Tuesday, May 13, 2008

OIL & NATURAL GAS CORPORATION (ONGC)

PROFILE:
ONGC which was incorporated on June 23, 1993 is a public sector petroleum company in India. It is the most valuable country in India by market capitalization contributing 77% of India’s crude oil production and 81% of India’s natural gas production. It is the highest profit making corporation in India. It was set up as a commission on August 14, 1956.
It is involved in exploring and exploiting hydrocarbons in 26 sedimentary basins of India. It produces about 30% of India’s crude oil.
· Sales $9.78 billions
· Profits $2.16 billions
· Assets $19.18 billions
· Market Value $27.86 billions
· Employees 38,033

Today, ONGC is the flagship company of India; and making this possible is a dedicated team of nearly 40,000 professionals who toil round the clock. It is this toil which amply reflects in the performance figures and aspirations of ONGC. The company has adapted progressive policies in scientific planning, acquisition, utilization, training and motivation of the team. At ONGC everybody matters, every soul counts.
ONGC has a unique distinction of being a company with in-house service capabilities in all the activity areas of exploration and production of oil & gas and related oil field services.
Needless to emphasize, this was made possible by the men & women behind the machine. Over 18,000 experienced and technically competent executives mostly scientists and engineers from distinguished Universities / Institutions of India and abroad form the core of our manpower. They include geologists, geophysicists, geochemists, drilling engineers, reservoir engineers, petroleum engineers, production engineers, engineering & technical service providers, financial and human resource experts, IT professionals and so on.


VISION:
To be a world-class Oil and Gas Company integrated in energy business with dominant Indian leadership and global presence.


MISSION:
World Class
· Dedicated to excellence by leveraging competitive advantages in R&D and technology with
involved people.
· Imbibe high standards of business ethics and organizational values.
· Abiding commitment to safety, health and environment to enrich quality of community life.
· Foster a culture of trust, openness and mutual concern to make working a stimulating and
challenging experience for our people.
· Strive for customer delight through quality products and services.
Intergrated In Energy Business
· Focus on domestic and international oil and gas exploration and production business opportunities.
· Provide value linkages in other sectors of energy business.
· Create growth opportunities and maximize shareholder value.
Dominant Indian Leadership
· Retain dominant position in Indian petroleum sector and enhance India's energy availability.



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 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.
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

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 MumbaiHigh.This discovery, along with subsequent discoveries of huge oil and gas fields in Western offshore changed the oil scenario of the country.

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.


PROGRESS RIGHT FROM ITS INITIATION

· The first was the discovery of oil in Cambay in September 1958. This was followed by discovery of oil in a well at Hazat, 16 kilometers from Ankleshwar, on 14 May 1960. These two discoveries exploded the myth about the non-existence of oil in the Cambay Basin and happily brought Gujarat forward on the country's oil map.
· This was followed by discovery of oil near Rudrasagar in Assam in December 1960 much to the anguish of the doubting Thomas, who had predicted gloomy prospects.
· However, the most significant of the achievements was the discovery of Bombay High on 19th February 1974, which, in reality, was the turning point in ONGC's history.
· The rig Sagar Samrat (self-propelled jack-up), was purchased at a cost of Rs. 12.7 crore from Mitsubishi. At that time no one would have dreamt that Sagar Samrat would create a niche for itself in the offshore oil world. This old workhorse has already completed drilling of 125 wells in a life span of 27 years, a feat unmatched by any other rig in the world, and is still going strong. Sagar Samrat had been instrumental in discovering 14 major structures, and adding more than three billion tonnes of oil and gas reserves.
· 4.0 BMT O + OEG should hopefully be established in deep A target of doubling the reserves in the nest 20 years has been set. About 2.0 BMT of oil + oil equivalent of gas (O + OEG) comes from the onshore and frontier basins. offshore waters. These additional 6.0 BMT of O + OEG both onshore and offshore would undoubtedly require higher risks, state-of-art new technology and much bigger investments. .
· ONGC decided to clear, by 31st March 2003, the entire backlog in exploratory drilling. And that is the crux. The more exploratory drilling, the greater likelihood of finding more oil.
· The long-pending organizational transformation project (OTP) was given a final shape after it had taken many twists and turns. This was not an easy task since the result of the pilot projects had to be objectively re-assessed. Now rechristened Corporate Rejuvenation Campaign (CRC), it was formally launched on 20th August 2001. What is CRC ? It divides ONGC into numerous Assets, Basins and Services, each headed by a senior executive, and which in turn became virtual corporates. The Multi-Disciplinary Team (MDT) concept is now reflected in the matrix relationship of CRC structure wherein the cadre specialization is blended with team orientation.
· But the most important achievement of ONGC was the accretion by 191 MMT of recoverable reserves during 200-02.
· Of the 115 producing fields, one field alone (Mumbai High) contributes 40 percent of production. Another 14 fields add 35% to the production. The remaining 100 fields contribute only 25% of the entire oil/ gas production. ONGC achieved the distinction of becoming zero debt corporate by pre-paying the bulk of its foreign loans.
· In short, the 46th year in the chequered history of ONGC has been one of great changes and achievements. And much of the credit should go to Raha and directors on the ONGC Board, besides of course, to the hundreds and thousands of executives working all over the country.


