ONGC Analysis

                                         
                                                        Sudhir Vasudeva,ONGC CMD

Oil and Natural Gas Corporation Limited (ONGC) (NSE: ONGC, BSE: 500312) is an Indian multinational oil and gas company headquartered in Dehradun, India. It is one of the largest Asia-based oil and gas exploration and production companies, and produces around 77% of India's crude oil (equivalent to around 30% of the country's total demand) and around 81% of its natural gas.[2] It is one of the largest publicly traded companies by market capitalization in India.[3] ONGC has been ranked 357th in the Fortune Global 500 list of the world's biggest corporations for the year 2012.[1] It is also among the Top 250 Global Energy Company by Platts.[4]
ONGC was founded on 14 August 1956 by the Indian state, which currently holds a 74.14% equity stake. It is involved in exploring for and exploiting hydrocarbons in 26 sedimentary basins of India, and owns and operates over 11,000 kilometers of pipelines in the country. Its international subsidiary ONGC Videsh currently has projects in 15 countries.



VISION:


To be a World-Class Oil and Gas Company
integrated in Energy business
with dominant Indian leadership
and Global presence.

NEW VISION:

GIVEN BY HON'BLE EX-PRESIDENT OF INDIA DR. APJ ABDUL KALAM 

“I would suggest ONGC to give world leadership in management of energy source, exploration of energy sources, diversification of energy sources, technology in Underground Coal Gasification, and above all, finding new ways of tapping energy wherever it is, to meet the ever-growing demand of the country.” 


STRATEGIC VISION: 2001-2020 

Focusing on core business of E&P, ONGC has set strategic objectives of :

• Doubling reserves (i.e. accreting 6 billion tonnes of O+OEG) by 2020; out of this 4 billion tonnes are targeted from the Deep-waters.
• Improving average recovery from 28 per cent to 40 per cent.
• Tie-up 20 MMTPA of equity Hydrocarbon from abroad.
• The focus of management will be to monetise the assets as well as to assetise the money. 




MISSION OF ONGC:

 •Dedicated to excellence by leveraging competitive advantages in R&D and technologywith involved 
  people.
•Imbibe high standards of business ethics and organizational values.
•Abiding commitment to health, safety and environment to enrich quality of Community life.
•Foster a culture of trust, openness and mutual concern to make working a stimulating &challenging    experience for our people.
•Strive for customer delight through quality products and services.
•Integrated in Energy Business.
•Focus on domestic and international oil & gas exploration and production businessopportunities.
•Providing value linkages in other sectors of energy business.
•Creating growth opportunities and maximize shareholder value.
•Retain dominant position in Indian Petroleum sector and enhance India's energyavailability.


The vision of ONGC is difficult to achieve,glamorous.Thus it perfectly connects with the people of India.

OBJECTIVES OF THE COMPANY:

•To maximize production of hydrocarbon, self reliance in technology, promotingindigenous efforts to achieve
  self reliance in technology, promoting indigenous efforts toachieve in all related equipment, material and
  services.
•Assist in conservation of oil, more efficient use energy and development of alternate source of energy.
•Environmental protection.
•Observe 100% safety in work.



BRIEF HISTORY:


ONGC was set up under the visionary leadership of Pandit Jawahar Lal Nehru, going against the wisdom of the then multinational oil companies operating in the country, who had almost written India off as a “Hydrocarbon Barren” country. Pandit Nehru reposed faith in Shri Keshav Dev Malviya who laid the foundation of ONGC in the form of Oil and Gas division, under Geological Survey of India, in 1955. A few months later, it was converted into an Oil and Natural Gas Directorate. The Directorate was converted into Commission and christened Oil & Natural Gas Commission on 14th August 1956. In 1994, Oil and Natural Gas Commission was converted in to a Corporation, and in 1997 it was recognized as one of the Navratnas by the Government of India. Subsequently, it has been conferred with Maharatna status in the year 2010.

