strategy organizational capabilities,

between strategy and reward structure between strategy and internal support system, and between strategy and the

organization culture.

The strategic implementing task is easily the most compacted and time-consuming part of strategic management. It cutacross virtually all facts of managing and must be initiated from many points inside the organization. The s trategy

implementer’s agenda for action emerges from careful assessment of what the organization must do differently and better to

carry out the strategic plan proficiently. Each manager has to think how much internal practices deviate from what the

strategy requires and how well strategy and organizational culture already match.

As needed changes and identified, management must supervise all the details of implementation and apply enough

pressure on the organization to convert objectives into results. Depending on the amount of internal change involved, full

implementation can take several moths to several years.

WHY STRATEGIC MANAGEMENT IS AN ONGOING PROCESS

Because each one of the five tasks of strategic management requires constant evaluation and a decision whether to

continue or change, a manager cannot afford distraction. Nothing about the strategic management process is final all prior

actions are subject to modification as conditions in the surrounding of environment change and ideas for improvement

emerge, strategic management is a process filled with motion. Changes in the organization situation, either from the insideor outside or both, fuel the need for strategic adjustments.

The task of evaluating performance and initiating corrective adjustments is both the end and the beginning of the strategic

management cycle. The match of the external and internal events, grant that revision in mission, objective, strategy and

implementation will be needed sooner or later. It is always incumbent on management to push for better performance to find

ways to improve the existing strategy and how it is being executed. Changing external conditions add further impetus to the

need for periodic revisions in a company’s mission. Performance adjustment object ive, strategy and approaches to strategy

execution.

Adjustments usually involve fine-tuning. But occasions for major strategic re-orientation do arise some time prompted by



significance external development and sometimes by sharply sliding financial performance. Strategy managers must stay

close enough to the situation to detect when changing conditions require a strategic response and when they don’t. It is thei r

job to scene the winds of change, recognize changes early, and initiate adjustments.

THE BENEFITS OF A “STRATEGY APPROACH” TO MANAGING

Today managers have to think strategically about their company’s position and impact of changing conditions. They have to

monitor the external; solution closely enough to know what kind of strategic changes to initiate. Simply said, fundamentals of

strategic management cede to drive the whole approach to managing organizations.

The advantages of first-rate strategic thinking and conscious strategic management include:

1. Providing better guidance to the entire organization on the crucial point of “what it is trying to do and to achieve.”

2. Making managers more alert to the winds of change, new opportunities and threatening development.

3. Providing managers with a rationale for evaluating competing budget requests for investment capital and new staff a

rationale that argues strongly for steering resources into strategy-supportive results producing areas.

4. Helping to unify the numerous related decisions by managers across the organization.

5. Creating a more proactive management posture and counteracting tendencies for decisions to be reactive and defensive.

EXTERNAL ENVIRONMENT

For the analysis of external environment following are important factors (PEST):

Ø Political –legal forces

Ø Economic forces

Ø Socio cultural forces

Ø Technological forces

POLITICAL FORCES: -

In Pakistan there are rapid changes of Government since poison. Each government that came in power condemned the

planning work done by the precious government. The slow development due to political instability but now the present

government is very stable to grow because govt. is providing incentives to different industries.

LEGAL FORCES: -

Legal component consists of legislation that has been passed. This component prescribes rules or laws that all members ofsociety must follow e.g. labour policy, employees’ social security scheme 1965 Partnership Act 1932 company 1984.

ECONOMIC FORCES: -

In Pakistan GNP is 5.41 and inflation rate is very high which is 12.7. The balance of payment position in Pakistan is -3.5%.

The employment rate is 34.94 million.

ECONOMIC OVERVIEW

Currency: Pakistani Rupee

Average Exchange Rate (20/1/02): U.S.$1 = 60.5 rupees

Gross Domestic Product (GDP, market exchange rates, 2000E): $52.1 billion

Real GDP Growth Rate (2000E): 1.8% (2001E): 2.3%

Inflation Rate (2000E): 15.6% (2000E): 11.1%

Current Account Balance (2000E): -$3.5 billionMerchandise Trade Balance (2000E): -$3.0 billion

Total External Debt (2000E): $38.5 billion

Major Trading Partners: United States, Japan, Germany, United Kingdom, and Saudi Arabia

Major Export Products: Raw cotton and textiles; rice; leather manufactures

Major Import Products: Petroleum; machinery and transport

SOCIO CULTURAL FORCES



In Pakistan population is increasing and social values are also changing so the demand of fuel consumption is also

increasing. People are coming from rural areas to cities and their life style and values are also changing. They are using

modern technology like care, motor cycle for traveling.

Pakistan's attempt to raise the living standards of its citizens has meant that economic development has largely taken

precedence over environmental issues.

Unchecked use of hazardous chemicals, vehicle emissions, and industrial activity has contributed to a number of

environmental and health hazards, chief among them being water pollution. Much of the country suffers from a lack of

potable water due to industrial waste and agricultural runoff that contaminates drinking water supplies. Poverty and high

population growth have aggravated, and to a certain extent, caused, these environmental problems.

TECHNOLOGICAL FORCES

Pakistan environment regarding the technology is not very advance due to the lack of resources. Natural gas, because of its

environmental qualities, efficiency, and technological advances are going to play an increasingly important role in meeting

demand for clean energy.

TASK ENVIRONMET

Ø Customer

Ø Supplier

Ø Labor component

Ø Competitors

Ø Government

CUSTOMER

Our customers are high class, low class and also middle class, because every class is used petrol for consumption.

SUPPLIER

Our suppliers are Pakistan refinery, National refinery and Attock refinery and Dhodak refinery.