LEADERSHIP STLYE

MR. SUBIR RAHA (CHAIRMAN & MD-ONGC)
· Mr. Subir Raha Receives CHEMTECH-CEW’s Achiever Of The Year Award
· Mr. Subir Raha bags SCOPE Individual Excellence Award for his outstanding contribution to Public Sector Management.
· Mr. Subir Raha has been awarded as the “ CEO Business Leader of the Year” in recognition of his Leadership Excellence at Indian Leadership Summit.
· Was awarded the “Grid Leadership Award” for his outstanding contribution in the filed of Corporate Management from Dr. P.N. Singh Foundation.
· Assumed badge-of-office of the President of the International Federation of Training & Development Organizations, Lisbon, Portugal, May 03, 2003.

The Following Leadership Qualities and Style followed by Mr. Subir Raha as per our study are as follows:
Leadership Qualities:
1. Innovative and Creative: Professional like Mr.Subir Raha think beyond the obvious and encourage their people to do the same. They ensure that employees have a peen ness for exploration and keep an open mind. It helps the organization to always be ready to look at opportunities for betterment and the search for new ideas, new practices, new products and new ways of doing things better goes on continuously.
Mr.Raha secured the individual award for “Excellence in Creativity & Innovation” in 2002.
2. Customer Orientation: Every professional has two sets of customers whom he must try to satisfy to the fullest possible extent namely, the external customer (the purchasers, the society at large) and the internal customer (the employees, his subordinates, peers and bosses. Professionals like Mr. Raha have ensured that the internal customers are given their due and takes care of the needs, desires and problems. Thus he has build up a customer orientation within the organisation too which is quite infectious and pervades the entire organisation.
Golden Peacock Award for Excellence in Corporate Governance was received by Mr. Raha on behalf of ONGC from Lord Swaraj Paul on 2nd in recognition to the contribution towards Corporate Governance, and helping in giving back to the society the best services and products with transparency and accountability.
3. Stop managing , start leading and cultivate managers:
He disliked the notion of management. Most managers in his view over- managed. Those who over managed helped to create a bureaucratic environment, which according to Mr. Subir Raha , kills large companies. He decided that ONGC’s leaders had to change their management styles i.e. too much controlling and monitoring .The only way to last at ONGC was to get on board, to become a lean leader, to adapt oneself to the company’s value and culture.


