ONGC, evolving from a directorate established in 1955, faced significant challenges including government control and overstaffing, which threatened its operational efficiency. Under Subir Raha's leadership, the company implemented a revitalized strategy focusing on global exploration, downstream integration, and improved internal processes, resulting in major growth in production and profits. Despite facing competition and internal conflicts, ONGC successfully signed key technology deals and launched multiple joint ventures to enhance its energy projects and asset monetization.

1. ONGC India : In search of a New
Growth Strategy
Arnab Chakraborty
MBA Oil&Gas 3rd Sem
UPES

2. ONGC : A brief history
Evolved from the Oil and Natural Gas Directorate set up by
the government of India in 1955
“Plan, promote, organize, and implement programs for
development of Petroleum Resources and the production
and sale of petroleum and petroleum products produced
by it, and to perform such other functions as the Central
Government may, from time to time, assign to it.”
57% of exploration licenses covering more than 588
thousand sq km

3. Subir Raha : The man involved
Joined Indian Oil Corporation (IOCL)as a management trainee in
1970
India’s first convenience store concept
sales at ONGC rose from Rs. 22,841 crores to Rs. 50,900 crores
In 2007, the company was ranked as the best E&P company in
Asia, third among global E&P companies, and 23rd among global
energy companies by Platts Top 250 Global Energy Companies.
profits rose from Rs. 6,197 crores to Rs. 14,175 crores to Rs.
50,900

4. Weakness @ ONGC : When Subir
Raha joined
Plodding along solely on the basis of its past performance
In 1999, McKinsey, the U.S. consulting company, had
predicted that ONGC would soon become a sick company,
insolvent and beyond repair should it continue on the
same trajectory.
crippling systems of government control over its strategy
competent group of technical personnel with flagging
motivation
serious problem with overstaffing
Mumbai High alone accounting for roughly 40% & 14 fields
contributing 35%.

5. Workforce : Sense of entitlement rather than
performance
Obsolete labor laws
bureaucratic delays in critical project approvals
Long tendering processes
very heavy interest and tax burden

6. Raha’s New Impetus to ONGC
locating reserves worldwide
CBM project in the state of West Bengal
Deepwater exploration projects in the KG basin
redoubling of efforts by ONGC subsidiary ONGC Videsh Ltd.
(OVL) to bid for acreage outside India
A voluntary retirement program was announced fairly early
in Raha’s tenure, and the offer had the positive effect of
reducing the ranks by 10%, an uphill accomplishment
Internal systems were revamped

7. entire decision-making structure of the company restructured by
eliminating bureaucratic layers of staff approvals
resulted in significant improvement with respect to the
tendering process
incentive plans targeting innovation and productivity
redesign of the entire performance appraisal process
Four new performance reward schemes
ONGC Academy
idle cash reserves to pay off its foreign debt
In 2004, the government decided to sell off a portion of its
holdings as a move to attract private capital to ONGC

8. OVL before RAHA and after RAHA
Before RAHA :
one property in Vietnam
After RAHA :
invested $4 billion out of its investment budget of $5.1
billion
controlled 25 properties in 18 countries
reported reserves of 206,109 MMTOE
production of 6.34 MMTOE in 2006
JV with MITTAL Group

9. OVL : Competition from CHINA
China’s Financial Strength Vs Indian’s Goodwill and
Diplomatic stand
OVL and China National Petroleum Company (CNPC)
bid for PetroKazakhstan
India- China Bilateral Partnership Agreement
OVL and CNPC won a bid for 38% of Al Furat
Production Company, Syria’s largest oil producer, and
later with Sinopec for 50% of Omimex de Colombia.

10. ONGC : Downstream Integration
Refining capacity from 2.6 million bpd to 4.84 million bpd
by 2012
Opportunity presented by MRPL
Moved into retail
wider flexibility in monetizing its assets
“Integration along the hydrocarbon value chain is not a
matter of choice for a company with a global footprint; it is
an imperative—we have to squeeze every available paise
out of every molecule of crude. We have to become a part
of the crude cycle, the refining cycle, and the product cycle
to tide over any downturn in any one of them.”

11. Detractors Against ONGC
Entering areas never chartered by ONGC
ONGC has lost its focus from E&P
Major finds of competitors are in areas where ONGC had been previously
active
Influential decision making
Onshore exploration ratio 1:4/1:5
Offshore 1:10
inefficient data analysis structure
Focused on Rig Utilization Maximising
By 2006, ONGC had spent Rs. 3000 crores (roughly $616 million) in
three years and had drilled an embarrassing 20 dry wells
200 engineers, geologists, and geoscientists to Reliance

12. Conflicts between RAHA and the
MINISTRY
Raha’s View
characterized India’s prospects as “limited.”
Cairn India CEO’s View
“I’ve always said for years that India is hugely unexplored”
Ministry View
“We have 26 sedimentary basins, which in absolute terms is huge.
But ONGC, far from being a failed company, is a company with lots
of potential. I want ONGC to focus on its core competence. Instead
of trying to make up its perceived losses in exploration by opening
up petrol pumps—and worse, fertilizer plants and power plants—I
want ONGC to prove to me that its spending on exploration has
reached optimal level and the next rupee spent would be a waste”

13. Scenario @ ONGC Just After RAHA
Left
signed technology deals with global giants like Schlumberger
and Baker Hughes to obtain critical insights into redeveloping its
mature fields
44 of its 165 marginal fields were ready to commence regular
production and that 96% of these assets would be brought back
into production over the next five years
Its alternative energy projects in coal-bed methane and coal
gasification had moved from the drawing board to an
exploratory phase
Two global scale petrochemical complexes were being set up in
Dahej (Gujarat State) and Mangalore (Karnataka State)

14. Present Scenario @ ONGC
JVs
OTPC : (ONGC Tripura Power Company Limited) ONGC, IL&FS
Energy Development Co. Ltd. and Govt. of Tripura, is setting up a
726.6 MW capacity combined cycle gas turbine based Mega
Power Project in the state of Tripura with the objective of
monetization of gas, which had been lying idle for want of
adequate market in the region
OPaL : ( ONGC Petro Addition Limited)ONGC + GSPC (26 : 5) in
2006 . Gail 19 % later. To be Commissioned by A2014
Mangalore Special Economic Zone Limited (MSEZ) with KIADB
ONGC Mangalore Petrochemicals Limited (OMPL) : feedstock,
mainly naphtha and aromatic streams from the MRPL refinery,
for which it shall enter into a feedstock sourcing arrangement
with MRPL for continuous supply of naphtha and other streams
Dahej SEZ Limited (DSL) with GIDC

15. Thank You