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Internship report on OGDCL

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I did six weeks internship at OGDCL as a compulsion for my BBA Hons degree
from Bahria University. It is a necessity for every student to do internship
with any organization relevant to their subject of studies. This stipulation is a
way of familiarizing the students with the practical world which they intend
to enter after completion of their education. During the tenure of my
internship I got an opportunity to understand the organization and apply my
knowledge and theoretical concepts in a better manner. This report precisely
states my experience.
The following report has been written on the format provided by the
university administration. It initiates with an introduction of the companys
background and proceeds with its contribution to Pakistans economy.
OGDCL forms the industrial base of our country and plays a dominant role in
energy generation activities to support the nation on the whole. This sector
dates back to the creation of Pakistan and ever since owing to its importance
it has been pampered by all sectors of production.
I interned in the production department of OGDCL and this report elaborates
my experience and understanding of the production soft wares, marketing
issues and human resource requirements of the company. I have also talked
about the financial standing and progress of the industry in 2009.
Operational, HR and market analysis all show positive results and bright
future of the company in the following industry of our country. Other than a
few pits that I discovered which include lack of use of modern technology,
bureaucratic, hierarchical structure and nepotism the overall analysis of the
company depicts a very positive and influential picture which is why it has
been profitable over the years.
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Oil industry is a lifeline for an economy. It is a world of oil exploration, oil
refining and oil marketing. Pakistan understands the importance of this
industry for its economic uplift. Therefore the government of Pakistan
established OGDCL in 1961. OGDCL is the leading firm providing 23% of total
consumption, saving Pakistan from imports and contributing to economy by
paying different charges to the government.
Prior to OGDCL's emergence, exploration activities in the country were
carried out by Pakistan Petroleum Ltd. (PPL) and Pakistan Oilfields Ltd. (POL).
In 1952, PPL discovered a giant gas field at Sui in Baluchistan. This discovery
generated immense interest in exploration and five major foreign oil
companies entered into concession agreements with the Government.
During the 1950s, these companies carried out extensive geological and
geophysical surveys and drilled 47 exploratory wells. As a result, a few small
gas fields were discovered. Despite these gas discoveries, exploration
activity after having reached its peak in mid-1950s, declined in the late
fifties. Private Companies whose main objective was to earn profit were not
interested in developing the gas discoveries especially when infrastructure
and demand for gas was non-existent. With exploration activity at its lowest
ebb several foreign exploration contracting companies terminated their
operation and either reduced or relinquished land holdings in 1961.


Oil and gas sector has been the oldest industrial base for Pakistan and the
world around us. It is the source of all kind of activities geared towards the
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generation of energy, for the use of other industries and activities that
support the economy of a nation. This reason alone has let the energy sector
to be pampered by all the sectors of production and society around us. The
setup of oil and gas related infrastructure and institutions started with the
formation of Pakistan. The then governments (in the first decade of
formation) did take some very useful decisions for the later generations of
Pakistan. They made sure that our energy needs were made secure enough
so that we could count on them. Many energy generation and exploration
projects were started which really proved useful in that decade of intense
growth of industrial development. These explorations fueled the
development process further to attain one of the fastest growths in the
history of Pakistan. This also proves that if these projects werent initiated
maybe the picture would have been much different and grotesque today.
In the public sector many companies and firms are operating including
OGDCL, PPL, PSO, SSGCL, SNGPL and PARCO. Private sector companies of
Pakistan have done a formidable job in attracting much needed investment
and also in fulfilling much of the strategic fuel needs of Pakistan. Major
Private Sector companies include: British Petroleum (BP), Asia Petroleum
Limited, Shell Pakistan, OMV Pakistan, Attock Petroleum Limited (APL) and
Chevron (Caltex) private limited.
The primary commercial energy supplies for the year 2006-07 in Pakistan
have been 60.4 million tons of oil equivalent (mtoe) from 57.9 mtoe in 200506. Natural Gas holds a share of 48.5% in primary energy supplies followed
by oil 30.0%, hydro electricity 12.6%, coal 7.3%, nuclear electricity 0.9% and
LPG 0.5% while imported electricity is only about 0.1%.
Fuel or petrol has many forms and is one of the most important energy
constituent as the world today depends on it. Most of its transportation and
many other needs would remain unfulfilled if this energy source is not
available in a timely manner or as per requirement. The total amount of
identified recoverable reserves of crude oil, according to the report of GSP
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(Geological Survey of Pakistan) is 341.800 million barrels. The average

production of crude oil during the 2006-07 was 67,438 barrels per day.
During the same period a total of 36 wells were drilled. The number of
development wells drilled during 2006-07 was 41. The drilling efforts resulted
in 17 discoveries mostly of gas/condensate, out of which, 10 were by OGDCL
and 7 by the private sector. The consumption of Petroleum products in 2007
was 1685 million tons. The percentage share of different sectors in its
consumption is as follows: Households (0.6) Industry (9.5), agriculture (0.6),
Transport (47.4), Power (40) and others (1.9) percent. There is excessive
increase in the demand for Petroleum since the number of vehicles has
increased at an alarming rate. This demand for petroleum is expected to
increase consistently over the years
Major products or kinds used and produced in Pakistan are Motor Spirit,
Kerosene, HOBC (High octane blending component), Diesel (HSD and LDO),
Furnace oil, Aviation Fuels and Naphtha. We export various by-products of
petroleum and in fact crude oil itself when it becomes more than necessary
and when there is no stocking space left in the storage depots.
At present the publicly owned shipping vessels in the industry are only 3;
held by NTC (National Tankers Corporation). Since 80% of our oil
requirements are fulfilled through the import of oil, our port facilities are of
absolute importance for the Petroleum sector. We have 2 major ports in the
country: Karachi and Port Qasim. Bulk of the traffic is handled by the Karachi
Port. Pipelines are the major transportation mode in the transfer of oil to
different locations. There are a variety of pipelines operating in the country
namely PARCO, Mahmood Kot-Faisalabad-Machike (MFM) Pipeline, APL Fuel
Oil Pipeline, White Oil Pipeline Project, Machike-Taru Jabba Pipeline Project
(MTJPP) and the trans-Karakoram oil pipeline. Refineries and the OMCs have
key installations and terminals to receive and store crude and petroleum
products in Karachi (Keamari, Korangi, Zulfiqarabad, and so on), Mahmood
Kot (mid-country) and Morgah (Rawalpindi). In addition, the PARCO pipeline
system has its own terminals at Korangi, Gujrat (mid-country), Faisalabad
and Machike.
The structure of firms in the Petroleum industry is summarized as follows:
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Upstream (Oil Exploration companies e.g. GSP)

