A STUDY ofINTERNATIONAL BUSINESS OPERATIONS OF ONGC Group 5 Abhishek Singh(11DM006) Apurv Jain(11IT009) B Shri Harsha(10FN108) Hema Koppala(11FN041) Shaurya Vikram Singh(11FN096)
Contents• About ONGC• OVL• Factors for Success• Competitive Strengths• CSR• New Opportunities• Issues and Threats• Recommendations• Learnings
ABOUT ONGC• Oil & Natural Gas Corporation is India’s 3rd Most Valuable Company• Has a market capitalization of Rs.2.32 trillion• Owns and operates more than 11000 kilometers of pipelines in India• Has paid the highest-ever dividend in the Indian corporate history.• Dividend paid in 2009-10: Rs 7,058 crore
About ONGC• In 2010, it was ranked 18th in the Platts Top 250 Global Energy Company Rankings• Every sixth LPG cylinder comes from ONGC.
ONGC VIDESH LIMITED• OVL is a wholly owned subsidiary of ONGC• OVL operates solely in foreign markets• OVL acquired 39 projects in 15 foreign countries• Has tie ups with some of the biggest names: – Petronas – British petroleum – Exxon etc.
ONGC VIDESH LIMITED• Pursuing Oil and gas exploration blocks in Algeria, Australia, Indonesia, Nepal, Iran, Rus sia, UAE and Venezuela• Investments of $1.7 billion in Sakhalin, Russia• A one time investment of $690 million in Sudan, biggest by any corporate in India• Projects are spread out in Vietnam, Russia, Sudan, Iraq, Iran, Lybia, Syri a, Myanmar, Australia, and Ivory Coast
ONGC VIDESH LIMITED• Going by the investments (Committed: US $ 4.3 billion, and Actual: US $ 2.75 billion) ONGC is the biggest Indian Multinational Corporation
Some Projects• Vietnam : Production Sharing Contract with 45 per cent stake in partnership with BP and Petro Vietnam
Some Projects• Russia: 20 per cent holding in the Sakhalin–1• The investment is the single largest foreign investment by India in any overseas venture and the single largest foreign investment in Russia.
Some Projects• Sudan:25 per cent of equity in the Greater Nile Oil Project• Around 3 Million Tonnes of crude oil is coming to India annually from this project.
COMPTETIVE STRENGTH• All crudes attract a premium in the market.• Strong intellectual property base, information, knowledge, skills and experience• Maximum number of Exploration Licenses, including competitive New Exploration Licensing Policy (NELP) rounds
COMPTETIVE STRENGTH• ONGC owns and operates more than 11000 kilometers of pipelines in India, including nearly 3200 kilometers of sub-sea pipelines No other company in India, operates even 50 per cent of this route length
CORPORATE SOCIAL RESPONSIBILITY• Successfully handled safety & environmental issues at all sites.• Proper treatment of affluent before releasing it in the environment.• At Sakhalin a $1 million micro-finance project with Exxon Mobil.• Park Beautification Programmers near foreign plants• Over $200 million for public infrastructure like roads & bridges both in Russia and Sudan• Have regulations in place to ensure that the laws of the land are followed
NEW OPPORTUNITIES• Foray into retailing by launching OVaL, fuel dispensing stations First OVaL @ Mangalore
NEW OPPORTUNITIES• Tie up with SHELL Bitumen co. for manufacturing petroleum products in India• Launched Mangalore SEZ to envisage an investment of 35000 crores• Foster tie ups with other Indian companies like GAIL, OIL etc. to jointly explore and extract oil & gas in India & abroad
ISSUES AND THREATS• The US-Iraq war has left the Iraq Block 8 exploration project inoperative• The dwindling petroleum reserves• Competition from other regional players like China National Petroleum corp., Korea Gas corp., Daewoo Intnl. Corp.• Has expertise over land ; while majority of the crude oil is deposited deep beneath the sea
ISSUES AND THREATS• The dictatorial regimes in Myanmar, Sudan & political instability Libya and strict government regulations in Iran
RECOMMENDATIONS• Aggressively lookout for new oil blocks• An overall organizational restructuring i.e., vertical to horizontal to facilitate faster communication• Keep upgrading technology to have an edge over regional players
RECOMMENDATIONS• Increase recovery from a low 28% to 40-50% (technologies)• Increase presence in the fuel retailing business by opening more pumps all over India• Form joint ventures with local companies to explore oil in India and abroad
LEARNINGS• Think global act local . ONGC has made sure that wherever they go they keep in mind the culture , ethics and the laws of the land• If a company cannot adapt and adjust to the local environment it might not last long
LEARNINGS• ONGC & OVL have proved that Indian companies can beat global standards by being the first Indian company to figure in double digits in Fortune 500 list• Corporate Social Responsibility is an important tool to be used by companies