OIL AND NATURAL GAS CORPORATION LIMITED
ANNUAL REPORT 2009-2010
DIRECTOR'S REPORT
Dear Members,
It gives me immense pleasure to present, on behalf of the Board of
Directors of your Company, the 17th Annual Report and Audited Statements of
Accounts for the year ended 31st March, 2010, together with the Auditors'
Report and Comments on the Accounts by the Comptroller and Auditor General
of India (C & AG).
Your Company continues to achieve excellence in its core area of E & P
sphere both in India as well as abroad, and also continues to win accolades
from various quarters. Finance Asia, Hongkong has ranked ONGC as Number-1
Top Blue Chip Company of India (or 2009 (December 2009). ONGC is ranked at
Second Position in Financial Express FE500 listing of Indian companies both
in terms of Net Worth and Overall Composite Ranking (March 2009). Your
Company has been ranked at 155th position in Forbes Global 2000 list of
world's biggest companies for 2010 (April 2010). ONGC retains number one
rank among Indian companies and has been ranked 95th among the Forbes
Global 2000 biggest companies as per profit.
Physical Performance: 2009-10
Exploration
In recent years, your Company has intensified its exploratory efforts in
domestic as well overseas basins to locate new oil and gas assets. These
efforts paid good dividends in terms of new discoveries and reserve
accretion, During FY10. your Company made twenty one (21) discoveries in
domestic fields operated by it-14 in onshore and 7 in offshore areas. Out
of 21 discoveries 11 were new prospect discoveries and 10 were new pool
discoveries.
Highest reserve accretion in last two decades
ONGC accreated 82.98 Million Tonnes of Oil Equivalent (MTOE) of Ultimate
Reserves (3P) in domestic operated fields the highest in last two decades.
Total reserve accretion in domestic basins has been 87.37 MTOE [including
4.39 MTOE from ONGC's share in Joint Ventures (JVs)]. Initial In-place
reserve accretion in domestic basins was 273.42 MTOE including 22.82 MTOE
from ONGC's share in JVs.
Reserve Replacement Ratio (RRR)
Reserve Replacement Ratio (RRR) i.e. the ratio of reserve accretion to the
production of ONGC in its own domestic fields in this fiscal has been quite
impressive at 1.74 for 3P reserves; again the highest in the last two
decades. This is the 5th consecutive year ONGC maintained RRR of more than
1 against global feature of lower than 1 registered by large number of oil
companies.
Oil & Gas production levels maintained
ONGC has maintained oil and gas production levels despite global trend of
declining production from matured oil fields. During FY'10, the combined
Oil and Gas production of ONGC, including OVL and ONGC's share in PSC-JVs,
was 60.93 MTOE; marginally lower as compared to 61.23 MTOE in FY'09.
Production from overseas fields registered 8.87 MTOE; the highest ever.
Largestoil & gas producer in the country
Oil and gas production from domestic fields, including ONGC's share in PSC
JVs has been 52.06 MTOE during FY'10 against 52.45 MTOE during FY'09. ONGC
accounted for 79% of India's crude oil and 54% of natural gas production
during FY'10.
Highest-ever production from overseas assets
ONGC Videsh Limited (OVL), the flagship wholly owned subsidiary for
overseas operations has now footprints across 15 countries with 39
projects. Since its first hydrocarbon revenue from overseas in 2002-03 from
Vietnam, this year OVL registered highest ever production of 8.87 MTOE of
oil and gas.
First oil from RJ-ON-90/1
Your Company holds 30% participating interest in RJ-ON-90/1 pre-NELP block
operated by Cairn Energy India Pty. Ltd. (CEIL). Till date, 25 discoveries
have been made in the block with six major discoveries i.e., Mangala,
Aishwariya, Raageshwari, Saraswati, Bhagyam and Shakti. Out of these
discoveries, Mangala commenced production from 24th August, 2009; and it
was dedicated to the nation by Hon'ble Prime Minister Dr. Manmohan Singh on
29th August, 2009 at Barmer.
Rajasthan.
Your Company is aggressively pursuing with the Government of India for
reimbursement of royalty which it is paying on behalf of the operator.
New Projects
During FY'10 the Board has approved development of various offshore
marginal fields viz additional development of D-1 field (13.962 MMT oil by
2025) at an investment of Rs. 21,636.5 Million, developmentof North
Taptig as field (4.116 BCM gas by 2021) at an investment of Rs. 7,557
Million and development of Cluster-7 fields (9,73 MMt of oil & condensate
and 4.52 BCM gas by 2029) at an investment of Rs. 32,410 Million.
Your Company is currently implementing redevelopment projects in major
fields of Western offshore at an estimated cost of Rs. 182 billion which
includes Mumbai High North redevelopment phase II at Rs. 71 billion, Mumbai
High South redevelopment phase II at Rs. 88 billion and Heera & South Heera
redevelopment at Rs. 23 billion. During FY'10, the following new facilities
were completed to enhance production:
* Installation of 4 Well Platforms C-39A, C-24, C-39-1 and C-22, along with
associated modification and pipelines under C-Series development.
* Installation of Process Platform BCPA-2 with 2nd stage booster
compressors for Bassein field (10MMSCMD) and Vasai East process facilities
having liquid handling capacity of 12,000 bopd, Gas compression of 2.0
MMSCMD and water injection facility of 47,000 bwpd along with associated
modifications under Vasai East development project.
* Three new smart wel platforms Rs.-16, Rs.-16 and Rs.-17 along with
associated cables, pipelines and topside modification under Mumbai High
South Redevelopment Phase II.
During the fiscal 2009-10, your Company brought 5 new marginal fields to
production. With this total, 50 such fields are now on stream and
these fields produced 2.0691 MTOE of oil and gas during 2009-10.
ONGC bags highest number of blocks in NELP-VIII
You would be pleased to note that in NELP-VIII bid round, ONGC in
partnership with its consortia members, submitted the bids for 25
exploration blocks and won 17 of these. In the eight NELP rounds which have
been rolled out so far, ONGC has won 50% of the blocks i.e.,121 out of
total 242 blocks awarded by the Govt, of India, Your Company now holds 80
NELP blocks (70 as operator) and 62 nomination blocks.
CBM production
Your Company is operating in 5 CBM Blocks i.e., Jharia, Bokaro, North
Karanpura and South Karanpura Blocks in Jharkhand and Raniganj Block in
West Bengal, CBM production from Pilot Project at Parbatpur commenced from
January, 2010. Final Development Plan (FDP) for Jharia block has been
submitted for approval of the Government.
Value Added Products
The Hazira Plant of your Company started production of a new product
Propane. During FY'10,1,316 MT of Propane was sold. During FY'10, revenue
from export of 1,568 MTof Naphtha has been Rs. 45,770 mil ion; the highest-
ever both in terms of quantity exported and revenue earned.
Alternate sources of energy
51 MW Wind power farms which your Company hadset up near Bhuj in Gujarat
with an investment of Rs. 3,080 million in September, 2009 is already
operational. The electricity generated is wheeled through the Gujarat State
Electricity Grid for captive consumption by ONGC at Ankleshwar, Ahmedabad,
Mehsana and Vadodara.
ONGC Energy Centre set up by your Company for holistic research for new and
alternate energy sources has been pursuing a number of new projects like.
Thermo-chemical generation of hydrogen. Bioconversion of coalfoil to
methane gas, Uranium exploration, Solid state lighting, Solar PV Energy
Farm, etc.
SCOPE Gold Trophy for achievements in CSR and R&D
You will be delighted to know that your Company received the Gold Trophy
for 'SCOPE Meritorious Award for Corporate Social Responsibility and
Responsiveness for 2007-2008 and Gold Trophy for R & D, Technology
Development and Innovation for the year 2008-09. The awards were presented
by H.E. the President of India, Smt. Pratibha Devisingh Patil to CMD, ONGC
on Public Sector Day i.e. on 10th April, 2010 at Vigyan Bhawan, New Delhi.
1. Financial Results
Despite volatile markets, your Company has earned a Profit After Tax of
Rs.167,676 million (Rs. 161,263 million in 2008-09), up 3.98%, which is
incidentally the highest-ever.
During the year under review, your Company registered Gross revenue of
Rs.619.832 million (Rs. 566,357 million in 2008-09), up 9.44%, by netting
off the revenue from trading of products of Mangalore Refinery &
Petrochemicals Limited (MRPL), a subsidiary of your Company, amounting to
Rs. Nil (Rs. 85,098 million in 2008-09).
Highlights:
Gross Revenue Rs. 619,832 million
Profit after Tax (PAT) Rs. 167,676 million
Contribution to Exchequer Rs. 280,988 million*
Return on Capital Employed 50.9%
Debt-Equity Ratio 0.00006:1
Earning Per Share (Rs.) 78.39
Book Value Per Share (Rs.) 404
*OID Cess, Excise duty, Royalty, Corporate and Dividend Distribution Tax
and Dividend on Government shareholding.
Financial Results (Rs. in milion)
2009-10 2008-09
Gross Revenue 619,832 651.455
Gross Profit 396,054 378,292
Less: Interest 686 1190
Exchange Variation (4,033) 3819
Depreciation 12,312 14,491
Amortisation 89,407 68,281
Depletion 45,302 42,148
Impairment (433) (3110)
Provision/Write Offs 2,974 11,666
Provision for Taxation
(including deferred tax 82,163 228,378 78,544 217,029
liability of Rs. 11,160 million)
Profit After Tax 167,676 161,263
Appropriations Profits Loss B/F - (1)
Interim Dividend 38,500 38,500
Proposed Final Dividend 32,083 29,944
Tax on Dividend 11,616 11,632
Transfer to General Reserve 85,477 81,188
Total 167,676 161,263
Previous year figures have been regrouped wherever necessary.
2. Dividend
Your Company paid an interim dividend of Rs. 18 per share (180%), in
December, 2009. The Board of Directors have recommended a final dividend of
Rs. 15 per share (150%) making the aggregate dividend at Rs. 33 per share
(330%) as compared to Rs. 32 per share (320%) paid in 2008-09. The total
dividend will absorb Rs. 70,583 million, besides Rs. 11.616 million as tax
on dividend, which is historically the highest dividend payout by the
Company.
3. Management Discussion and Analysis Report
In terms of Clause 49(IV)(F) of the Listing Agreement with the Stock
Exchanges, a Management Discussion and Analysis Report has been included
and forms part of the Annual Report of the Company.
4. Production and Sales
Highlights of production and sales of Crude Oil. Natural Gas and Value-
added products:
Unit Production Sales Value (Rs. in
million)
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
Direct
Crude Oil (MMT) *26.46 *27.02 22.33 22.88 445,040 391,907
NaturalGas (BCM) **25.59 **25.43 20.60 20.53 73,797 75,528
Ethane/Propane 000 MT 535 497 533 497 10,249 9,889
LPG 000 MT 1105 1026 1108 1029 21,924 22,752
Naphtha 000 MT 1592 1553 1598 1545 47,137 48,406
SKO 000 MT 165 156 166 153 3,255 4,448
Others ***463 ***1.349
Sub Total 601,865 554,279
Trading
Motor Spirit 000 KL 0.55 273 27 11,062
SKO 000 KL - 441 - 12,253
HSD 000 KL 4.29 1742 156 61,883
Sub Total 183 85,198
Total 602.048 639,477
* Includes 1.79 MMT (Previous year 1.65 MMT) from Joint Ventures.
** Includes 2.49 BCM (Previous year 2.95 BCM) from Joint Ventures.
*** Sale of electricity of Rs. 131 million (Previous year Rs. 205 million)
regrouped to other income.
5. Oil & Gas Reserves
Your Company has made voluntary disclosures in respect of Oil & Gas
Reserves, conforming to SPE classification 1994 and US Financial Accounting
Standards Board (FASB-S9). ONGC has added 250.60 MTOE of oil and oil-
equivalent gas (O+OEG) initial inplace volume with 82.98 MTOE of O+OEG as
the ultimate reserve component during FY'10. The ultimate reserves
accretion, including its share in joint ventures is 87.37 MTOE of O+OEG,
which is the highest in last two decades.