Mid Stream (Oil Refining Companies e.g. PARCO )

Down Stream (Oil Marketing Companies e.g Shell)

The Upstream sector of our Petroleum industry consists of the Oil exploration
and extraction companies. The Midstream sector represents the oil refineries
operating in the sector. The downstream sector comprises of the firms that
directly market the petroleum and its by-products to the final consumer.
Pakistan has the worlds second largest pipeline network after America in the
world which is being run by two companies namely the SNGPL and SSGCL.
The transmission system of SNGPL is in Punjab and NWFP. The key
installations for Gas are the areas where it is discovered, since it's from there
that the gas is being pumped into the pipeline system of the country. For
example the main Transmission system for most of Pakistan is situated near
Gas is brought out from the gas fields, processed sent to the distribution
networks and from there sent to the consumers as required. There is a
vertically integrated environment for Gas sector. The upstream sector
consists of different companies that may or may not be involved in the






Success Ratio
Finding and
Cost, Spend



Supply Chain




Technical Staff Gap Requisition to

Order cycle

& DownDownstream

Production Cost

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well. Many companies are operating exploratory wells and development

drilling wells in Pakistan. Midstream sector is processing gas and distributing
it to networks for transporting and home delivery. Downstream sector is
where the gas is supplied to the end users the main suppliers being SSGCL
and SNGPL who have been marketing and setting the price for different

The Oil & Gas Development Company Limited (OGDCL) was created under an
Ordinance in 1961, to undertake comprehensive exploratory program and
promote Pakistans oil and gas prospects. In 1997, it was converted into a
Public Limited Company and is now governed by the Companies Ordinance
OGDCL is the largest petroleum exploration & production (E&P) company in
the Pakistan oil and gas sector based on recoverable reserves, hydrocarbon
production and exploration acreage holding. As at June 30, 2006, OGDCL
held the largest portfolio of recoverable hydrocarbon reserves of Pakistan, at
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32% of gas and 37% of oil, respectively. In addition, OGDCL contributed 22%
of the countrys total natural gas production and 48% of its oil production on
net basis.
Prior to 23rd October 1997, OGDCL was a statutory Corporation and was
known as Oil & Gas Development Company. It was incorporated as a Public
Limited Company w.e.f. 23rd October1997 and became known as Oil & Gas
Development Company Limited.
In November 2003, Government of Pakistan (GOP) divested 5% of its
shareholding in OGDCL by way of an Initial Public Offering (IPO) on the
Pakistani Stock Exchanges. Subsequently, in December 2006, GOP divested
another 10% of its stake in OGDCL in the form of Global Depository Shares
and listing of the Company on the London Stock Exchange.
OGDCL plays a leading role in developing oil and gas resources in Pakistan.
Our principle objective is to first expand and accelerate onshore exploration
and development activities and, contingent upon theses activities, undertake
carefully selected offshore and international development activities to
augment our oil and gas resources. With a balanced, efficient and
competitive structure, OGDCL explores and exploits indigenous resources for
optimum production of oil and gas, besides seeking opportunities abroad.
OGDCL has the largest acreage position in Pakistan and currently operates
17 exploration concessions and holds non operated working interest in
another 7 exploration concessions. In addition OGDCL has 35 Mining and
Development & Production Leases, which are operated by it besides having
working interest ownership in 28 non-operated Mining and Development &
Production Leases, OGDCL has an extensive database. Services of the
Companys highly qualified and skilled expertise in the fields of geology and
geophysics are frequently availed y the local and foreign oil companies. It
also leases out its drilling rigs to the private sector and carries out seismic
surveys and data processing on contract for these companies on extremely
competitive rates.
OGDCL now holds the largest shares of oil and gas reserves in the country,
i.e. 48% of total oil and 37% of total gas reserves. Its percentage share of the
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total oil and gas production in Pakistan is 34% and 28% respectively. On the
basis of its activities since inception, the company has until June 30, 2003
and made 59 discoveries with a success ratio of 1:3. OGDCLs updated
estimates for remaining recoverable oil and gas reserves as on 1 st July, 2003,
stood at 9.228 billion standard cubic feet (BSCF) of gas and 164.25 million
barrels of oil including companys share in non operated Joint Ventures.
During the last 42 years OGDCL has grown into a technically and
commercially viable organization.
The main functions of the Corporation are:1. To plan, organize and implement
development of oil and as resources.





2. To carry out geological, geophysical and other surveys for the

exploration of oil and gas.
3. To carry out drilling and other prospecting operations to prove and
estimate the reserves of oil and gas.
4. To produce, refine and sale oil and gas
5. To perform other functions as the Federal Government may from time
to time assign to the Corporation.
In order to achieve this goal, the Company seeks to execute the following
1. Accelerate Production Growth: by continuing to accelerate production
growth, allowing the Company to utilize its significant reserves base
and capitalize on the strong economic growth and accelerating energy
demand in Pakistan.
2. Exploit Exploration Opportunities: by building the Companys future
reserves portfolio through its large onshore exploration acreage. For
the fiscal year 2007, the Company has set targets for exploration
drilling of at least 41 wells and plan to increase this target to 52 wells
in fiscal year 2008 and 65 wells in fiscal year 2009.
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3. Maintain Low Cost Operations: OGDCLs operating environment,

namely the geographic concentration of its reserves base within
Pakistan, will be a major factor in allowing it to control its low cost
structure. Within Pakistan, the Companys leading position also enables
it to access economies of scale across its significant reserves base and
4. Pursue Selective International Expansion: while domestic expansion
remains OGDCLs core focus, the Company intends to grow and
diversify its portfolio through selective international expansion in the
medium to long-term.
5. Implementing International Best Practice: by ensuring an efficient
organizational structure and business processes that are focused on
core production. As part of our restructuring plan, OGDCL has
established an in-house technical services division, the Petroserv
Directorate, which separates technical support services from core E&P

