Report on O.N.G.C. Ltd.

Mehsana
By
Mousumi K. Mitra 
MBA 2nd Semester
Shree Amreli Jilla Leuva Patel MBA Mahila Collage
Amreli–365 601 GJ
E-mail: vijaypithadia@lycos.com
 

INTRODUCTION

ONGC Group of Companies comprises of Oil and Natural Gas Corporation Limited (ONGC - The Parent
Company); ONGC Videsh Limited (OVL – a wholly owned subsidiary of ONGC); ONGC Nile Ganga BV
(ONG BV - a wholly owned subsidiary of OVL) and Mangalore Refinery and Petrochemicals Limited
(MRPL - a subsidiary of ONGC).

Oil and Natural Gas Corporation Limited (ONGC) is India's Most Valuable Company, having a market
share of above 80% in India's Crude Oil and Natural Gas Exploration and Production. ONGC registered
the highest profit among all Indian companies at US $ 1.92 billion (Rs. 8664.4 Crore) in the year
2003-04. Its production of Crude Oil in 2003-04 was 26.7 MMT and of Natural Gas 25.70 Billion Cubic
Meters. ONGC also produce Value-Added Products (VAP) like C2-C3; LPG; Naphtha and SKO.

ONGC Videsh Limited (OVL) is overseas arm of ONGC, engaged in Exploration & Production Activities.
It trans-nationally operates E&P Business in 10 countries, making ONGC the biggest Indian
Multinational Corporation. In recent years, it has laid footholds in hydrocarbon acreage in various
countries including Ivory Cost and Australia. ONGC Nile Ganga BV is a wholly owned subsidiary of OVL
and has equity in producing field in Sudan.

Mangalore Refinery and Petrochemicals Limited (MRPL), where ONGC now owns 71.6% equity, were
taken over by ONGC in March 2003. Under ONGC's management control, MRPL has seen a major
turnaround and its market valuation has increased 1100%. MRPL has one of the modern refineries in
India at Mangalore having annual capacity of 9.69 MMTPA. It is the most energy-efficient refinery in
India and has a two-digit energy index of 85%.

ONGC envisages organizing Import/International Sale of Crude Oil and Export of Petroleum Products
through Tendering Procedure for all the Group Companies. However, it would be restricted to the
Companies/ Firms/ Vendors registered with ONGC on its approved Vendor Lists.

HISTORY

1947 – 1960

During the pre-independence period, the Assam Oil Company in the northeastern and Attock Oil
company in northwestern part of the undivided India were the only oil companies producing oil in the
country, with minimal exploration input. The major part of Indian sedimentary basins was deemed to
be unfit for development of oil and gas resources. 
After independence, the national Government realized the importance oil and gas for rapid industrial
development and its strategic role in defense. Consequently, while framing the Industrial Policy
Statement of 1948, the development of petroleum industry in the country was considered to be of
utmost necessity. 

Until 1955, private oil companies mainly carried out exploration of hydrocarbon resources of India. In
Assam, the Assam Oil Company was producing oil at Digboi (discovered in 1889) and the Oil India Ltd.
(a 50% joint venture between Government of India and Burmah Oil Company) was engaged in
developing two newly discovered large fields Naharkatiya and Moran in Assam. In West Bengal, the
Indo-Stanvac Petroleum project (a joint venture between Government of India and Standard Vacuum
Oil Company of USA) was engaged in exploration work. The vast sedimentary tract in other parts of
India and adjoining offshore remained largely unexplored.

In 1955, Government of India decided to develop the oil and natural gas resources in the various
regions of the country as part of the Public Sector development. With this objective, an Oil and Natural
Gas Directorate was set up towards the end of 1955, as a subordinate office under the then Ministry of
Natural Resources and Scientific Research. The department was constituted with a nucleus of
geoscientists from the Geological survey of India. 

Foreign experts from USA, West Germany, Romania and erstwhile U.S.S.R visited India and helped the
government with their expertise. Finally, the visiting Soviet experts drew up a detailed plan for
geological and geophysical surveys and drilling operations to be carried out in the 2nd Five Year Plan
(1956-57 to 1960-61). 

In April 1956, the Government of India adopted the Industrial Policy Resolution, which placed mineral
oil industry among the schedule 'A' industries, the future development of which was to be the sole and
exclusive responsibility of the state.