SOCIAL OBJECTIVES

· ONGC is playing an important role in strengthening the fabric of society. This giant in India's corporate world has a finely tuned sense of moral responsibility towards the community of people where it operates and the country at large.
· Local population is the one which is benefited most as a result of the ONGC operations in the region. It generates employment & business opportunities, which in turn improves the overall economy of the region and the living standards of the community.
· ONGC operations provide the necessary boost required for the industrial growth of the region. The requirement of the physical inputs for our operations results in setting of ancillary industries and vendors network, generating a lot of economic potential.
· Oil & Gas production ushers an era of growth, many core sector industries like power, fertiliser and transport, thrive as a natural consequence of the oil and gas availability.
· Apart from this, grants-in-aid help in building schools and hospitals. Villages are adopted and several health and community welfare programs are organised in the area around our activities.
· Since 1996-97, the execution of these programmes has been further streamlined. Work-centre wise allocations are made each year and programmes are being executed under the comprehensive guidelines issued on the subject.Major emphasis has been given for promotion of education,health and community development and in times of natural calamities such as floods, cyclones, earthquakes, landslides,etc.The impact of our concerted efforts is being felt by the community and good-will is being generated.Our programs about health care, eye camps, helping the educational institutions are being widely appreciated.
· A proactive approach towards socio-economic development is adopted i.e. projects are identified by ONGC at the plant level by involving the district administration, local representatives and recognized voluntary organisations. Priority is given to areas around the projects with the following themes.
§ Promotion of literacy
§ Grant of scholarship & assistance to deserving young pupils of weaker sections of the society.
§ Health care for women , children and disabled
§ Medical camps
§ Mobile dispensaries
§ Supplimenting the efforts of already existing health centers in the rural areas.
§ Facilities for constructing schools /renovation of school buildings, other necessary infrastructure.
§ Providing civic amenities e.g sanitation, clean drinking water facilities to panchatyas, Gram Sabhas etc
§ Development of agriculture and other cottage industries
§ Environment protection
§ Animal husbandry
§ Promotion of sports
§ Women & child development
§ Sponsoring/ co-sponsoring professional meets, conventions, seminars etc.
§ Development of the socially and economically weaker sections of the society
§ Promotion of art and culture
§ Calamity relief
§ Development of infrastructure facilities-improvement of roads, bridges, street lighting, drainage systems etc
§ Support to vocational training institutions for upgrading the skills of the local people
· Everyone who works at ONGC is responsible for protecting the environment, health and safety of our people and communities worldwide.
· The dedication to the causes of environment and safety in ONGC is amply demonstrated by the fact that a separate institute named Institute of Petroleum Safety and Environment Management(IPSEM) had been set up way back in 1989 to deal with these issues. The objectives of the institute are committed to upgrade & develop human resources with a view to minimize the over all risk to human life, damage to property, process and the environment. The main functions of the Institute are Training, Research and Development, Consultancy Services, Data Bank and information services and as an advisory capacity in evolving standards and procedures. The institute offers training courses in basic and advanced training, safety and environment management, fire safety offshore survival & safety, coxswain boat handling, etc. The offshore survival & safety and coxswain programs are practical training programs for offshore going personnel. It includes a certificate course in first aid and fire fighting.
· ONGC's safety policy seeks to provide safe and healthy working conditions and enlist the active support of all staff in achieving these end.


SOCIAL AUDIT

Social Audit is the evaluation of social performances of a company by a knowledgeable person with suitable background and experience. It is a systematic study of an organization’s social performance. It provides a portfolio of the co. for understanding & improving cos. 'social performance.
Internal auditors conduct social audit as per the directions of the management in the company. Their main purpose is to evaluate the social performance of the company.

ONCG has adopted two interconnected instruments in order to study the manner in which companies discharge their social responsibilities/performances. These two instruments are:
1. Local Meetings: It is yearly conducted and is a public meeting and is open to representatives of different social groups- shareholders, employees, customers, and the society. At the meeting, the director reports on the progress and performance of the company in regards to social responsibilities. Representatives of different social groups raise questions and discuss this subject in depth.
2. Social Audit: it has reference to factual assessment of company’s social performance by trained and professional observers. It acts as a tool for measuring the social responsibility/performance of the company.

The company follows 2 main methods or approaches for conducting their social audit.

1. The Cost Approach: the company calculates the expenditure incurred by them on different social overheads activities like pollution control, rural development,. R&D activities. Education, community services etc. for a specific period decided for the audit purpose. Then the benefits available to concerned people from such expenditures are estimated. The expenditure/cost incurred and returns available are used as base for social audit.
2. The Programme Management Approach: in this approach, every social performance activity like education, employee’s welfare, etc is evaluated separately with reference to its objectives and actual achievements. If actual performance is low as compared to objectives decided, the social performance will be treated as poor according to the audit.


ORGANIZATIONAL CHART

FUNCTIONS OF ALL DEPARTMENTS


Ø PUBLIC RELATIONS

Public Relations is as old as human civilisation. It has existed in one form or the other. There are umpteen examples of its varied form, content and end use.ONGC is committed to provide the best standards of Corporate Governance to all the stake-holders. The Corporate Governance process in ONGC is focussed on the key business objectives:

1. Creating Value,
2. Strengthening Oil Security,
3. Maximizing Return to Investors,
4. Ensuring best feasible HSE practices, and
5. Blending prudence of a State Enterprise with agility of a Trans-national.

