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Analyzing, Monitoring and Controlling OF Budget

A Summer Training Project Report (Finance)

Submitted in partial fulfilment of the requirement for the

Award of degree of Masters of Business Administration

2011-2013

Submitted by: Guided

by:

Pandey Ashutosh Kumar B. Dr. Shitole M.V

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PREFACE

The purpose of this report is to explain what I did and what I learned

during my Internship period with the Institute of Petroleum Safety

Health & Environment Management (IPSHEM), a unit of Oil and

Natural Gas Corporation Ltd located in Goa, India. This report is also

a requirement for partial fulfillment of Oil and Natural Gas

corporation (ONGC) Internship program. This report primarily

focuses on Controlling, Monitoring and Analysis of Budget of

IPSHEM. The report also implies various assignments handled byme, working environment and success and shortcomings of the

system followed in the Organization.

The Internship program is designed in such a way that student can

grasp maximum knowledge and get practical exposure to Industrial

environment in minimum possible time. However, time is a major

constraint in this program, but it provides an opportunity to the

student in understanding the industry with special emphasis on

development skills in analyzing and interpreting practical problems

though the application of theories and techniques of financial

management. This is a new platform of learning through practical

experience, which incorporates survey and comparative analysis.

And finally this Internship program has given me an opportunity to

relate the theory with practice, to test validity and applicability of my

classroom learning against real life industrial situations.

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INDEX

Chapter No Particulars PageNo

1 Introduction

2 Research Methodology

3 Conceptual Discussion

4 Data Analysis

5 Finding, Conclusion and Suggestions

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Chapter 1:INTRODUCTION

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Overview of Industry as a whole:

TheOil Industrystarted off more than five thousand years back.Oil sipping up from the ground was used to make the boatswaterproof in the Middle East and also used as medicating as wellas for painting different things.

THE DEMAND FOR OIL WAS MUCH HIGHER THAN WHAT IT ACTUALLY

PRODUCEDAND THISBROUGHTFORWARD THE CONCEPT OFMAKING OIL

PRODUCTION COMPANIES WHICH IS COLLECTIVELY KNOWN AS THE OIL

INDUSTRY.

The Oil Industry is a very important industry in the world and alot depends on the price of the oil and it has been observed thatwhenever the oil prices increase the price of various productsalso increases. The Oil Industry also through oil productionaccounts for a large amount of the consumption of energy. Inthis issue the Middle East is in the first position and the lowest

consumption is done by the countries in Europe.According to the statistics the amount of oil consumed by the world everyyear is as many as 30 billion barrel among which nearly 25 percent of the oilconsumption is done by United States of America. The Oil Industry can be

parted in two, Upstream and Downstream. The importance of oil in the worldevolved at a slow pace but once it was identified, it became one of the mostimportant things in the lives of human beings.

Oil Industry Statistics: The oil sector is considered to be one of

the important areas of concern for the

It has acted as a challenge before the global economicscenario. There is fast growing oil consumption in the non-Asian countries.

The non-OECD Asia (Including both India and China)accounts for around 40 percent of the total increase in worldoil use. From estimation it is found that to meet the projectedincrease in world oil demand the total petroleum supply in

2030 is required to reach 250 million barrels per day from 164million barrels per day as of the year 2012.

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The world oil consumption has increased by 1.2 million barrelsper day in the year 2005, even after the increase of 2.6 millionbarrels per day as in the year 2004.

In the year 2004, China's oil use have increased by 0.9 millionbarrels per day and at the same time its demand increased byonly 0.4 million barrels per day in 2005.

Among the various sectors, the transportation sector in theworld has led to a high pressure to the industry, as there arefew alternatives to the petroleum.

The Indian Scenario -

After the Indian Independence, the Oil Industry in India was a verysmall one in size and Oil was produced mainly from Assam and thetotal amount of Oil production was not more than 250,000 tons peryear.

This small amount of production made the oil experts from differentcountries predict the future of the oil industry as a dull one and alsodoubted India's ability to search for new oil reserves. But the

Government of India declared the Oil industry in India as the coresector industry under the Industrial Policy Resolution bill in the year1954, which helped the Oil Industry in India vastly.

Oil exploration and production in India is done by companies likeNOC or National Oil Corporation, ONGC or Oil and Natural GasCorporation and OIL who are actually the oil companies in India thatare owned by the government under the Industrial Policy Rule. The

National Oil Corporation during the 1970s used to produce and supply

more than 70 percent of the domestic need for the petroleum but bythe end of this amount dropped to near about 35 percent. This wasbecause the demand on the one hand was increasing at a good rate andthe production was declining at a steady rate.

World's sixth largest oil consumer, India bought crude oil worth astaggering $160 billion last fiscal.

According to a study by industrial body Assocham, the amount spentis equivalent to more than half of the country's total earnings fromexports during the same period. Looking from the imports angle and

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the impact on the trade deficit, crude oil along with gold importsaccounted for 44.4 percent of India's total imports in 2011-12. Suchhigh level of imports exerts paramount pressure on India's external

payments .For the past five years, crude oil imports have been

equivalent to about 40 percent of the country's total exports. In 2011-12, the figure was at an astonishing high of over 53 percent. India'sexports crossed $300 billion in 2011-12, while imports stood at $485

billion. The maximum imports were of crude oil - about $160 billion -while gold and silver contributed to $60 billion in the last fiscal.

The study viewed that austerity in oil consumption will address aplethora of problems faced by India such as a rising trade deficit, abulging fuel subsidy bill and other macro imbalances.

Widening fiscal deficit and increasing of the current account deficitare among the main problems faced by the national economy as thesetwo issues have had their impact on some of the recent ratings outlookdowngrades done by the global agencies like Standard and Poor's andthe oil austerity will surely help.

The share of crude oil and gold imports has been increasing constantlyfor the last five years. These, together, accounted for 38.8 percent ofthe country's total import bill in 2007-08, which shot up to over 44

percent in the previous financial year. Crude alone was responsible forover 31 percent of the country's imports, while gold imports accountedfor 12.6 percent. The crude oil imports have not increased only

because of price increase in the last several years. In quantitative termsalso, these imports have shown a rising trend. The quantity of

petroleum imports has increased from 82 million tons in 2002-03 to164 million tons in 2010-11. Simultaneously, the average price ofcrude oil has also been rising over the years barring 2009-10.

As a result, the import bill of the country in rupee terms on account ofoil imports has risen by over 500 percent between 2002-03 and 2010-11. These imports have also been a big drain on India's foreignexchange reserves. In 2002-03, petroleum imports as proportion to thecountry's foreign exchange reserves were 23.18 percent. The ratiowent up to 34.80 percent in 2010-11, the paper disclosed.

"However, with the crude prices falling in the international market, theequation is expected to change in the on-going financial year of 2012-

13.Every fall in the crude oil prices was a good news for the Indianeconomy and the government's fiscal situation.

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The Oil that is produced by the Oil Industry in India provides more

than 35 percent of the energy that is primarily consumed by the peopleof India. This amount is expected to grow further with both economicand overall growth in terms of production as well as percentage. Thedemand for oil is predicted to go higher and higher with every passingdecade and is expected to reach an amount of nearly 250 millionmetric ton by the year 2024.

Some of the major companies in the Oil Industry in India are:

Oil India Ltd. Reliance industries Bharat Petroleum Corporation Limited Hindustan Petroleum

HIGHLIGHTS IN THE PETROLEUM & NATURAL GAS SECTOR

DURING 2010-11

India has total reserves (proved & indicated) of 757 million

metric tons of crude oil and1241 billion cubic meters of natural

gas as on 1.4.2011.

The total number of exploratory and development wells and

metreage drilled in onshore and offshore areas during 2010-11

was 420 and 1005 thousand meters respectively.

Crude oil production during 2010-11at 37.71 million metric

tons is 11.91% higher than 33.69 million metric tons produced

during 2009-10.

Gross Production of Natural Gas in the country at 52.22 billion

cubic metres during 2010-11 is 9.95% higher than the

production of 47.50 billion cubic metres during 2009-10

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The flaring of Natural Gas in 2010-11at 1.85% of gross

production is lower than at 2.00% in 2009-10.

The refining capacity in the country increased to 187.386

million metric tons per annum (MMTPA) as on 1.4.2011 from

183.386 MMTPA as on 1.4.2010.

The total refinery crude throughput during 2010-11 at 206.15

million metric tons is higher about 7% than 192.77 million

metric tons crude processed in 2009-10 (including data in respect

of RIL, SEZ Refinery.)

The production of petroleum products during 2010-11 was

190.364 million metric tons (including 2.168 million metric tons

of LPG production from natural gas) against the last years

production at 179.769 million metric tons (including 2.243

million metric tons of LPG production from natural gas).