LABOUR COMPONENT Labour is frequently available in Pakistan because of high unemployment rate. So skilled and unskilled persons are

available at lower wages rate.

COMPETITORS

Major competitors of Shell are PSO with petrol pumps and Caltex with petrol pumps. But Shell Pakistan Limited operates in

the Petroleum refining sector. Shell Pakistan Limited also compete with three other petroleum refiners in Asia

· Chennai Petroleum Corporation Limited

· National Refinery Limited

· Mangalore Ref & Petrochemicals Limited

INTERNAL ENVIRONMENT

· Organization Structure

· Organization Culture

ORGANIZATION STRUCTURE · Shell is the largest multinational organization with many product lines. Employees tend to be functional specialists

organized according to market/product distinction.

· Shell Pakistan is divided into five functional areas i.e. Retail, Commercial, Operations, Finance, and Human Resources.

· Management attempts to find synergy among divisional activities through the use of committees and horizontal linkages.

· Decision of major impact result from strategic plans made by organizational staff

ORGANIZATION CULTURE

· Quality is the key ingredient and commitment to quality is share by executives and workers.

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· The organizational Culture of the Shell is based on commitment of the top management for quality, employees, local

community, innovation, and performance.

ORGANIZATIONAL RESOURCES

Shell has established 1404 petrol filing station in different areas of Pakistan. But now the company is trying to reduce the

number of petrol filling station because they do not need that filling station, whose monthly sales are less than 500000 liters.

Up till now about 50 pumps are renovated in deferent cities of Pakistan.

NUMBER OF DEPOTS IN PAKISTAN

Shell has got 14 depots in different areas of Pakistan.

TYPES OF RESOURCES

1) Marketing

2) Finance

3) Research and development

4) Human resources

5) Operation

6) Information System

MARKETING Shell has strong distribution channels. Their market size is very large. Therefore, marketing staff is very efficient and their

main objective is satisfying the customer and people have the brand loyalty.

MARKET LEADERSHIP DUE TO INNOVATION

Shell is considered to be the market leader in innovation. It was the first company to get legal approval to operate Mini-

Market. It was the first among its competitors to introduce (rainbow) jet wash and (Proserv) branded oil change facility. It

provides suggestive literatures to its customers while launching a new product such as Helix super and Helix Lubricant etc.

It was also the first company to introduce the concept of Mobile Training Unit (MTU) for the purpose of training the workers

and introducing quality and quantity control units, which check the quality and quantity of motor gasoline at various filling

stations.

INNOVATION THE KEY TO OPPORTUNITY

Innovative use of technology is the key to other possible opportunities related to remote gas reserves that remain stranded

due to the prohibitive cost of development.FINANCE

During the 12 months ending 6/30/01, earnings per share totaled 30.12 Pakistan Rupees per share. Thus, the Price /

Earnings ratio is 5.48. Earnings per share fell 18.7% in 2001 from 2000.

As of June 2001, the company's long-term debt was 63.90 million Pakistan Rupees and total liabilities (i.e., all monies owed)

were 6.68 billion Pakistan Rupees. The long-term debt to equity ratio of the company is very low, at only 0.01.

As of June 2001, the accounts receivable for the company were 2.45 billion Pakistan Rupees, which is equivalent to 14 days

of sales. This is slightly higher than at the end of 2000, when Shell Pakistan Limited had 12 days of sales in accounts

receivable.

RESEARCH AND DEVELOPMENT

Research and development strategy deals with product and process innovation and improvement. Shell spends on research

and development more than most in the other companies to differentiate the performance of its products to its competitors.

COMOPANY’S RAPID GROWTH Shell has grown rapidly since 1993 and its volume of sales has rapidly increased in all the areas of Pakistan. Shells have

20.3% market share in 1996.

Shell has a market share of approx 21% for all petroleum products in Pakistan. Pakistan recorded annual sales of 3.51

million tones of petroleum products from July 2000 to June 2001. Revenue in the same period amounted to Rs.74.996 billion

and profit after tax was recorded as Rs.1056 million.

HUMAN RESOURCES

Shell provides the training facility to their labour and management to create the good relation to their employees. Shell

Company also motives its employees and provides different incentive on their good performance



OPERATIONS

Operation of the company is based on continues improvement is the acknowledgment that workers experiences and

knowledge can help to show production problem and contribute towards tightening variances and reducing error.

INFORMATION SYSTEM

Shell design and mange high-class information system that improve the productivity and decision-making. In organization

information may be collected, stored and synthesized in such manner that answers important operational and strategic

questions.

Information system is one of the strength of the organization. It provide aid in environmental scanning and in controlling

activities, it can also used as a weapon in gaining competitive advantage.

FINANCIAL PERFORMANCE

SALES ANALYSIS Shell Pakistan Limited reported sales of 63.63 billion Pakistan Rupees (US$1.06 billion) for the fiscal year ending June of

2001. This represents an increase of 76.2% versus 2000, when the company's sales were 36.12 billion Pakistan Rupees.

During 2001, the company's sales increased at a faster rate than all three comparable companies. While Shell Pakistan

Limited enjoyed a sales increase of 76.2%, the other companies saw smaller increases: Chennai Petroleum Corporation

Limited sales were up 29.1%, National Refinery Limited increased 15.9%, and Mangalore Ref & Petrochemicals Limited

experienced a sales decline of 6.3%. Shell Pakistan Limited currently has 608 employees. With sales of 63.63 billion

Pakistan Rupees (US$1.06 billion), this equates to sales of US$1,742,581 per employee.