The management must have the operational freedom to pursue the Business Goals within a definitive framework of accountability. The practice of Corporate Governance, therefore, is based on these principles:
1. Independent verification of financial reporting and reserves accounting,
2. Protection of shareholders’ rights and proactive investor relations, and
3.Transparent and timely disclosure of all material aspects of the Company’s operations and performance.
In recognition of excellence in Corporate Governance, the Institute of Company Secretaries of India conferred the ‘ICSI National Award for Excellence in Corporate Governance’, in the public sector, for the year 2003 to ONGC.

Ø MARKETING
The ONGC has obtained approval from the Centre for marketing aviation turbine fuel (ATF) and refueling at airports and would start marketing products in 2006-07.
OIL and Natural Gas Corporation Ltd (ONGC) may go back to selling all its value-added products, especially naphtha, only through public sector marketing companies. ONGC has been selling, even exporting, naphtha on its own for the last two years after the failure of the PSU companies in effectively marketing its products.

Value-added products including naphtha, LPG, kerosene and heavy-cut, add about Rs 3,000 crore to ONGC's turnover of about Rs 24,000 crore every year.
According to sources, a Government notification circulated earlier this month has already barred the company from selling kerosene and liquefied petroleum gas (LPG) to private players. These products will have to be sold through PSUs despite the sector decontrol as the products continue to attract subsidies.
Following this, ONGC may now also shelve marketing of natural gas liquid (NGL) or naphtha-equivalent and aromatic naphtha (ARN) on its own initiative, sources said. Last year, the company had produced about two million tonnes of naphtha, kerosene and heavy-cut at its Hazira and Uran units.
ONGC had begun selling naphtha on its own after delays in lifting its product by PSU marketing companies, Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation Ltd (HPCL).
ONGC discovered "steep price differences costing almost Rs 200 crore each year because of dependence on IOC and HPCL" when it sold naphtha through these PSUs.
Naphtha being a deregulated commodity, ONGC's product has remained low on the priority list of PSUs trying to push their own stocks, leaving the company with no other choice but to export. As a result, the company set up its own marketing cell which carried out independent sale and exports of naphtha for ONGC.
But with renewed focus on strengthening its position as an exploration and production company, ONGC may move away.

Ø HUMAN RESOURCES

HR Vision
"To attain organizational excellence by developing and inspiring the true potential of company’s human capital and providing opportunities for growth, well being and enrichment".

HR Mission

"To create a value and knowledge based organization by inculcating a culture of learning, innovation & team working and aligning business priorities with aspiration of employees leading to development of an empowered, responsive and competent human capital".

HR Objectives
1. To develop and sustain core values
2. To develop business leaders for tomorrow
3. To provide job contentment through empowerment, accountability and responsibility
4. To build and upgrade competencies through virtual learning, opportunities for growth and providing challenges in the job
5 To foster a climate of creativity, innovation and enthusiasm
6. To enhance the quality of life of employees and their family
7. To inculcate high understanding of 'Service' to a greater cause HR Vision, Mission & Objectives


HR Strategy

· To meet challenging demands of the business environment, focus of the HR Strategy is on change
of the employees' ‘mindset’
· Building quality culture and resources
· Re-engineering and redeployment for maximizing utilisation of HR potential
· To build and upgrade competencies through virtual learning, opportunities for growth and providing challenges in the job
· Re-strengthening mutual faith, trust and respect
· Inculcating a spirit of learning & enjoying challenges
· Developing Human Resource through virtual learning, providing opportunities for growth,
inculcating involvement and exposure to benchmarking in performance

Role Of HR
· Alignment of HR vision with corporate vision
· Shift from support group to strategic partner in business operations
· HR as a change agent
· Enhance productivity and performance by developing employee competency and potential
· Developing professional attitude and approach
· Developing ‘Global Managers’ for tomorrow to ensure the role of global players

Measuring HR Performance
HR Parameters have been incorporated in the MOU by ONGC since 1994-95, to systematically and scientifically evaluate effectiveness of HR Systems, which enables and facilitates time bound initiatives.
· Transformation of ONGC-HR as facilitator and Change Agent for Pilot Implementation at WRBC
· ERP for HR-Project SHRAMIK
· Training and development
· Action Plan and Implementation for achieving HR mission and objectives
· Roll out of Succession Planning Model for identified key positions
· HR audit
· IR for enhancing efficiency and productivity
· Introducing the concepts of mentoring and knowledge management
· Conducting a Climate Survey to identify areas for OD interventions

A Motivated Team
HR policies at ONGC revolve around the basic tenet of creating a highly motivated, vibrant & self-driven team. The Company cares for each & every employee and has in-built systems to recognise & reward them periodically. Motivation plays an important role in HR Development. In order to keep its employees motivated the company has incorporated schemes such as Reward and Recognition Scheme, Grievance Handling Scheme and Suggestion Scheme.