The country exported 59.13 million metric tons of petroleum

products against the imports of 26.31 million metric tons

(including 8.95 million metric tons of LNG) during 2010-11.

The consumption of petroleum products during 2010-11 was

141.785 million metric tons (including sales through private

imports) which is 3.60% higher than that of 138.196 million

metric tons during 2009-10.

The total number of retail outlets of Public Sector Oil

Marketing Companies as on 1.4.2011 has gone up to 38964

from 36462 on 1.4.2010.

The total number of LPG consumers of Public Sector OilMarketing Companies as on 1.4.2011 was 125.266 millionagainst 114.952 million as on 1.4.2010.

The number of persons employed (including contract

employees) in petroleum industry has been increased from139865 on 1st April 2010 to 141929 on 1st April, 2011.

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1.1 : Industry Profile

(a) Exploration & Production sector in India:

Exploration activity started in India way backing 1866 in the NorthernEastern state of Assam with the drilling of Digboi well, just seven years after

drilling of the first oil well in Pennsylvania, USA. For about a century theE&P activity was restricted to the North Eastern part of the country and tillearly 1960s the total crude production in India was only about 10,000 bpd.Burmah oil was the only company engaged in E&P activity. With thegrowing demand the government recognized the need for exploringhydrocarbon resources and accordingly set up Oil and Natural GasCommission in 1956. Burmah oil was also merged with Oil India limited.This was however taken over by the government of India in the year 1981.ONGC was converted into a public limited company in 1993.ONGC and

OIL enjoy the status of national oil companies and have a duopoly of 90%and 10%share respectively. The national oil companies market theirproduction directly except natural gas which is distributed through GasAuthority of India Ltd (GAIL). Thus, the upstream petroleum industry inIndia is over a century old, the Digboi field of Assam Oil Co having been puton production as early as in the year 1890. However, oil production in Indiaexceeded the figure of One million tons per year only in the year 1961 whenONGC put the Ankleswar field on production.

The production of crude oil increased to over 35 million tons per year in theyear 1997-1998. This represents only less than 50% of the countrys

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requirement of petroleum. The balance has to be made good by importsputting our foreign exchange exchequer to a great strain. Considering theever-growing demand of petroleum at the rate of about 7% per annum, andthe dwindling reliance on indigenous production of oil and natural gas, the

Government of India in 1991, decided to open up the exploration andproduction of oil and natural gas to the private sector. The ministry ofPetroleum invites bids from the private parties/consortiums in a number of

bidding rounds. Consequently, as many as 30 small oil and gas fields around50 exploration blocks were awarded to private parties, for exploration and

production work. It was also decided by government to import liquefiedNatural Gas, to meet the ever growing requirement of natural gas in thecountry. The government also decided to open up oil exploration in thedeeper continental shelf by private parties.

(b) Indian Oil and Gas Industry

With the government gradually giving up control on the oil and gas sector infavor of market forces, Indian oil companies both upstream and downstreamare getting exposed to international price fluctuations. This is changing theground realities for this vital sector of the Indian economy.

(c) The Global Scenario

Globally, the oil and gas sector is dominated by certain large private

companies who have a presence in almost all segments of oil and gas valuechain. Historically, oil price has been the single most important challengefacing the global oil industry. The problem is all the more acute as the large

private companies account for only a small share of world oil productioneven as oil prices remain unpredictable and prone to wide production costsagainst the oil production costs of the Organization of Petroleum ExportingCountries and increasingly relying on technological innovations and othercosts cutting measures to lower their own production costs.

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(d) The Indian Upstream Sector:

For the upstream players (the crude oil producers), the linkage to

international crude oil prices implies volatility in earnings. While a rise ininternational crude oil prices would translate into a positive contribution tothe bottom line, a decline in the international prices, on the other hand,would exert pressure on the margins of all upstream countries. The nationaloil companies would, however, is protected from the downside risk by thefloor price fixed by the government. But if the floor price is removed and theinternational oil prices drop to levels lower than the cost of production, eventhe national oil companies would require government intervention to protecttheir bottom line. What aggravates the risk further is the fact that decliningoil production and stagnating reserves dedicate that the upstream companiesventure into exploration areas that have a high-risk-high-return profile(likedeep water blocks). And this has implications for future exploration and

production (E&P) costs. Given the emerging scenario, ICRA expects thestrategies of the upstream players to focus on: use of battery recoverytechniques; employment of cost cutting measures; entry into high-risk-high-return areas(with the assumption that oil prices will not fall below the cost of

production);integration into downstream areas; partnering; venturing intoother geographical regions; and, undertaking organizational restructuring.ICRA believes that through the employment of these strategies, domestic

upstream players would be able to strengthen their position in their corebusiness (E&P) while at the same time diversifying their risk portfolio andenhancing their revenue base.

(e) The Indian downstream sector:

The phased dismantling of the APM has exposed the Indian downstreamplayers (refiners and marketers of petroleum products) to market forces. Therefining margins of the Indian refineries are now linked to the internationalrefining margins. A fluctuation in the international prices of crude oil/

product translates into a variation in the domestic margin (although they are,to a large extent, protected by the positive net duty protection). In the first 18months of decontrol (fiscal year 1999 and first half of fiscal year 2000) the

profitability of Indian refineries has increased (and is expected to increasefurther) as their margins have increased following higher duty protection,

and linkage of crude and product prices with international prices. Howeveron the side, the expected surplus in the domestic market may limit this

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margin expansion. The other factor influencing the profitability of Indianrefineries in the deregulated scenario would be refinery configuration,operating cost, and refinery location. The ownership of marketing anddistribution infrastructure would be strategic importance and would enhance

profitability as a marketing sector is decontrolled. While the profitability ofthe integrated players would be higher and more resilient to economictroughs, the pure refining companies would find it difficult to sustain

profitability in a decontrolled scenario. Accordingly, the pure refining andmarketing sector is likely to lead to severe competition among the various

players in the industry, and a greater focus on branding and productdifferentiation. Given the changes taking place, ICRA expects the strategiesof downstream players to focus on: strengthening import infrastructure;enhancing scale of operations; upgrading processing facilities; implementingenvironmental projects; strengthening marketing and distributioninfrastructure and promoting brands; entering into strategic alliances;venturing into other areas of the energy value chain for optimizing the risk-return profile; and restructuring the organization.

(f) The Indian gas sub-sector:

The share of natural gas in Indias energy mix has increased more than threetimes since the early 1980s. Energy efficiency, multiplicity of applications,

and environment neutrality are the key factors that are likely to propel furtherrise in demand for gas in India. The increase in demand could come bothfrom the existing uses of natural gas and from newer application. A risingdemand for gas has implications on the supply level. An increased thrust onliquefied natural gas imports would signal positive developments on thesupply front. ICRA also expects the decontrol of the oil sector to enable theexisting oil companies to pursue gas distribution, is likely to benefit from theexpected rise in natural gas supplies. Besides, its exposure to price riskswould be minimal because of the fixed nature of natural gas transportation

tariffs.Likely Strategic Initiatives: - ICRA believes that in response to the phasedderegulation, the strategic initiatives of the various players in the energyvalue chain would focus on the following factors. Product mix. This willhave to be in line with market demand. Technology would play a major rolein influencing the product mix. Cost competitiveness. Technologicaladvancements and scale of operations would have an impact on operatingcosts. Infrastructure/ Logistics. The ownership of infrastructure for sourcingcrude oil and the logistics for distributing finished products would have a

considerable impact on operating costs. Integration into different elements ofthe value chain would be imperative for bringing synergetic benefits,

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reducing volatility in earnings, and enhancing value addition. Brandbuilding, pricing, and packaging. These would be used as tools to delivergreater value to customers.

1.2: The Key Players in Indias Energy Sector:

Coal India Limited (CIL) was created after 1973-74 nationalization ofIndias coal industry. CIL acts as a holding company and was

designed to integrate and streamline the industry. Its eight regionalsubsidiaries accounts for about 90 percent of Indias coal output andoperates 510 mines and 16 coking coal washeries.

The Ministry of Petroleum and Natural Gas sets policies and overseasthe oil and gas industry.

In 1959, the Oil and Natural Gas Commission (ONGC) was formed bythe government to run Indias main upstream activities. In 1994, it waschanged from a Commission to a Corporation in preparation foreventual privatization.

Oil India Limited (OIL) controls upstream activities in northeasternareas such as Assam.

Indian Oil Corporation (IOC) is Indias latest refining and marketingcompany. It also is responsible for purchasing imported crude oil.

Other refining/ marketing companies include Hindustan Petroleum,Bharat Petroleum, Madras Refineries, and Cochin Refineries.