SALES COMPARISONS (FISCAL YEAR ENDING 2001)

Company YearEnded

Sales(US$blns)

SalesGrowth

Sales/

Emp(US$) Largest Region

Shell Pakistan Limited Jun 2001 1.059 76.2% 1,742,581Pakistan

(100.0%)

Chennai Petroleum Corporation

Limited

Mar

20011.442 29.1% 817,968 India (100.0%)

National Refinery Limited Jun 2001 0.572 15.9% 553,885 Pakistan



(100.0%)

Mangalore Ref & PetrochemicalsLimited

Mar2001

0.577 -6.3% N/A India (100.0%)

RECENT STOCK PERFORMANCE

In recent years, this stock has performed terribly. In fiscal year 2000, the stock traded as high as 367.50 Pakistan Rupees,

versus 165.15 Pakistan Rupees on 1/18/02.

For the 52 weeks ending 1/18/02, the stock of this company was down 42.5% to 165.15 Pakistan Rupees. During the past

13 weeks, the stock has fallen 8.3%.

During the 12 months ending 6/30/01, earnings per share totaled 30.12 Pakistan Rupees per share. Thus, the Price /

Earnings ratio is 5.48. Earnings per share fell 18.7% in 2001 from 2000.

This company is currently trading at 0.09 time’s sales. Shell Pakistan Limited is trading at 1.07 times book value. The

company's price to book ratio is higher than that of all three comparable companies, which are trading between 0.25 and

0.97 times book value.

SUMMARY OF COMPANY EVALUATIONS

Company Date P/E Price/ Book

Price/ Sales 52 WkPr Chg

Shell Pakistan Limited 1/18/02 5.5 1.07 0.09 42.50%

Chennai Petroleum Corporation Limited 1/18/02 N/A 0.25 0.04 43.31%

National Refinery Limited 1/17/02 3.5 0.97 0.08 3.00%

Mangalore Ref & Petrochemicals Limited 1/18/02 N/A 0.73 0.20 21.86%

The market capitalization of this company is 5.79 billion Pakistan Rupees (US$96.42 million). Closely held shares (i.e., those

held by officers, directors, pension and benefit plans and those shareholders who own more than 5% of the stock) amount to

over 50% of the total shares outstanding: thus, it is impossible for an outsider to acquire a majority of the shares without the

consent of management and other insiders. The capitalization of the floating stock (i.e., that which is not closely held) is 2.33

billion Pakistan Rupees (US$38.83 million).

Dividend Analysis

During the 12 months ending 6/30/01, Shell Pakistan Limited paid dividends totaling 12.50 Pakistan Rupees per share.

Since the stock is currently trading at 165.15 Pakistan Rupees, this implies a dividend yield of 7.6%. The company has paid

a dividend for 4 straight years.

During the same 12 month period ended 6/30/01, the Company reported earnings of 30.12 Pakistan Rupees per share.

Thus, the company paid 41.5% of its profits as dividends.

PROFITABILITY ANALYSIS

On the 63.63 billion Pakistan Rupees in sales reported by the company in 2001, the cost of goods sold totaled 44.75 billion

Pakistan Rupees, or 70.3% of sales (i.e., the gross profit was 29.7% of sales). This gross profit margin is significantly better

than the company achieved in 2000, when cost of goods sold totaled 91.1% of sales.

Shell Pakistan Limited's 2001 gross profit margin of 29.7% was better than all three comparable companies (which had

gross profits in 2001 between 3.9% and 5.1% of sales).The company's earnings before interest, taxes, depreciation and amorization (EBITDA) were 1.96 billion Pakistan Rupees,

or 3.1% of sales. This EBITDA margin is worse than the company achieved in 2000, when the EBITDA margin was equal to

5.6% of sales. The three comparable companies had EBITDA margins that were all higher (between 3.2% and 4.8%) than

that achieved by Shell Pakistan Limited.

In 2001, earnings before extraordinary items at Shell Pakistan Limited were 1.06 billion Pakistan Rupees, or 1.7% of sales.

This profit margin is lower than the level the company achieved in 2000, when the profit margin was 3.6% of sales.

The company's return on equity in 2001 was 22.1%. This was significantly worse than the already high 32.0% return the

company achieved in 2000. (Extraordinary items have been excluded).



PROFITABILITY COMPARISON

Company Year

GrossProfitMargin

EBITDAMargin

Earnsbef.extra

Shell Pakistan Limited 2001 29.7% 3.1% 1.7%

Shell Pakistan Limited 2000 8.9% 5.6% 3.6%

Vs. ----- ----- ----- -----

Chennai Petroleum Corporation Limited 2001 5.1% 4.8% 1.8%

National Refinery Limited 2001 3.9% 3.2% 2.3%

Mangalore Ref & Petrochemicals Limited 2001 4.7% 4.3% -9.4%

INVENTORY ANALYSIS As of June 2001, the value of the company's inventory totaled 2.76 billion Pakistan Rupees. Since the cost of goods sold

was 44.75 billion Pakistan Rupees for the year, the company had 22 days of inventory on hand (another way to look at this

is to say that the company turned over its inventory 16.2 times per year). In terms of inventory turnover, this is an

improvement over June 2000, when the company's inventory was 2.44 billion Pakistan Rupees, equivalent to 27 days in

inventory.

The 22 days in inventory is lower than the three comparable companies, which had inventories between 39 and 99 days at

the end of 2001.

FINANCIAL POSITION

The 14 days of accounts receivable at Shell Pakistan Limited are lower than all three comparable companies: Chennai

Petroleum Corporation Limited had 35 days, National Refinery Limited had 107 days, while Mangalore Ref & Petrochemicals

Limited had 51 days outstanding at the end of the fiscal year 2001.

Company Year LT Debt/ Equity

DaysAR

DaysInv.