Soon, after the formation of the Oil and Natural Gas Directorate, it became apparent that it would not
be possible for the Directorate with its limited financial and administrative powers as subordinate office
of the Government, to function efficiently. So in August, 1956, the Directorate was raised to the status
of a commission with enhanced powers, although it continued to be under the government. In October
1959, the Commission was converted into a statutory body by an act of the Indian Parliament, which
enhanced powers of the commission further. The main functions of the Oil and Natural Gas
Commission subject to the provisions of the Act, were "to plan, promote, organize and implement
programs for development of Petroleum Resources and the production and sale of petroleum and
petroleum products produced by it, and to perform such other functions as the Central Government
may, from time to time, assign to it ". The act further outlined the activities and steps to be taken by
ONGC in fulfilling its mandate.

1961 – 1990

Since its inception, ONGC has been instrumental in transforming the country's limited upstream sector
into a large viable playing field, with its activities spread throughout India and significantly in overseas
territories. In the inland areas, ONGC not only found new resources in Assam but 

Also established new oil province in Cambay basin (Gujarat), while adding new petroliferous areas in
the Assam-Arakan Fold Belt and East coast basins (both inland and offshore). 
ONGC went offshore in early 70's and discovered a giant oil field in the form of Bombay High, now
known as Mumbai High. This discovery, along with subsequent discoveries of huge oil and gas fields in
Western offshore changed the oil scenario of the country. Subsequently, over 5 billion tonnes of
hydrocarbons, which were present in the country, were discovered. The most important contribution of
ONGC, however, is its self-reliance and development of core competence in E&P activities at a globally
competitive level.

After 1990
The liberalized economic policy, adopted by the Government of India in July 1991, sought to
deregulate and de-license the core sectors (including petroleum sector) with partial disinvestments of
government equity in Public Sector Undertakings and other measures. As a consequence thereof,
ONGC was re-organized as a limited Company under the Company's Act, 1956 in February 1994.

After the conversion of business of the erstwhile Oil & Natural Gas Commission to that of Oil & Natural
Gas Corporation Limited in 1993, the Government disinvested 2 per cent of its shares through
competitive bidding. Subsequently, ONGC expanded its equity by another 2 per cent by offering shares
to its employees.

During March 1999, ONGC, Indian Oil Corporation (IOC) - a downstream giant and Gas Authority of
India Limited (GAIL) - the only gas marketing company, agreed to have cross holding in each other's
stock. This paved the way for long-term strategic alliances both for the domestic and overseas
business opportunities in the energy value chain, amongst themselves. Consequent to this the
Government sold off 10 per cent of its share holding in ONGC to IOC and 2.5 per cent to GAIL. With
this, the Government holding in ONGC came down to 84.11 per cent. In the year 2002-03, after taking
over MRPL from the A V Birla Group, 

ONGC diversified into the downstream sector. ONGC will soon be entering into the retailing business.
ONGC has also entered the global field through its subsidiary, ONGC Videsh Ltd. (OVL). ONGC has
made major investments in Vietnam, Sakhalin and Sudan and earned its first hydrocarbon revenue
from its investment in Vietnam.

SWOT ANALYSIS

1) STRENGTHS
A) O.N.G.C LTD is perceived to be the leader in oil production industry.
B) O.N.G.C has a very efficient and professional management team.
C) O.N.G.C being an international company has sufficient resources and capital to invest.
D) O.N.G.C has ISO-9001 & ISO 14001 registration.

2) WEAKNESSES
A) O.N.G.C facing difficulties to produce oil from aging reservoirs.

3) OPPURTUNITY
A) Energy utilization of buried coal resource (700 -1700M), estimated 63BT – Equivalent to 15000
BCM.
B) O.N.G.C facing difficulties to produce oil from aging reservoirs.

4) WEAKNESSES
A) Security of personnel & property especially crude oil continues to be a cause of concern in certain
area.
B) In some exploration Campaign Company involves high technology, high technology, High
investment and high risks.

CONCLUSION

After studying the detail of O.N.G.C LTD I reached at conclusion that O.N.G.C has achieved its entire
desire goal with its hard work and unique idea. O.N.G.C is having a good manpower and provides good
facilities to their employees. The majority of the company's profitability ratios show an increasing
trend. The performance of the company can be considered as satisfactory. As per my opinion that
O.N.G.C LTD has a wide scope to develop in coming years

BIBLIOGRAPHY
BOOKS:

FINANCIAL ACCOUNTING (A MANAGERIAL PERSPECTIVE)

WEBSITES:

www.ongcindia.com
www.google.com
www.clipart.com

O.N.G.C LTD. ANNUAL REPORT