Ultimate Reserve (3P) accretion O+OEG (in MTOE)
Year Domestic ONGC's Total OVL's Total
Assets share in Domestic Share in
Domestic Reserve Foreign
JVs Assets
(1) (2) (3)=(1)+(2) (4) (5)=(3)+(+)
2007-08 63.82 -0.34 63.48 46.73 110,21
2008-09 68.90 2.2 71.72 135.08 206.80
2009-10 82.98 4.39 87.37 0.35 87.72
6. Statement of Reserve Recognition Accounting
The concept of Reserve Recognition Accounting attempts to recognize income
at the point of discovery of reserves and seeks to demonstrate the
intrinsic strength of an organization with reference to its future earning
capacity in terms of current prices for income as well as expenditure. This
information is based on the estimated net proved reserves (developed and
undeveloped) as determined by the Reserves Estimates Committee.
As per FASB-69 on disclosure about Oil and Gas producing activities,
publicly traded enterprises that have significant Oil and Gas producing
activities, are to disclose with complete set of annual financial
statements, the following supplemental information:
a) Proved Oil and Gas reserve quantities.
b) Capitalized costs relating to Oil and Gas producing activities.
c) Cost incurred for property acquisition, exploration and development
activities.
d) Results of operations for Oil and Gas producing activities.
e) A standardized measure of discounted future net cash flows relating to
proved Oil and Gas reserve quantities.
Your Company has disclosed information in respect of (a) and (d) above in
the Annual Financial Statements. Your Company has made voluntary disclosure
on standardized measure of discounted future net cash lows relating to
proved oil and gas reserve at Annexure-A to this report as Statement of
Reserve Recognition Accounting (RRA).
7. Financial Accounting
The Financial Statements have been prepared in accordance with the
Generally Accepted Accounting Principles (GAAP) and in compliance with all
applicable Accounting Standards (AS-1 to AS-29) and Successful Efforts
Method as per the Guidance Note on Accounting for Oil & Gas Producing
Activities issued by The Institute of Chartered Accountants of India (ICAI)
and provisions of the Companies Act, 1956.
8. Internal Control System
The Company has well established and efficient internal control system and
procedures. Your Company has already implemented SAP R/3 system for
integration of various business processes across the organization. The
system has now been upgraded from earlier version of My SAP 4.6C to ECC
6.0. The Company also as well defined financial powers of various
executives in its Book of Delegated Powers (BDP). Integrated BDP has
recently been revised to bring further delegation, The Company has m-house
Internal Audit Department commensurate with its size of operations. Audit
observations are periodically reviewed by the Audit & Ethics Committee of
the Board and necessary directions are issued wherever required.
9. Subsidiaries
(i) ONGC Videsh Limited (OVL)
(i) ONGC Videsh Limited, the wholly-owned subsidiary of your Company for
overseas E & P activities, registered/satisfactory performance during 2009-
10. The company presently has participation in 40 projects in 15 countries.
The Big Deal
A consortium led by OVL signed a contract on 12r May, 2010 for 40%
ownership in the company, formed for developing Carabobo-1-Norte and
Carabobo-1-Centro heavy oil blocks in Venezuela. The Corporacian Venezolana
del Petrleo ('CVP'), a subsidiary of Petr'leos de Venezuela S.A. ('PDVSA'),
Venezuela's state oil company, will hold the remaining 60% equity interest.
The members of the OVL's Consortium are: OVL (11%), Indian Oil Corporation
Limited (3.5%), Oil India Limited (3.5%), Repsol YPF (11.0%) and Petroliam
Nasional Berhad ('PETRONAS') (11%). The company will build heavy oil
production facilities, upgrading facilities and associated infrastructure.
The upstream production facilities are expected to produce around 400,000
barrels per day of extra heavy oil of which approximately 200,000 barrels
per day will be upgraded into light crude oil in a facility to be located
in the Soledad area, Anzo'tegui State. The license term will be for 25
years with the potential for a 15 year extension.
Out of 39 projects, OVL is operator in 16 projects and joint operator in 6
projects. OVL is currently producing oil and gas from Greater Nile Oil
Project and Block 5A in Sudan, Block 06.1 in Vietnam, AI Furat Project in
Syria, Sakhalin-I Project and Imperial Energy in Russia, Mansarovar Energy
Project in Colombia and San Cristobal Project in Venezuela. Block BC-10 in
Brazil commenced production from 13th July, 2009. Block A-1 and A-3 in
Myanmar and Carabobo Project in Venezuela are in development phase. North
Ramadan Block, NEMED Project in Egypt and Farsi Offshore Block in Iran have
discoveries and appraisal work is being carried out. Development for Abu
Khashab and Rashid discovehes in Block-24, Syria has been approved by the
Syrian Government and further exploration work is ongoing in the block. OVL
had completed the Product Pipeline Project for Sudan Government and handed
over the pipeline to it in October, 2005 and is currently under lease. The
remaining projects are in exploration phase.
During 2009-10, OVL's consolidated share in production of oil and oil
equivalent gas (O+OEG), was 8.87 MMT. OVL's consolidated gross revenue
during 2009-10 was Rs. 153,828 million (Rs. 184,235 million during 2008-09)
down 16.5%. OVL's consolidated Profit After Tax during 2009-10 was
Rs.20,896 million (Rs. 28,067 million during 2008-09) down by 25.55%. The
reduction in Gross Revenue and Profit After Tax is mainly on account of
fall in crude oil prices in the international markets during 2009-10.
Direct Subsidiaries of OVL:
a) ONGC Nile Ganga B.V. (ONGBV):
* B.1.M.M ONGBV, a subsidiary of OVL, is engaged in E&P activities in
Sudan, Syria, Venezuela and Brazil. ONGBV holds 25% Participating Interest
(PI) in Greater Nile Oil Project (GNOP), Sudan with its share of oil
production of about 2.126 MMT during 2009-10.
* It has 16.66% to 18.75% participative interest in four Production Sharing
Contracts (PSCs) in AI Furat Project (AFPC), Syria with its share of oil
and gas production of about 0.718 MMTOE during 2009-10.
* ONGBV also holds 40% PI in San Cristobal Project in Venezuela with its
share of oil production of about 0.704 MMT during 2009-10.
* Further ONGBV has 15% PI in BC-10 Project in Offshore Brazil which has
commenced production in 2009-10 contributing to OVL's share of 0.192 MMt
oil during the year. The current total production of the project is about
80,000 barrels of oil per day.
* ONGBV also has 100% PI and is the operator of exploratory blocks BM-S-73
and BM-ES-42 and holds 25% PI in exploratory blocks Block BM-SEAL-4 and
Block BM-BAR-1 all located in Deepwater Offshore, Brazil.
b) ONGC Narmada Limited (ONL):
ONL, a wholly-owned subsidiary of OVL is engaged n E&P activities n
Nigeria-Sao Tome & Principe, Jo it Development Zone: JDZ) with' 3.5% D in
deepwater explor at on Block-2
c) ONGC Amazon Alaknanda Limited (OAAL):
OAAL, a wholly-owned subsidiary of OVL, holds stake in E & P projects in
Colombia, through Mansarovar Aiakaranda Energy Colombia Limited (MECL), a
50:50 joint venture company with Sinopec of China. During 2009-10, OVL's
share of production in MECL was about 0.409 MMT of oil.
d) Jarpeno Limited:
Jarpeno Limited, a wholly-owned subsidiary of OVL incorporated in Cyprus,
Jarpeno acquired Imperial Energy Corporation pic, a UK listed Limited
upstream oil exploration and production entity with its main activities in
Tomsk region of Western Siberia in Russia, in January, 2009. During 2009-
10, Imperial Energy's production was about 0.543 MMT of oil.
e) AB Startkapitalet nr 5636 {name changed to Carabobo One AB):
OVL holds 11% in Carabobo project through a mixed company AB Startkapitalet
nr 5636 (name changed to Carabobo One AB).
Joint Venture of OVL:
f) ONGC Mittal Energy Limited (OMEL)
OVL along with Mittal Investments Sari (MIS) promoted OMEL a joint venture
company incorporated in Cyprus OVL and MIS hold 98% equity shares of OMEL
in the ratio of 49 (OVL): 49 (MIS) with balance 2% shares held by SBI
Capital Markets Ltd. OMEL holds45 5% and 64.33% PI in exploration Blocks
OPL 279 and OPL 285 respectively in Nigeria. OMEL also holds 1.11% Class-C
shares in ONGBV exclusively for AFPC Syrian Assets, such inveslment being
financed by Class-C Preference Shares; Issued by OMEL in the ratio of 51:49
to OVL and MIS respectively.
(n) Mangalore Refinery & Petrochemicals Limited (MRPL)
Your Company contin ues to hold 71.62% equity stake in MRPL, which has put
in a commendable all-round performance, despite downturn during 2009-10.
Highlights
* Refinery crudethruput-12 50MMT.
* Turnover-Rs. 360,809 million.
* Profit After Tax-Rs. 11,124 million.
Keeping in view its plans to make investments in various projects, a
dividend of 12% has been recommended by its Board. MRPL has successfully
completed the turnaround of the 6MMTPA unit as per schedule and also revamp
of Gas Oil Desulphurisation unit. The distil.ate yield was highest ever
72.8% at an operating level of 12.5 MMTPA The domestic dispatches were
highest during the FY 2009-10. MRPL received the first parcel of 'Mangala'
crude from the Rajasthan oil field of ONGC and Cairn on 9th October, 2009.
MRPL has achieved 'Excellent' performance results under the MOU with ONGC,
its holding company. MRPL achieved its lowest ever energy index in terms of
MBTU/BBL/MRGF (MBN) of 58.27 during the year. The excellent operating,
production and safety standards maintained by its Refinery have enabled
MRPL to achieve remarkable energy saving and also an accident-free year.
ICRA has reaffi rmed their Issuer rating of or AAA' to MRPL for lowest
credit nsk. CRISIL issued rating of 'Cr AAA' to MRPL indicating highest
safety.
It bagged the following awards and accreditations during the year:
* Winner in the 'Most Safe Refinery' in last three years and runner up in
'Refineries' categories of OISD awards for the year 2008-09.
* Jawahartal Nehru Centenary Award 2008-09 - Joint 1st Prize in Specific
Energy Consumption Performance amongst all Refineries in Public Sector.
* Superstar Achiever Award-2008 for best export performance from Kanara
Chamber of Commerce and also State Level Export Award for the Year 2005-06
and 2006-07 from Govt, of Kamataka.
Direct Marketing
Direct marketing sales of MRPL registered an overall growth of 3% covering
products Bitumen, Furnace Oil, Naphtha, Mixed Xylene, LSHS and Sulphur,
with sales of 800 TMT in 2009-10. MRPL Shell Aviation Fuel Services Private
Limited (a Joint Venture Company of MRPL and Shell Global) has made good
progress in marketing of ATF to domestic airlines at Bangalore and
Hyderabad airports and is likely to commence operation at Mangalore airport
shortly.
Implementation of the Phase III Refinery Project with a project cost of
Rs.121,600 million, was on schedule during the year 2009-10. With a view to
add value to the propylene, implementation of Polypropylene unit at a cost
of Rs. 18,030 million has been approved. A contract for construction of
ISBL facility has been placed on EIL for execution under open book
execution method. Your Company has approved to extend a loan facility of
Rs. 50,000 million for part financing the projects. OIDB has also
sanctioned a loan of Rs. 2,000 million for the projects.
10. Exemption in respect of Annual Report of Subsidiaries and Consolidated
Financial Statement
In terms of approval granted by the Central Government under Section 212(8)
of the Companies Act, 1956 copies of the Balance Sheets, Profit and Loss
Accounts, Reports of the Board of the Directors and Reports of the Auditors
of the subsidiary companies have not been attached to the Accounts of the
Company. The Company will make these documents/details available upon
request by any member of the Company interested in obtaining the same.
Annual Reports of MRPL and OVL are available on website www.mrpl.co.in and
www.ongcvidesh.com respectively.
In accordance with the Accounting Standard (AS)-21 on 'Consolidated
Financial Statements' read with AS-23 on 'Accounting for Investments in
Associates' and AS-27 on 'Financial Reporting of Interests in Joint
Ventures', audited Consolidated Financial Statements for the year ended
31st March, 2010 of the Company and its subsidiaries form part of the
Annual Report.