1.3: Energy Scenario

While the frequency of rise in oil prices is increasing each decade , thepossibility of a downward trend in global oil prices seems bleak. Energysecurity, as an issue of national strategic importance ,came to take the centrestage of the planning process against the backdrop of frequent rise in globalcrude oil prices .Our strong dependence on fossil fuels will continue for most

part of the 21st century .Energy security has an important bearing onachieving national economic development goals and improving the qualityof life of the people The level of per capita energy consumption has for long

been consider as one of the key indicators of economic growth .Thecontinued dependence of the nation on fossil fuels is loaded against it with

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inherent price volatility linked to finite global reserves. In addition ,globalwarming, caused largely by greenhouse gas emissions from fossil-fuelgenerating system , is also a major concern. India needs to develop alternatefuels considering the aforesaid two concern. In addition, indiscriminate and

inefficient burning of fuel wood in traditional chulhas and in industries forthermal process heat has resulted in environmental pollution and healthhazards

Profile of the Organisation:

1.5: History of ONGC

1947 - 1960

During the pre-independence period, the Assam Oil Company in thenortheastern and Attock Oil company in northwestern part of the undivided India

were the only oil companies producing oil in the country, with minimalexploration input. The major part of Indian sedimentary basins was deemed to beunfit for development of oil and gas resources.

After independence, the national Government realized the importance oil and gasfor rapid industrial development and its strategic role in defense. Consequently,while framing the Industrial Policy Statement of 1948, the development of

petroleum industry in the country was considered to be of utmost necessity.

Until 1955, private oil companies mainly carried out exploration of hydrocarbonresources of India. In Assam, the Assam Oil Company was producing oil atDigboi (discovered in 1889) and the Oil India Ltd. (a 50% joint venture betweenGovernment of India and Burmah Oil Company) was engaged in developing twonewly discovered large fields Naharkatiya and Moran in Assam. In West Bengal,the Indo-Stanvac Petroleum project (a joint venture between Government ofIndia and Standard Vacuum Oil Company of USA) was engaged in explorationwork. The vast sedimentary tract in other parts of India and adjoining offshoreremained largely unexplored.

In 1955, Government of India decided to develop the oil and natural gasresources in the various regions of the country as part of the Public Sector

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development. With this objective, an Oil and Natural Gas Directorate was set uptowards the end of 1955, as a subordinate office under the then Ministry of

Natural Resources and Scientific Research. The department was constituted with

a nucleus of geoscientists from the Geological survey of India.

A delegation under the leadership of Mr. K D Malviya, the then Minister ofNatural Resources, visited several European countries to study the status of oilindustry in those countries and to facilitate the training of Indian professionalsfor exploring potential oil and gas reserves. Foreign experts from USA, WestGermany, Romania and erstwhile U.S.S.R visited India and helped thegovernment with their expertise. Finally, the visiting Soviet experts drew up adetailed plan for geological and geophysical surveys and drilling operations to becarried out in the 2nd Five Year Plan (1956-57 to 1960-61).

In April 1956, the Government of India adopted the Industrial Policy Resolution,which placed mineral oil industry among the schedule 'A' industries, the futuredevelopment of which was to be the sole and exclusive responsibility of the state.

Soon, after the formation of the Oil and Natural Gas Directorate, it becameapparent that it would not be possible for the Directorate with its limitedfinancial and administrative powers as subordinate office of the Government, tofunction efficiently. So in August, 1956, the Directorate was raised to the status

of a commission with enhanced powers, although it continued to be under thegovernment. In October 1959, the Commission was converted into a statutory

body by an act of the Indian Parliament, which enhanced powers of thecommission further. The main functions of the Oil and Natural Gas Commissionsubject to the provisions of the Act, were "to plan, promote, organize andimplement programmes for development of Petroleum Resources and the

production and sale of petroleum and petroleum products produced by it, and toperform such other functions as the Central Government may, from time to time,assign to it ". The act further outlined the activities and steps to be taken by

ONGC in fulfilling its mandate.

1961 - 1990

Since its inception, ONGC has been instrumental in transforming the country'slimited upstream sector into a large viable playing field, with its activities spreadthroughout India and significantly in overseas territories. In the inland areas,ONGC not only found new resources in Assam but also established new oil

province in Cambay basin (Gujarat), while adding new petroliferous areas in the

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Assam-Arakan Fold Belt and East coast basins (both inland and offshore).

ONGC went offshore in early 70's and discovered a giant oil field in the form ofBombay High, now known as Mumbai High. This discovery, along withsubsequent discoveries of huge oil and gas fields in Western offshore changedthe oil scenario of the country. Subsequently, over 5 billion tons ofhydrocarbons, which were present in the country, were discovered. The mostimportant contribution of ONGC, however, is its self-reliance and developmentof core competence in E&P activities at a globally competitive level.

After 1990

The liberalized economic policy, adopted by the Government of India in July1991, sought to deregulate and de-license the core sectors (including petroleumsector) with partial disinvestments of government equity in Public SectorUndertakings and other measures. As a consequence thereof, ONGC was re-organized as a limited Company under the Company's Act, 1956 in February1994.

After the conversion of business of the erstwhile Oil & Natural Gas Commissionto that of Oil & Natural Gas Corporation Limited in 1993, the Governmentdisinvested 2 per cent of its shares through competitive bidding. Subsequently,ONGC expanded its equity by another 2 per cent by offering shares to itsemployees.

During March 1999, ONGC, Indian Oil Corporation (IOC) - a downstream giant

and Gas Authority of India Limited (GAIL) - the only gas marketing company,agreed to have cross holding in each other's stock. This paved the way for long-term strategic alliances both for the domestic and overseas business opportunitiesin the energy value chain, amongst themselves. Consequent to this theGovernment sold off 10 per cent of its share holding in ONGC to IOC and 2.5

per cent to GAIL. With this, the Government holding in ONGC came down to84.11 per cent.

In the year 2002-03, after taking over MRPL from the A V Birla Group, ONGC

diversified into the downstream sector. ONGC will soon be entering into theretailing business. ONGC has also entered the global field through its subsidiary,

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ONGC Videsh Ltd. (OVL). ONGC has made major investments in Vietnam,Sakhalin and Sudan and earned its first hydrocarbon revenue from its investmentin Vietnam.

Vision And Mission

To be global leader in integrated energy business through sustainable growth, knowledge

excellence and exemplary governance practices.

World Class

Dedicated to excellence by leveraging competitive advantages in R&D and technology with

involved people.

Imbibe high standards of business ethics and organizational values.

Abiding commitment to safety, health and environment to enrich quality of community life.

Foster a culture of trust, openness and mutual concern to make working a stimulating andchallenging experience for our people.

Strive for customer delight through quality products and services.

Integrated In Energy Business

Focus on domestic and international oil and gas exploration and production businessopportunities.

Provide value linkages in other sectors of energy business.

Create growth opportunities and maximize shareholder value.

Dominant Indian Leadership

Retain dominant position in Indian petroleum sector and enhance India's energy availability.

Objectives And Functions

HR Objectives

Enrich and sustain the culture of integrity, belongingness, teamwork, accountability andinnovation.

Attract, nurture, engage and retain talent for competitive advantage.

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Enhance employee competencies continuously.

Build a joyous work place.

Promote high performance work systems.

Upgrade and innovate HR practices, systems and procedures to global benchmarks.

Promote work life balance.

Measure and Audit HR performance.

Promote work life balance.Integrate the employee family into the organisational fabric.

Inculcate a sense of Corporate Social responsibilities among employees.

http://www.ongcindia.com/people.asp#b

Problems of the Company/ Industry:

1.4: Table illustrating Growth of Oil Industry at a glance

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Growth Expectations In Oil And Gas: (http://www.offshore-

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technology.com/features/feature81879/)

ICD Research surveys oil and gas executives' expectations for the growth prospects of theircompanies. The report provides an insight into the type and likelihood of structural changes inthe competitive landscape in terms of mergers, acquisitions and business structure.

To gain insight into confidence levels and the mood of the oil and gas sector ICD Researchcarried out a survey of the industry's top executives. The results also revealed the likely effectsthat the recession and recovery will have on competition within the industry.

57% of respondents in the upstream and downstream oil and gas industry are more optimistic

about revenue growth for their companies over the next 12 months, relative to the previous 12months (Figure 1). A further 26% are neutral about revenue growth compared with 13% whowere less optimistic about their company's revenue prospects.

The overall high level of optimism in the oil and gas industry compared with Q2 2009 mightsuggest either a strong belief in the imminent end to the global economic upheaval or successfulsteps being taken by companies to increase revenues and reduce costs, and the emergence ofnew profitable markets.

Downstream and midstream

Companies in the downstream and midstream segment are more optimistic about revenuegrowth over the next 12 months (Table 1). The rise in fuel use for road and air transportation is

primarily driving demand for refined petroleum products such as air turbine fuel and diesel.