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OGDCL is a government owned organization; most of its customers are
government owned. Everything OGDCL produces is sold under the name of
President of Pakistan there and then. In other words once the oil or gas
comes out of the ground it is no longer the property of OGDCL. There are no
Oil and Gas storage facilities of OGDCL. The fields are operated with the view
of optimizing their output over a length of period of time. This is important
because if the fields are over producing then they might dry out very quickly.
However due to the prevalent demand conditions most fields are producing
at their maximum output level. Production is done round the clock without
any scheduled stops except for maintenance.
There are six customers of OGDCL, 4 oil refineries and 2 gas companies.
Crude oil from the fields is transported to the two oil refineries in Karachi,
PARCO in Multan and Attock oil refinery. Gas for further processing is sold to
SNGPL and SSGCL. Transportation of the products is the responsibility of
Gas is only transported through gas pipelines to the gas processing plants of
the respective companies where it is processed for daily consumption. No
other means are used. However raw gas extracted from underground has
very variable composition; it contains a lot of impurities in various quantities.
Before the raw gas which can be fed into the processing plants, it needs to
be of the required standard. There are several on site gas processing plants
which process it so that the required standards are met and then it is
transported. Oil is transported through pipelines and also through oil tankers.
The gas pipelines are set up in collaboration with the government where
possible. These pipelines take the oil directly from the oil fields to the
refineries. Where pipelines are not present or cannot be made due to any
reason third party carriers are used to transport the oil. NLC tankers are often
used by OGDCL for this purpose. OGDCL doesnt own any oil tankers or any
oil carrying vehicles however it bears the cost.
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OGDCL financial performance has been consistently improving with
sustainable growth since the time it became a self-financing Company. The
Company is the single largest contributor of more than Rs. 37 billion to the
national exchequer in the shape of royalty, duties, taxes and other
OGDCL financial performance in the current year is quite impressive. Sales
growth is about 25%, the reason for the high sales is rise in oil and is prices
in the country. Gross profit, operating profit, Net profit of the company are
high as compared all companies in the industry, this is because of the less
decommissioning cost, no financial leverage, and other incomes. While in
turnover, companys debtor turnover is less as compared to other companies
showing managerial inefficiency and infectivity. Earning per share of
company is ever rising due to rising net income, while it is less as compared
to companies in industry; this is because of 22times more share of OGDCL
than any other company in industry. OGDCL has a growth of almost 40%. An
in future prospect, the companys growth is expected to be 37.61% under
sustainable growth method, while 35.31% under varying growth method,
showing the company is growing robustly. OGDCL is 85% government owned,
so the major income of it goes to the government revenues
OGDCL is 100% equity financed company out of which 85% share is of
Government of Pakistan and remaining 15% is issued to general public and
some shares are also bought by international investors. Government of
Pakistan divested 9.5% of the total shares of the company through
secondary offering in the form of Global Depository Shares to international
and local institutional investors. OGDCL became the first Pakistani E&P
Company listed in the London Stock Exchange with effect from December
2006 and acquired 70% working interest along with the operatorship in
Guddu Block under an assignment agreement executed in 2007 between

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OGDCL has high operating leverage as it has high total Fixed Expenditures as
compared to variable expenditure, it gives a magnifying effect. It also shows
that the company is risky one.
The sales of OGDCL have also grown insignificantly. In 2002 the sales of
OGDCL million barrels of oil and now it has reached to 14500 barrels of oil.
This growth in sales is due to increasing demand of oil. The sale of Gas has
also increased from 250000 MMcF in 2002 to 300000 in 2005 which was also
same in 2007, now it has increased to 350000.
The EPS of OGDCL has increased from 4 in 2002 to 11.54 in 2008. The
Dividend payout rate of OGDCL is very high because of the government
control due to 85% share in capital. Government covers its losses of petrol by
getting these dividends.


All policy related issues are dealt by the board of Directors that is headed by
a non-executive Chairman and a full time Managing director. The general
direction, policies and affairs of the Company vests in a Board of Directors,
which consists of 01 Chairman, 10 Directors and 01 Managing Director (MD).
MD is responsible for operational and other activities. The OGDCL has been
re-organized during the last few years; it now operates much purely as Oil
Company does. Emphasis is on Professional Competence and getting things
done. OGDCL can broadly be divided in to following three companies:


Exploration & Production (E& P )

Technical Services

The whole organization has been streamlined on the functional basis and it
has emerged as an efficient unit, while speed and competence are its Hall
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Mark. It is now divided into separate departments and each department is in

a position to work independent business unit. For effective operational
activities, different Executive Directors performs following activities in
consultation with General Managers, who are assisted by the concerned
Departmental Managers:

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The Executive Director Exploration:

Supervises all the geophysical and geological and exploration activities and
is assisted by different Manager.
Executive Director Drilling:
When a potential oil or gas field has been identified through seismic surveys,
it is then drilled to assess the quality and quantity of the deposits. This
process is achieved through drilling. ED (Drilling) is responsible for all the
drilling activities carried out by OGDCL in the country.
Executive Director Admin:
The administration department manages all the activities from recruitment
to training and development and is responsible for management of personnel
Executive Director Corporate Affairs:
Looks after the activities of planning of different development programs and
monitors the implementation of that program. It coordinates with all the
department of OGDCL and prepares a strategic plan for the activities of
OGDCL. This department also acts as a liaison between OGDCL different
1. Maintenance of service record of employees from their induction to
retirement and beyond.
2. Transfers Postings and maintenance of seniority.
3. Handling of Personnel grievances.
4. Processing of Pension / EOBI and retirement cases.
5. Implementation of CBA Managements agreements after every two years
6. Maintenance of Database-Computerization.
7. Responses to Senate, National Assembly Questions / Other Government
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Housing section is also one of the permanent parts of OGDCL Islamabad
therefore it performs the function for OGDCLs staff member to hire houses
for their accommodation. It has many functions they are:

Hiring of houses for the employees of OGDCL.

Hiring of building for offices and lodges at Islamabad.

Hiring of lodges, rest houses for staff and officer at big cities like Lahore,
Karachi Peshawar etc.