11. Joint Ventures/Associates
(i) ONGC Tripura Power Company Limited (OTPC)
ONGC has promoted OTPC with envisaged equity stake of 50% along with Govt
of Tripura (0.5%) and IL & FS (26%) to set-up 726.6 MW (363.3x2) gas based
Combined Cycle Power Plant (CCPP) at Pallatana in Tripura to monetize its
idle gas assets in Tnpura. Various linkages like gas supply by ONGC and
power off-take by NE states have been finalized. The JV company has also
tied updebt forthe project with Power Finance Corporation Limited Bharat
Heavy Electricals Limited has been engaged as EPC agency for completion of
Generation Project on turnkey basis. The first phase of the project is
likely to be completed by December, 2011.
(ii) ONGC Petro-additions Limited (OPaL)
Your Company has promoted a JV company 'ONGC Petro-additions Limited'
(OPaL) with 26% equity stake along with GAIL (19%) and Gujarat State
Petroleum Corporation Ltd (GSPCL) (5%) to implement a mega petrochemical
complex comprising of 1.1 MMTPA ethylene Cracker and global scale polymer
units within Dahej SEZ as a step towards downstream integration. A map-
statutory approvals like Environmental Clearance from MoEF, SEZ Unit
approval etc have been ootamed and major LSTK contracts relating to site
infrastructure development, dual feed cracker contract, technology
licensors) for downstream polymer units have been awarded. M/s EIL has been
engaged as the PMC of the project.
(iii) Mangalore Special Economic Zone Limited (MSEZ)
ONGC with 26% equity stake in MSEZ along with KIADB (23%) and IL & FS+KCCI
(51%), is promoting another SEZ in coastal Mangalore. Ministry of Commerce
& Industry has formally notified to set up a Petro-chemical Specific SEZ in
1453 acres of land. MSEZ has alloted requisite land to ONGC Mangalore
Petrochemical Ltd, a company promoted by ONGC, for setting up an aromatic
based petrochemical unit. MSEZ has signed a Co-developer agreement with
Indian Strategic Petroleum Reserves Limited (ISPRL) to develop a free trade
zone for warehousing of Strategic Crude Reserve. Resettlement and
Rehabilitation work of Project Displaced People is in progress over 136
acres of land. Requisite infrastructure like water supply system, pipe-line
corridor etc. is under implementation.
(iv) ONGC Mangalore Petrochemicals Limited (OMPL)
ONGC has promoted OMPL with 46% equity participation, along with MRPL (3%)
for setting up manufacturing facilities for 0 92 MMTPA Para-Xylene and 0.14
MMTPA Benzene from MRPL's aromatic streams in Mangalore SEZ as value
addition project The project is under implementation Contracts relating to
project management, technology licenser and site grading have been awarded
while LSTK contract for process packages are under finalization. Debt
syndication process has been completed and Rupee term loan agreement with
bankers signed.
(v) ONGC TERI Biotech Limited (OTBL)
OTBL is Joint Venture company of ONGC. incorporated on 26th March, 2007,
with the Energy and Research if in Institute (TERI) The JV has been
promoted for addressing the requirement of Berenice at on of oily sludges
Microbial Enhanced Oil Recovery, prevention of wax deposition bacteria in
tubulars, flow assurance of line pipes for E & P operations. Apart from
ONGC. OTBL is bagging contracts for application of above technologies from
other companies like Oil India Limited, Railways, Refinance, private
companies etc.
(vi) Petronet MHB Limited (PMHBL)
PMHBL is a JV company of ONGC (28.766%), HPCL (28.766%) and PIL (7.898%).
Balance 34.57% of equity is held by the leading banks. It owns and operates
a multi product pipeline to transport MRPL's products to hinterland of
Kamataka. Maintaining its turnaround trend, PMHBL, as per unaudited results
for the year 2009-10, has made a net profit of Rs.50 million on a
throughput of 2.53 MMT against Net profit of Rs. 20 million with
throthghput of 2.45 MMT during the year 2008-09.
(vii) Petronet LNG Limited (PLL)
ONGC has 12.5% equity stake in PLL, identical to similar stake by other Oil
PSUs co-promoters viz., IOCL, GAIL and BPCL. PLL has started commissioning
of Dahej LNG terminal of 10 MMTPA capacity and also commenced construction
of LNG Receiving and Re-gasification Terminal of 5.0 MMTPA at Kochi The
turnover of during 2009-10 was Rs. 106.491 million (previous year Rs.84,287
million) and net profit was Rs. 4,045 million (previous year Rs.5,184
million). PLL has declared a dividend of 17.5%, same as the previous year.
(viii) Pawan Hans Helicopters Limited (PHHL)
The Company has 21.5% equity stake in PHHL with balance 78.5% equity with
the Government of India. PHHL is one of the Asia's largest helicopter
operators having a well balanced operational fleet of 36 helicopters. It
provides helicopter support for ONGC's offshore operations. PHHL was
successful in providing all the 12 Dauphin N and N3 helicopters fully
compliant with AS-4 as per the new contract with ONGC. The net profit of
PHHL for the year 2008-09 was Rs. 251 20 million and it paid a dividend of
10%. The accounts of PHHL for 2009-10 are under finalisation.
(ix) Dahej SEZ Limited (DSL)
Your Company with 23% equity stake along with Gujarat Industrial
Development Corporation (26%) is developing a multi-product SEZ at Dahej in
coastal Gujarat over 1717 hectares of land through an SPV 'Dahej Special
Economic Zone Ltd'. SEZ has formally been approved by Ministry of Commerce
& Industry and Gazette notification issued. This SEZ, now declared as
Petroleum, Chemical, Petrochemical Investment Region (PCPIR) by Government
of India, is operational since September 2009. Environment clearance from
Ministry of Environment & Forest (MoEF) was received on 17th March 2010.
About 90% of the saleable land has been allotted to prospective unit
holders.
12. Other Projects/Business initiatives
(a) C2-C3-C4 Extraction Plant;
ONGC is setting up a C2-C3-C4 Extraction Plant at Dahej using LNG from PLL
as feed stock. The plant is nearing mechanical completion with overall
progress of 98.24% as on 31st March, 2010.
(b) Partnerships for growth
(i) ONGC led Consortium signs agreements for sourcing LNG from Iran
ONGC/OVL, in association with Hinduja Group and Petronet LNG have entered
into agreements with Iranian authorities on 1st December, 2009 at New Delhi
for participation in development of gas fields and liquefaction facilities
in Iran. Indian participation would entitle supply of LNG up to a minimum
of 6 MMTPA on long-term basis.
(ii) Moll with M/s Sistema, Russia
OVL entered into a non-exclusive Memorandum of Understanding (MoU) on 8th
December, 2009 at Moscow with M/s Sistema, a leading diversified industrial
group of Russia to explore the possibilities of jointly studying and
participating in attractive oil and gas assets in Russia and third
countries.
(iii) MoU with ENARSA, NOC of Argentina
OVL signed an MoU with ENARSA, the national oil company of Argentina for
cooperation in E&P ventures in Argentina, India and other countries on 14th
October, 2009 in New Delhi in presence of H.E Dr. Cristina Fernandez de
Kirchner,President of Argentina and Hon'ble Prime Minister of India, Dr.
Manmohan Singh.
(iv) MoU with Bfiarat Petroleum Corporation Limited (BPCL)
ONGC executed an MoU with BPCL\on 23rd February. 2010 for exploring
/opportunities in downstream gas business such as participation in CGD
networks, laying natural gas pipelines, marketing of natural gas and CNG
compression for developing CNG corridors across the state and national
highways and for other mutually agreed business.
(v) MoU with GAIL India Limited
The MoU executed with GAIL for mutual co-operation In the areas of Natural
Gas Pipelines, Transmission and Marketing business has been extended for
two years w.e.f. 24th July 2009
(vi) MoU with FMC Technologies (S) Pte Ltd, Singapore
ONGC and FMC Technologies (S) Pte Ltd, Singapore signed an MoU on 14th
July, 2009 at New Delhi to pursue collaboration and competence enhancement
in area of deepwaterdevelopment.
13. Information Technology
Project ICE
Project ICE, the ERP based business portal of ONGC was upgraded from My SAP
4.6c to ECC 6.0 to leverage the new functionalities of the latest ERP
system consisting of Production Revenue Accounting (PRA), Governance, Risk
& Compliance (GRC). Master Data Management (MDM), Identity Management
(IDM). Occupation Health (OH). Mobile Asset Management. System based
processes for Performance Related Pay (PRP), Perquisites and Online Claims
and re-imbursements have now been enabled in totality.
E & P Disaster Recovery Server
E & P Document Management Disaster Recovery Server established at Vadodara
was inaugurated on 10th November, 2009. With this, ONGC's efforts to create
an online Central Repository of all accumulated intellectual assets has now
been completed.
14. Health, Safety & Environment (HSE)
Your Company has implemented globally recognized QHSE management systems
conforming to requirements of ISO 9001, OHSAS 18001 and ISO 14001 at ONGC
facilities and certified by reputed certification agencies at all its
operational units. Surveillance Audits for sustaining HSE accreditation was
carried out in 402 units during the year. Corporate guidelines on incident
reporting, investigation and monitoring of recommendations was developed
and implemented for maintaining uniformity through out the organization in
line with international practice.
Corporate Disaster Management Plan (CDMP) and guidelines have been
developed for uniform disaster management all across ONGC. Your Company has
also developed Occupational Health physical fitness criteria for employees
deployed for offshore operations. Occupational Health (OH) module has now
been populated on SAP system.
Ringal Plantation:
Sustaining fragile ecosystem of Himalayas is one of the objectives
underlined in National Action Plan on Climate Change launched by Hon'ble
Prime Minister. Ringal has high carbon sequestration potential, is fodder
for musk deer and has potential to provide employment opportunity to local
people. In the first phase. 338,000 ringal plants have been planted in
Joshimath and Kedamath forest area in 125 hectare land during 2008-09. In
the second phase, plantation of another 400,000 ringal saplings are
envisaged in 160 hectares area of upper Himalayas.
Mangrove Plantation:
Mangrove plantation has been under taken by ONGC along the Dhadar river
estuary in Gandhar area of Gujarat to protect flooding of water and
degeneration of near by land are as Mangrove plantation on the shore line
of Dhadar River in Gandhar area has been intensified One of the important
components of this project is spreading awareness about mangrove plantation
in urban and coastal rural areas of Gujarat and Maharastra.
15. Clean Development Mechanism (CDM)
ONGC's 5th and 6th Clean Development Mechanism (CDM) projects namely-
Energy Efficiency in Amine circulation pumps al Hazira and 51 MW wind power
project at Gujarat, were registered with United Nations Framework
Convention on Climate Change (UNFCCC) on 23rd Sept 2009 and 1st March 2010
respectively. The projects are estimated to earn annual Certified Emission
Reduction (CER) of 85,762 and 4,043 respectively. Expected annual CERs
earned by ONGC is about 210.000. In addition, two more CDM projects, viz
Gas Flaring Reduction at Jorhat and Green Building project at Delhi have
been successfully validated during the year The total expected CERs from
these two projects will be around 28,000 per annum.
ONGC's first CDM project, 'Waste heat Recovery Project at Mumbai High' has
been successfully verified and the United Nations Framework Convention on
Climate Change (UNFCCC) issued the first set of Certified Emission
Reduction (CERs) for this project on 18th March 2010. With this issuance,
the decks are clear for ONGC to trade and earn revenues from CDM projects.
16. Human Resources
You are aware that your Company has vast pool of skilled and talented
professionals-trie most valuable asset for the company. Your Company
continued to extend several welfare benefits to its employees and their
families by way of comprehensive medical care, education, housing and
social security. During the year 2009-10. your Company implemented various
new and revised welfare policies for its employees. 75 employees were
released under the Voluntary Retirement Scheme during the year The Human
Resource value of the employees based on 'Lev and Schwartz' model is
enclosed at Annexure 'B'.
Pay Revision of Executives
Ministry of Petroleum and Natura Gas issued Presidential Directives to
implement revision of pay and allowances of Board level and below Board
level executives in your Company dated, 24th Apr. 2009 Subsecjently revison
of pay scales for executives w.e.f. 1st January, 2007 and revision of
perquisites and allowances for executives w.e.f. 26th November, 2008 were
implemented in your Company in June, schematic representation of the 2009
and February, 2010 respectively.
The Unions had submitted their charter of demands in 2007 and a working
group comprising representatives of Unions and the Management was
constituted. The working group held three meetings before pay revision
guidelines for executives were issued by DPE. Thereafter, the Unions
submitted the modified charter of demands in October, 2009. The
negotiations on the modified charter of demands have started and two
meetings of the working group took place thereafter where issues have been
discussed threadbare and certain issues have been clarified.