"Oil and gas buyers are more optimistic compared with suppliers about revenue growth in thenext year."

Moreover, the use of natural gas in commercial vehicles and industrial use is further drivinginvestment in storage infrastructure for the refined petroleum products of compressed natural gasand liquefied natural gas.

Companies are focusing on increasing their revenue generation by means of adding theirrefining and storage capacities with much of the global refining capacity additions coming into

play in 2009-10 within Asian countries.

Companies are also focusing on sustaining high operating rates, improving efficiency andreducing operating costs.

Upstream oil and gas

Explorers/producers and suppliers in the upstream oil and gas industry have voiced optimism

about the industry growth rate. The majority of buyers and suppliers expect the industry to growat a faster or equal rate against the global GDP growth rate of 2%. The GDP of advanced

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economies is expected to grow by 1% in 2010.

In general, buyer companies are more optimistic compared with suppliers about revenue growth

in the next year. Overall, suppliers' optimism level has increased considerably from 2009 due tothe growth in optimism levels among the buyer companies across different industries. Somesuppliers also have long-term contracts set up and greater selling power than buyers or are notunduly affected by reduced demand.

The optimism level in the upstream oil and gas sector has considerably increased in 2010 fromthat of 2009 fueled by improved cash flows and credit metrics during the year as a result ofhigher oil prices. In the case of the downstream and midstream oil and gas sector, contract

backlogs and the rise in oil prices are expected to provide the required support to activity levelsand credit profiles of companies operating in the sector.

Globally, the optimism level is high in the oil and gas sector due to a rise in explorationsuccesses and a more stable oil price, indicating that the sector is on the recovery path.

Regional growth expectations

Analysis of respondents' expectations by region reveals that 45% of European respondents areoptimistic about revenue growth over the coming year compared with 56% of North Americanrespondents, 61% of Asia Pacific respondents and 63% from the rest of the world region (Table2).

"The GDP of advanced economies is expected to grow by 1% in 2010."

The optimism level of European respondents is lower compared with other respondents as somecountries in the region (for example, Russia) are facing major challenges due to a steepslowdown in production levels and credit difficulties faced by many companies across the oilindustry value chain.

The European oil and gas sector should rebound by 2010-11 driven by the increased funding forcapital expenditures, leading to a considerable rise of investment in the sector.

Optimism in North American companies substantially increased in 2010 over 2009 in tandemwith the growth of the economy and GDP. The credit worthiness of large integrated upstream oiland gas companies is set to improve in North America driven by their oil-heavy upstream

portfolios, sizable cash balances and reasonably low net debt levels.

The optimism level is high in the rest of the world and the Asia-Pacific region due to the fasteconomic growth in countries such as China, India and in the Middle East. Investments in the oiland gas sector are expected to increase in Asia and the Middle East in sectors such as drilling,transportation and storage infrastructure segments.

Essar Oil's gas reserve discovery in the Raniganj field in India is expected to drive upinvestment in this sector. Investment in natural gas transportation is exemplified by the recent

signing of a gas transportation agreement between Origin Energy and Epic Energy for building agas pipeline to connect Eastern Australia with the rest of the country.

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The International Energy Agency estimates that global refining capacity will increase by1.8mbpd in 2009, with Asia accounting for around 80% of the increase. Successes in crude oildrilling sites in African countries such as Nigeria and Egypt also aided in increasing theoptimism levels in these regions. The increase of spending in technology development such ashigh level engineering services and reliable engineering management further helped in boostingthe optimism level of respondents across all regions.

Small oil and gas companies

"45% of European respondents are optimistic about revenue growth over the coming year."

Around 61% of respondents from smaller oil and gas companies, with revenues up to $100m,are more optimistic about revenue growth as compared to respondents from medium and large-sized companies (Table 3). This indicates that the recession might have leveled out the

competition, resulting in smaller companies having fair access to a wider audience to impressand gain business.

Many companies are forming partnerships to optimise working capital and reduce costs, andthey are also planning to venture into low-cost countries in Asia for reducing production costs.

The net difference in optimism trends for the oil and gas industry was mapped with theindividual results of 19 other industries. The global and extensive nature of the ICD ResearchSurvey 2010 helps us understand the position of the oil and gas industry in relation to othermajor industries. The oil and gas industry occupies seventh position in the list with a relativeoptimism trend of 44% in its favour. This indicates that the sector is well into the recovery path

along with other sectors that are driving the economy.

http://www.offshore-technology.com/features/feature81879/

Players in oil industry:

1) Oil India Ltd.:

2) Hindustan Petroleum Corporation Ltd.,

3) Bharat Petroleum Corporation Ltd.

4) Gas Authority of India Ltd.

5) Reliance Industries Ltd.

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Competitors information:

1) Oil India Ltd.:

The story of Oil India Limited (OIL) traces and symbolises the development and growth of theIndian petroleum industry. From the discovery of crude oil in the far east of India at Digboi,Assam in 1889 to its present status as a fully integrated upstream petroleum company, OIL hascome far, crossing many milestones.

On February 18, 1959, Oil India Private Limited was incorporated to expand and develop thenewly discovered oil fields of Naharkatiya and Moran in the Indian North East. In 1961, it

became a joint venture company between the Indian Government and Burmah Oil CompanyLimited, UK.

In 1981, OIL became a wholly-owned Government of India enterprise. Today, OIL is a premierIndian National Oil Company engaged in the business of exploration, development and

production of crude oil and natural gas, transportation of crude oil and production of LPG. OILalso provides various E&P related services and holds 26% equity in Numaligarh RefineryLimited.

The Authorized share capital of the Company is Rs. 500 Crores. The Issued, Subscribed and

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Paid share capital of the company is Rs. 240.45 Crores. At present, The Government of India,the Promoter of the Company is holding 78.43% of the total Issued & Paid-up Capital of theCompany. The balance 21.57% of the Equity capital is held by others.

OIL has over 1 lakh sq km of PEL/ML areas for its exploration and production activities, mostof it in the Indian North East, which accounts for its entire crude oil production and majority ofgas production. Rajasthan is the other producing area of OIL, contributing 10 per cent of its totalgas production.

Additionally, OILs exploration activities are spread over onshore areas of Ganga Valley andMahanadi. OIL also has participating interest in NELP exploration blocks in MahanadiOffshore, Mumbai Deepwater, Krishna Godavari Deepwater, etc. as well as various overseas

projects in Libya, Gabon, Iran, Nigeria and Sudan.

In a recent CRISIL-India Today survey, OIL was adjudged as one of the five best major PSUsand one of three best energy sector PSUs in the country.

2) Hindustan Petroleum Corporation Ltd.,

HPCL is a Government of India Enterprise with a Navratna Status, anda Fortune 500 andForbes 2000 company, with an annual turnover of Rs. 1,32,670 Crores and sales/income fromoperations of Rs 1,43,396 Crores (US$ 31,546 Millions) during FY 2010-11, having about 20%Marketing share in India among PSUs and a strong market infrastructure. HPCL's Crude

Thruput and Market Sales (including exports) are 14.75 Million Metric Tonnes (MMT) and27.03 MMT respectively in the same period.

HPCL operates 2 major refineries producing a wide variety of petroleum fuels & specialties, onein Mumbai (West Coast) of6.5 Million Metric Tonnes Per Annum (MMTPA) capacity and theother in Vishakapatnam, (East Coast) with a capacity of8.3 MMTPA. HPCL holds an equitystake of 16.95% in Mangalore Refinery & Petrochemicals Limited, a state-of-the-art refinery atMangalore with a capacity of 9 MMTPA. In addition, HPCL is constructing a 9 MMTPArefinery at Bathinda, in the state of Punjab, as aJoint venture with Mittal Energy InvestmentsPte. Ltd.

HPCL also owns and operates the largest Lube Refinery in the India producing Lube Base Oilsof international standards, with a capacity of335 TMT. This Lube Refinery accounts for over40% of the India's total Lube Base Oil production.

HPCL's vast marketing network consists of 13 Zonal offices in major cities and 101 RegionalOffices facilitated by a Supply & Distribution infrastructure comprising Terminals, Pipelinenetworks, Aviation Service Stations, LPG Bottling Plants, Inland Relay Depots & Retail Outlets,Lube and LPG Distributorships. HPCL, over the years, has moved from strength to strength onall fronts. The refining capacity steadily increased from 5.5 MMTPA in 1984/85 to 14.8MMTPA presently. On the financial front, the turnover has grown from Rs. 2687 Crores in

1984-85 to an impressive Rs 1,32,670 Crores in FY 2010-11.

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3) Bharat Petroleum Corporation Ltd.