Over 50 years of its existence ONGC has crossed many a milestones to realize the energy dreams of India. The journey of ONGC, over these years, has been a tale of conviction, courage and commitment. ONGCs’ superlative efforts have resulted in converting earlier frontier areas into new hydrocarbon provinces. From a modest beginning, ONGC has grown to be one of the largest E&P companies in the world in terms of reserves and production.

ONGC as an integrated Oil & Gas Corporate has developed in-house capability in all aspects of exploration and production business i.e., Acquisition, Processing & Interpretation (API) of Seismic data, drilling, work-over and well stimulation operations, engineering & construction, production, processing, refining, transportation, marketing, applied R&D and training, etc.

Today, Oil and Natural Gas Corporation Ltd. (ONGC) is, the leader in Exploration & Production (E&P) activities in India having 72% contribution to India’s total production of crude oil and 48% of natural gas. ONGC has established more than 7 Billion Tonnes of in-place hydrocarbon reserves in the country. In fact, six out of seven producing basins in India have been discovered by ONGC. ONGC produces more than 1.27 million Barrels of Oil Equivalent (BOE) per day. It also contributes over three million tonnes per annum of Value-Added-Products including LPG, C2 - C3, Naphtha, MS, HSD, Aviation Fuel, SKO etc.

ORGANIZATIONAL  STRUCTURE:

The structure is a strictly hierarchical  organization with strictly defined roles and there is a unity of command which it makes it one of the most efficient companies of the country and best Mahanavaratna PSU.

Policies:

HR Vision

"To build and nurture a world class Human capital for leadership in energy business". 

HR Mission

"To adopt and continuously innovate best-in-class HR practices to support business leaders through engaged, empowered and enthused employees".

This shows that the company nurtures best practices within the company environment and promotes  innovation and the management is able to motivate the  employees to  perform their best.

No. of employees:

ONGC has 33,000 employees on its rolls. Of this number, 24,000 work across the company’s various offices, while 9,000 are employed on rigs.

PRODUCTS:


1.Crude Oil.
2.Natural Gas.
3.Liquefied petroleum Gas.
4.Natural Gasoline.
5.Ethane/Propane.
6.Achromatic Naphtha.
7.Superior Kerosene Oil 



SERVICES: 

1. Chief Drilling Services, Mumbai 
2. Chief Well Services, Mumbai 
3. Chief Geo- Physical Services, Dehradun 
4. Chief Logging Services, Baroda 
5. Chief Engineering Services, Mumbai 
6. Chief Offshore Logistics, Mumbai 
7. Chief Technical Services, Mumbai 
8. Chief Info-com Services, New Delhi 
9. Chief Corporate Planning, New Delhi 
10. Chief Human Resource Development, Dehradun 
11. Chief Employee Relations, Dehradun 
12. Chief Security, Dehradun 
13. Company Secretary, New Delhi 
14. Chief Marketing, New Delhi 
15. Chief Corporate Affairs &Co-ordination, New Delhi 
16. Chief Corporate Communication, New Delhi 
17. Chief Material Management, Dehradun 
18. Chief Technical Services, Dehradun 
19. Chief Health, Safety & Environment, Mumbai 
20. Chief Legal, New Delhi 
21. Chief Medical, Dehradun 
22. Chief Internal audit, New Delhi 
23. Chief Commercial, New Delhi 
24. Chief Exploration & Development, Dehradun 



ONGC HYDROCARBON VALUE CHAIN:

SWOT ANALYSIS OF ONGC WITH RESPECT OF THE OIL SECTORS:

Strengths

 State owned

One of the biggest advantages & strength of the company is that it is state owned. Thisled the company have great infrastructure with the governments support. The policymaking also becomes easier due to the same reason. Moreover any undue and sustained pressure creates due impact on the government as well.

Growing demographics

ONGC went to global fields through its subsidiary, ONGC Videsh Ltd. (OVL). ONGChas made major investments in Vietnam, Sakhalin and Sudan and earned its firsthydrocarbon revenue from its investment in Vietnam.