Wage revision of unionised staff
17. Employee Welfare Trusts
Your Company has established the following major Trusts for welfare of the
employees:
* Employees Contributory Provident Fund (ECPF) Trust, managing Provident
Fund accounts of employees of your Company.
* The Post Retirement Benefit Scheme (PRBS) Trust of your Company manages
the pension scheme of the employees.
* The Composite Social Security Scheme (CSSS) formulated by your Company
provides an assured ex-gratia payment in the event of unfortunate death or
permanent disability of an employee in service. Families of deceased
employees get a financial assistance under the scheme ranging between
Rs.1.5 million to Rs. 2.0 million.
* ONGC Sahayag Trust has been created for welfare of secondary workforce
or their heirs, who are in financial distress. Gratuity Fund Trust has been
created for payment of gratuity with provision of Gratuity Rules.
Your Company implemented the Employees Pension Scheme (EPS 1995),
retrospectively w.e.f. 16th November, 1995.
Your Company implemented a single integrated seamless computerised
accounting system for all welfare trusts pertaining to investments,
accounts, settlement and contribution etc. Employee accounts are now
maintained on the new system, duly reconciled and updated, and can be
viewed by the employees themselves on Company's intranet. Almost all
payments are made to the members through e-payment mechanism.
Implementation Of Government Directives For Priority Section
Your Company complies with the Government directives for Priority Section
of the society. The percentage of Scheduled Caste (SC) and Scheduled Tribe
(ST) employees were 15.80% and 8.53% respectively as on 1st April, 2010.
Your Company is fully committed for the welfare of SC and ST communities.
The following welfare activities are carried out by your Company for their
upliftment in and around its operational areas:
i) Annual component plan:
An amount of Rs. 30 million is distributed to various work centres of ONGC
for implementation of welfare schemes. This fund is especially meant for
providing help and support in areas like Education and training. Community
development, Health care, etc.
ii) Scholarship to SC and ST meritorious students:
Your Company spent Rs.4.92 million for supporting 100 students of the SC
and ST community for pursuing higher professional courses at different
recognized institutes and universities.
18. Industrial Relations
Your Company took structured initiatives to maintain harmonious Industrial
Relations in the organization. Pursuant to the strike resorted to by the
office bearers of ASTO (Association of Scientific and Technical Officers)
in January, 2009, the recognition to ASTO was withdrawn. A Code of Conduct
was framed and adopted for regulating the relations between the Officers
Association and the Management of your Company, which inter-alia, lays down
aframework for bilateral resolution of all issues and disputes. Further, a
new policy on recognition of Officers' Association incorporating the Code
of Conduct was issued with the aim to bring in reforms through
administrative decisions.
19. Grievance Management System
Your Company provides an easily accessible mechanism to the employees for
red ressal of their grievances, either through informal or formal channels.
All key executives of your Company have designated a publicized time slot,
thrice a week, to meet public representatives for speedy redressal of their
grievances. Your Company has also approved creation of a 'single window
front office' at all work-centres. An officer not below Chief Manager level
is responsible for ensuing accessibility and responsiveness to public
grievances.
20. Right to Information Act, 2005 (RTI Act)
An elaborate mechanism has been set up throughout the organisation to deal
with the requests received under the RTI Act. Dunng the year, 701 requests
were received, out of which information was provided in respect of 600
requests and 2 cases were transferred to other public authorities. 91
requests were rejected 8 applications were pending for supply of
information as on 31st March, 2010 and these have been processed later on.
Further, against a total of 152 appeals dealt with during the Geophysical
field personnel carrying out survey work year, 68 were rejected and the
balance 54 appeals were accepted and 30 appeals were pending as on 31st
March, 2010 which have been dealt with later on.
21. Implementation of Official Language Policy
During the year, a series of initiatives were undertaken for promotion and
propagation of Rajbhasha in official communication, Literary works in
official language continued to be financially supported by your Company. In
addition, all inductees at the executive level were exposed to the Official
Language Policy of the Govt. of India. Your Company also contributed
actively in publishing the bilingual Petroleum Terminology, an initiative
of the Ministry of Petroleum and Natural Gas and in effective
implementation of the Hindi Teaching Scheme of Govt, of India at all its
regional work centres. Your company received appreciation from the
Government of India for excellent progress of implementation of Official
language directives.
22. Human Resource Development
32,978 ONGCians (as on 31st March, 2010) dedicated themselves for the
excellent performance of your company during the year Your Company believes
in and acts on the premise thai human capital is the vital source of
competitive advantage Toward this end, your Company initiated several path
breaking measures listed below to foster development of its human capital.
a. Performance Management System and Performance Related Pay
Your Company, in line with the DPE Guidelines is devising a robust
performance management system which is effective in identifying and
rewarding high performers. As part of the process, the performance
appraisal system has been completely e-enabled. To strengthen transparency
in the system performance ratings of the executives have been disclosed to
them. Incentive payments for the year 2007-08 and 2008-09 were made during
the year to the executives of your Company based on the MoU rating of the
Company and the individual's performance.
b. Training
During the year, ONGC conducted various training programmes for its
executives and staff spanning 140,510 training man days. His Excellency Dr.
A.P.J. Abdul Kalam, Former President of India launched triel Centre for
Creative Leadership at ONGC Academy, Dehradun on 30th May, 2009.12
'Orientation Programme on Creative Leadership' involving 309 officers have
been conducted at different work centres targeting young corporate level
officers through reputed management institutes of the country such as
Indian Institute of Management and Administrative Staff College of India,
Hyderabad. In addition, leadership development is the focus of a continuing
programme for senior officers through Indian School of Business, Hyderabad.
c. New Initiatives
* An Employee Engagement Survey was carried out in your Company during the
year with the help of a globally renowned consultant in which over 7,000
employees participated.
* To embed the guru-shishya ethos in your Company, a total of 36 senior
level executives were trained as 'Coaches' and 45 as 'Mentors' during the
year. Fresh joining inductees are being provided the guidance of such
mentors for their seamless integration into your Company.
* Your Company is utilizing Assessment and Development Centres as an
evaluating tool to assess potential of middle level managers and utilizing
the assessment to impart Advanced Management Training to the high potential
executives. During the year, 240 DGMs were assessed utilizing this
methodology.
* Multi-Disciplinary Team working, which is the essence of functioning of
your company, was strengthened during the year with the aim to make it more
effective and productive by engaging globally reputed consultants. Several
recommendations of the consultants have been implemented with promising
results and the effort is on to motivate more and more employees to adapt
to these systems.
23. Accolades
Consistent with the trend in preceding years, your Company, its various
operating units and its senior management officials have been in receipt of
various awards and recognitions. Details of such accolades are placed at
Annexure 'C'.
24. Sports
Your Company presently has around 170 sports persons, including 123
international level performers, on its rolls who represent the Company in
different games in addition to around 100 sports persons on scholarship.
Your Company sponsored mega sporting events like 2nd ONGC Nehru Cup
International Tournament 2009 and World Snooker Championship. ONGCian Shri
Pankaj Advaniwon his third Asian Billiards title in April, 2009 and created
history by winning his maiden World Professional Billiards Championship in
2009. ONGCians Ms. Sinimole Poulose and Shri Gautam Gambhir were conferred
with Arjuna Award in recognition of their achievements in athletics and
cricket respectively. Shri Gautam Gambhirwas also ranked No. 1 batsman in
ICC Test world rankings. Shri Chetan Anand won the Dutch Open Grand Prix
badminton Tournament in October, 2009and also the Gold medal in SAF Games
held at Dhaka, Bangladesh in February, 2010. Shri Rupesh Kumar finished
Runners up in Australia Open Grand Prix badminton Tournament held in July,
2009. Shri K. Sasikiran was the member of the Chess team that won Bronze
medal in World Team Championship at Bursa in January, 2010. Ms. Koneru
Humpy won the 1st place in Fide World Women's Grand Prix Cycle event at
Turkey in March, 2010.
Your Company maintained its supremacy in Petroleum Sports Promotion Board
tournaments. During the year 2009-10, it has accumulated record breaking
176 points way ahead of other member companies.
25. Women Empowerment
Women employees constituted 6.1% of ONGC's workforce. During the year,
programmes for empowerment and development, including programme on gender
sensitization was organized. Your Company actively supported and nominated
its lady employees for programmes organised by 'Women in Public
Sector' (WIPS) and 'Women in Leadership Role's.
26. Corporate Social Responsibility (CSR)
During the year, your Company operationalised the increase in its
commitment from 0.75% to 2% of net profit for its Corporate Social
Responsibilities (CSR) and focused on reaching out to the society through
sustainable projects with active participation of the stakeholders. Twelve
major focus areas of CSR activities were identified. Your Company is
committed to follow the Guidelines on CSR issued by the Department of
Public Enterprises. Major CSR Projects launched during the year are as
follows:
* Greening Initiative of the Southern Ridge, New Delhi:
The initiative envisages greening an approximate area of 15 sq.kms in and
around the upcoming ONGC building (Rajiv Gandhi Urja Bhavan) and TERI
university campus situated at Institutional Area, Vasant Kunj, New Delhi.
* TERI-ONGC 'Soldiers of the Earth' project:
The Soldiers of the Earth campaign is an all encompassing, environmental
awareness generation programme. The campaign is aimed at sensitizing
children and young adults towards a greener future.
* Skill based vocational computer training:
Setting up and running of five centres named as Gandhi Institute of
Computer Education & Information
* Technology at ONGC work centres at Dehradun, Sibsagar, Mehsana, Karaikal
and Rajahmundry, for provision of free job/entrepreneurship oriented
computer education to youth belonging to marginalized sections of the
society through institutes run by Bharatiya vidya Bhavan.
* Asmita:
Educating youth, rediscovering pride in India's heritage':
Production of a series of 13 films of 45-miniutes duration each every year
(for the next 5 years) on select topics of India's cultural heritage
jointly with Surabhi Foundation and TERI for connecting the audience to
India's cultural roots to evoke a sense of national made.
* 'Ashadeep'-Girl child education programme:
Aimed to ensure continued schooling of the girl students belonging to
economically weaker sections of society, with observable improved learning
levels of the support receiving students. This is a unique and laudable
initiative taken by ONGC Officers Mahila Samiti.
* Multi-specialty hospitals:
Two multi-specialty hospital on P-P-P model proposed at Sivasagar, Assam
and Ankleshwar, Gujarat.
* Support to Hemophilia Federation (India):
Providing support for education of children with Hemophilia. Hemophilia is
a genetically transmitted, life-long, life threatening bleeding disorder.
* Mobile Medicare Units:
Implementation of Mobile Medicare Unit Project through Help-Age India for
community based health care services to destitute older persons and other
vulnerable citizens in 20 locations across the country.
* Renewable energy for solar water pumping and home lighting:
Providing lighting and water to poor households in Gujarat and Tamil Nadu.
* Mokshda Green Cremation System:
Setting up energy efficient and environmental friendly green cremation
system in association with local municipal bodies at work centers of ONGC.
* Conservation of ancient monuments:
To support Archaeological Survey of India in its endeavour for the
conservation and development of the Ahom monuments at Sivasagar Assam.
27. Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies Act,
1956, with respect to Directors' Responsibility Statement, it is hereby
confirmed that:
(i) In the preparation of the annual accounts, the applicable accounting
standards have been followed and there are no material departures from the
same;
(ii) The Director share selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of the
Company as at 31st March, 2010 and of the profit of the Company for the
year ended on that date;
(iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
and
(iv) The Directors have prepared the annual accounts of the Company on a
'going concern' basis.
28. Corporate Governance Your Company has taken structured initiatives
towards Corporate Governance and its practices are valued by the various
stakeholders. The practices evolve round multi-layered checks and balances
to ensure transparency.
In terms of Clause 49 of the Listing Agreement, a report on Corporate
Governance for the year ended 31.03.2010, supported by a certificate from
the Company's Auditors confirming compliance of conditions, forms part of
this Report.
Guidelines of Department of Public Enterprises (DPE), Government of India,
on Corporate Governance which were earlier voluntary, have been made
mandatory from May, 2010. ONGC has implemented the DPE guidelines to the
maximum extent possible except with regard to appointment of requisite
number of Independent Directors, which is being followed up with the
Ministry of Petroleums Natural Gas.