Shell Pakistan Limited 2001 0.01 14 22

Chennai Petroleum Corporation Limited 2001 0.60 35 47

National Refinery Limited 2001 0.00 107 39

Mangalore Ref & Petrochemicals Limited 2001 5.12 51 99

COMPETITOR ANALYSIS

Shell Pakistan Limited operates in the Petroleum refining sector. This analysis compares Shell Pakistan Limited with three

other petroleum refiners in Asia:

Chennai Petroleum Corporation Limited of India (2001 sales of 69.56 billion Indian Rupees [US$1.44 billion] of which 100%

was Oil & gas exploration).

National Refinery Limited (34.33 billion Pakistan Rupees [US$571.61 million] of which 93% was Fuel).

Mangalore Ref & Petrochemicals Limited, that is based in India (27.85 billion Indian Rupees [US$577.35 million] of which

100% was Petroleum products).

PAKISTAN STATE OIL












WEAKNESS

· They have no proper shades and sitting arrangements at the filling stations because people who came for oil changing and

car washing face difficulties in this regard.

· There is no proper drainage system at filling station.

· There is very little empowerment of employees.

· Shell has eight regional retail managers who are watching the activities of petrol pumps in all over the Pakistan that is

insufficient to handle the problems.

OPPORTUNITIES

· Shell has maintained a tradition of introducing new innovation as compare to its competitors. The example being the

mobile, training unit, quality and quantity unit, Mini-market (select, Jet was (Rianbow), oil change. Lubricants (Rumila

C.D.X,) Helix that is opportunity for Shell to maintain these facilities.

· People perceptions are changing and they prefer digital pumps. So they should renovate their petrol pumps. Shell also has

an opportunity to enter in the nice market.

· Shell has strong financial position so it has opportunity to avail a new market share in CNG business.

· Shell is the market leader due to innovation so it can easily win the customer confidence.

THREATS

· The smuggling of petrol in Baluchistan form Iran is one of the greats threats to the company.

· The fake oil makes up a large share in the market, if such practices are not prohibited it will create a disastrous effects on

sale

· PSO is also servicing in profitable areas.

· Shell is charging few paisas more than their competitor. Shell is facing very stiff competition to PSO and Caltex.

· Entrant of new companies in the refinery sector.

CURRENT MARKETING STRATEGY OF SHELL PAKISTAN LTD.

The current strategy of shell is concentrate on its business and selected market areas. By using this strategy company

expands its business by upgrading petrol pumps in the country.

Especially they are concentrating in the following three areas:

1. Customer service

2. Brand image

3. Quality and quantityCUSTOMER SERVICES: -

Shell Pakistan ltd. is working for customer satisfaction because customers play a very vital role in the prosperity ort failure of

a particular company. That is the reason that shell is operating with the basic aim to satisfy its customers and provide better

and better service to its customers. In brief it can be said that shell gives a strong emphasis on customer services.

SEVEN STEPS FOR BETTER CUSTOMER SERVICES: -

Every shell operation site follows the seven-point formula for providing customer service to its customer is stated below:

1. As customer drive in, guide him to a vacant filing unit by a neatly uniformed attendant of the petrol pump.

2. Then the attendant well comes to that customer from the driver side.

3. Attendant takes the keys form the customer. After that the attendant asks to the customer about the quantities of fuel.4. The attendant shows meter reading before filing the fuel to the customer.

5. After filling the tank the attendant tells the customer to see the meter reading and amount of li ters, hands over the keys

and takes the amount of money.

6. Attendant ask to the customer that he would like to purchase an international high quality of Rimula x.

7. Then the attendant cleans windscreen of the vehicle and says good-bye with smile.

By this procedure a customer feels that he is being given proper attention and he will again come to the filling station to fill

the tank of his vehicle.

· Rainbow Jet Wash and preserver oil change facilities are also available at filling stations.



· Majority of the filling stations are working for 24 hours for customers.

· In many of the stations, shops offer a wide range of convenience goods through the select shops and stores.

BRAND IMAGE

The second strategy of Shell is creating a strong Brand Image of the company in the customers mind. In visual terms, the

installation of Shell’s Retail Visual Identity (RVI) makes a striking and immediate difference between shell’s gasoline stati ons

and those of its competitors, Pakistan State Oil (PSO) and Caltex. The RVI programme is massive, for the 1200 or so sites

which shell inherited through the take over, around two thirds are scheduled to be developed as RVI sites, many of them

being completely redesigned from the underground storage tanks up. In addition, new sites are being acquired in strategic

locations.

The new sites are being designed according to the international standards keeping in view the cleanliness in all respects

and an Excellent/Terrific out look. The purpose of this is to attract the customer and develop a strong brand image in his

mind.

QUALITY AND QUANTITY

The third strategy of the company is to set standards for reliability and honest dealing because it is fundamental to the

company’s reputation. For the improvement of quality and quantity following points are important:

· Mobile training units

· Quality and quantity control units

MOBILE TRAINING UNITS: -

Mobile training units visit sites, keeping staff up to date on a whole range of topics including, most importantly, issues of

health, safety and environment. MTU train the workers on different filling stations.

QUALITY AND QUANTITY CONTROL UNITS: -

Another mobile innovation cover fuels quality assurance, an area where cynical disregard of standards, manifested by

dilution of premium grades with low-cost gasoline has become so common that customers have given up complaining about

it. Recognizing the importance to the company’s reputation for delivering the right quality of fuel, shell has introduced

random gasoline testing forecast. Technicians operate what are, effectively, mobile field laboratories, testing fuels quality

using an octane meter. This produces a result in just a few minutes, instead of days using normal centralized laboratory

facilities.

According to Shell, “Fuel Quality is fundamental to our reputation for honest dealing”. Quantity control units check that

whether the retailers are giving the right quantity or less quantity of fuel to the customers. The quantity is checked through

various instruments. The quantity control units also check the digital pump.