Top Technology

ONGC is the technological advancements that were implemented over the last few years.The advancements were substantial and improved the company's ability to extract thegreatest amount of oil and gas.

Hard Industry for Competitor to enter

The oil sector is an industry wherein not many competitors can enter owing to the scaleand government intervention.

Strive to be environmentally friendly

The Company has in its guiding principles to cut down emission and become naturefriendly in due course of time.

Strong Infrastructure

The company implemented some well needed improvements to the infrastructure andcreated a strength for the company.

Weaknesses:

State-owned

Because of Huge govt. Of India control on ONGC many important decisions are beingtaken by govt. of India and sometime it proved to be fatal for example govt's poor decisions have come in way e.g. In case of APKO oilfields acquisition , government blocked the deal which later went to Chinese CNOOC. This resulted in loss of face of ONGC in international market.

Ever changing laws

The ever changing laws pose a big threat to the company. The Company is bleeding dueto the rising crude oil prices in the international market but the government has its own priorities.

Opportunities:

Possible Mergers with Smaller Companies

ONGC has always great opportunities to get into mergers & acquisitions with companies across the globe.

Finding Alternative Fuels before competitor

It may itself get into the research operations in terms of finding alternative fuels before itscompetitors

Expanding into more areas

The company has great opportunities to expand in offshore locations

Grow their hold in the energy market 

The Company can become more aggressive in locating new oil-fields across the globe.

Threats:

•The company may be facing some real threat from alternative fuels in the next decade or so.

•Corrupt Government may not have the company's best interest in mind.

•Could fall behind technology with the everything changing so quickly this day and age.
•Security of personnel and property especially crude oil continues to be a cause of concernin  certain areas.
•In some exploration campaign company involves high technology, which means high risk.

Corporate  Social  Responsibility:


The mission of ONGC stated that the company would have an "abiding commitment to health, safety, and environment to enrich quality of community life."And this mission was reflected in its CSR activities. CSR at ONGC began as a philanthropic activity where the company contributed to several socio-economic developmental programs like building schools and hospitals, developing agriculture and cottage industry, building infrastructure facilities, etc., around its areas of operation on an ad hoc basis...

•ONGC is spearheading the United Nations Global Compact - World's biggest corporate citizenship initiative to bring Industry, UN bodies, NGOs, Civil societies and corporate on the same platform. 

•During the year, your Company has undertaken various CSR projects at its work centres and corporate level.




•ONGC's CSR programs at the corporate level focused on disaster relief management and water management projects. 


•ONGC and the Global Compact Program
The concept of 'global compact' was initiated by UN Secretary-General Kofi Annan in July 2000. The idea was to form an international corporate citizenship network for the advancement of universal social and environmental principles.

ONGC  all over India:

ONGC Videsh:

ONGC Videsh Limited (OVL) is the international arm of ONGC. It was rechristened on 15 June 1989. It currently has 14 oil and projects across 15 countries. It's share of oil and gas production was 8.753 MMT of O+OEG in 2011-12 as against 0.253 MMT of O+OEG in 2002-03. OVL’s overseas cumulative investment has crossed USD 14 billion.
OVL currently has presence in 33 E&P projects in 15 countries, namely ; Vietnam, Iraq, Libya, Syria, Sudan, South Sudan, Iran, Cuba, Brazil, Venezuela, Russia, Myanmar, Colombia, Nigeria and Kazakhstan.

Some of the leading alliance partners of OVL are BP, CNPC, Ecopetrol, ENI, Exxon, Statoil Hydro, PDVSA, Petrobras, Petronas , Petrovietnam, Repsol, Rosneft, Shell, Sinopec, Total and TPOC.