Your Company has voluntarily got its Secretarial Compliance Audit conducted
for the financial year ended 31st March, 2010 from M/s A.N. Kukreja & Co.,
Company Secretaries in whole-time practice; their report forms part of this
Annual Report.
In line with global practices, your Company has made all information,
required by investors, available on the Company's corporate
website www.ongcindia.com/investercenter.asp.
Apart from the mandatory measures required to be implemented as a part of
Corporate Governance, ONGC has gone the extra mile in this regard for the
benefit of the stakeholders:
(a) Whistle Blower Policy:
A Whistle Blower Policy has been implemented as a voluntary initiative and
is functional from 1st December, 2009. The policy ensures that a genuine
Whistle Blower is granted due protection from any victimization. The Policy
is available to all employees of the Company and has been uploaded on the
intranet of the Company.
(b) Annual Report on working of the Audit & Ethics Committee:
With a view to apprise the Board of the working of the Audit & Ethics
Committee during the year, an elaborate annual report on the working of the
Audit & Ethics Committee for FY'10 has been prepared and will be put up to
Board for its information. This is in line with the recommendation of the
C&AG. The first Annual Report of the Audit& Ethics Committee for the FY'09
was compiled and approved by the Committee.
(c) MCA Voluntary Guidelines on Corporate Governance:
ONGC has implemented the voluntary guidelines on Corporate Governance
issued by Ministry of Corporate Affairs to the extent feasible and within
the competency domain of the management.
(d) Enterprise-wide Risk Management (ERM) framework:
In response to the increasing need for corporate governance in the wake of
several corporate disasters and decline in stakeholder confidence, SEBI set
out requirements for Companies, under Clause 49 (of the listing agreement),
to create an oversight mechanism to address risks. Accordingly your Company
has developed a comprehensive Enterprise-wide Risk Management (ERM)
framework. Under the framework Risk Register portfolio has been compiled
and an ERM Policy has been firmed up. Risk Management process on pilot
scale has been initiated in six representative locations i.e., Mumbai High,
Rajahmundry and Assam Assets, Western Onshore Basin, Keshav Dev Malviya
Institute of Petroleum Exploration (KDMIPE) and Hazira Plant.
You would be pleased to know that your Company has received 'Nil' comments
from C & AG and Statutory Auditors for the year 2009-10. This is the fourth
time in a row thatthe organization has received 'Nil' comments and six
times in last seven years.
29. Statutory Disclosures
Section 274(1)(g) of the Companies Act, 1956 is not applicable to the
Government Companies. Your Directors have made necessary disclosures, as
required under various provisions of the Act and Clause 49 of the Listing
Agreement.
Particulars of Employees
In terms of the provisions of Section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975, the names
and other particulars of the employees are set out in the annexure to the
Directors' Report. However, having regard to the provisions of section
219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid
information is being sent to all the members of the Company and others
entitled thereto. Any member interested in obtaining such particulars may
write to the Company Secretary at the registered office of the Company.
30. Energy Conservation
The information required under section 217(1)(e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988, is annexed as Annexure-'D'.
31. Auditors
The Statutory Auditors of your Company are appointed by the Comptroller &
Auditor General of India (C & AG). M/s PSD & Associates, M/s. Padmanabhan
Ramani & Ramanujam, M/s Singhi & Co., M/s Kalyaniwalla & Mistry and M/s
Arun K. Agarwal& Associates, Chartered Accountants were appointed as joint
Statutory Auditors for the financial year 2009-10. The remuneration of the
Statutory Auditors for annual audit assignments has been fixed at Rs. 11.75
million. Further a fee ranging between Rs. 10,000 to Rs. 40,000 for each
Block (depending upon ho quantum of activity in the aggregating to 2.08
million is being pa d to the Statutory Auditors to certification of the
accounts of Joint Venture NEIP Blocks. In addition million Rs.0.75 being
paid for certification of compliance of conditions of Corporate Governance.
The above fees are exclusive of applicable service tax and reimbursement of
reasonable travelling and out of pocket expenses actually incurred.
32. Auditors' Report on the Accounts
The comments of the C & AG form part of this Report as Annexure-'E'. There
is no qualification in the Auditors' Report and there are no supplementary
comments by C&AG under Section 619(4) of the Companies Act, 1956
Chartered Accounts referred to in the Auditors' Report are self-
explanatory and therefore do not call for any further comments.
33. Cost Audit
Pursuant to the directions of the Central Government for audit of Cost
Accounts, the proposal for appointment of 7 firms of Cost Accountants as
Cost Auditors for auditing the cost accounts of your Company for the year
ended 31st March, 2010 was approved by the Central Government and they have
accordingly been appointed.
4. Directors
During the year under report, Shri S. Sundareshan on taking over the charge
as Secretary in the Ministry of Petroleum to Natural Gas (MOPBING)
submitted resignation from the Board of ONGC on 4th February, 2010.
Subsequently, Shri Sudhir Bhargava, Additional Secretary, Mo P & NG,
Government of India was appointed as Government director on the Board of
ONGC w.e.f. 15th March, 2010. Your Directors place on record their deep
appreciation for the valuable contributions made by Shri S. Sundareshan
during his tenure.
Dr. A.K. Balyan, Director (HR) on his appointment as MD & CEO of Petronet
LNG Limited, resigned from the Board of ONGC aid was relieved on 15th July,
2010. Your Directors place on record their deep appreciation for the
valuable contributions made by Dr. A.K. Balyan during his tenure as
Director(HR) and in various capacities in ONGC.
The strength of the Board of Directors of ONGC as on 31st July, 2010 was 12
Directors, comprising 6 Executive Directors (Functional Directors including
Chairman and Managing Director) and 6 Non-Executive Directors comprising 2
Government nominees and 4 Independent Directors.
Pursuant to the provisions of Section 255 and 256 of the Companies Act,
1956 and Clause 104(1) of the Articles of Association of the Company, Shri.
A.K. Hazarika, Shri D K Pande and Shri D K Sarraf retire by rotation at the
17th Annual General Meeting (AGM) and being eligible, offer themselves for
reappointment.
Shri Sudhir Bhargava, who was appointed as Additional Director after the
last AGM, holds office up to the 17th AGM. The Company has received notice
in writing from a member pursuant to the provisions of Section 257 of the
Companies Act, 1956, proposing his candidature for appointmentas Director
of the Company liable to retire by rotation.
Brief resume of the Directors seeking Appointment/Re-appointment, together
with the nature of their expertise in specific functional areas and names
of the companies in which they hold the directorship, number of shares held
and the membership/chairmanship of committees of the Board, as stipulated
under Clause 49 of the Listing Agreement with the Stock Exchanges are given
in the notice convening the 17th AGM of the Company, and form part of the
Annual Report.
35. Acknowledgement
Your Directors are highly grateful for all the help, guidance and support
received from the Ministry of Petroleum and Natural Gas, Ministry of
Finance, DPE, MCA, MEA, and other agencies in Central and State
Governments. Your Directors acknowledge the constructive suggestions
received from Statutory Auditors and Comptroller & Auditor General of India
and are grateful for their continued support and cooperation.
Your Directors thank all share-owners, business partners and members of the
ONGC Family for their faith, trust and confidence reposed in ONGC.
Your Directors wish to place on record their sincere appreciation for the
unstinting efforts and dedicated contributions put in by the ONGCians at
all levels, to ensure that the Company continues to grow and excel.
On behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Date : 2nd August, 2010 Chairman and Managing Director
ANNEXURE-A
STATEMENT OF RESERVE RECOGNITION ACCOUNTING
Standardised measure of Discounted Future Net Cash Flows relating to Proved
Oil and Gas Reserve quantities as on 31st March, 2010.
(Rs. in million)
Particulars Gross Value as at Present value (Discounted
at 10%) as at
31st March, 31st March, 31st March, 31st March,
2010 2009 2010 2009
REVENUES
OIL 7,867,192.91 7,020,106.35 3,746,236.98 3,424,402.41
GAS 2,113,383.30 1,214,415.98 966,613.81 612,658.72
Total Revenues 9,980,576.21 8,234,522.33 4,712,850.79 4,037,061.13
COSTS
Operating,
Selling 4,113,636.85 3,408,278.12 1,920,003.22 1,671,945.92
& General
Corporate Tax 1,512,940.18 987,826.53 714,667.98 478,461.15
Sub Total 5,626,577.03 4,396,104.65 2,634,671.20 2,150,407.07
Evaluated Cost
of Aciqustion of
Assets,
Development
and
Abandonment
a) Assets 801,282.30 671,575.40 523,913.71 400,951.79
b) Development 221,268.30 357,388.54 159,131.27 244,656.30
c) Abandonment 164,006.68 160,089.70 10,891.04 2,281.93
Sub Total 1,186,557.28 1,189,053.64 693,936.02 647,890.02
Total Cost 6,813,134.31 5,585,158.29 3,328,607.22 2,798,297.09
Net future 3,167,441.90 2,649,364.04 1,384,243.57 1,238,764.04
earnings from
Proved
Reserves
Notes:
1) The Revenues on account of crude oil have been worked out on the basis
of average price for the year 2009-10. The average price for crude oils net
of Subsidy Discount. The Revenue of the Gas has been worked out on the
basis of latest Price fixed (US$ 4.2/mmbtu including royalty) by MoPNG vide
order dated 31st May, 2010.
2) Expenditure on Development, Acquisition of capital assets, Abandonment
costs and Operating Expenditure have been considered at current costs i.e.
as on 31.03.2010. Taxes and Leaves have been considered at prevailing rates
as on 31.03.2010. In computing future tax expenditure as on 31.03.2010, the
Survey & Dry Well expenditure have been excluded.
3) The reserves have been estimated by ONGC's Reserve Estimates Committee
following the standard International reserve or engineering practices.
4) Only Proved reserves have been considered. Probable or Possible reserves
have not been considered. These reserves exclude ONGC's share of foreign JV
Assets.
5) Both revenues and costs have been discounted to present value using 10%
discounting factor. The Net future earnings, therefore, represent the net
expected future cash in flows from production of recoverable reserves of
crude oil and gas.
6) However, nether the estimated net reserves nor the related present value
should be taken as a forecast of future cash flows or value of these
reserves because (a) future estimated production schedules used n the
valuation process are subject to change, (b) up-graduation of Probable and
Possible reserves would significantly affect the gross and net present
value of the expected future cash flows, (c) future crude oil and natural
gas prices are subject to change and (d) future expenditure on production
(operating), development, acquisition cost of capital assets, abandonment
costs and rates of taxes and level, which may be at variance from those
assumed hereon.
Employees as on 31st March, 2010:
Employee Group Age Distribution Total
<31 31-40 41-50 51-60 2009-10 2008-09
(A) Technical
Executive 1290 1182 8216 8854 19542 19110
Non-Executive 124 544 1575 823 3066 3452
Total (A) 1414 1726 9791 9677 22608 22562
(B) Non-Technical
Executive 174 460 1602 2706 4942 4834
Non-Executive 46 659 2198 2373 5276 5639
Total (B) 220 1119 3800 5079 10218 10473
Grand Total (A+B) 1634 2845 13591 14756 32826 33035
Note: Whole time Directors excluded.
Valuation as on 31st March, 2010
Rs. in million
Value per
Employee Group Age Distribution Total Employee
<31 31-40 41-50 51-60 2009-10 2008-09
(A) Technical
Executive 37,389 31,039 150,096 82,588 301,112 15.41 13.5
Non-Executve 1,557 6,233 16,288 4,469 28,547 9.3 9.2
Total (A) 38,946 37,272 166,384 87,057 329,659 14.6 12.9
(B) Non-Technical
Executive 4,923 11,703 27,225 23.104 66,955 13.5 11.8
Non-Executive 590 6,909 18,097 9,144 34,740 6.6 6.6
Total (B) 5,513 18,612 45,322 32,248 101,695 10.0 9.0
Grand Total 44,459 55,884 211,706 119,305 431,354 13.1 11.7
(A+B)
*Valuation based on most widely used 'Lev & Schwartzst model.
* Aggregate future earnings during remaining employment period of
employees, discounted @ 7% p.a., provides present valuation.
* Future earning based on current emoluments with normal incremental
profile.