SHELL OPERATIONAL STRATEGY

Shell operate its site with a very efficient management to improve the quality and quantity of fuel and provides the better

customer satisfaction services. For this purpose shell follows its strategic objectives, plans, and strategy and policies.

Following important aspect of Shell’s site control by the management with efficiently and effectively:

· Site Take-over

· Product receipt procedure

· Bank accounts

· Indenting and Payment procedures

· Credit sales

· Product testing· Imprested account operation

· Price change operation

· Wet stock management policy

SITE TAKE-OVER

PURPOSE

The purpose of this procedure is to ensure that when a site is taken over as a company operation site (COP) the working

capital taken over at the site is correctly valued. The step, which should be taken on the “hand over day” i.e., the first day of



site operations as a COS are also outlined.

SCOPE

This procedure applies to existing dealer sites which are to be taken over as COS.

RESPONSIBILITY

The territory manager is responsible to ensure compliance with the procedure.

PROCEDURE AND STANDARDS

STOCK TAKING

At the time of site taken-over company follows the following procedure for stock taking:

The dealer agrees to a target date for handing over the site which is called that “hand over date”. When taking-over the site,

two options are available.

INITIAL WORKING CAPITAL

Working capital requirement at a site is determined keeping in view the sales of the site.

A copy of the invoice of the initial fill to be sent to RSO/2 for recording and the original is to be retained at the site in a

separate file.

OUTSTANDING BILLS

All outstanding bills for utilities etc. incurred by the site before the hand over date have to pay by the dealer. Any outstanding

amount should be mentioned in the site take-over note and recovered form the out-going dealer.

PRODUCT RECEIPT PROCEDURE

PURPOSE

To ensure that the quantity and specifications of the received product match with that ordered.

SCOPE

This procedure applies to all company operated sites for the receipt of all products and applies to of wet Stock as well as

packed lubricants.

RESPONSIBILITY

The site manager is responsible to ensure compliance with the procedure.


Fuels

The site manger should be present at the site during the decantation of the product.Before decantation the site manager should tally the product specification with the grade ordered. All seals should be

checked for integrity and numbers matched with those on the invoice.

Lubes

At the time of receipt of lubes, the site manager should check the quantity ands specification mentioned on the invoice with

that of the indent placed.

It should be made sure that the product received is not damaged or leaking.

BANK ACCOUNTS

In case of authorized bank signatories. The name of the Site manager may be included in operating deposit account.

However, site mangers are not authorized signatory to operate Imprest account.

INDNTING AND PAYMENT PROCEDURES

FUEL

After the initial fill, all products will be financed by the cash proceeds from the initial fill. Payment of fuel made under

following Process:

· The price for fuels is the indent price and invoices must be prepared on this basis.

· All supplies are to be made as per arrangement with the depot/installation (COD/DOD or advance DD).

· All cheques/DD’s must be made out for exactly the same amount as the invoice and drawn in favour of shell Pakistan Ltd.

· Each cheques/DD must be handed over to the truck driver after noting the particulars of the cheques/DD. All the copies of



invoice site copy of the invoice to be retained on the site and a file maintained.

Lubes

After the initial fill, all products will be financed by the cash proceeds from the initial fill. Payment of f uel made under

following Process:

· Indent should be placed on telephone at the nearest supply point.

· A cheque/DD for the exact value of the invoice should be drawn in favour of shell of Pakistan Ltd.

· Details of cheque/DD number and date should be noted on the invoice when precut is delivered at the site.

· Site of the company has a copy of the invoice, the site manger red band copy returned to the truck driver on which all

cheques details will have to be recorded.

CREDIT SALES

PURPOSE

Credit is extended to the customers in a manner that the exposure of the company is minimized.

SCOPE

Applies to all company operational sites.

RESPONSIBILITY

It is the responsibility of the territory manager to ensure that all credit accounts are approved by the regional manger.

Approval of the credit terms and operation lies with the regional manager of the recommendation of the territory manager.

Maintenance of al the necessary credit customers and sales records in the responsibility of the site manger under the

supervision of the territory manager.


Account opening: -

All new credit accounts can only be opened with the approval of RRMs. The customer should apply in writhing to RRM for

opening a credit account with the site. The application should contain the following basic details:

I. Customer name

II. Customer address

III. Number and type of vehicles etc.

CREDIT LIMITS

I. In case of the default of payment by the customer the site will stop extending credit to the customer.

II. The site will first try to recover the credit amount form the customer. In case the customer does not pay the balance within the month, the balance amount will be deducted from the security deposit and the account will be closed.

III. The site will send a security deposit deduction note to specify the deduction of the security deposit for a particular

customer and send the amount to the site to balance off the credit sales.

PRODUCT TESTING

PURPOSE

Tested product is authorized and is accounted for in daily stock. Product testing is a process of taking fuel product from the

nozzles for the purpose of testing that dispensers are dispensing the right quantity of the product. Since this product is not

considered as the sold product a proper accounting process needs to be in place.

RESPONSIBILITY

It is the responsibility of the site manger to ensure that all the product testing is conducted in his presence and that all the

testing is properly authorized by the territory manager and in case of testing due to QCU and maintenance staff. The

signatures of the concerned staff are taken. Testing may also be conducted by the weights and measures officials.PROCEDURE AND STANDARDS

· To conduct ay testing of the product it is mandatory that the measuring cylinders kept at the site should be vetted by the

quality control unit.

· The amount of the product withdrawn from each nozzle is noted and after the completion of testing the product if decanted

in the tank.

· All the necessary testing should be conducted in the presence of the site manger.

· It is to be ensured by the site manger that the entire tested product is decanted back into the respective tanks.