TypePublicTraded asBSE:500547NSE: BPCL IndustryOil and gas Founded 1976 Headquarters Ballard Pier, Mumbai,

Maharashtra,India Key people R. K. Singh(Chairman & MD) Products Petroleum, natural gas, and otherpetrochemicals Revenue US$44.581 billion (2012)[1]Net income US$ 163 million (2012)[1]Total assets US$ 15.275

billion (2012)[1]Total equity US$ 3.117 billion (2012)[1] Owner(s) Government of IndiaEmployees 14,154 (2012)[1] Website www.bharatpetroleum.com

4) Gas Authority of India Ltd.

Formation of GAIL

GAIL (India) Ltd was incorporated in August 1984 as a Central Public Sector Undertaking(PSU) under the Ministry of Petroleum & Natural Gas (MoP&NG). The company was initiallygiven the responsibility of construction, operation & maintenance of the Hazira Vijaypur Jagdishpur (HVJ) pipeline Project. It was one of the largest cross-country natural gas pipeline

projects in the world. Originally this 1800 Km long pipeline was built at a cost of Rs 1700Crores and it laid the foundation for development of market for natural Gas in India.

Current Businesses - Domestic

GAIL, after having started as a natural gas transmission company during the late eighties, has

grown organically by building large network of Natural Gas Pipelines covering over 9500 Kmwith a capacity of around 172 MMSCMD; two LPG Pipelines covering 2040 Km with acapacity of 3.3 MMTPA of LPG; seven gas processing plants for production of LPG and otherLiquid Hydrocarbons, with a production capacity of 1.4 MMTPA; and a gas based integratedPetrochemical plant of 410,000 TPA polymer capacity which is further being expanded to acapacity of 900,000 TPA. The Company also has 70% equity share in Brahmaputra Cracker andPolymer Limited (BCPL) which is setting up a 280,000 TPA polymer plant in Assam. Further,GAIL is a co-promoter with 17% equity stake in ONGC Petro-additions Limited (OPaL) whichis implementing a green field petrochemical complex of 1.1 MMTPA Ethylene capacity at Dahejin the State of Gujarat. GAIL has 31.52% stake along with NTPC as equal partner in JVcompany, RGPPL at Dabhol which operates largest gas based power generation facility in the

country and is also setting up 5 MMTPA LNG terminal.

Keeping in mind the requirement of growth and consolidation as well as opportunities arisingout of New Exploration Licensing Policy (NELP) of Government of India, the company hasmoved into upstream of gas value chain i.e. Exploration & Production and currently has stakesin 31 E&P blocks including 2 blocks overseas (in Myanmar).

GAIL is a pioneer in City Gas Distribution (CGD) business in India, with Indraprastha GasLimited (IGL) in Delhi and Mahanagar Gas Limited (MGL) in Mumbai being its biggest successstories. Besides IGL and MGL, GAIL has set up several JVs for CGD to supply gas tohouseholds, transport sector & commercial consumers in various cities including Hyderabad,Agartala, Kanpur, Indore, Vadodara, Lucknow, Agra and Pune. In 2008, GAIL incorporated awholly owned subsidiary, GAIL Gas Ltd (GGL) to exclusively focus on city gas distribution

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business. GGL has been authorized for implementation of CGD projects in four cities namelyKota, Dewas, Sonepat & Meerut in the 1st round of bidding by Petroleum & Natural GasRegulatory Board (PNGRB).

Leveraging on its pipeline network, GAIL has built a strong Optic Fibre Cable (OFC) network

of approximately 13,000 km for its own internal use and leasing of bandwidth as a carriers'carrier.

As a part of its initiative towards reducing carbon footprint and creating a path of sustainablegrowth, GAIL is building a portfolio of renewable businesses. The company has successfullycommissioned wind energy power projects of 118 MW across states of Gujarat, Tamil Nadu andKarnataka.

Global Presence

As a strategy of going global and further expanding global footprint, GAIL has formed a wholly-

owned subsidiary company, GAIL Global (Singapore) Pte Ltd. in Singapore for pursuingoverseas business opportunities including LNG & petrochemical trading. GAIL has alsoestablished a wholly owned subsidiary, GAIL Global (USA) Inc. in Texas, USA. The USsubsidiary has acquired 20% working interest in an unincorporated joint venture with CarrizoOil & Gas Inc in the Eagle Ford shale acreage in the state of Texas. In addition to having twowholly owned subsidiaries in Singapore & USA, GAIL has a representative office in Cairo,Egypt to pursue business opportunities in Africa and Middle East.

GAIL is also an equity partner in two retail gas companies in Egypt, namely Fayum GasCompany (FGC) and National Gas Company (Natgas). Besides, GAIL is an equity partner in aretail gas company involved in city gas and CNG business in China China Gas Holdings

Limited (China Gas). Further, GAIL and China Gas have formed an equally owned joint venturecompany GAIL China Gas Global Energy Holdings Limited for pursuing gas sectoropportunities primarily in China.

GAIL is a part of consortium in two offshore E&P blocks in Myanmar and also holdsparticipating interest in the joint venture company South East Asia Gas Pipeline CompanyLimited incorporated for transportation of gas to be produced from two blocks in Myanmar toChina.

Consistent track record

GAIL has been a leading public enterprise with a consistently excellent financial track record.

The Turnover and PAT have shown remarkable accomplishment with CAGR of 16% and 12%respectively in the last decade.

GAIL has recently developed corporate growth strategy for the period 2011-20 and the same hasbeen approved by the Board of Directors. GAIL aspires to become an integrated hydrocarbonmajor with significant upstream and downstream interests by 2020.

5) Reliance Industries Ltd.

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private

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sector enterprise, with businesses in the energy and materials value chain. Group's annualrevenues are in excess of US$ 66 billion. The flagship company,Reliance Industries Limited,is a Fortune Global 500 company and is the largest private sector company in India.

Backward vertical integration has been the cornerstone of the evolution and growth ofReliance. Starting with textiles in the late seventies, Reliance pursued a strategy of backwardvertical integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleumrefining and oil and gas exploration and production - to be fully integrated along the materialsand energy value chain.

The Group's activities span exploration and production of oil and gas, petroleum refining andmarketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles,retail, infotel and special economic zones.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre

producer in the world and among the top five to ten producers in the world in majorpetrochemical products.

Major Group Companies are Reliance Industries Limited, including its subsidiaries andReliance Industrial Infrastructure Limited.

India Petroleum Industry( Contribution in GDP )

Over the years India Petroleum Industry has played an influential part in triggering the speedyexpansion of the country's economy by contributing 15% in the total GDP. Further to this,

petroleum exports gave new dimension to foreign exchange earnings by drawing US$ 23.64billion in the FY 2008-09.

To assist and acknowledge the expansion of the sector, the Cabinet Committee on EconomicAffairs felicitated 44 petroleum research blocks on November 2008 under the New ExplorationLicensing Policy (NELP-VII).

Various Production Segments:

Refinery production: Refinery production in context of crude oil escalated from 156.11 MT inFY 2007-08 to 160.67 MT in FY 2008-09. Indian Oil Corporation Ltd is looking forward toelevate the capacity of its Haldia refinery and Panipat refinery plants to 7.5 million tones and 15million tones respectively in 2010.

Natural Gas Production: The natural gas production in 2008-09 increased from the previousyear's 32.40 billion cubic metres tonnes (BCM) to 32.84 BCM. In 2009 alone the Natural gas

production was registered at 33,846 million cubic metres.

Crude Oil Production: The projected production of crude oil during the 11th Five-Year Plan

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(2007-2012) is 206.76 MMT, while that of natural gas is 255.27 BCM. Cumulative productionof crude oil between April-December 2009 was 25,152 MT, while cumulative production ofrefinery production during the same period was 119,283 MT.

India as an international refining destination

India is steadily emerging as an international destination for oil refining with investmentrequirements lesser by 25% - 50% as compared to its Asian counterparts. As per the analysiscarried out by Deutsche Bank, India is expected to enhance its refining competence by 45% inthe next 5 years. Being the fifth biggest worldwide nation in context of distillation capacity,India enjoys 3% of the international capacity share. To move ahead in making its presence feltstrongly in the global market, Indian petroleum firms are planning to raise their distillationcapacity from the existing 149 mtpa to 243 mtpa by FY 2011-12.

Indian petroleum retail market

Expansion of Indian petroleum retail market is triggered by the growth in automobile sales thatresulted in major foreign investments. The growth is estimated to sustain and the market is likelyto expand further by 20 million every year till 2030, placing India at the world map in terms of

being the biggest automobile market.

Accordingly, the petroleum dealers Bharat Petroleum Corporation, Hindustan PetroleumCorporation and Indian Oil Corporation in collaboration with each other are looking forward toadd 2,262 petrol pumps in India by 2010.

