Yadvendraa

Jaipuria Institute of Management

Introduction of ONGC
It was established in the year 1956.
Its Head quarter is in Dehradun.
The chairman and MD of ONGC is Mr. Radhey S.

Sharma.
Its revenue was $24.032 billion in the year 2008.
Currently there are 34000 employees.

Cont
ONGC is business organization involved in the exploration

and production of hydrocarbons in India and abroad.

ONGC is the leader in the upstream petroleum sector and

a leading Navratna public sector.

ONGC set up OVL in 1996 as a wholly owned subsidiary.

Cont
It is the largest Oil exploration and production (E&P)

company in India.
It has market share over 84% in crude oil and gas

production.
Around 57 % petroleum exploration licenses in India

for over 588 thousands of area belongs to ONGC.

Cont
It major products includes petroleum, crude natural

gas, liquefied petroleum gas (LPG), kerosene and

petrochemical products.

Reason for Expansion ONGC

business
Licensing Policy
Demand of Crude Oil
Oil Prices
Competition
Burden
Dependency

 Licensing Policy:- by this private sector can also

participate in the exploration and production.

Demand of crude oil:- demand was increasing day by

day.
Oil Prices:- The trend of international prices was

volatile and rising.

 Competition:- Domestic competition was increasing.

Burden:- Increasing burden on the country due to

the rising oil import bill.

Dependency:- The bottom-line was crude oil prices.

Major strategic decisions taken

ONGC changed from a Commission to a company.
ONGC appointed MC kinsey as a consultant for

complete revamping and restructuring of the

organization.
ONGC expanded its global operation through its

subsidiary OVL.

Cont
ONGC bought 71% stake in the MRPL refinery.
ONGC decided to acquire equity oil abroad through

the endeavors of the OVL.

Human resource development.

Objectives of ONGC
Doubling reserves to 6 billion tones by 2020.
Improving average recovery from 28% to 40%.
Tying 20 MMT per annum of equity of hydrocarbon

from abroad.

Internationalization Strategy of
ONGC

Carried out in house studies of various moderate

and semi-major, major offshore and onshore fields.
Came up with about 400 Oil and Gas blocks.

Evaluated these fields with available data

Came up with the priority list for foreign foray

Combination of marketing entry strategy of:

Joint venture with equity participation in producing
oil/gas fields.
Joint venture with equity participation for exploration
and development blocks.
Consortium approach, pooling other Indian oil
companies, such as IOC Ltd, GAIL, etc.

Operator ship contracts (management contracts)

Turkey engineering Contracts.

Countries where OVL has its

producing assets
Producing assets of OVL :

a. Having 20 percent holding in Sakhalin(Russia)

b. Having 45 percent stake in partnership with British
Petroleum.
c. Having 25 percent equity in the Greater Nile Oil
Project in Sudan.

Countries where OVL having discoveries

and exploration
OVL assets with discoveries & exploration :

a. Having 100 percent interest in Appraisal &

Development in Qatar.
b. Having 70 percent interest in Exploration & Appraisal
in Egypt.
c. 15 percent interest in Development Phase in Brazil.
d. 20 percent participation interest in Myanmar.

OVL Operations
Vietnam

Myanmar

Sudan

Sakhalin-I

Critically evaluate the reasons

influencing ONGCs international
expansion?
Factors influencing expansion New exploration licensing policy

Lack of new discoveries

Domestic competition

Identify the key factors affecting

OVLs country selection.
Opportunity in the area of oil exploration.
Future relationship with the countries.
Size of the other company or its growth

OVL made use of strategic alliances and

joint ventures for its international
expansion ventures rather than opting
for complete ownership. Do you agree
with such a kind of approach?

Reasons for Joint Ventures and Alliances

Gain Access to a Particular Resource
Risk and Cost Sharing
Learning

Speed to Market