Qatar Petroleum Company - Case Study Example

Name: Student ID: Internship company name: Semester Summer 20xx Field Supervisor Field Supervisor’ contact Work Address: Email: Academic Supervisor Dr. Internship Final Report Table of Contents Table of Contents ii 1.0 Introduction to Qatar Petroleum: 1 2.0 Organization objectives and missions: 2 2.1 Mission 2 2.2 Objective 2 2.3 Services offered 2 2.3.1 QP refinery 3 2.3.2 Gas to Liquids (GTL) 3 2.3.3 Natural Gas Liquids (NGL) 3 2.3.4 Liquefied Natural Gas (LNG) 3 3.0 Internship position description: 3 3.1 Job title: 3 3.2 Position Reporting to: 3 3.3 Job title Description: 3 3.4 Company’s Expectation 4 4.0 Training completed 4 4.1 Week 1 4 4.2 Week 2 5 4.3 Week 3 7 4.4 Week 4 7 5.0 Intern’s contribution to organization: 8 6.0 Academic training and organization’s expectation comparison: 9 7.0 Usefulness and merit of the internship training 10 8.0 Assessment of the organization’s work environment 10 9.0 Suggestion for program improvement 10 10. Conclusions 11 References 12 1.0 Introduction to Qatar Petroleum: Qatar Petroleum (QP), a state-owned corporation established in 1974, is responsible for all phases of the oil and gas industry in Qatar. The principal activities of Qatar Petroleum and its subsidiaries and joint ventures cover exploration, drilling and production operations, transport, storage, marketing and sale of crude oil, natural gas liquids, liquefied natural gas, gas-to-liquids, refined products, petrochemicals and fertilizers, and helicopter and financial services. Qatar Petroleum’s strategy of conducting hydrocarbon exploration and new projects is through Exploration and Production Sharing Agreements (EPSA) and Development and Production Sharing Agreements (DPSA) concluded with major international oil and gas companies.Thriving on a spirit of enterprise, each of the joint ventures is underpinned by transparency, innovation and determination to achieve unparalleled standards of both quality products and services.The operations and activities of Qatar Petroleum are conducted on various onshore locations, which include Doha, Dukhan, Mesaieed and RasLaffan industrial cities, as well as offshore areas including Halul Island, offshore production stations, drilling platforms and the North Gas Field Qatar Petroleum (2013). Qatar Petroleum is committed to its part as both a concerned partner and affiliate to the protection, preservation and conservation of the natural environment, while ensuring that the company’s employees and the general public live in a clean, safer world. The first well, Dukhan 1, was drilled in 1939. Development continued after World War II and in 1949 the first crude exports occurred and the first offshore concessions were granted. In 1960, the Idd Al-Shargi and MaydanMahzam fields were discovered. The largest offshore field, BulHanine, was discovered in 1970 and came on-stream in 1972. Qatar Petroleum was created in 1974 Qatar Petroleum (2013). 2.0 Organization objectives and missions: 2.1 Mission The company’s mission to ensure the State gets maximum benefit from its petroleum resources by engaging directly or indirectly in all activities that would add value to these resources. 2.2 Objective The overall objective of the company is to maximize its contribution to the national wealth of the State of Qatar, through the safe, efficient and environmentally acceptable exploitation of Qatar's hydrocarbon reserves and through related activities. Specifically the company seeks: 1. To provide the state with a reliable cash flow, of maximum value, from diversified business interests. 2. To build an organization with internationally competitive business and technical expertise. 3. To maximize the employment of capable Qatari nationals, and develop them to the competence level of the leading International Oil Company employees. 4. To meet National oil and gas demand in a cost-effective way. While the key physical assets are the country’s Oil & Gas reserves, the ability to maximize the economic returns to the State from these resources depends totally on the quality and commitment of the staff; who the company values as its greatest asset. The company also value its great partners, suppliers and customers and endeavours to: 1. Set an example in Qatar in personal and organizational integrity and transparency. 2. Treat all people fairly and with mutual respect. 3. Have total participation of an excellent diverse workforce, rendering our diversity a source of strength. 4. Reward and promote based on merit, performance and competence. 5. Openly communicate and work as a single integrated team. 2.3 Services offered Qatar Petroleum Company offers various services which include: 2.3.1 QP refinery This entails processing crude oil into domestic and export petroleum products. 2.3.2 Gas to Liquids (GTL) The plant has a capacity of 34,000 barrels per day. 2.3.3 Natural Gas Liquids (NGL) The company produces propane, butane and condensate which are mainly produced for export. 2.3.4 Liquefied Natural Gas (LNG) The company has two joint ventures, Qatargas and Rasgas which exports gas to Japan, Spain, South Korea and India. Others services include pipeline gas projects and petrochemicals & fertilizers all serving the domestic market, United Arab Emirates and other Asian countries as well as the European markets. 