ONGC Group of Companies:

1.ONGC Videsh Limited (OVL)

2.Mangalore Refinery and Petrochemicals Limited (MRPL)

3.ONGC Nile Ganga BV (ONG BV)

4.ONGC Mittal Energy Limted (OMEL)

5.ONGC Mittal Energy Services Limited (OMESL)

6.ONGC Tripura Power Company Pvt.Ltd. (OTPCL)

7. Kakinada Refinery & Petrochemicals Limited (KRPL) 

8.Kakinada SEZ Limited 

9.Mangalore SEZ Limited 

10.Dahej SEZ Limited 

11.Rajasthan Refinery Limited (RRL) 

Revenue Break-up:

Employee management ::Treating employees like customers

Companies should have a similar approach to employees and customers. A company shouldstrive to retain an employee in the same way it tries to retain a customer.

ONGC is an organization which is a pride for the nation, the reason being its excellence in its performance. The reason behind this is its strategies outside as well as inside the organization.ONGC is a firm which knows how to deal with the internal as well as the external environmentof its functioning.If we deeply look into its smooth running work environment, then we would find the initiativesthis giant corporation has taken for the well being of its people. ONGC is committed to its valueand promise of creating a healthy work environment for its employees, which facilitates their growth, builds up their confidence, and fosters in its employees a sense of belonging as well as job satisfaction.A lot has already being done here at ONGC, many are in process and much more is planned, for the valuable employees of the renowned ONGC.

ONGC is a firm which believes that the non-financial benefits are as much important as the financial ones, and hence has thoughtfully kept a balance between both, as both are greatmotivating factors. Therefore, like any other employee friendly organization, ONGC too has twotypes of motivating factors:-

-financial benefits

-non financial benefits.


PERFORMANCE APPRAISAL SYSTEM AT ONGC:

Performance appraisal report is an index of an employee’s work performance over a given period of time. It is crucial for his or her career growth as it indicates the strengths, weaknesses,training needs, nature of job being performed and problems faced in work situation.The objectives of the performance appraisal system at ONGC are:
•To set norms and targets of work performance, as well as, to monitor the work progressof employees.
•To facilitate placement of employees in accordance with their suitability for differenttypes of assignments.
•To provide an objective basis for determination of merit, efficiency and suitability for the purpose of promotion.
•To identify areas requiring exposure for training and development.

The performance appraisal system seeks to evaluate:
•The work performance of an employee on the present job in relation to the expectedlevels of performance, both qualitative and quantitative.
•The extent of development achieved by the employee during the period under review.
•Evaluation of behavioural attributes, attitudes and abilities.
•Evaluation of potentials for assuming higher responsibility.The appraisal covers:
•Performance during the period from 1st April to 31st march of every year.
•All regular employees of the company.a) Non Executives. b) Executives


Awards:

ONGC shines bright at the Petrofed Oil & Gas Industry Awards 2011

Continuing on its rich patch of recognition, ONGC swept the Petrofed Oil & Gas Industry Awards 2011 by taking home 3 prestigious awards in the categories of "Environmental Sustainability: Company of the Year", "Human  Resource Management: Company of the Year" and "Innovator of the Year: Team (Won by IOGPT)". 

Future prospects:

ONGC has planned a Rs 77.5 billion revamp of onshore pipelines and installations and approved a Rs 23.5 billion investment in Assam. It registered five oil and gas discoveries on the East Coast and Northeast in May 2007. ONGC aims to produce 25 million metric standard cubic meters per day of gas from the Krishna Godavari basin by 2012-2013 from the estimated available 6 trillion cubic feet of gas reserves. It signed a feedstock supply agreement with Brahmaptura Cracker and Polymer (BCPL) for the Assam gas cracker plant being set up in Lepetkata, Dibrugarh and a memorandum of understanding with British Pertoleum to jointly undertake oil and gas exploration and production projects in India and abroad. An agreement with Hindustan Petroleum Corporation (HPCL) enables its Tatipaka refinery and MRPL (subsidiary) to supply petroleum products to HPCL. 

References:

  1>www.ongcindia.com
  2>www.ongcreports.com
  3>www.moneycontrol.com
  4>Annual Reports