· The site is also supposed to enter the product testing amount in the SMS along with the details o the date, amount of



product from respective nozzles and testing conducting authority.

IMPREST ACCOUNT OPERATION

PURPOSE

To ensure that all Territory Managers and aware of the imprest account operating procedures. This is one to ensure that the

company exposure is reduced by using correct banking practices. The Imprest Account procedures have been designed to

ensure implementation of standards of imprest operation outlined in Management Policies and Procedure Guide.

SCOPE

The procedure is applicable to imprest account operation and the reimbursements.

FREQUENCY

This procedure is to be followed whenever, the imprest account is operated and claims for reimbursements are made.

RESPONSIBILITY

It is the responsibility of the Regional Manager and the Territory Manager to ensure that the Imprest Account is operatedand claims for reimbursements are made in accordance with the requirements given in the procedures.

PROCEDURES AND STANDARDS

a) The imprest account should only be used to meet all the expenses of business nature such as salaries housekeeping,

bank charges, etc.

b) Imprest limits for sites are set by RSO on the recommendation of the concerned RRM. All the operating expenses of the

site are detailed in the imprest approval form and the total of all the expenses makes up the imprest limit of the sale.

PRICE CHANGE PROCEDURE

PURPOSE

The purpose of this procedure is to ensure that the changes in the working capital status as a result of the price change of

the product are recorded and reported accurately.

SCOPE

This procedure applies to the change of prices for all grades of fuels and lubricants sold at the site.

RESPONSIBILITY

It is the responsibility of the RRM to ensure that price change takes place at a COS in the presence of a representative of

shell Pakistan limited. It is the responsibility of the site manger to ensure that he change in working capital value is reported

correctly and accurately. The territory manger is responsible for the verification of the accuracy of the above.


When the price is changed, the following procedure is t be applied at the COS:

Ø The new prices are notified by RSO to FNC/12 supply points and regional offices to update their record accordingly.

Ø Only the concerned territory manger is authorized to change thee prices on COS. At the time of the price change, the sale

is temporarily stopped.

Ø The site manager and the territory manager representative must take a dip of the storage tank and note the meter

readings of all dispensing units jointly.

WETSTOCK MNAGEMENT POLICY

Due to the very nature of petroleum, losses being one of their inherent characteristics play an important role in the efficiency

of petroleum business. The potential of cost saving by improving the controls and reducing the losses is considerable.

A primary responsibility in the site operation is to ensure that the physical losses are kept at minimum so that maximum,

quantity of the product received is delivered to the customer.

MONITORING OF LOSSES

Loss of performance standards are normally assessed on historical basis by comparing monthly results. Effective monitoring

of losses can be achieved by following way:



Ø Accurate measurement and accounting for all the deliveries.

Ø Proper calibration of the tank lorries, dispensers and storage tanks at retail site.

Ø Good product safety with low risk of undetected theft.

Ø Periodic physical measurement of the actual product stacks and comparison with the corresponding book stock to access

the losses for a given period.

Ø Assessment of the loss control performance against the targets. The targets will vary according to the type of the product

and equipment used.

Ø Random spot-checks to ensure compliance to procedures and performance of the equipment.

STRATEGIC OPTIONS

There are two separate aspects, which are needed consideration for development alternative strategies.

1. The alternative direction in which the organization may choose to develop.

2. The alternative methods by which the direction of development might be achieved.

Decision on direction and methods are not independent of each other. Now we shall discuss the direction in which the shell

limited may choose to develop.

1. Selling out

2. Consolidation

3. Market penetration

4. Product development5. Market Development

6. Diversification

a) Related

b) Unrelated

SELLING OUT

In selling out if the company feels any danger about the survival of company; the company would like to dispose of its

assets. Shell is the biggest company of the world. It has a strong financial position. That is why shell does not choose such

type of direction.

CONSOLIDATION

In such direction, the company will change the way of operation but concentrate on present state of business. Shell is

waving on this direction. The shell is waving by following factors!

· Maintaining a share in a growing market· Competing in a declining market

· Improving quality

· Increasing market activity

· Imposing productivity through capital investment

MARKET PENETRATION

“Opportunities often exist for gaining market shares as a deliberate strategy”

This is called market penetration. The shell is also working on this direction by providing better services on its company

operation sites. The above discussion in consolidation also relevant to this direction.



Products

Current New

Customers

New

Current

MARKET DEVELOPMENT

In market development, the company locates any new areas where it could start its business to minimize the risk. Market

development can include new market segment. Shell has no capital problem that is why Shell is working on the direction of

market development. The proof of this is that Shell has expanded its business more than hundred countries. Now Shell is

expanding its business in all small and big cities of Pakistan.

PRODUCT DEVELOPMENT

Shell will feel that the consolidation in their present market does not adequate opportunities after the search for coping with

changing environment. Shell developed the product of CNG. This shows that shell is also working on this direction.

DIVERSIFICATION

Diversification means new product and new market. The two broader concept of diversification are:

1. Related diversification

2. Unrelated diversification

RELATED DIVERSIFICATION

Related diversification means development beyond the present product and market, but still within the broad confines of the

industry in which the company operates. Shell has introduced CNG that is the best example of related diversification.

Unrelated Diversification It is the development beyond the present industry into product/mkt, which have not clear relationship with present

product/mkt. Shell is interested in other business e.g., petrochemicals, coal and metals.

Evaluation of strategic options

We have selected two strategic options for improvement of shell performance asmaintain the leader of quality in the customer services. For this purpose weevaluated them, which is better to achieve the organizational objectives.

Ø Product development.

Ø Market development

To evaluate the options we use the tool of SWOT analysis. There are three steps involved in evaluation of strategy option.

