ongc videsh case study on 4.5 trillion deal in vrankneft russian farms

1. ONGC Videsh , the
overseas arm of state-
run Oil and Natural Gas
Corp (ONGC)
BY:- mudit bansal
email :
muditbansal5377@gmail.com

2. Capacity Planning
it is the process of
determining the
production capacity
needed by an
organization to meet
changing demands for
its products.

4. CLASSIFICATIONS OF CAPACITY PLANNING
LONG TERM
CAPACITY
PLANNING
MEDIUM TERM
CAPACITY
PLANNING
SHORT TERM
CAPACITY
PLANNING

5. Introduction to company
It was established in 14
august 1956.
In 1997 the ONGC
declared as Navratna.
ONGC become
“MAHARATNA” PSU in
2010.
Produces over 1.24
million barrels of oil
equivalent per day
Maintains place as
World's Third ranked
E&P Company .

6. ARM OF ONGC
ONGC Videsh, a
Miniratna Schedule “A”
Central Public Sector
Enterprise (CPSE) of the
Government of India
under the administrative
control of the Ministry of
Petroleum & Natural Gas
is the wholly owned
subsidiary and overseas
arm of Oil and Natural
Gas Corporation Limited
(ONGC)AIM:-The primary
business of ONGC
Videsh is to prospect
for oil and gas
acreages outside India,
including exploration,
development and
production of oil and
gas.

7. • Presently, ONGC Videsh owns Participating
Interests in 36 oil and gas assets in 17
countries and contributes to 14.5% and 8% of
oil and natural gas production of India
respectively. In terms of reserves and
production, ONGC Videsh is the second largest
petroleum Company of India, next only to its
parent ONGC.

10. "Urja Sangam 2015: Shaping India’s Energy Security", an international
energy summit, is being organised in New Delhi on March 27, 2015 under
the aegis of the Ministry of Petroleum & Natural Gas.

11. Capacity extension
1. Mozambique's offshore Rovuma Area 1
• $4.125 billion investment for 16% stake.
• raised Euro 525 million (about $712 million) last year.
• 75 Trillion cubic feet of gas reserves.
2. Vankor Field (East Siberia of the Russian Federation)
• acquire 15% shares in vankorneft.
• ovl share of oil production around 66000 bpd.

12. ONGC: Multiple gains from Russian oil
deal
source:www.business-standard.com/
annual production of 20 mt by 2017-18 versus the 8.87 mt
prevailing
“The deal value of 15 per cent stake is $2.46/ barrel of oil equivalent, lower
than CNPC (China National Petroleum Corp)-ENI deal at $2.8/ barrel of oil
equivalent in Mozambique,” say analysts at India Nivesh Research.
The deal will enable (OVL) to source 66,000 barrels of oil from Vankorneft daily
or three million tonnes (mt) annually

15. 15
Turn around…. how?
Cost
Efficiencies
Financial
Restructuring
•Higher capacity utilization
•Improved Crude Mix
•Crude cost and freight reduced
•Energy consumption minimized.
•Debt restructured
•High cost debt pre-paid
•Interest rates minimized with
ONGC’s creditworthiness
•Tax Incentives for Phase II also
helped

16. 16
Accounting:
Acquisition cost
Operating costs
Capital expenditures
Non-capital expenditures
Exploration expenditures
Development expenditures
Supporting equipment and facilities
Depreciation, depletion and amortization
Inventory

17. DECISION MAKING
• Factors affecting the decision making in E&P.
1. Technological factors
2. Economic factors.

19. ECONOMIC FACTORS
• Cost of benefit.
• Funds.
• Rate of Return.
Source: en.wikipedia.org

20. Cost Benefit Analysis
Cost–benefit analysis (CBA)
is a systematic process for
calculating and comparing
benefits and costs of a
project for two purposes:
A)
justification/feasibility
B) to see how it compares
with alternate projects
It involves comparing the
total expected cost of each
option against the total
expected benefits, to see
whether the benefits
outweigh the costs, and by
how much.
Source: marketbasic.com/economictimes/.org

21. FUNDS
• NPV (net present value)
• PVB (present value of benefits)
• PVC (present value of costs)
• BCR (benefit cost ratio) = PVB / PVC
• Net benefit = (PVB - PVC)
Source: managementwiki.org/oilsector

22. Rate of Return

23. PRODUCTION OPTIMIZATION
Improving Productivity is a huge problem.
Various Factors :
• Operational Costs
• Hardware Damage
• Reservoir Performance
• Environmental Requirements
• Operational Difficulties
Source: Oil and Gas Production Handbook by ABB