Actually PAO is the head of two major sections, that in general admin section
and housing section. All type of documents/cases are tabled to the PAO for
verification and signed. He may approve the legal cases and also has the
power to reject illegal cases. Particularly in housing cases the approval of
PAO is must. The posting (DAK) of all Islamabad come to the PAO and also he
distributes the post to the required party/person. He is the in charge of
overall staff of both sections.
The main function of transport section is to provide transport facilities to the
officer staff member of OGDCL Islamabad. Various types of vehicle they
provide to the officers / staff in various shapes.
Manager they provide official vehicles for duty.
For each department they provide special vehicle for emergency cases.

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Large number of coasters for officers and buses for other lower staff are
available which perform the duty of to pick early in the morning and drop at
the end of office time the staff to perform their duties.
At each field from 5 to 6 vehicles ready every time for field duties at the time
of emergency.
Similarly some vehicles are available for engineers and other staff.


Legal Service Department
Legal service department is one of the most simple and little department but
its functions are always maintained on climax position in OGDCL. To deal with
court and legal cases, whenever occur in OGDCL. If any body from outside
accused on OGDCL in any affair, then legal service department stands from
management side of OGDCL. They have their own advocates, but mostly
they consult with outside advocates on various fees. On the other side when
OGDCL claims on any person or body of person, so at this also they deals the
cases same as above. But when inside OGDCL any employee appeal against
any officer under the section rule 25, so if the case is lower level then legal
service department delete that claim by negotiation with employee. After
that if the employee is frustrated then he can go to the court for appeal. It is
not essential for employee as well as for legal service department that they
hire advocate for case. Employee can witness in court personally, but legal
service department are always advocates from the management side. It is
the information from the department that mostly cases are go in favors of

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Medical Center Department Organogram

Manager Medical Services

It is the head of the medical services and is responsible for,

To manage the medical centers of the corporation.

To provide medical facilities to the corporation employees.

OGDCL Medical Centre Islamabad Function

To check the OPD patients

To check the OPD bills.

Every year medical centre make an arrangement with any drug store on 6%
discount. It is a permanent discount so after check up, the patient may
receive the drugs from that particular drug store. For verification the owner
of the drug store send bills to the DCMO at the each month. DCMO checks
and make verification and signed on those bills. After that they refer the bills
to the account department for payment. Vaccination programmed is also
processed in MC. They keep money for vaccination.
Diagnostic Facilities
X-ray and laboratory diagnostic facilities are available at M.C Islamabad.
Patients are referred for hospitalization as and when required to
hospital/nursing, homes /specialist on the panel of the corporation and reimbursement is allowed when such facilities are not availed.
Medicines are provided to patients from entitle panelist chemist through
prescription. Emergency drug are also kept at both medical centre to meet
any emergency.
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Vaccination facilities for children are available at both medical centers and
every Monday is specially fixed for this purpose.
Ambulance equipped with first aid kit is available at medical centre
Islamabad for 24 hours duty.
Welfare Section
It is just like a bridge between the union and management. It is also a proper
channel between the two bodies.
Functions of Welfare Section
Various types of functions performed by the welfare section are as under:

To deal with union matters.

To provide facilities to the staff members of their families.

Grant of house building advance.

Conveyance advance, to give amount to the staff members after five

years in OGDCL for conveyance.

Distress grant, at the time when any staff member die, the amount will be
given to his wife.

Benevolent fund, in extra fund by pension. i.e. deducted every

monthRs.15/- by their income

Similarly large number of facilities they provide to the staff member, due to
the arrangement with management. The union and management make on
agreement after every two years. Welfare section negotiates with union from
the management side.

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Pension Section
Pension was introduced in OGDCL after 1984. After 10 years in OGDCL the
staff member qualified for pension and after 25. Years he can demand for
pension. The super innovation of the pension is maximum 60 Years. After 60
years he can not stay more. Accommodation allowance is 50% of the growth
monthly pension supposes that on the age of 25 years of service his pension
will be counted of the 14th scale employee.As a whole it means that OGDCL
will provide pension till 15 years and something. After that the pension
allowance will be counted again.
Recruitment Section
Recruitment section is one which is a real base to provide facilities of
selection of new and old employees.
Functions of Recruitment Section
Recruitment section basically performs the following functions.
Analyze the recruitment of employees in each department.

To recruit new candidates as a trainee.

To recruit the experimental employees for higher jobs.

To take examination and interview of new and experimental candidates.

After circulation to every department they analyze that how many
employees perform their duties and how many are required and they take a
deficiency with his scale. This procedure is called Organogram.
After the completion of organogram they take the official approval from
chairman and give advertisement through public relation department of the
most required vacancies. The recruitment procedure of the OGDCL is mostly
related with CSS of Pakistan .i.e. as under:

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Sindh rural


Sindh urban










After the advertisement they receive application from all Pakistan and take
written examination. This examination is held in those departments, where
the candidate want to join and that department send the result to
recruitment section.
The selection procedure is recently shortly changed and is as under:Written Test




Academic Qualification


The time for a written test is usually one hour. Those candidates who
qualified the test then they send a call for interview if they are not low merit.
It should be kept in mind that the interview has no value and no marks. It is
just only for to and to analyze the courage, boldness communication skill,
convincing power and also his dealing with other people.
Contract Basis
Trainees Special Trainees
Hiring through Contractor
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Classified appointment
Managing Director and Members of Human Resource Committee.
Managing Director
Executive Director (Admin) / G.M. (Admin)


Executive Director (Concerned)

Professional / Expert in the relevant field/discipline
Preferably having PhD or Master degree in the
Relevant subject
Head of Department Concerned



Executive Director (Admin)


Executive Director (Concerned)


Head of Department Concerned


Head of Department Concerned Professional/Expert


Head of Department Concerned


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Discipline section deals with those matters which depend upon any
misbehavior, mis-conduct or any offence which occur in fields and offices by
the employees. In OGDCL there is delegation of powers .Every higher
authority can take action against that evil. After taking action he send a
report to discipline section then discipline section help him in penalties with
the approval of executive directors and chairman under the rule of 1973.
ODGCL Servants (Efficiency and Discipline) Rules-1973.
Government servant (efficiency and discipline) rules 1960 which were
adopted in the draft service rules vide part-II statutory notification (SRO)
govt of Pakistan cabinet secretariat(established division) notification No.SRO1213(1)/73 published in the gazette of Pakistan enter ordinary dated 18-081973.These new rules have been adopted by the oil and gas developing
company limited and matters relating to efficiency and discipline of the
employees shall henceforth be governed by the OGDCL servants rules 1973
being issued as annex.

