Should Cairn India Venture into Offshore Drilling?
(7 pages of text)
Global consumption of petroleum products stood at just more than 90 million barrels per day by the end of 2013, and was expected to increase to 91 million or more by the end of 2014. Petroleum companies were constantly exploring the planet for new oil reserves to meet this voracious demand for fossil fuels. Because three-quarters of the earth was water, it was evident that these oil reserves were largely underwater; however, until the end of 2013, very few players had explored this opportunity. Although reaching deep-water drilling sites posed various challenges — environmental, political, technological, etc. — offshore exploration was the future of the oil and gas industry.
Because of its very successful campaigns, Cairn India was ideally positioned for offshore exploration. Capturing and capitalizing on the opportunity of offshore exploration would give it an edge, but the question remained: Would it be better to gain the prime mover advantage or wait for other players to start the process so that it could learn from others’ mistakes and reap benefits later?
The teaching objectives of the case are:
- To educate students about the rapidly changing dynamics of the oil and gas (O&G) industry.
- To provide a snapshot of the prospects for O&G companies in India and the different options, such as offshore drilling for future growth.
- To provide students with an understanding of how macro- and micro-level business environment factors influence strategic decision making and the conduct of business.
Mining, Quarrying, and Oil and Gas Extraction
India, Large, 2014
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