ANNEXURE-C
RECOGNITIONS, AWARDS AND ACCREDITATIONS
International Rankings
1. No. 3 E&P Company in the world
Ranked as number three E&P Company n the World and 26th among leading
global energy majors as per Platts Top 250 Global Energy company rankings
2009; based on assets, revenues, profits and Return on invested Capital
(ROC) (November, 2009).
2. No. 24 in PFC ENERGY 50
Ranked 24th among the Global publicly-listed energy companies as per 'PFC
Energy 50st 1st (January, 2010).
3. Finance As a ranks ONGC no. 1 among Indian Blue Chps.
Ranked number 1 Top Blue Chip of India in the Finance As a 100 1st for 2009
with the highest aggregate net profit (before exceptional) over the period
2006-2008. ONGC has been ranked at 10th position in As a and at 1st
position among 19 Indian Companies which are in the FY'10 1st on aggregate
profit (December, 2009).
4. ONGC ranked at 155th position in Forbes Global 2000 1st for 2010
ONGC has been ranked at 155th position in the Forbes Global 2000 1st 2010
(April, 2010) of the world's biggest companies. ONGC maintains number One
rank among Indian companies and has been ranked 95th among the global 2000
biggest companies as per profit (April, 2010).
Indian Rankings
5. ONGC ranked at second position in FE500 1st 2010
ONGC has been ranked at second position as per Financial Express's FE500,
listing of Indian companies. ONGC stands at second both in net worth and
overall composite ranking based on parameters like top line growth, net
worth, market cap etc (March, 2009).
6. Business Today Ranks ONGC as Best Company to Work for in Core Sector
Business Today has ranked ONGC at top of Best Companies to Work for in Core
sector. ONGC scores high at 13th place in overall ranking amongst all the
Indian Companies, including public and private (February, 2010).
Accreditation
7. Accreditation of internal Audit Department
Quality Management System (QMS) of internal Audit Department (AD) of ONGC
has been upgraded from SO 9001:2000 to SO 9001:2008 (November, 2009).
Awards
8. SCOPE Mertorous Awards
ONGC won the Gold Trophy for SCOPE Mertorous Award for Corporate Social
Responsibility & Responsiveness for the year 2007-08 and Gold Trophy for
R&D, Technology Development & innovation for the year 2008-09. The awards
were presented by H.E. President of India, Smt. Pratbha Devsingh Patil to
CMD on Public Sector Day i.e., 10th April, 2010 at New Delhi.
9. ONGC bags four National Safety Awards in Oil Mines Category
ONGC has bagged four National Safety Awards in Oil Mines Category for year
2007. This fourth consecutive year that ONGC has bagged these awards;
instituted by the Ministry of Labour & Employment, Govt. of India to
motivate, appreciate and recognize the extraordinary performance in the
area of mines safety. These awards were given away by H.E. Mr. N. Hamd
Ansar, Hon'ble vice President of India at New Delhi on 23rd October, 2009.
10. OSD Awards
ONGC and MRPL have won the following six Oil industry Safety Awards' for
the year 2008-09, instituted by Oil industry Safety Directorate (OSD), MoP
& NG. Cauvery Asset has been declared as winner in the category Oil & Gas
Assets (Onshore) on safety standards.
1. Heera Processing plant has been adjudged as the best Offshore Production
Platform under PSUs category on safety standards.
2. Sagar Shakt has been adjudged as the best Offshore Drilling Rg, under
PSU category on safety standards.
3. MRPL has been ranked at number two in Refineries category.
4. MRPL has also been rated as the most safe refiniery on last three years.
5. ONGC's Rajah sundry Asset has been rated as the most safe Onshore Oil &
Gas Asset on last three years.
6. ONGCan Shri Supryo Chowdhury, Chief Engineer (Drilling), Assam Asset has
been selected for a cash award for has valuable contribution on the area of
safety.
11. ONGC sweeps PSPB Awards
ONGC swept the year's Petroleum Sports Promotion Board Annual Awards. ONGC
won the Petroleium Ministers Trophy 7th time in succession (October, 2009).
12. DankBhaskar India Prde Awards for Excellence
ONGC bagged the coveted Gold Award on the Oil and Gas Category of the 1st
Dank Bhaskar India Pride Awards for Excellence in PSUsst instituted by the
Dank Bhaskar Group (October, 2009).
13. Golden Peacock Award for Corporate Governance
ONGC has been conferred with Golden Peacock Award for Excellence in
Corporate Governance for 2009 instituted by the World Council of Corporate
Governance, London (October, 2009).
14. OKGC bags Best Overall Performance Award for oil and gas conservation
programmes
ONGC bagged the Best Overall Performance Award instituted by Petroleum
Conservation Research Association (PCRA) amongst the upstream Sector Oil
Companies for the oil and gas conservation programmes during the year 2009
(January, 2010).
15. ONGC bags 5th BML Munjal Award for Excellence in Learning &
Development
ONGC clnched 5th BML Munjal Award for Excellence in Learning & Development
in Public Sector category, instituted in the name of Dr. Brjmohan Lall
Munjal (BML), Chairman, Hero Group (March, 2010).
16. DSIJ Award to ONGC
ONGC clinched two DSJ-PSU awards 2010, one for excellent Overall
Performance in the category of Heavy Weights and the other for Highest
Market captalisation amongst PSU's in the category of Wealth Bulders
(April, 2010).
17. ONGC gets Amity Leadership for Business Excellence for leveraging IT:
ONGC has been awarded Amity Leadership for Business Excellence award for
leveraging IT in Oil & Gas Sector instituted by the Amity University
(January, 2010).
18. ONGC receves 'Delhi Green Award'
ONGC has been awarded the 'Delhi Green Award' as a part of the regional
excellence series initated by Planman Media titled The Sunday Indian Mega
Excellence Awards 2009, Delhi and NCR' (July, 2009).
19. Hazra Plant bags commendation at the CII-TC Sustanablty Awards 2009
ONGC, Hazra Plant received 'Commendation for Strong Commitmentist among
Independent Units for the year 2009 at the CII-ITC Sustainability Awards
(November, 2009).
20. CSR Award for Cauvery Asset
Cauvery Asset, Karaikal of ONGC has been awarded Rs. 5 Lakh and Citation by
the Govt, of Tamil Nadu for its valuable contribution towards CSR during
the year 2007-08.
Awards to Individuals
1. Business Today ranks CMD, ONGC among top ten Indian CEOs
Business Today in 7th Feb, 2010 edition has also ranked Mr. R.S Sharma, CMD
ONGC at 9th amongst the top Ten Indian CEOs, under section CEO-Watch for
the year 2009.
2. CMD conferred with 1st Amity Leadership Award for Corporate Excellencest
Mr. R.S. Sharma, CMD, ONGC has been conferred 'Amity Leadership Award for
Corporate Excellence in the Oil & Gas industryst by Amity Business School
(September, 2009).
3. Confederation of indian industry felicitates R.S. Sharma, CMD, ONGC
Mr. R.S. Sharma, CMD, ONGC and Charman, CII Apex Council of PSEs was
felctated by CII at a glittering function in New Delhi on Tuesday, May 11,
2010. Mr. Sharma was felctated for his outstanding contribution to the
cause of PSEs. Despite has commtments for the most valuable PSE of india,
Mr. Sharma has always been keen to address the larger ssues of the indian
industry in general and the Public Sector in particular.
4. Fre Service Medal to ONGCans
Three ONGCans, Mr Neeraj Sharma, Cheif Manager (Free Services), Assam
Asset, Mr L.R. Dutta, Fre Officer, Assam Asset and Mr N.C. Das, Asst. Chief
inspector (Free Services), Cachar Forward Base were bestowed 'Free Service
Medal for Mertorous Services by the Government of India on the occasion of
independence Day 2009.
A. ENERGY CONSERVATION
The following measures were taken towards energy conservation during FY'10.
a. 212 energy audits were conducted during FY10. At the same time, 468
energy audits observations were neutralized.
b. Energy conservation awareness and efficient use of energy by celebrating
OGCF-10 at all the locations of ONGC and carried out different activities
like cycle rally, LPG Quiz programme, quiz, drawing, slogian, essay
competition, Drivers awareness programmes, Nukkad Natak, exhibition, free
pollution check up, street play etc.
c. Training on Energy conservation techniques were imparted at all
locations of ONGC to create awareness as part of energy conservation. Total
18,350 employees attended these training programme.
d. New energy efficient light sources like CFL, sodium lights, T-5 Tube
lights, etc., were fitted in place of inefficient lights.
e. Calendars, stickers & literature on 'Energy Conservation Technqueist
under the company of 'URJA UDAst were distributed among the employees and
their families for awareness.
f. A conference on 'Emerging Technologies and issues in LED Lampast was
jointly held with UREDA.
g. Training/stage blanking of lean amine charge pumps at Hazra Plant helped
n saving to the tune of Rs.5 Lacs kWH of energy.
The project's registered with UNFCCC as a CDM project.
h. Replaced more than 15 years old 80 diesel engines in drilling gas by
energy efficient one and achieved fuel saving and higher reliability.
Gas flaring in ONGC has been brought down from 6% of production in 2001-02
to 2.79% in 2009-10, a reduction of 784 MMSCM per annum over 2001-02,
valued at about Rs. 5,500 million at the gas rate of US$ 4.2/MMBTU.
The following initatives which were taken earlier and are contributing
towards annual savings.
a. Use of waste heat recovery at platforms, rigs & plants at Hazra & Uran
for oil heating, water purification & steam generation.
b. Use of energy efficient equipment, devices such as turbo expanders at
Hazra & Uran, compression system for gas flaring reduction, tank vapour
recovery system, VFD's etc.
c. Thermal energy cost reduction achieved by maintenance of steam traps at
processing plants at Hazira & Uran.
d. Harnessed solar energy by using solar water heaters Panoramic view of
ONGC Hazra Plant and use of photovoltac panels at various locations at
Dehradun, Uran, Unmanned platforms on offshore, Rajahmundry, CWS Baroda,
Jodhpur.
e. Use of Gas engines and gas turbnes for power generation at Rajahmundry,
Cauvery, Assam, Ankleshwar Assets, Hazra & Uran Plants & Platforms on
offshore.
f. Interfuel subsituation at Bokaro, Agartalla, Rajahmundry & Karakal and
proper capacity utlisation of equipments.
g. Carried out Maintenance management contract for SRPs and achieved
availability more than 99% and gained more of production.
Impact of measures for reduction of energy consumption and consequent
impact on the cost of production of goods.
Above measures have resulted in reduction of significant quantity of fuel
consumption (HSD, Natural gas and electricity).
B. RESEARCH AND DEVELOPMENT
1. Specific areas in which R & D was carried out
* Development of raid technique for detection of gaseous hydrocarbon
oxdzers for geo-microbal survey.
* Development of the process for mass cultivation of selected Mcroalgae for
hydrocarbon production:
* A project on collaboration with Central Food Technology Research
institute (CFTR), Mysore has been taken up.
* Identification of suitable chemical additives for the flow assurance
problem of heavy crude oils and mitigation of parafin/asphaltenes
deposition in well conducts and transportation lines.
* Designing of polymer gel formulations for profile modification /water
shut-off jobs suitable for arresting water production in oil & gas wells in
various Indian oil fields.
* Analysis of sub- surface samples to generate PVT parameters. Reservoir
characterization (in terms of permeability) of different Indian oil/gas
fields.
* Collaborative work on MEOR application in reservoirs with temperature
above 900 C is in progress and its field trial in Nandej field is planned.
* Optimisation of Gel System for Profile modification & Water shut-off
jobs.
* Estimating flood front movement using streamline modeling.
* High resolution seismic survey (HRSS) for exploration and development of
UCG.
* Methodology for processing of Multi component and Long offset data.
* Seismic Imaging of Oil Production rate.
* Investigations on biogenic gas source and entrapment styles in Krishna-
Godavari Basin for understanding on various geochemical aspects of the
source of biogenic gas.
* Simulation studies for CBM exploitation in Parbatpur block in Jharia.
* Shale gas potential & prospectivity in Indian basins.
* Basin Centered gas Exploration in Indian basins.
2. Benefit derived as a result of the above R & D
* Helping in the planning of exploration activities in the Basin.
* Analysis time of detection of gaseous hydrocarbon is reduced to 3 days
instead of 10 days, thus making the technique rapid and increasing the
efficiency.