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The following are the minor and major penalties namely:


With holding for a specific period, promotion are increment, otherwise

then for unfitness for promotion financial advancement, in accordance
with the rules or orders pertaining to the service or post.

Stoppage for a specific period, at an efficiency bar in the time scale, other
wise then for unfitness to cross such bars.

Recovery from the pay of the whole or any part of any pecuniary
(minority) loss caused to corporation by negligence or breach of orders.


Reduction to a lower post or time scale, or to a lower stage in a time


Compulsory retirement.

Removal from service and

Dismissal from service.

Removal from the service does not but the dismissal from the service
does disqualify for future in this rule, removal or dismissal from service
does not include the discharge of a person.

There will be no appeal against minor penalties. However, a person on whom
major penalties is imposed shall have a right to appeal to the next higher
Provided that whether the penalties are imposed by order of the board of
directors, there shall be no appeal but the person concerned may apply for
review of the order.
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The chairmans approval is necessary at all the stages for issuing the show
cause notices and enquiry letter for awarding the final punishment.
Career planning is basically career orientation and career development.
Career planning section is under the control of personnel manager. It informs
the employees of OGDCL about their future planning. That what he performs
his duty and also they prescribed to the employees their operational set up.
It informs the employees that what they will do after 5 years And 10 years.
Promotion is main figure of career planning section. The elaboration is as
under:The promotion and recruitment criteria of the corporation was notified vide
O. M.N.AA, 0103-15 dated 12 November, 1984, where after a few
clarifications were also issued from time to time. However, there have been
some problems in application of the promotion criteria in some cases.
Therefore to remove these difficulties, the promotion criteria has been
reviewed and revised under the guidance of the executive directors.
The revised promotion criteria are notified herewith which shall be effective
from first July, 1991.
Yearly performance reviews are critical. Organizations are hard pressed to
find good reasons why they cant dedicate an hour long meeting once a year
to ensure the mutual needs of the employee and organization are being met.
Performance review help supervisors feel more honest in their relation ship
with their subordinates and feel better about themselves in their supervisor
roles. Subordinates are assured clear understanding of what expected from
them, their own personal strengths and areas for development and a solid
sense of their relationship with their supervisor. Avoiding performance issues
ultimately decrease morale, decrease credibility of management, decreases
the organizations overall effectiveness and wastes more of managements
time to do what isnt being done properly.
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The scoring system is also having a major impact on effective performance

appraisals. The accuracy and reliability of any scoring system increases with
full descriptions/definitions, and better still with examples for each score
band. This gives everyone the same objective scientific reference points, and
reduces subjectivity.
The performance appraisal process typically consists of four related steps as

Establish a common understanding between the manager (evaluator)

and employee (evaluate) regarding work expectations; mainly, the
work to be accomplished and how the work is to be evaluated.

Ongoing assessment of performance and the progress against work

expectation. Provisions should be made for the regular feedback of
information to clarify and modify the goals and expectations, to correct
un acceptable performance before it was too late, and to reward
superior performance with proper praise and reorganization.

Formal documentation of performance through the completion of a

performance and development appraisal form appropriate to the job

The formal performance and development appraisal discussion, based

on the completed appraisal form and ending in the construction of a
development plan.

All the departments at OGDC are enforce to follow following performance

Very Good







Page | 27


CPC invites recommendations to reach end February and end August

each year. They are seldom received according to schedule.
Consequently, CPC has great difficulty in meeting the promotion dates
of 1st July and 1st December each year

Cases are received with inadequate information causing wastage of

time and un-necessary correspondence

There is lack of effective communication among departments which

causes un-necessary wastage in time and efforts

Absence or lack of clarity of promotion channels

Career Planning begins from the Department of the individual. H.O.D

has obligation to pay special attention to the Career development of
those in his Department. Recommendations received in CPC very rarely
have that aspect properly dealt


Computerization of record is of great essence for speedy disposal and

accuracy of record

CPC is keen for digitalizing ACRs and related record. Consultancy

services of a reputed company will greatly help in this direction

Training of staff and officers of CPC in the field of computerization is

essential and primary step

On line information system may be developed among Personnel, CPC,

Administration and other related departments. This will speed up
information and provide updated and accurate data

Promotion criteria should incorporate changes reflecting ongoing

trends. CPC may be involved in appraising the management on the
current issues and difficulties in practical application. (Proposals for
improvement in Promotion Criteria have been recently submitted).
Page | 28


Major oil and gas fields of OGDCL are in Tando Alam, Toot, Uch, Bobi, Chanda,
Chak Naurang, Dhodak, Daru, Dakhni, Fimkassar, Kunnar, Kal, Lashari,
Missan, Missa Keswal, Nandpur, Pasakhi, Pali, Qadirpur, Rajian, Sadqal, Sono
and Thora.

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Public relation department is one of the permanent departments of OGDC.
Unfortunately it cannot surely say that on which date and year it was
established in OGDCL.
Initially it was started and performs duties in Karachi, but in 1985 shifted to
Islamabad along with whole records.
Public relation department is more concerned with press. The main objective
is to provide accurate and an esteem information to the general public about
OGDCLs functions that what OGDCL is doing. For the development of oil and
gas sometime press conference also arranged for this purpose. Public
relation department deliberate plan and sustained efforts to established and
maintain natural understanding between an organization and its public.
It also performs the function to maintain the relation between the
management and staff. Public relation department operates various methods
and procedures to inform the public. Various types of newspapers are mostly
used to inform the public. Through newspapers they give advertisement
about OGDCL.
The operations of OGDCL are such that it does not require a formal
marketing department. As is evident in the diagram below, OGDCL supplies
gas and oil through pipelines. The product is transported to oil companies
such as PSO, Shell and gas companies such as SSGCL and SGNPL. The
product reaches the end consumers through these companies.
Since the gas is supplied to the end users the main suppliers being SSGCL
and SNGPL who have been marketing and setting the price for different

Page | 30

At home the demand for energy in the form of gas and oil has skyrocketed.
With the shortage of electricity the industrial sector is also looking to gas for
its energy supplies. Therefore right now there is a deficit between demand
and supply.
In the product line of OGDCL, the following are its products by which it is
earning profits:

Crude Oil.




Low Speed Diesel.

Kerosene Oil.


Solvent Oil.