· Incentive Schemes to Enhance Productivity
· Productivity Honorarium Scheme
· Job Incentive
· Quarterly Incentive
· Reserve Establishment Honorarium
· Roll out of Succession Planning Model for identified key positions
· Group Incentives for cohesive team working, with a view to enhance productivity


Ø RESEARCH AND DEVELOPMENT

ONGC, India's most valuable and profit-making corporate today, is set to invest further in high-technology exploration and production - and beyond.
According to Subir Raha, Chairman and Managing Director of ONGC, the company is now "engaged in a major campaign for high-technology, high-cost, high-risk exploration in deep waters and frontier basins''.
Its crude oil production has, however, hit a plateau, no big discoveries having been made in the recent past.
Instead of confining itself to exploration for and production of crude oil and gas, it will have its own refineries to process crude into petrol, kerosene, high-speed diesel, naphtha, and so on. It also plans to set up about 600 retail outlets to market petrol, diesel, and other products
ONGC is also into the extraction of coal-bed methane (CBM), having pioneered the technology in the country. Methane extracted from coal beds is supplied through pipelines to be used as fuel in industries and to generate electricity. But its extraction involves a tough, technology-intensive process. India is estimated to have the potential to produce around 1.5 trillion cubic metres of CBM.
ONGC has drilled about a dozen R&D (research and development) wells in Jharia. Today, production-testing is under way in the Jharia fields, where about 25,000 cubic metres of gas a day is being flared.
ONGC has nine R&D institutes that are being independently managed. The Keshav Dev Malaviya Institute of Petroleum Exploration in Dehra Dun, which was established in 1962, is the premier centre for basic and applied research in petroleum exploration. KDMIPE deals with the research needs of the various ONGC regions in the areas of basin analysis, petroleum economics, geosciences and developing alternative sources of energy.
Another institute at Dehra Dun is the Geodata Processing and Interpretation Centre (GEOPIC). Apart from the processing and interpretation of geoscientific data in areas that range from seismic to petrophysical, geological and reservoir engineering, it analyses the 3-D seismic data gathered by ONGC to unravel sub-surface complexities in the search for oil and gas.
The Institute of Reservoir Studies (IRS), set up in 1978 in Ahmedabad, is ONGC's nodal agency for formulating oil and gas production schemes. ONGC's decisions on hydrocarbon exploitation are based on IRS' recommendations. The major projects it has completed include development plans for OIL's Kharsang oilfield; OVL's Tuba field in Iraq; the Ain-Zalah oilfield for the Iraq National Oil Company; and techno-economic studies of potential fields in Vietnam, Indonesia, Russia, China, and so on. The Institute of Drilling Technology (IDT), situated in the Doon valley, provides advanced technological knowledge to meet challenges in the field of drilling.
The other centres include the Institute of Oil and Gas Production Technology, the Institute of Engineering and Ocean Technology, both in Mumbai; the Institute of Petroleum Safety and Environment Management in Goa, the Institute of Management Development at Dehra Dun, and the Institute of Biotechnology and Geotectonics Studies at Jorhat, Assam.

Ø FINANCE

1. Crude oil supplies during the current half year are at the prices settled with refineries which workout at an average of Rs. 9953/MT. The corresponding sales revenue during the period of the last half year was accounted for at the provisional average price of Rs. 8134/MT since the prices had not been finally settled with the refineries at that time. The adjustment of settled price (average Rs. 9868/MT for the half year) was made subsequently in the last quarter of the financial year 2002-03.

2. Gross sales for the quarter includes Rs. 13106 lakh on account of revision of crude oil price from Rs. 2094/MT to Rs. 2119.73/MT for the period 1996-98.

3. Staff expenditure in the half year 2002-03 included a provision for VRS Rs. 23500 lakh, which actually did not materialize and thus was reversed later in the same year.

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