* Microbial utilisation of crude oil under anaerobic condition is found to
be extremely slow. However the wells viraj # 7, Viraj # 33, NK# 69 and
NK#166 can be taken up for MEOR by injecting only nutrients.
*The studies on the source of biogenic gas indicate helped in understanding
the nature of organic matter in sediments and its origin and concentration.
* The studies resulted in identification of true oxygen index (Oil) and
atomic O/C as suitable geochemical proxies to quantify the generation of
biogenic methane.
* Ensuring flow assurance of oils and improving its productivity.
* Arresting excessive water production and enhancement in oil productivity.
* The generated PVT data is used in various reservoir engineering
calculation for optimal field exploitation.
* Characterisation of reservoir heterogeneity in terms of permeability
provides valuable information useful in the context of further field
development, profile modification, water shut-off and stimulation jobs.
* The R&D carried out so far has provided deep insight into the shale gas
habitats, principles & practices, technological applications in exploration
& production. Also, direct gas measurements in the cored sections in shales
in different Indian basins has provided the data on different properties
like gas contents, gas holding capacity of shales, gas saturation factors
and gas deliverability characteristics; which has bearing on the
prospectivity of the basin.
* The R&D carried out was basin specific in the Cambay basin to carry out
studies & generate data to assess the Basin Centered Gas BCGA prospectivity
in the Tankari Depression of the Cambay basin.
* Successful application of MEOR has helped in improving oil mobility in
extremely viscous Charada#3 well.
* Optimisation of Gel System has helped in improving well productivity
through rigless jobs and has given positive responses in terms of oil gain.
* The streamline modeling study was useful in proper placement of
development wells in Kalol-VA.
* The simulation of CBM carried out for Parbatpur block in Jharia has
helped in placing the development wells for development of 18 sq.km of
Parbatpur area which envisaged gas production plateau of 4.8. 6.0 lakh m3/d
for 8 years.
* The high resolution seismic survey (HRSS) has helped in the engineering
design of Vastan UCG pilot project.
* The processing of multi component and Long offset data will benefit in
proper utilisation of reflections captured at longer offset and can help in
deeper seismic imaging including sub-basalt imaging.
* Seismic Imaging of Oil Production rate will be quite beneficial in
producing assets for well monitoring and optimised well placement.
3. Institute of Drilling Technology-Specific areas in which R & D was
carried out during 2009-109 & benefits derived as a result of the above R &
* Development of Drilling fluids for Deep water drilling
Benefit:
In-house capabilities in designing drilling fluids for deep water.
* Feasibility studies of non damaging HTHP pay zone drilling fluid for HTHP
wells.
Benefit: In-house capability in designing NDDF upto 1500C.
* Designing of LTMO drilling fluid for sub-hydrostatic pay zone drilling
using (HGS-8000) along with return permeability & wellbore clean up studies
Benefit: Formulation for sub hydrostatic reservoir.
* Formulation of specifications of HTHP fluid loss control agent,
Hostadrill 4706 or equivalent; HTHP deflocculant;
* Polysperse XI IT or equivalent;
Benefit: Quality assurance of HTHP additives for its procurement.
* Biodegradability of polymers like PHPA, PAC (LVG), PAC(R), XCP etc and
determination of their shelf life for improvement of specifications.
Benefit: Optimal utilisation of polymers in oil well drilling.
* Screening of suitable biocide for Polymer mud IDT R &D
Benefit: Checking degradation of polymer mud.
* Formulation of very low weight (close to hydrostatic-1.05) drilling fluid
systems for drilling large sections of shale and reservoir sand alterations
without isolation by casing.
Benefit: Enhancement of drilling productivity through application of rock
mechanics principle.
* Design of silicate based drilling fluid for challenging wells to provide
gauge hole and maximum inhibition in water based mud systems.
Benefit: Gauged hole, Well bore stability, Enhancement of drilling
productivity.
* Field trial of IDT developed Amine {Choline Chloride) base High
Performance Water based mud system
Benefit: Successfully field implemented in 2 wells of Ahmedabad asset #LMHT
& #LMHR with enhancement of ROP, achieving near gauge hole saving in rig
days.
* Sticking severity reduction by spherical beads.
Benefit: Minimising incidence of stuck up
* Formulation of drilling fluid for Gandhar area of Ankleshwar asset.
Benefit: Enhancement of drilling productivity through application of rock
mechanics principle.
* Corrosively evaluation of Polyamine enhanced water base mud system
Benefit: Minimising corrosion in metallic materials.
* Solutions to challenges faced in cementation of deep water wells
Benefits: In house capabilities in designing cement slurry for deep water.
* Comprehensive study and designing of cement slurry for expandable liner
cementation in MR
Benefits: Quality liner cementation job.
* Field support services for providing cementation plan and cement slurry
designs for all types of cementation on specific requirement in i) MBP
Basin, Kolkata; ii) CBM Development Project, Bokaro, iii) Frontier Basin,
Dehradun, iv) OVL Blocks
Benefits: Quality cementation jobs.
* Analysis of cementation failure in ISC Well#SNIA at Mehsana Asset and
suggesting remedial measures.
Benefits: Rectification of cementing failure.
* Study of Air Percussion Drilling of Top Hole Sections
Benefits: For faster drilling of Hard rock sections of the top hole
section.
* Study of Liner drilling and its application in ONGC fields
Benefits: To drill complicated depleted zones in faster manner.
* Feasibility studies and Well planning for DHAB in Dhondharmukh area of A
& AA Basin - to Probe the Hydrocarbon Potential of Tura & Sylhet formations
in environmentally fragile area.
Benefits: To save the environment and achieve our targets of Oil
exploration.
* Well Planning for OVL wells: Well Engineering, Mud Design and Cement
slurry design of OVL Block Wells
* Well plan of B128-RB-1X (for Vietnam)
* Tentative casing seat selection & casing design for well BM-S-73 (for
Brazil)
* Tentative casing seat selection & casing design forwells of N-34/N35 of
Cuba offshore.
Benefits: To drill the wells in safe and fast manner.
4. IOGPT, Navi Mumbai: Specific areas in which R&D carried out in 2009-10
and benefits derived as a result of this R & D
* Deep Penetrating Acid System (DPRAS) & gelled acid in horizontal 08 wells
of MH Asset: Realised Oil gain 781 (bopd)
* Self Diverting Acid (SDA) in multilayered 08 wells of MH & N &H Asset:
Realised Oil gain 1050 (bopd)
* Multistage Acid Fracturing in 05 wellsof N&H Asset: Realised Oil gain 740
(bopd)
* Solvent Treatment jobs in 04 wells of N&H Asset: Realised Oil gain 521
(bopd)
* Visco Elastic Self Diverting Acid (VSDA) jobs design given for 03 of MH &
07 N & H Asset, Chemical procurement under progress
* Specialised bio polymer Water control jobs in Narimanam field.
Substantial decrease in water reduction achieved.
* Enzyme technology for mud cake removal in 03 Horizontal wells of M H
Asset: Observed better productivity
* Designed & implemented a new solvent system for Wax removal in ICG-ICP
line successfully, Mumbai High Asset.
* IOGPT developed formulation for scale removal in 03 wells of MH asset
with realised Liquid gain of 963 BLPD and oil gain of 129 BOPD
5. (EOT, Navi Mumbai: Specific areas in which R&D carried out in 2009-10
and benefits derived as a result of this R & D
* Use of composite materials (water service, helideck, pumps storage tanks,
tubings, pipelines) for onshore and offshore installations.
Benefits: To minimise life cycle costs
* Developed Software based on the latest The Society of Naval Architects &
Marine Engineers (SNAME) guidelines (2005) for determining the Jack up leg
penetration and possibility of Punch Through.
Benefits: To calculate the bearing capacity of the spud cans and determine
the susceptibility for punch through of jack-up rigs.
* Minimum facility platform for marginal fields
Benefits: To optimise platform cost for cost sensitive marginal fields
* HAZOP/HAZID Study for CPF-Gandhar, Hazira and Uran plant
Benefits: Enhancement of safety and productivity
* Material of construction for handling/injection of Acid Gas into B-193
reservoir of B&S asset, MOC for B-193-BPB pipeline and impact of mixing of
highly sour B-193 gas on Bassein (36' dia & 42' dia) pielines and air
injection pilot in Gamij field.
Benefits: Optimisation of cost with better quality and without sacrificing
HSE requirement
6. Future Plan of Action
* Generation of PVT data for catering the needs of operational areas of
ONGC. Ultimate objective is to develop basin-wise applicable three
dimensional model of permeability and storage capacity which can be useful
for better understanding of reservoir heterogeneity as well as for more
realistic performance prediction through simulation studies.
* For exploration and exploitation Shale gas based on the integrated
analysis and finding, a Pilot project has been approved by ONGC in Damodar
Basin. An international agency with due expertise and experience in shale
gas exploitation has been hired as domain consultant.
* As a result of the R&D work, prospective areas in the Tankari Depression
has been narrowed down and drillable locations are being proposed
fortesting the Basin Centered Gas for the first time in an Indian Basin.
* Collaborative work on MEOR application in reservoirs with temperature
above 900C is in progress. Microbial system for high temperature reservoirs
(above 900C) have been successfully tested in laboratory and their field
trial is planned in Nandej field.
*Induction of Passive Seismic topography technology through hiring of
services as a pilot study in the NE area was carried out in Sector V-C of
Cachar. The results are under examination.
* Recently, offshore seismic acquisition has been carried out using
technology DISCover (Deep Interpolated Streamer Coverage), which will give
3D seismic data with enhanced bandwidth, providing both high resolution and
deep penetration. In this method mid to high frequency data from shallow
towed streamers and low frequency data from deeper towed streamers are
acquired simultaneously. This is expected to give improved imaging beneath
highly absorptive overburdens such as basalt and salt, or acquiring data
suitable for inversion to absolute rock properties. The data is acquired by
M/s Western Geco in Western Offshore Basin on pilot scale and processing is
in progress.
* Jambusar area in South Cambay basin covering NW part of NELP-VI block CB-
ONN-2004/3 identified for acquiring Spectraseis data. Action has been
initiated for confirming deliverables.
* Negotiations for a collaborative project with NT, Kharagpur on
'Intelligent Seismic Data Analysis in general and Intelligent Reservoir
Characterisation' are underway.
* A collaborative project with Colorado School of Mines, USA on 'time lapse
AVO investigation in carbonates' is under active consideration.
7. Technology Absorption and Adaptation
* Continuous Flow Isotope Ratio Mass Spectrometer (CF-IRMS)
Stable isotope ratio mass spectrometer is a dual inlet cum continuous flow
isotope ratio mass spectrometer and is used for stable isotopic ratio
determination in oil/gas/rock samples. The instrument has a capability to
study stable isotope ratios of carbon, hydrogen, nitrogen and oxygen
present in natural gases, oils and sediments.
* Pyrolysis-Gas Chromatography-Mass Spectrometry: Pyrolysis-GC-MS uses
anaerobic thermal degradation to split macromolecule into fragments
separated and identified using GC/MS, thus yielding detailed structural
information on organic matter composition.
* Dual Furnace Elemental Analyzer (Euro EA3000) for CHNS/O determination.
* State-of-the-art X-ray Diffractometer was successfully installed and
working satisfactorily in Sedimentology Div. of KDMIPE in January, 2010.
* State-of-the-art TIMS (Thermal lonisation Mass Spectrometer) was
successfully installed and working satisfactorily in Geo-chronology &
Fission Track Div. of KDMIPE in October, 2009.
* IES Basin Modelling System & Software installed in KDMIPE.
Corporate Licensing of Interpretation Software
* The corporate licensing of PAN System and PAN MESH software, Kingdom
Suite interpretation software implemented last year are completely absorbed
in ONGC during this year.
The following new software has been inducted under corporate licensing:
* Open Detects/from M/s dGB Earth Sciences
* Seismic Data Processing Software -Thrustline
* Site specific licenses of Thrustline software for imaging in thrust fold
areas and complex geology terrain from M/s GEOTOMO for GEOPIC, Dehradun and
RCC Jorhat inducted last year are being absorbed in ONGC.
* High Pressure Air Injection Laboratory (HPAI) Set up: This process would
be instrumental in identifying candidate reservoirs for air injection as a
part of EOR efforts and extending the heavy oil learning curve to the
light/medium oil system.