Qadir Pur Development Project
Qadirpur gas field, one of the large fields in the country was
discovered in 1990. It is located in the central Indus basin,
south of kandhkot and Sui gas field. In accordance with the
consolidated revised development plan dated 30 November,
2002 phase-II revamp project was commissioned on 23
January 2004 to process MMscfd of gas. Under this plan
pretreatment memguard unit and new membrane elements
were installed and drilling of one well was completed.
Chanda Development Project
Chanda oil field, the over discovery in NWFP, was brought on
to stream and it started giving production from 17 July, 2004,
and is currently producing 3,500 barrels of oil and 13 MMscf
Page | 31

of gas per day. Chanda LPG plant will also be installed by

October 2004 were 25-40 M.tons of LPG will be produced.
The third well at Chanda field is planned to be in third
quarter of 2004- 2005.This will increased the production of
field to 5,300 sbarells of oil and 19 MMscf of gas per day.
Bobi Development Project
First phase of the bobi development project has also been
commissioned in June 2004 and is producing 1,050 barells of
stabilized condensate per day. Phase-II of the project is
expected to be streamlined in October 2004. On its
completion, the field will produce about 2,800 barrels of oil
per day and 125 M.tons of LGP Satellite fields namely
Mithrao and chak dim.
Dhodak Plant Enhancement And Dakhni Expansion
Dhodak plant enhancement and dakhni expansion projects
are also in progress and are expected to be completed by
some time completion, the projects will result in substantial
enhancement of production of oil, gas, LPG and sulpher.
Growth Rate for the Entire Industry
Reflecting increasing consumer demand for petroleum
products, world crude oil demand has been growing at an
annualized compound rate slightly in excess of 2 percent in
recent years. Demand growth is highest in the developing
world, particularly in China and India (each with a population
in excess of 1 billion) and to a lesser extent in Africa (0.8
billion) and South America (0.35 billion). Where high demand
growth exists it is primarily due to rapidly rising consumer
demand for transportation via cars and trucks powered with
internal combustion engines. For economic and/or political
reasons, this high demand growth component did not exist in
most of the developing world even a decade ago.

Page | 32

Until 2030, global energy demand is expected to increase by

50% of which around 60% of the energy supply is expected
to be met by oil and natural gas. Currently 74% of the
energy mix, will still be by far the dominant contributor to
the energy mix in 2020. Oil will remain the dominant energy
source for the transport sector and feedstock for the
petrochemical industry. Gas will take an increasing market
share in energy supply, essentially for power generation.

Page | 33

OGDCL is Pakistans largest E and P Company. It has a major
share in the industry. In the past competition has been
minimum but today things have changed. Its competitors,
though still not in any position to threaten its share, are
gaining strength. Major competitors for OGDCL are discussed
BP Pakistan is a truly Pakistan based company and lately it
has hired its entire employee pool from Pakistan. BP has
limited all its operations to southern Sindh in order to keep it
simple and efficient. From the time of its inception BP has
been responsible for 22% of the total exploratory wells
drilled and 43% of all the discoveries made in Pakistan.
Currently BP is responsible for 16% of the oil and 6% of the
gas that is conceived from all of the exploration projects of
OMV Pakistan
OMV is basically the biggest private E&P Company working in
the gas sector of Pakistan. It is the operator of the Sawan
and Miano gas fields, and the Kadanwari processing facilities,
OMV is reliably producing more than 100,000 boe/d (100%),
covering around 16% of Pakistans natural gas demand.
Mari Gas
Mari Gas Company Limited is one of the largest oil & gas
exploration and production companies in Pakistan. Over the
years with the development of the Field and the subsequent
evaluations its gas reserves were enhanced to 6.8TCF, thus
making Mari the countrys 2nd largest gas field.
Page | 34

Pakistan Petroleum Ltd is Pakistan's Premier E&P Company,

the oldest Exploration and Production Company in the
country was incorporated on 5th June 1950. The gas, LPG
and NGL production from PPL operated and non-operated
fields for the year 2004-05 in terms of oil equivalent, was
about 171,205 barrels of crude oil per day.

Technology is of crucial importance to enable oil and gas
companies to grow their business. It is important to
benchmark their use of technology with industry peers.
Instilling value management as a key competence supports
business / IT strategy alignment.
OGDCL is using the modern seismic technology for improving
its ability to discover the unexploited oil and gas potential in
the country. A number of major institutional reforms and
improvements have been implemented in all areas of
operations enabling the company to take up the challenge of
making the country self-reliant in the energy sector.
Oil related machinery
Pakistan being an agrarian economy and not having
extensive knowledge in technical fields has always had
problem with industrial developments. No industry in
Pakistan can be said to be 100% self sufficient in the
indigenous production of their machinery and Petroleum is
no exception. In fact, the machinery required in the
Petroleum sector is far more complicated and advanced than
in other industries. According to Total Group of Companies
which is an indenter for many refineries and oil and gas
distribution networks most of the refineries and other
industries related to oil and gas have one common source of
their imports: Germany. Majority of our imports in the
Petroleum capital items are imported from Germany,
Page | 35

especially in the upstream sector that includes OGDCL. The

prime purpose of the machinery used in this sector is in the
use of oil extraction. One oil drill, that can dig up to 100 feet
costs around .1- .2 million dollars from Germany. The figure is
in respect to the fact that if we buy these machinery in bulk.
Otherwise the cost is higher. Netherlands is our second
option for the import of the Capital Machinery. The small
parts used in the machinery like bolts, nuts and some basic
electric material are taken from our indigenous production or
resellers in Dubai and Arab Countries. Since the capital
requirement is quite high, the machinery is updated after
every 7 years as its maximum life is said to be 10 years after
which the machinery does not work up to its potential and
also with time new machinery keeps coming which can
extract more oil in the same time due to technological
innovations taking place in the sector. However keeping all
this in mind it is proposed that machinery should be renewed
in 5 years to keep up the supply of oil, but the upstream
sector (which obviously includes OGDCL) doesnt find it
economically feasible.
Gas Related Machinery
Pakistan has the latest and the most improvised machinery
that is being used in different processes of gas refining,
pumping and distribution. The machinery and Capital used in
this industry is very tough to use and learn because of the
technical expertise needed. Pakistan lacks that know how so
they have to call in engineers to setup machinery whenever
they buy it to setup a new refining or distribution plant.
All of the equipment that is usually upgraded to or installed
on a new project originates from European countries like
Germany, Austria and Italy. Some of the equipment also
comes from USA and Japan. Lately there has been a lot said
about Ukrainian and Russian machinery as well.