3.0 Internship position description: 3.1 Job title: NLG Market Analyst 3.2 Position Reporting to: Dr. Rajab Al Esmael 3.3 Job title Description: This position was very crucial in the company as it entailed providing up to date statistical data about the market to my immediate supervisor which was important in forming the basis making day to day investment decisions on behalf of the company. The specific responsibilities included the following: Collecting and analyzing data relating to oil and gas including all the oil products within the company’s existing markets so as have an up to date database on the current market trends. Closely monitoring new regulations and competitors strategic actions that may have a direct impact on the company’s petroleum and gas sales. Constant analysis of the business opportunities available for the company and making timely recommendations to the management through the supervisor. Performing profitability analysis for individual products and possible market destinations to aid in decision making on whether to explore new markets for the company’s products. 3.4 Company’s Expectation Even though I was on internship for one month, my immediate supervisor had very high expectations from me in terms of learning fast and familiarizing myself with the company’s products, its operations the staff that I would deal with on a day to day basis as well as the market for the company’s products. Being a fast learner was very key as by the time I was starting my internship, the person who was dealing with tasks I was to handle was on annual leave and therefore the company needed someone who would quickly and easily settle down on the job. 4.0 Training completed 4.1 Week 1 The first week entailed orientation in to the company and in particular the Project Planning and Evaluation department. This involved my supervisor taking me round to familiarize myself with the staff in the department and later handed me over to one of the members of the department who would train me on the exact work I was to carry out within the one month I was on internship. My first training was on health and safety in the office and around the premises of Qatar petroleum. Dealing with petroleum products that are very flammable, the company laid a lot of emphasis on observing the health, safety and environment policies to ensure that no staff member endangered them-selves whether working in the operations section of the company or in the office. The second training was on organizational skills. The position I was assuming was a very busy and demanding position that required some with very high organizational skills. I was given basic training on how to prioritize tasks in order of urgency or importance. This entailed general organizational skills, planning, and resource scheduling among others Suttle (2013). Within the first week, I was also introduced to the products that the company deals in among them the liquefied natural gas (NLG) and the major markets and clients of the company’s products. I was as well given important material in the form of company’s brochures and magazines to read which would further expose me to the company’s business and operations. 4.2 Week 2 The second week began with detailed training on the company’s products and in particular the liquefied natural gas and its uses in the homes and industries as well as the important issues to be observed during its transportation. After arriving at the costs and before setting the price, I was trained on price differentiation which entailed pricing the same products differently depending on the market that the goods were to be delivered to. Prices of LNG for example to the Far East market are normally higher than those of European countries. I was also trained on how to conduct a strength-weakness-opportunity-threat (SWOT) analysis for LNG in both the Far East market as well as the European market. This was a routine exercise as the volatility of prices and other parameters affecting the oil market required someone to review the company’s position in the market on a regular and timely basis. The following two tables 1 & 2 shows the SWOT analysis for the Far East and European markets. Table I: Far East SWOT analysis (Japan, Korea, Taiwan) Strength 1. Prices of LNG are higher than in Europe 2. Japan is the biggest importer of LNG in the world Weakness 1. The ongoing discussions relating to Japanese buyers’ intention to move away from the oil link pricing mechanism will have adverse effects on the company’s prices. Opportunity LNG in Canada & Australia have lower gross heating value (GHV) than Qatar which means that there is an opportunity of the company to sell more to The Far East. Threats 1. Russia has an ambitious plan to increase its LNG exports to Japan. 2. Australia’s LNG supply to the world market is posed to grow by 2015 to exceed Qatar. Table 2: Europe SWOT analysis Strength 1. The declining indigenous production of gas in Europe has made the EU an attractive market for gas deliveries. Weakness 1. LNG prices in Europe are lower than those of the Far East. 2. Countries like Russia offer alternative sources of cheaper pipeline gases to the European market Opportunity The environmental conscious European market may replace use of oil with LNG. Threats 1. Stiff competition from Russia and other countries. 2. The current economic crisis continues to affect the demand for LNG in Europe. 