· Suitability

· Feasibility

· Acceptability



Suitability

Shell is one of biggest multinational company dealing in Pakistan. As such there is no financial problem facing by shell. By

market development shell can cope with aggressive competitors. By product development (CNG) Shell can decrease its

dependence on particular supplier (Greave Pakistan Ltd.).

By market development the company can capture the market of CNG. Use of CNG reduce the environmental pollution and

save the consumption of fuel.

Developing market (establish new outlets and upgrade existing outlets) increase growth rate and market share

simultaneously.

Feasibility

Through feasibility we will assess how our strategy might work in practice. In product development shell has not sufficient

resources to cope with existing requirement.

In market development shell has sufficient resources to meet the current needs of the customers. Shell also capable to

performing the services in the field of new market.

· Shell can achieve market position by developing the new outlets and improving the services of existing outlets.

· Shell can cope with reaction of competitors by market and product development.· Shell has sufficient technology to fulfill the current requirement of market development.

Acceptability

Through acceptability we will try to assess weather the consequences of proceeding with a strategy are acceptable.

· Shell can increase it profit market share, and growth rate by established and upgrading outlets.

· There is a great financial risk to develop a new product but there is no as such risk in market development.

· In developing a product there is high rate of risk in this way the company may losses its goodwill. This thing badly affect on

the capital structure of the company.

· Shell has strong culture so this is no affect on our new strategy for developing new market.

Selection

There are two issues which needs consideration, first a way in which an organization’s circumstances will dictate which

methods of evaluation are most useful at the time of selecting future strategies.

Secondly, the process by which selection of strategies occurs since how the information from evaluation is used in strategic

decision making.

After the evaluation of the strategic options we are concluded that the market development is the best option so, our

selections is market development. Because it provide a chance to earn more profit and competitive advantage and has a low

risk as compare to other options.

GLOBAL SCENARIOS TO 2020 OF SHELL

PEOPLE AND CONNECTIONS

Shell International builds a set of global scenarios every three years to explore the overarching challenges arising from

changes in the business environment that need to be faced by its businesses. These scenarios provide a useful context fortesting our strategies and plans and help us to anticipate significant changes in the world around us.CONTACTING SHELL

MEDIA RELATIONS

The Group Press Office deals with all media enquiries relating to the Group's corporate activities and its international

businesses. The Press Office also handles all media enquiries about the businesses of Shell in the UK. For urgent media

queries out of office hours, please contact the duty press officer on pager no 07659 129 454 and leave a message and

contact details.

LNG BECOMING A TRULY GLOBAL TRADE

Today the LNG trade is growing - and rapidly becoming truly global. Currently contracted LNG volumes are likely to reach

120 million tons per annum by 2005 - an average annual growth rate of over 5% since 1995.



The number of markets is also increasing. By the end of this decade, new LNG markets will likely be added in China, India

and the Americas.

This of course will require increased shipping capacity. If all current orders are completed, the world's LNG fleet will expand

from 127 active carriers today, to almost 180 in the next five years.

The growth in volumes between now and 2005 will largely come from expansions of existing projects. But several new

projects around the world are likely to be under construction by that time - and will fuel additional growth in the LNG industry

in the second half of the decade.

Within Shell alone, we have interests in five existing LNG projects all of which have expansions under construction or underconsideration. Additionally, we are involved in the development of several new projects - four of which are shown on the

chart: Sakhalin, Timor Sea, Namibia and Venezuela.

The growth in the LNG industry is driven by overall growth in global natural gas demand - but also by the decreasing cost of

delivering LNG competitively to market.

Shell, as technical service provider to the LNG projects in which we participate, has played a key role in capital cost

reductions. Subsequent LNG developments over the past 30 years have demonstrated a 50% reduction in development

costs.

We believe this can be improved upon even more. Our goal is for our next LNG development to be delivered at a significant

improvement over Oman - which is the lowest cost project to date.

NIGERIA LNG A GOOD EXAMPLE

A specific example of the opportunities in LNG is in Nigeria. The first production of LNG in Nigeria was from the first of a

two-train project that came on stream in October 1999. The two trains together now deliver some 6 million tons a year,

mainly to Atlantic Rim and Mediterranean markets.Approval of a third train was granted in 1999. Construction is well underway with first deliveries set for early 2003.

The possibility of a further two-train expansion is already under serious discussion amongst the partners, government and

customers driven by gas availability, cost and customer demand. Once built, Nigeria could be producing almost 15 mtpa by

as early as 2006, making it one of the world's largest LNG producers.

The technological and financial challenges of the original LNG project in Nigeria were considerable. But the project is now

well placed to help meet growing demand in Europe and North America.

I'd like to move now to a completely different climate - to the Sakhalin project in far eastern Russia - where we are partners

with Mitsui and Mitsubishi.

The challenges involved here are much different. The project involves field development, an onshore pipeline to deliver the

gas to an ice-free port, and construction of the liquefaction facilities - for a total estimated cost of $8.9 bln.

Sakhalin LNG will be the first from Russia. It will add a new source of energy supply for Pacific markets and will play a

significant role in guaranteeing energy security in the north east Asian region for years to come.

INNOVATION THE KEY TO OPPORTUNITY

Innovative use of technology is the key to other possible opportunities related to remote gas reserves that remain strandeddue to the prohibitive cost of development.

Shell has recently outlined plans to apply our Floating LNG technology to overcome these difficulties and monetise the Kudu

field offshore Namibia, and the Sunrise field in the East Timor Sea.

In both cases, Floating LNG will enable lower construction costs, a minimal physical footprint, and a higher degree of

flexibility. Depending on the location, up-front capital costs can be reduced by up to 40% - which is often the difference

projects like these need to make them realities.