Investments in India Petroleum Industry

In 2010 the state-owned oil firms are expected to splurge US$ 11.34 billion on developing

supplies and constructing new shipping networks for petroleum and natural gas.

Indian Oil Corporation is looking forward to establish a petroleum plant in the state of WestBengal by bringing in investments worth US$ 596.63 million.

ONGC will bring in US$ 694 million for raising services at its oil fields in Assam andadjoining states to enhance the petroleum output. In addition it will also splurge US$ 5.65 billion

on capital expenses in the next two years.

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GAIL (India) Limited and OVL, the international associate of leading oil and gas playerONGC, are expected to bring in investments worth US$ 250 million.

Future of India Petroleum Industry

As per the latest CII-KPMG analysis, the energy industry of India will help tin the expansion ofthe petroleum sector by bringing in investments worth US$ 120 billion-US$ 150 billion in thenext 3-5 years. By 2012, the prospects in India Petroleum Industry are estimated to accomplishUS$ 35 billion to US$ 40.

http://business.mapsofindia.com/india-petroleum-industry/

SWOT analysis of ONGC

SWOT

Strengths

1.Indias largest crude oil and natural gas producer

2.Strong brand name3.High profit making4.Has over 40,000 employees5.It produces about 30% of India's crude oil requirement6.Contributes 77% of India's crude oil production and 81% of India's natural gas production7.Commemorative Coin set was released to mark 50 Years of ONGC All crudes are sweet andmost (76%) are light, with sulphur percentage ranging from 0.02-0.10, API gravity range 26-46 and hence attract a premium in the market.

8 Strong intellectual property base, information, knowledge, skills and experience

9 Maximum number of Exploration Licenses, including competitive NELP rounds. ONGC hasbagged 121 of the 235 Blocks (more than 50%) awarded in the 8 rounds of bidding, under theNew Exploration Licensing Policy (NELP) of the Indian Government.

10 ONGC owns and operates more than 26,600 kilometers of pipelines in India, including sub-sea pipelines. No other company in India, operates even 50 per cent of this route length.

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Weakness

1.Legal issues2.Employee management

3.Bureaucracy4.Human rights and rehabilitation issues

Opportunity

1.Increasing fuel/oil prices2.Increasing natural gas market3.More oil well discoveries4.Expand export market

Threats

1.Government regulations2.High Competition3.Hybrid and electric cars in the market

http://www.mbaskool.com/brandguide/energy/348-ongc.html

Introduction

In 1989, the Institute of Petroleum Safety, Health and Environment Management(IPSHEM) was established by Oil and Natural Gas corporation ltd (ONGC) withthe objective of promoting standards of safety, health and environment in

petroleum sector in India. The Institute is committed to upgrade and develophuman resources with a view to minimize the overall risk to human life, damageto property, process and the environment.

The main functions of the Institute are Training, Research and Development,Consultancy Services, Data bank and Information services and by serving in anAdvisory capacity in evolving standards and procedures. The Institute offerstraining courses in Basic & Advanced Safety and Environment Management,Fire Safety, Offshore Survival & Safety and Coxswain Boat Handling etc. Theoffshore survival and safety and COXSWAIN program are practical training

programs for offshore going personnel. It includes a certificate course in FirstAid and Fire Fighting.

The picturesque IPSHEM site spreads over 101.5 hectares with an exclusive seafront 1.15 km is situated about 60 km away from Dabolim Airport at Betul

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village, South Goa, in close proximity to the well known Mobor Beach.

The Institute is being further upgraded by introducing Helicopter UnderwaterEscape Training (HUET) facility. Statistics show that 85% of accidents arecaused by shortcoming in the system. It is, therefore, imperative that personnelengaged in this high risk and hazardous industry are exposed to latest issues andconcepts involved in safety and environment management.

IPSHEM's scientific and systematic HRD training programs are carefullyconceptualized in theoretical and practical aspects to suit the requirements oftarget groups. IPSHEM also plays an advisory role in a number of committeesappointed by the Government of India for the purpose of framing of regulations,review of environmental plans, formulation of guidelines, etc.

IPSHEM's work associations and collaborations include:

National Institute of Oceanography (NIO), Goa

National Environmental Engineering Research Institute (NEERI), Nagpur

Indian Institute of Technology (IIT), Delhi

Indian Institute of Chemical Technology (IICT), Hyderabad

National Institute of Ocean Technology (NIOT), Chennai

Institute of Occupational Health (IOH), Goa

Loss Prevention Association (LPA), Mumbai

National Productivity Council (NPC), Mumbai

Goa University, Goa

Pune University, Pune

WAPCOS, New Delhi

Training programs

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Basic And Advanced Training Programs

IPSHEM offers training courses in Basic & Advanced Safety and EnvironmentManagement relevant to the Petroleum industry for all executives and Fire Safety

Management courses for fire safety executives. For offshore going executives, anOffshore survival at sea and Coxswain Boat Handling program offers trainingunder real life conditions so as to equip participants with maximum practicalexposure.

Specialized Training Programs

The faculty for the training courses offered by IPSHEM comprises qualified andtrained personnel with considerable experience in safety, health and environmentmanagement. Faculties for these training programs are also drawn from otherorganizations like BHEL, NIO, BARC, NEERI, etc.

The specialized training courses offered are:

Occupational Health and Ergonomics

Safety in civil construction

Safety auditors course

Marine oil spill response

Safety in logistics

On-site Hydrogen Sulphide safety course

Safety handling of explosives and radioactive devices in seismic and welllogging operations

Safety Services

Development of safety management systems and procedures offshore andonshore

Emergency response planning/disaster management planning

Fire prevention and control system services

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Other safety management services based on loss control philosophy

Consultancy on petroleum safety for on-site solutions

Safety auditing

Environmental Services

Environment Monitoring - offshore and onshore

Ambient Air Quality Monitoring

Environment Baseline Data Generation

Environment Auditing

Environment Impact Assessment (EIA)

Environment Database

Oil Spill Modelling

Environment Management Plan (EMP)

Clients

Foreign Service Institute, Ministry of External Affairs

Petronet LNG Limited

Hindustan Petroleum Corporation Ltd.

Selan Exploration Technology Ltd.

Enron Oil & Gas (I) Ltd.

NIKO Resources Ltd.

Gujarat State Petroleum Corporation Ltd.

Oil India Ltd.

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Hindustan Oil Exploration Company

Interlink Petroleum Ltd.

1.1: Profile of the Company

o ONGC is now a Fortune 500 Company and is the only and thefirst ever Indian Company to figure in the Fortunes list ofWorlds Most Admired Companies in the year 2007. Rankedas the number two E&P Company in world (Platts ranking oftop 250 Energy Companies 2011), ONGC remains Indias MostValuable PSU in terms of net profit and net-worth.

o ONGC has been ranked at 172nd position in the Forbes Global2000 list for the year 2011 of the worlds biggest companiesreleased on 21st April 2010. The ranking is based on Sales (US$22.6 billion), Profits (US$ 4.3 billion), Assets (US$ 44.6 billion)and Market Capitalization (US$ 53.2 billion). 57 IndianCompanies find placed in the list among which ONGC has beenranked at No.3.

o

ONGC has been ranked 24th among the Global publicly-listedEnergy companies as per PFC Energy 50 (2011)

o Financial Express in its latest listing of top 500 Companies ofIndia for the year 2010-11 has placed ONGC, second oncomposite overall ranking amongst all companies in India.ONGC also maintains its position as most valuable PSU of theCountry.

o Business World, in its latest survey on Most Respected

Companies 2011 (published on 14th February, 2011) rankedONGC fourth amongst all the companies in both private and

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public sector in India. ONGC has emerged as not only the sectorleader (oil & gas sector) but also the most respected companyamongst all the PSUs.

o Transparency International in a recently released reportPromoting Revenue Transparency: 2011 Report on Oil & GasCompanies has ranked ONGC at top on parameters fororganisational disclosure. ONGC ranked at 26th on reporting onanti-corruption programmes and at 16th place on Country-leveldisclosure International Operations.

o ONGC has been ranked 361st position as per Fortune Global500 - 2011 list, based on revenues, profits, assets andshareholders equity.

Represents Indias Energy Security

ONGC has single-handedly scripted Indias hydrocarbon saga by:

Establishing 7.38 billion tons of In-place hydrocarbon reserves withmore than 300 discoveries of oil and gas; in fact, 6 out of the 7

producing basins have been discovered by ONGC: out of these In-place hydrocarbons in domestic acreages, Ultimate Reserves are 2.60Billion Metric tons (BMT) of Oil Plus Oil Equivalent Gas (O+OEG).

Cumulatively produced 851 Million Metric Tons (MMT) of crude and532 Billion Cubic Meters (BCM) of Natural Gas, from 111 fields.