Page | 36

Machinery that is being used in the Upstream sector

including OGDCL includes Pumps that bring Gas out and
pippins responsible for taking that gas to the processing
plants if the impurity content is too high. This machinery has
many parts like piping and nuts and bolts connecting them
that are made in Pakistan but like oil most of the rigs that are
used to bring gas out from under the crust are made in
countries like Italy, Russia and Germany. China has also gone
into this sector but yet has not shown any important signs.
Many innovations are taking place in the oil and gas industry.
It remains the most lucrative and profitable business in the
world as global demand for energy soars disproportionately
to the supply. In this scenario a significant amount of
resources are invested in R & D for more cost-effective,
efficient and productive extraction of gas and oil.


Currently OGDCL is operator in Nineteen Exploratory Blocks
and working interest in nine non-operated blocks. In addition
company has got 34 mining and D & PL leases. Targets have
been based on risks and opportunities. Physical targets for
the year 200-02 was envisage drilling of fourteen wells (nine
exploratory and five development), 2950 Km of seismic
survey, production of 28,111 barrels per day, 730 MMcf per
day gas, 313 metric tons per day pf LPG and 60 tons per
days pf sulphur. To accelerate exploration activities by
covering 3,200 km of seismic Survey and drilling of 12
exploratory wells with the clear objective of a net increase in
oil and gas reserves. It is expected that exploratory program
will result in increase in OGDCL reservoir in oil and Gas and
also to the countrys reservoir.
To develop the already discovered oil and gas fields with a
view to enhance production and improve revenues of US$ 35
million per annum and 24,500 barrels of oil per day and
Page | 37

565,605 Mmcfd of gas is expected to be produced during

1999-2000. Exploratory wells are being drilled on various
points i.e. Sanjharo , Norijagir, Ghari, &, Chanda etc; from
these points oil and gas are discoved to achieve the future
To modernize, replace and effectively maintain the drilling,
seismic and processing equipment in order to keep the
equipment in sound operating condition at all times. To
develop OGDCLs human resources through transfer of
technology and training. To rationalize stores and spares
inventory to the optimum level. OGDCL is providing gas to
IPPs like Uch power from Uch Gas Filed Project and from
Nandpur / Panjpir to Fauji Kabirwala Power Limited. All these
projects are contributing a lot of income to the OGDCLs
current revenues. Despite number of Joint ventures and
competitors in the oil and gas sector, OGDCL has drilled
different concessions independently as well as it has
ventures with other companys successfully. OGDCL Seismic
Crews are busy in G&G survey on different concession like
Kharar, Basal, Ranpathani, Sanghar and Zin etc.


OGDCL plans to drill 45 wells during current financial year
(2005-06), to explore new Drillable prospects. The Company
has also started three new development projects Tando
Allah Yar, Sinjhoro and Uch-II. The Company has placed great
emphasis on fast track completion of these projects and on
progressive project management concepts.

Page | 38




Personnel (HR) Department Functions

Maintenance of personnel files
As we have mentioned above that every section is related to
the concerned department. So whenever any new employees
recruit OGDCL, the concerned section maintained this
personnel record from the first day. Every employee has their
own personal file in personnel department.
The personnel department also maintains the record of each
employee for promotion, the minimum time for promotion is
five years. So at the end of every year they check the record
of each employee, his ACR (Annual Confidential Report),
experience qualification etc. Similarly if any employee want
to leave for more than 48 days which are Official than
concerned department will approval them and send to the
personnel section. In short any type of personal problem or
work will maintain in his personal files with personnel
department. Its called correspondence.
Pay Scale and Fixation
It is also the function of personnel department that they
fixed the pay scale for employees. There are three types of
employees in OGDC.

Executive Group




Contractual Staff

(1 - 16)

Recently personnel department has computerized the whole

process to reduce the burden, whenever they want any type
Page | 39

of data immediately, call to computer. They have their own

computer section.

Production Department Functions

Various measures have been taken in order to augment
production levels to reach new heights. This includes setting
up of aggressive targets, enduring commitment by its
professionals, and induction of latest technologies, pursuing
techniques, enhancing in-house engineering design and
simulation capabilities, utilization of state-of-the art
automation systems and fostering use of information

Marketing Department Functions

OGDCL does not do any kind of marketing since its major
contacts are regular local and overseas clients. The
engineers constantly explore areas for oil and gas reserves in
order to see where they can hit the jack pot.

During my stay at OGDC head office, I have observed some
weaknesses in the organizational setup functioning of
various departments. The main issues are with the Hr
department and are briefly described below.

Lack of Awareness of Employees Regarding Latest
Technological Changes
Technical and non technical employees working at field /
wells sites in far away areas of the country do not have any
access to the latest modern and technological changes,
literature etc.
Page | 40

Lack of Career Planning Of Employees

OGDC is only organization in the field of exploration and
development of oil and gas resources of the country, but
unfortunately does not use scientific techniques in career
planning of employees.
Unfair Utilization of Transport
OGDC have a large number of vehicles, mostly at sites but
they are misused by their location in charge. While officers of
Equ. Grades 19 are not entitled to have official transport.
OGDC also provides pick and drop facilities to stop and
officers to some extent with few Buses / Coasters but it is not
sufficiently only few percent get benefit from this.

Page | 41

Unnecessary Purchases at Sites

Due to less accountability and more delegate powers,
location in charge uses their powers towards petty cash
purchases from local market. OGDC have a centralized
procurement department but stocks are accumulated in the
absence of the strict rules and policies regarding purchases
and stock position.
Poor Method of Recruitment
To recruit the employees both internal and external methods
are used but the corporation gives preference to the internal
method. The main draw back of this method is that it blocks
the way for new generation which carry new ideas and
knowledge. Further more the recruitment system is also
influenced by the nepotism of politicians.
In just Way of Awarding Training
Training is used to develop the skills of the employees in this
regard lot expenditure is made on training but unfortunately
training facilities is also awarded to the employees based on
Promotion Policy
Promotion policy is the mixture of both merit and seniority,
but in practice emphasis is given to ACR and one can say
that where there is ACR there is less chance of favoritisms.