Effective application of leading technology opens up many opportunities. Another example is Gas to Liquids.

Shell has demonstrated that GTL technology can be commercial and that the products are competitive on the world market.

Liquid fuels produced by the Shell Middle Distillate Synthesis process at a commercial scale plant producing 12,000 bpd at

Bintulu here in Malaysia, are so clean they are leading to the creation of new markets.

Development of the next generation plant - capable of producing 75,000 bpd - will require investment in excess of a billion

dollars each. But economies of scale and improved designs will result in s ignificant advantages.

They allow monetisation of gas reserves that would otherwise be uneconomic. They provide extra revenues for resource

owners from new markets for natural gas products. The liquids produced can also substitute for expensive oil imports.

Because of these advantages, by the end of this decade, we believe Gas to Liquids will be a significant industry.

New natural gas markets are opening up and creating new opportunities - particularly here in Asia. Underlying economic

growth - and the related surge in demand for electricity - is the driver in China and India.

SHELL WORKING ON KEY INFRASTRUCTURE

To meet that demand, Shell and other companies are heavily involved in the planning and development of key infrastructure

projects. This infrastructure - which includes pipelines, LNG import terminals, distribution systems, and power plants - will

cost billions of dollars.

In China alone, the total amount to be spent on projects open to foreign investors in order to build domestic natural gas



infrastructure - upstream, midstream and downstream - could be as high as $25 bln over the next ten years.

MATURE MARKETS DIFFERENT

At the other end of the market maturity spectrum are the US and Europe. As markets mature and liberalise, marketing and

trading opportunities emerge. But these opportunities require different capabilities for success.

Instead of billions of dollars for investment in capital-intensive infrastructure projects, these markets require highly skilled

human resources and balance sheets capable of supporting the commercial risks and financial exposures.

Shell's most significant involvement in these areas is through Coral in the US, and Shell Energy in Europe. In these markets,

new technologies and business models are allowing us to develop innovative ways of meeting our customers' needs.As exciting and expansive as the opportunities I've outlined may seem, they are but a few of the wide variety of opportunities

I see in the world's natural gas business. I believe they add up to a significant new path forward for the global gas industry.

Ours is an industry of the future, not of the past.

BUT THERE ARE ALSO CHALLENGES

Delivering these opportunities and growth will not happen without overcoming a number of challenges. We will mention just

four:

a) The need to do business based on principles;

b) The need to contribute to sustainable development;

c) The need to get deregulation right;

d) The need to attract the necessary human resources.

A few decades back, when companies first started producing statements of business principles, there was considerable

cynicism. People thought they were just nice words - public relations material. We believe that, in the 21st century, they are

far more than that. We believe the Shell business principles, and the qualities we demonstrate, will be critical businessassets.

WORKING IN A DIFFERENT WORLD

Our world today is different. It is more global, transparent and fast moving. In this world, living by a clearly articulated set of

business principles is an advantage for our employees, our customers, our suppliers, our partners and the governments with

which we interact. The principles set the boundary conditions within which we do business.

Every commitment is important but, to me, of overriding importance is our commitment to sustainable development. This

commitment encompasses our belief that all we do must take into account not only the economic impact, but also the social

and environmental impact.

We know we can't do this alone. That's why our commitment relies heavily on working together with partners, governments

and local communities to ensure we strike the appropriate balance in all three areas of Sustainable Development.

Another continuing challenge will be to get deregulation right. The California debacle has illustrated for us many of the

potential pitfalls. It is now incumbent on us all - in government and industry - to work together to design systems that prevent

energy shortages or that discourage long term investment.

We must always keep in mind the ultimate aim of producing products and services more efficiently and reliably - andensuring long-term security.

The final challenge is attracting the human capital required to deliver the growth and value. As the number of natural gas

markets increase, and as more and more markets liberalise, the demand for experienced people in our industry rises.

And the demand is not limited to those in traditional natural gas fields such as pipeline engineers and technologists -

although these will remain important. We will also need increasing numbers of experienced international business

developers, regulatory experts, traders, IT systems specialists, and financiers.

Perhaps most importantly, we need strategists, asset operators, managers and marketers with local experience. Success

calls for a diverse work force - one well matched to the diverse markets that will be key to the future.

In summary, our industry is facing a broad range of opportunities. The Shell long- term energy scenarios indicate that

demand for clean, efficient energy is going to grow. And, natural gas, because of its environmental qualities, efficiency, and

technological advances, is going to play an increasingly important role.

But there will also be challenges - such as the attraction of the necessary human and financial capital. Anti globalization and

supply security add to these challenges.

But, the global demand for more and cleaner energy goes on. And I believe our industry is well positioned to meet the

challenges along the way.



Recommendations

· There should be proper shades and proper sitting arrangements at the filling stations because people who come for oil

changing and car washing face difficulties in this regard.

· Lubricants should be disposed in a proper way to protect the environment form being polluted.

· Shell should provide small incentive to its customers.

· Schemes like “Buy 50 liters of super and get a come free or a cola drink free”, should be kept introducing time to time by

shell.

· Shell should make company operation site in every city for capture the new market.

· There is only one thing that is constant that is change; shell should investment on research development to cope with

dynamic environment.· Company should established new regional office to control the activities of company operations site.

· Lubricants should provide the facility 0f free oil change on all its out lets.

· Shell should develop modern retail outlet. These outlets should have all possible facilities for customers because one of

the reasons behind decrease market share is modernization of competitors.

· Shell should develop effective marketing programs that will help the company increase sales that will lead to increase

market share. In these market programs emphasis should be given to advertising, which is most effective and efficient tool

of promotion for such type of business.

history of oil industry in pakistan

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