ONGC has bagged 121 of the 235 Blocks (more than 50%) awarded inthe 8 rounds of bidding, under the New Exploration Licensing Policy(NELP) of the Indian Government.

ONGCs wholly-owned subsidiary ONGC Videsh Ltd. (OVL) is thebiggest Indian multinational, with 33 Oil & Gas projects (9 of themproducing) in 15 countries, i.e. Vietnam, Sudan, South Sudan, Russia,Iraq, Iran, Myanmar, Libya, Cuba, Colombia, Nigeria, Brazil, Syria,Venezuela and Kazakhstan.

ONGC Group: Presence Across The EnergySpectrum

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Indias Most Valuable Public Sector Enterprise

As per latest survey Business Today (BT) (February 6, 2011

issue) ONGC has been ranked as the 'Best Employers toWork For' among all PSUs. ONGC with an Index score of40 stands at 13th amongst top 25 India Corporates. ONGChas also been ranked as the 'Best Employer to Work for' inthe Core sector, even among the non PSU Corporates inIndia.

1.2: ACCREDITATIONS:

ONGC Academy gets ISO-9001:2008 accreditation

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ONGC Academy was conferred with ISO-9001:2008Certification for quality management on 1st November,2010.

ONGC bagged the Petrofed Oil & Gas Industry Awards2009 and 2010 for excellence in various categories. ONGCbagged the 'Leading Oil & Corporate of The Year Award'for 2009 & 2010 and the 'Exploration & ProductionCompany of the Year Award for 2010.

ONGC also bagged 'Innovator of the year Team categoryAward for 2009.

MRPL clinched the 'Refinery of the Year Award' for 2010.

ONGC bagged the first ever FE-EVI Green BusinessLeadership Awards, instituted by Financial Express andEmergent Ventures India. The award was received by CMDon the occasion of World Environment Day.

ONGC bagged the Silver Trophy for Best HR Practices,2011 at the inaugural ceremony of the NIPM NationalConference held in Delhi on 14th February, 2011.

The Shine.Com HR leadership Awards were announced bythe IES Group of Companies in collaboration with theWorld HRD congress and Shine.Com of Hindustan Times.The Jury conferred upon ONGC, the award for the BestLeadership Practices in the area of Corporate SocialResponsibility in a function in Mumbai on 9th February,2011.

ONGC bagged the Corporate Governance Certificate for

excellence in corporate governance practices instituted bythe Institute of Company Secretaries India (ICSI).

ONGC bagged the PCRA 'Award for Excellence' for theBest Overall Performance in the Upstream Sector.

ONGC bagged the 'Golden Peacock Award' at the 5thGlobal Conference on Social Responsibility. The award wasreceived on from Chairman, World Council for CorporateGovernance and Former Prime Minister of Sweden.

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ONGC bagged the maiden Indian Chamber of CommerceSustainability Vision 2011 Awards in the category-'Sustainability

Reporting and Transparency'. The award was handed overto ONGC during the Summit on India Sustainability Vision@ Future at New Delhi.

ONGC bagged the awards on Best Financial Performanceand Corporate Governance given by Department of PublicEnterprises Government of India in association with IndianChamber of Commerce and Deloitte, the KnowledgePartner.

Indian National Oil Champion: ONGC

Domestic Operations

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Global Ranking

ONGC ranks as the Numero Uno Oil & Gas Exploration & Production(E&P) Company in the world, as per Platts 250 Global Energy Companies

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List for the year 2008 based on assets, revenues, profits and return oninvested capital (ROIC).

ONGC ranks 20th among the Global publicly-listed Energy

companies as per PFC Energy 50 (Jan 2008)

ONGC is the only Company from India in the FortuneMagazines list of the Worlds Most Admired Companies 2007.

Occupies 152nd rank in Forbes Global 2000 2009 list (up 46notches than last year) of the elite companies across the world;

based on sales, profits, assets and market valuation during thelast fiscal. In terms of profits, ONGC maintains its top rankfrom India.

ONGC ranked 335th position as per Fortune Global 500 - 2008list; up from 369th rank last year, based on revenues, profits,assets and shareholders equity. ONGC maintains top rank interms of profits among seven companies from India in the list.

Pioneering Efforts

ONGC is the only fullyintegrated petroleum company in India,operating along the entire hydrocarbon value chain:

Holds largest share of hydrocarbon acreages in India (51% in PELAreas & 67% in ML Areas).

Contributes over 79 per cent of Indians oil and gas production.

bout one tenth of Indian refining capacity.

Value chain integration.

Interests in LNG and product transportation business.

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ONGC GROUP: A Rich Heritage

Competitive Strength

All crudes are sweet and most (76%) are light, with sulphurpercentage ranging from 0.02-0.10, API gravity range 26-46 and hence attract a premium in the market.

Strong intellectual property base, information, knowledge,skills and experience

Maximum number of Exploration Licenses, including

competitive NELP rounds. ONGC has bagged 121 of the 235Blocks (more than 50%) awarded in the 8 rounds of bidding,

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under the New Exploration Licensing Policy (NELP) of theIndian Government.

ONGC owns and operates more than 26,600 kilometers of

pipelines in India, including sub-sea pipelines. No othercompany in India, operates even 50 per cent of this routelength.

Strategic Vision: 2001-2020

To focus on core business of E&P, ONGC has set strategicobjectives of:

Doubling reserves (i.e. accreting 6 billion tons of O+OEG).

Improving average recovery from 28 per cent to 40 per cent.

Tie-up 20 MMTPA of equity Hydrocarbon from abroad by 2018.

Accrete 1 Billion tons of resources from unconventional sources of

energy.

The focus of management will be to monetize the assets as well as toassetise the money.

Sourcing Equity Oil Abroad

ONGC has extended its operations beyond domestic arena, andnow, through its wholly owned subsidiary, the ONGC VideshLimited (OVL), is operating in 15 countries with 33 projects tosource equity oil & gas for energy security of the country. Over theyears OVL has emerged as the biggest Indian Multinational.

ONGCs overseas arm ONGC Videsh Limited (OVL),continued to maintain robust growth with 5.042 MMT of

Crude and 2.022 BCM of Gas during 2010-11.

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ONGC Videsh Ltds (OVL) proved reserves (1P) as on 1stApril 2011 stood at 202.908 MTOE, which next to ONGC, isthe second largest holding of proved oil and gas reserves byany Indian Company. OVLs share of total reserves (3P) of

oil and oil equivalent gas as on 1st April 2011 was 435.004MTOE. There was an impressive reserve accretion of466.23 MMT of oil and oil equivalent gas during the year2010-11. The Reserves-to-Production (R/P) Rationconsidering proved reserves was 21 for the year 2010-11.

OVL signed agreements with KazMunaiGas (KMG), thenational oil company of Kazakhstan for acquisition of 25%

participative interest in Satpayev exploration block inKazakhstan. The agreement was signed on 16th April 2011with KazMunaiGas in the presence of Dr. Manmohan Singh,Honble Prime Minister of India and H.E. Nursultan

Nazarbayev, Prsident of Kazakhstan.

The company now has participation in 33 projects in 15countries, namely Vietnam (2 projects), Russia (2 projects),Sudan (3 Projects includes 2 Project in South Sudan), Iran(1 project), Iraq (1 project), Libya (1 project), Myanmar (2

projects), Syria (2 projects), Cuba (2 projects), Brazil (6

projects), Nigeria (2 projects), Colombia (6 projects),Venezula (2 projects) and Kazakhstan (1 project). Out of 33

projects, OVL is operator in 11 projects and joint operator in6 projects.

OVLs share of production of oil and oil-equivalent gas(O+OEG), together with its wholly owned subsidiariesONGC Nile Ganga B.V. ONGC Narmada Ltd, ONGCAmazon Alaknanda Limited, Jarpeno Limited, Carabobo

One AB and ONGC Mittal Energy Limited, increased from8.87 MMTOE to 9.45 MMTONE, up 6.5%. Consolidatedgross revenue of OVL increased from Rs.153.83 billion toRs.186.83 billion, up 21% and consolidated net profit fromRs.20.90 billion to Rs.26.91 billion, up 29%.

OVLs strategic objective of sourcing 20 million tons ofequity oil abroad per year is likely to be fulfilled by 2018.

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Significant International Footprint (OVL)

Frontiers of Technology

State-of-the-art seismic data acquisition, processing andinterpretation facilities

Uses one of the Top Ten Virtual Reality Interpretationfacilities in the world

Alliances with Transocean, Schlumberger, Halliburton andBaker Hughes, IPR, Petrobras, Norsk, ENI, Shell

One of the biggest ERP implementations in the Asia.