4.3 Week 3 The third week involved practical training on project evaluation techniques. This involved applying the acquired academic knowledge to assess the return on investment in Europe and Canada by calculating the net present value and the internal rate of return on the projects. According to Kingston (2001), a project that has a positive net present value should normally be undertaken as it means that it will increase the owners’ wealth having put other factors into consideration. However, the net present value should not only be the parameter to assess whether a project should be undertaken or not. According to Cellini & Kee (2010), there are instances that the net present value conflict with other project evaluation tools like the benefit cost ratio hence meaning that the investors have to assess whether the investment is to processed or not based on other factors. A comparison of the QP’s project in United states and Canada for example for the periods 2013 to 2032 taking into account various factors such as initial cost of investment, shipping costs, selling prices and sales volume to various destinations yields conflicting Net present values of the expected net cash flows and the internal rate of return meaning that the person in charge of investment has to make decisions based on other non-financial parameters. 4.4 Week 4 The fourth week involved building up on the knowledge I had gathered in week three on project evaluation as well as sensitivity analysis to determine the most profitable and viable project. This entailed preparing a comparative analysis of the Net cash flows from Canada and the United States projects taking in to account the varying shipping charges to the various market destinations. I also incorporate the element of inflation to arrive at the pricing of the LNG in the various markets. The other engagement was to calculate the sensitivity analysis of the two projects in Canada and the United States using varying components of the capital expenditure, the discounting rate and the shipping costs. This was concluded by making excel and power point presentations of the Net cash flows from the two projects as well as the result of the sensitivity analysis arrived at from changing the various parameters. 5.0 Intern’s contribution to organization: The benefits of my one month internship in Qatar Petroleum was twofold in that I gained variable practical experience and at the same time the organization benefited in various ways. One of the benefits is that as highlighted earlier, I started my internship when one of the members of staff that was handling the tasks I was dealing with had gone for a month long annual leave. This meant that the company did not have to hire a temporary employee to fill the vacant position for the period that the employee was on leave. The other benefit that I brought to the organization was that I taught one of the employees that I was working with the area of sensitivity analysis. Together we were able to explore the practical application of sensitivity analysis in project evaluation which is bound to improve the quality of decisions made in relation to investments. The other notable benefit that I can attribute to my one month internship in the company was that I improved the level of interaction between the members of staff. When I joined the company, the main mode of communication between employees was through emails. This was the case even for employees in the same office and who are seated adjacent to each other. This was partly due to the nature of work and the busy schedules that the employees had. I am naturally social and as such I found it a bit order. Therefore when one day during the usual morning meetings I was asked by my supervisor to make a comment on what I have observed about the working environment, I was quick to point out that there lacked a bit of team work as everybody was concerned about their own work. Majority of the employees concurred with me and promised to improve on that. By the time I was through with my internship, there was remarkable improvement in the level of interaction and consultation in the office. 6.0 Academic training and organization’s expectation comparison: Most of the academic knowledge I have learned especially in finance, economics, management and marketing was very relevant and applicable in course of my day to day internship work. Price differentiation that was covered in economics and also marketing studies was one area that was in application in the company during my internship program. According to Gray (2012), differentiation works well where the company operates in markets that are distinct and where the prices set in one market will not affect the demand for the products in the other market. The Qatar Petroleum was selling its liquefied natural gas at lower price in Europe than it was selling to the Far East countries as these are different markets with different levels of competition. Customers in the European market were more price-sensitive and also there was stiffer competition from other companies selling the same products in Europe than there was in North America. Another area that I had covered in my finance course work and that was in application in the company was the project evaluation criteria. The company was always exploring new investment opportunities and new markets and before any such major decision was made, the manager in charge of investment had to make a project justification report. The criteria for assessing the viability