My stay at OGDCL was a very eye-opening and valuable
learning experience for me. I am awed by how well things
can work in state run organizations. My internship at OGDCL
removed my previous misperceptions regarding the
Page | 42

bureaucracy, nepotism and corruption are very much present
in the organization but overall there is a smooth running of
operations and profitability is very much there. There is great
focus on the companys mission of providing oil and gas to
Pakistan and maintaining productivity. Discoveries of energy
reservoirs are made on a regular basis.
The company also maintains a chic, informative and very upto-date website for the public which is quite commendable.

During my stay in OGDC I carefully observed the major flaws
and setbacks face by the company. I put forward my
suggestions the following practicable remedies to improve
the existing practices.
1. Quarterly comparison of actual verses budgeted
expenditure is carried out to ascertain weakness and cost
2. Timely payment to the vendor, supplier and contractors
is effective tool for image building of OGDCL. To achieve
this, internal procedure should be well defined which will
reduce time in these payments.
3. To save time of the employees chasing their payments
employee related payments should be excluded from the
ambit of pre-audit.
4. All accountants should be given training on different
accounting modules and chart of accounts. So that
monopoly and dependence on few is eliminated.
5. Rotation of duties should be made at regular interval to
improve the overall work output and to keep the interest
of the employee intact.

Page | 43

6. Responsibility of clearing/correcting the entries should be

fixed with the section generating the activities.
7. A professional Accountant should be assigned the job to
the review of AFEs with the collaboration of technical
professionals for proper and effective control to avoid
cost over runs.
8. For effective cost control, standardization of different
stationery items and consumable is approved for
purchasing in bulk from the manufacturer directly.
9. A good internal Control is a key to success for an
organization, but in OGDCL there is a lack of internal
control, which should be improved and implemented
10. Ensure core E&P excellence through Meld exploration,
production and reservoir management, hasten and grow
reserves to meet Pakistans energy requirements,
accelerate production, in part via building enhancement
11. Attain new horizons, explore and master remaining
Pakistan structures, partner to build new expertise
offshore, heavier oils,
Understand potential for and
exploit non-conventional hydrocarbons, operationalise
international E&P intent
12. Fit with and help shape Pakistans downstream
downstream to leverage reserves, strategically add
reserves/production to enhance domestic infrastructure.
13. With the passage of time many modern technologies
changes take place in oil and gas industry, OGDC must
take necessary action to acquire modern technologies so
that they can compete at international level and in this
way they can play more effective role in Pakistans
Page | 44

14. They should to pay full attention to the intensive

professional training of staff in related fields. The
department concerned can organize professional training
at OGDC or with outside agencies etc and latest
literature newspapers and magazines etc of professional
interest should be provided at sites free of cost.
15. Anticipate and support core operations and become
commercially competitive.
16. Although the management in recent past takes some
initiative in this area, a new department career planning
department is created and few posting were made in
this department . But to achieve excellent and positive
results rapid operations are too much essential.
17. Management should try to develop maximum and
minimum store inventory levels and also 100% physical
verification to be done at least once a year. The powers
of location in charges should be reviewed and minimized.
18. Management must take necessary action to control
costs i.e. administrative and selling expenses.
19. To offset recruitment bias favoritism should be
completely discouraged. And try to eliminate political
interference in recruitment, because it will affect the
efficiency and ultimately the corporation will be unable to
achieve its objective.

Training facilities should be awarded according to the

requirement of the job.

If appraiser make appraising based on actual

performance it will decrease heart burning problem
and employees efficiency will be increased.

As the promotion policy of the corporation clearly

shows merit + seniority, so it should be fully
Page | 45

Beside this it is also desirable to suggest that in this

modern area computerization of record is very much
essential .So to facilitate the management computer
system in all the section must be introduced.

The production of oil and gas is contributing a lot in reducing
the countrys import bill.
Power generation by IPPs
(Industrial Power Projects) in the country is a major source of
energy. OGDCLs Uch Gas field and Panjpir/ Nandpur Gas
Fields are the two main fields, which have now started
supplying Gas to power companies. This is not only meeting
the requirement of the IPPS but also contributing a lot
towards meeting the demand of electricity in the country.
OGDCLs contribution to the national exchequer in the form
of royalty; excise duty, debt servicing, and taxes are a huge
support as compared to the other state owned organizations.
OGDCL entered into new JV agreements in various
exploration Blocks with the foreign oil companies to boost up
the efforts for increasing the Oil & gas demand of this
OGDCL is following the strategy of maintaining balanced
growth through acquisition of new exploration acreage,
maintaining and enhancing production from existing fields,
expeditious production from new discoveries and joint
venture opportunities outside Pakistan. The focus of the
Company, for the period ahead, will be to ensure production
growth and deliver its exploration and development program
with the objective of securing oil and gas reserves and
enhance its production base. Strenuous efforts are on going
to build an extensive, diversified and high quality portfolio of
exploration licenses. The Company expects to continue a
high level of exploration activity including 2-D and 3-D
seismic acquisition in the onshore and offshore areas,
extensive exploratory drilling and follow on its recent
Page | 46

successes with further appraisal drilling leading to potential

new field developments. The Company anticipates a
significant boost to its existing production on completion of
current and future development projects, resulting into
strong operating cash flow and sound financial position of
the Company, thus leading to significant value addition for
the shareholders. We are confident that the pace of growth
will continue in times to come and we have every reason to
look forward to the future with confidence.

Page | 47

1. Ministry of Petroleum and Natural Resources site.
4. Pakistan industrial Reviews
5. Annual Reports of OGDCL
6. Business Recorder News Paper
7. Observer Journals.
8. Interview of OGDCL MD.Human Resource management
(7th edition) by Descenso.
9. Management theory and practice, (4th edition),by Ernest
Principle of personnel management, (4th Edition),
by Edwin B.Flippo

Behavior in organizations, By H.Joseph Reitr.

Personnel: The management of people at work (5 th
Edition) By Dale S.Beach
Operations management/Theory and Practice (2 nd
Edition), By Joseph G.Monks.
Business research for decision making, By DavisCosenza


Petroleum Policy, 2007, Ministry of Petroleum.


Vision 2030, 2007, Ministry of Planning Commission

Page | 48


Strategic Plan, 2006, OGDCL

Page | 49