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Best In Class Infrastructure And Facilities

The Company operates with 27 Seismic crews, manages 240onshore production installations, 202 offshore installations,

77 drilling (plus 44 hired) and 58 work-over rigs (plus 30hired), owns and operates more than 26,598 kilometers ofpipeline in India, including 6,707 kilometers of sub-seapipelines.

ONGC has adopted Best-in-class business practices formodernization, expansion and integration of all Info-comsystems.

1.3: Financials (2009-10)

ONGC groups turnover during 2010-11 has been Rs.127, 905 Crore withnet profit of Rs.22,456 Crore. ONGC paid highest-ever dividend of Rs.7,486Crore. The Net Worth of ONGC Group of companies is Rs.114, 531 Crore.

During 2010-11, the turnover of ONGC (on standalonebasis) has been Rs.69,532 Crore with net profit of Rs.18,924Crore; the highest-ever despite sharing under-recovery ofRs.24,892 Crore to the Oil Marketing Companies (OMCs) as

per the instructions of the Government of India. Net worth ofONGC (on standalone basis) has been Rs.96,709 Crore.

OVLs consolidated gross revenue increased by 21% from

Rs.15,383 Crore during 2009-10 to Rs.18,683 Crore during2010-11 and consolidated net profit increased by 29% fromRs.2,090 Crore during 2009-10 to Rs.2,691 Crore during2010-11.

The turnover of MRPL has been Rs.43,800 Crore, up 21%from Rs.36,141 Crore and net profit has been Rs.1,177Crore, up 6% from Rs.1,112 Crore.

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The Road Ahead

ONGC looks forward to become an integrated energy provider, with:

New Discoveries and fast track development

Equity Oil from Abroad

Downstream Value Additions & Forward Integration

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Leveraging state-of-the art technology and global bestpractices

New Sources of Energy

Production from small and marginal fields

ONGC has taken structured initiatives to tap unconventionalenergy sources, be it unconventional gases like Coal BedMethane (CBM), Underground Coal Gasification (UCG),Shale Gas and Gas Hydrates, or unconventional energysources like wind, solar etc. ONGC created a landmark forexploration of unconventional hydrocarbons when itsucceeded in striking shale gas from its first R&D well

RNSG-1 at Icchapur, near Durgapur, West Bengal inJanuary11. Earlier, CBM production from Pilot Project atParbatpur, Jharkhand had already started in January10,while Pilot UCG project has been launched in Vastan,Gujarat.

ONGC Energy Centre Trust, a dedicated centre created byONGC for holistic research in non-conventional energysources, has taken up three projects viz., Thermo-chemical

reactor for Hydrogen, Geo-bio Reactors and Fuel Cells.ONGC has already commissioned a 50 MW Wind Farm inGujarat and plan is afoot to set up another 100 MW WindFarm in Rajasthan. ONGC has also set up 3 Solar ThermalEngines at Solar Energy Centre, Ministry of New andRenewable Energy (MNRE) campus at Gurgaon.

Value-chain integration

Pursuing the globally-established integrated business model inpetroleum industry, ONGC took up equity in the ailingMangalore Refinery & Petrochemicals Limited (MRPL), astand-alone refinery of 9.69 MMT capacity, in March 2003.This not only added that desired comfort to this Company inmitigating higher risk of E&P operation but also set an example

in the Indian business history where a PSU has taken over a

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joint stock company and turned it around in a record time of oneyear.

Moving ahead, ONGC has taken structured initiatives towards

value-multiplier integration projects like Refinery, LNG,Petrochemicals, Power, SEZ, etc., to have presence in the entirehydrocarbon value-chain.

1.4: Corporate Social Responsibility

ONGC is also a responsible corporate citizen and is playing animportant role in strengthening the fabrics of the society. ONGC

Group of companies promotes Education, Heath care &Entrepreneurship in the Community and support WaterManagement and Disaster Relief in the country. The company hasincreased its budget towards socio-economic development to 2% ofnet profit from 0.75%.

Corporate Governance

ONGC also was the first Indian PSU to sign Integrity Pact, to bringin transparency in all its official transactions. It also has launchedthe Whistle Blower Policy, following the best CorporateGovernance practices.

Health, Safety & Environment

ONGC has implemented globally recognized QHSE managementsystems conforming to requirements of ISO 9001, OHSAS 18001and ISO 14001 at ONGC facilities and certified by reputedcertification agencies at all its operational units.

ONGC shares the global concern on Climate change and global

warming. ONGC has drawn elaborate programme to becomecarbon neutral and has registered 6 CDM (Clean Development

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Mechanism) projects with United Nations Framework Conventionon Climate Change (UNFCC). ONGC has already started earningCER (Certified Emission Reduction) credits, in the process,

becoming the first Indian PSU to do so.

Human Resources

ONGC has vast pool of skilled and talented professionals the

most valuable asset for the company. 33,229 ONGCians (as on 31stMarch, 2011) dedicate themselves for the excellent performance ofyour company during the year. ONGC continues to extend severalwelfare benefits to the employees and their families by way ofcomprehensive medical care, education, housing and socialsecurity.

1.5: History of ONGC

1947 - 1960

During the pre-independence period, the Assam Oil Company in thenortheastern and Attock Oil company in northwestern part of the undividedIndia were the only oil companies producing oil in the country, with minimalexploration input. The major part of Indian sedimentary basins was deemed

to be unfit for development of oil and gas resources.

After independence, the national Government realized the importance oil andgas for rapid industrial development and its strategic role in defense.Consequently, while framing the Industrial Policy Statement of 1948, thedevelopment of petroleum industry in the country was considered to be ofutmost necessity.

Until 1955, private oil companies mainly carried out exploration ofhydrocarbon resources of India. In Assam, the Assam Oil Company was

producing oil at Digboi (discovered in 1889) and the Oil India Ltd. (a 50%

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joint venture between Government of India and Burmah Oil Company) wasengaged in developing two newly discovered large fields Naharkatiya andMoran in Assam. In West Bengal, the Indo-Stanvac Petroleum project (a

joint venture between Government of India and Standard Vacuum Oil

Company of USA) was engaged in exploration work. The vast sedimentarytract in other parts of India and adjoining offshore remained largelyunexplored.

In 1955, Government of India decided to develop the oil and natural gasresources in the various regions of the country as part of the Public Sectordevelopment. With this objective, an Oil and Natural Gas Directorate was setup towards the end of 1955, as a subordinate office under the then Ministryof Natural Resources and Scientific Research. The department wasconstituted with a nucleus of geoscientists from the Geological survey ofIndia.

A delegation under the leadership of Mr. K D Malviya, the then Minister ofNatural Resources, visited several European countries to study the status ofoil industry in those countries and to facilitate the training of Indian

professionals for exploring potential oil and gas reserves. Foreign expertsfrom USA, West Germany, Romania and erstwhile U.S.S.R visited India andhelped the government with their expertise. Finally, the visiting Sovietexperts drew up a detailed plan for geological and geophysical surveys and

drilling operations to be carried out in the 2nd Five Year Plan (1956-57 to1960-61).

In April 1956, the Government of India adopted the Industrial PolicyResolution, which placed mineral oil industry among the schedule 'A'industries, the future development of which was to be the sole and exclusiveresponsibility of the state.

Soon, after the formation of the Oil and Natural Gas Directorate, it became

apparent that it would not be possible for the Directorate with its limitedfinancial and administrative powers as subordinate office of the Government,to function efficiently. So in August, 1956, the Directorate was raised to thestatus of a commission with enhanced powers, although it continued to beunder the government. In October 1959, the Commission was converted intoa statutory body by an act of the Indian Parliament, which enhanced powersof the commission further. The main functions of the Oil and Natural GasCommission subject to the provisions of the Act, were "to plan, promote,organize and implement programmes for development of PetroleumResources and the production and sale of petroleum and petroleum products

produced by it, and to perform such other functions as the Central

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Government may, from time to time, assign to it ". The act further outlinedthe activities and steps to be taken by ONGC in fulfilling its mandate.

1961 - 1990

Since its inception, ONGC has been instrumental in transforming thecountry's limited upstream sector into a large viable playing field, with itsactivities spread throughout India and significantly in overseas territories. Inthe inland areas, ONGC not only found new resources in Assam but alsoestablished new oil province in Cambay basin (Gujarat), while adding new

petroliferous areas in the Assam-Arakan Fold Belt and East coast basins(both inland and offshore).

ONGC went offshore in early 70's and discovered a giant oil field in the formof Bombay High, now known as Mumbai High. This discovery, along withsubsequent discoveries of huge oil and gas fields in Western offshorechanged the oil scenario of the country. Subsequently, over 5 billion tons ofhydrocarbons, which were present in the country, were discovered. The mostimportant contribution of ONGC, however, is its self-reliance anddevelopment of core competence in E&P activities at a globally competitivelevel.

After 1990

The liberalized economic poli

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