of the projects were based on the net present value and the cost benefit ratio, internal rate of return and repayment period among others. There was need to use many methods of assessing the viability of any project since each method contains some inherent weaknesses that may not fully address all the factors that needs to be considered when making the investment decision. For example, according to Perez et al (2005), the lack of a universal discounting rate may result in the same project having different net present values due to usage of different discounting rates. Another challenge is that it is difficult to estimate the future benefits and costs of a project meaning any working on wrong estimates of the cash inflows and out flows will result in wrong net present value and subsequently any decisions made based on the net present value will be wrong. 7.0 Usefulness and merit of the internship training The best time of learning is when a task is done practically in a real life situation than when it is taught in the lecture hall. This was one area that I benefited through the internship as I was able to relate properly the academic concepts that I had previously learnt with the real application of these concepts in the work environment. It was interesting for me to refer to my lecture notes when confronted with finance and economic concepts relating to pricing and costing of products as this gave me a better and clearer understanding of the concepts. I have also gained important contacts from the Qatar petroleum that I believe will be of great importance once I finish my studies and the time I will be looking for employment. 8.0 Assessment of the organization’s work environment During my one month internship, I was not furnished with internet which made it more difficult to carry out research relating to the company and my course work. To catch up on all the work and ensure that I was up to date with my assignments, I had to carry the work home. I also did not have access to email services in the offices and as such for any work that I needed to submitted to my supervisor, I could only do it from home. Another observation about the organization was that there was an organized work environment. Everybody was clear on their roles mean that there was a good flow of work from one person to the other. This also helped in eliminating duplication in responsibilities and duties hence resulting efficiency and effectiveness in finalizing tasks and assignment. My supervisor was very welcoming and helpful to me which made it very easy for me to settle very fast in my role. This was replicated by the other members of the department who were always willing to help me in case I was stuck on any thing relating to my job. 9.0 Suggestion for program improvement I would recommend an increase in the duration of the internship. There are numerous things to be learnt in the organization but the one month duration was not enough. I suggest a longer period of at least six months which would help one to use the first month in learning about the company and its operation as well as be taken through the functions of the various departments as opposed to only learning about the department that deals with ones area of study. The next five months would then be utilized in actual practical work which would help the intern to gain an in-depth understanding about the practical application of the academic concepts. I would also suggest that other students taking their internship program in the company be equipped with all the necessary facilities to help them to be more effective. It’s important for instance to be furnished with an internet to facilitate the intern to carry out extensive research work relating to the company as well as the course work 10. Conclusions The one month internship program at Qatar Petroleum was a priceless experience that greatly helped in complimenting my academic work. The choice of the company was ideal as I was able to apply a number of principle and concepts that I have learned in my course work. I have also been trained on areas of organizational management that I believe will help in course of my studies as well as helping me lay a firm foundation to prepare me for employment once I finish my studies. As highlighted above, the duration of the internship was adequate and hence the time to learn certain areas of the company’s operations was not enough. This forced my supervisor to rush me through certain areas so as to keep up with the internship program hence skipping on certain important areas. References Cellini, S., & Kee, J. (2010). Cost-effectiveness and cost-benefit analysis, handbook of practical program evaluation. Gray, T. (2012). Differentiated pricing, Thomas H.Gray, retrieved on 22nd July 2013 from www.tom-gray.com/2012/04/19/differentiated-pricing/ Kingston, G. (2001). For the students: cost benefit analysis in theory and practice, the Australian economic review, Vol.34, Is.4, Pp.478-487. Pérez, M., Tarrío, J., & Pasqual, J. (2005). Anomalies in net present value calculations. A solution, hacienda pública española,Vol.173, Is.2, Pp. 47-60. Suttle, R. (2013). Organizational skills in the work place, Demand Media, retrieved on 22nd July, 2013 from http://smallbusiness.chron.com/organizational-skills-workplace-1277.html Qatar Petroleum. (2013). Developing Qatar’s energy resources for the world. http://www.qp.com.qa/en/Homepage.aspx Read More