Fraca++: Studies for mapping and modelling fracture network has been taken
up for Borholla Basement.
* Rheological studies of fluid for characterization and Theological
behaviour studies of EOR emulsion. This is being used for viscosity and
cheology measurements of crude oil in thermal tube experiments.
*Integrated PVT Package from M/s Chandler Engineering, Houston, USA. The
facility is regularly being used in PVT sample studies for phase behaviour,
molar composition and solid deposition studies for enhanced reservoir fluid
characterisation and thermodynamic evaluation in mercury-free environment.
* Multi-Component Seismic Survey 3D-3C Muiti component seismic API
technology inducted through departmental crew A&AA Basin in 2007-08. Now,
six of the new data acquisition systems have been procured along with
digital multi-component sensors, which are capable of carrying out multi-
component survey. 3D-3C seismic data survey is being carried out in
Laplingaon area of A&AA Basin, Jorhat. The data is being acquired and
processed in consultation with Dr. Garota
* New Data Acquisition System-14 new state-of-the-art data acquisition
system with 24 bit delta sigma technology has been procured. These systems
will be capable of mixed mode (Analog/digital/geophone/hydrophone)
operation with high channel count to facilitate seismic data acquisition in
logistically difficult areas as well as in geologically complex areas with
smaller bin size. Data acquired with the new digital system have shown
remarkable improvement in the imaging of the deeper events after
processing.
8. Collaborative projects with Foreign Institutes/Domain Experts/MoU.
* Structural Modeling Projects by M/s Midland Valley Exploration
M/s MVE has been issued LOI to carry out 'Long term consultancy services
for three years on structural modeling'. The scope of work involves three
year consultancy services that include training and project work in the
latest version of M/S MVE software to a team of twenty executives from
Basins & Institutes, in order to create domain experts in structural
modeling. Besides technology transfer nine projects will be carried out
along with a team of ONGC geoscientists in order to impart with the
knowledge of best practices in structural modeling.
* Study of subsurface samples of Krishna-Godavari Basins with Prof. Dr.
Gerta Keller, Princeton University,
Princeton, USA
As a joint collaborative project between KDMIPE Dehradun and RGL, Chennai,
in association with Prof. Dr. Gerta Keller, Princeton University,
Princeton, USA is under way. This study will lead to high resolution dating
and intra-basinal correlation of subsurface sections across KfI' Boundary
in KG Basin leading ultimately to better understanding of geological
history and possible causes of mass extinctions.
* Interpretation of G&G Data of Mahanadi Basin in collaboration with Mr.
CD. Johnston an Independent seismic interpreter & Integrator from Alberta,
Canada.
Interpretation and integration of all seismic and other available G&G data
of Mahanadi Basin covering approx.60,000 sq. km. so as to bring out
Paleogeography, defined Petroleum System and also to identify prospective
areas.
Interpretation of G&G data in collaboration with Dr. Ben Law
For the purpose of viewing and evaluating the potential of basin-centered
gas accumulations and shale gas in the onshore and offshore basins of
India.
* Mr. Anthony Beckett was engaged as an expert for drilling of High
pressure, High Temperature wells in offshore areas.
* Collaborative Research Project with IIT-Kharagpur on 'Estimation of
lifetime & lifecycle cost of FRP pipes manufactured using various
technologies for offshore & onshore applications.'
* Collaboration with DNV, Norway for qualification of new composite
technology for Pipes, Storage tanks, Shafts and risers, LNG storage and
transport, Pressure vessels, Steel structure repair without hot work.
* Collaboration with Norwegian Composite Center, Norway and NTNU, Norway
for material characterization for high temperature performance composite
materials.
9. Information Regarding Imported Technology imported during the last five
years:
Technology Imported Year
A(i) * 'Strata Bug' software for Bio-stratigraphy. 2005-06
* Log data processing software-GEOFRAME containing
ELAN PLUS, dip-meter, image processing and interpretation
package along with hardware.
* State of Art digital micro gravitymeter, Proton
Precession magnetometer together with DGPS, Total
station and Auto level for topographical survey to meet
the requirements of precision GM survey.
* ISO Prime GC-IRMS
* Sun servers and work-stations for EPINET (Exploration
& Production Information Network)
* Suit of 2D/3D Move Software of Mid land valley
* Three Numbers PC based software from Geographix.
* Geosec2D Paradigm software installed in F15K server
* Configured five sun blade 150 systems with PCI cards
and installed windows XP so as to work both as
workstation and PC.
* IBM P690 (8CPU) Petrobank server upgraded to 32
CPU for supplementing seismic data processing
* 3 No's of Mobile Processing Units (MPU) for
reducing API cycle time.
* PC based Seismic Interpretation system with
matching hardware and software.
* High temperature anaerobic bio-reactor.
* Microscope with image analyser.
* Refrigerated centrifuge.
* Incubated shaker.
* High temperature incubator.
* High precision metering pump.
* End Face grinder.
(ii) * Data Station (DASTA-720) 2006-07
* GV Isoprime Continuous Flow Isotope Ratio
Mass Spectrometry (CF-IRMS)
* Varian CP3800 Natural Gas Analyzer
* GC-MS-MS(Varian)
* Latest releases of Landmark/Hampson Russell/Jason/
GeoQuest Interpretation Software installed as part
of regular M&S.
* Geo-Vlsion Centre (Virtual Reality Centre) with
SGI Onyx 3900 Server (16 CPU, 64 GB RAM) installed
for 3 Pipe, Curved screen, immersive volume
visualization using the software from M/s Paradigm.
* Petrel Suite of Software along with Interactive
Petrophysics from M/s GeoQuest Systems Installed.
* Latest release of Solaris Operating System version
10 installed and configured for future migration of
Landmark Application Software.
* Netvault Backup Software for Lanfree/SAN backup installed.
* ZFS (Zeta Byte file system) was created on one SUN
machine with Solaris 10 for performance evaluation with
respect to existing UFS file system.
* Biglron Foundry Gigabit Ethernet switch upgraded to
120 gigabit fiber ports along with redundant power module
to provide seamless gigabit network connectivity to all
servers and clients throughout GEOPIC.
* EPOS3SE upgraded to RFC (Rock & Fluid Canvas)
* Q-Marine.
* Sea bed logging.
* GX Technology.
* Digital Multilevel Vertical seismic profiling (VSP).
* Air borne Electromagnetic Survey.
* Multi Transient Electro Magnetic (MTEM) technique.
* Virtual Drilling Technology.
(iii) * Rapid Solvent Extraction Unit (Soxtherm System). 2007-08
* Petrobank Master Data Store (MDS), from M/S Halliburton
Offshore Services Inc.- a multi-client solution for
the management of E&P technical data.
* 64 CPUs SGI ALTIX machine.
* 48 node IBM PC Cluster system with dual CPU per
node equipped with Geocluster 4.1 application
software of M/S CGG.
* 272 node IBM PC Cluster system with dual CPU
per node equipped with OMEGA application
software of M/S Western Geco
* Corporate Licensing of Interpretation software
from M/s Hampson Russel, M/s Landmark,
M/s Geoquest and M/s Paradigm.
* CGG Geocluster application software for processing.
* WGC Omega: application software for processing.
* StatMod MC and EarthMod FT modules added to
Fugro-Jason's MyBench software suite.
* LWD/Geosteering with Laterolog tool.
* Compact combo LWD tool.
* FPWD-Formation Pressure While Drilling tool.
* 'Air Injection Laboratory' for identifying
candidate reservoirs for air injection as
a part of EOR efforts.
* Cluster Computing capabilities have been
established, which will reduce significant
run-time of various G&G applications and
reservoir simulation processes.
* Four licenses for G&G modules (Open Works-2,
SeisWorks-1 and StratWorks-1 of M/s
Landmark Graphic Corporation).
* Three licenses for Reservoir Simulation
(Model Builder-3 of M/s Computer
Modeling Group Limited).
* PC Cluster technology, both Hardware and
Software, for seismic data processing.
* 3D-3C Multi-Component Seismic Survey.
* Four numbers of state-of-the-art multi
component digital VSP equipment.
* 14 new state-of-art data acquisition system
with 24 bit delta sigma technology.
(iv) Latest releases of Landmark/Hampson
Russell/Jason/GeoQuest/Paradigm/Midland Valley/ 2008-09
GOCAD Interpretation Software installed as
part of regular M&S.
* Corporate licensing of existing Petral and
Geoframe suit of interpretation software
from M/s Schlumberger
* Induction of Basin modeling software
'Petromod' from M/s IES Germany and pore pressure
prediction software 'Drill works Predict'
from M/S Knowledge systems
* Thrustline software for imaging in thrust fold
areas and complex geology terrain from M/s GEOTOMO.
* FASTVEL software for automatic residual move
out application from M/s PARADIGM.
* Procured two nos. of Precision Air
Conditioner (18 TR & 9 TR) of Emersion
make from OES M/S WIPRO Ltd.
* 125 TB and 50 TB of SATA based Storage
System is being provided for PC Cluster
of OMEGA and CGG Applications Software.
* Procured 100 Nos of 3592 magnetic media.
* Up gradation of Processing
LAN from 100 Mbps to Gigabit LAN.
* State-of-the-art LTO-4 Tape Library has
been procured and commissioned.
* High end Workstations (22 Nos)
inducted for interpretation and Processing.
* Long-Term Technical Services by M/s
Midland Valley Exploration (MVE),
U.K. for Structural Modeling
* IES Basin Modeling Technology
* STAR Structural Analogues for Reservoirs, U.K
* State-of-the-art automatic fission track
dating system in Geochronology and
fission track division.
* Probe-Global E&P database
from Petroconsultant S.A.
* Magnetotelluric System (MT)
* Integrated PVT Package from M/s
Chandler Engineering, Houston, USA.
(v) Latest releases of Landmark/Hampson
Russell /Jason/GeoQuest/Paradigm/Midland 2009-10
Valley/GOCAD/Drill Works/Petromod/Kingdom
suite/ OpendTect/ PANSYSTEM &
PANMESH Interpretation Software installed
as part of regular M&S.
* Unlimited site specific license of
PANSYSTEM s/w for all ONGC offices within
corporate deal and 3 licenses of PANMESH
s/w under corporate license from M/s EPS.
* 100% Corporate licensing of Geoframe/
Petrel s/w from M/s GeoQuest and
finalisation of its corporate AMC.
* 100% corporate licensing of Paradigm
interpretation s/w and finalisation of
its corporate AMC.
* RokDoc software (1D/2D/3D/Chronoseis) from
M/s ICON SCIENCE has been inducted in GEOPIC.
* IES Basin Modeling Technology
* Auto Counting FT system.
* Landmark's R5000 software was successfully
installed in Linux Based workstation.
* Pipe conveyed logging system.
B. Has the technology been fully absorbed Yes
C. If not fully absorbed, areas where this
has not taken place, reasons thereof, Not
and future plans of action applicable
10. Expenditure on Research & Development
(Rs. in million)
2009-10 2008-09
Capital 213.67 500.60
Recurring 1,985.78 1,574.44
Total 2,199.45 2,075.04
Total R&D Expenditure as a percentage
of Total Turnover 0.35% 0.32%
11. Information on Foreign Exchange Earnings and Outgo
(Rs. in million)
2009-10 2008-09
Foreign Exchange Earnings 45,870.97 34,324.54
Foreign Exchange Outgo 147,775.81 115,602.49
MANAGEMENT DISCUSSION AND ANALYSIS
1. The Economy
Global economy continues to be under shadow of one of the worst global
economic downturn. Dubai debacle, then economic turmoil in Greece and now
doubts about the financial health of certain other countries in the
European Union bears testimony to the fact that all is still not well with
the financial health of many countries.
Global economy shrunk by 0.6% in 2009 on account of 3.2% decline in
advanced economies; Europe being the worst affected with a decline of 4.1%.
However, developing Asia grew by 6.6% led by China (8.7%) and India (5.7%).
WEO 2010 (April 2010) projects that in 2010 the world output may increase
by 4.2% over 2009 and growth in advanced economies is expected to be 2.3%
over 2009. Emerging and Developing economies are projected to grow by 6.3%
over 2009; led by China (10%) and India (8.8%).
Striking an optimistic note in July, 2010, IMF raised its 2010 world growth
forecast to 4.6% and boasted estimates for the US and China. India is
projected to grow at 9.5%. However, IMF warned that 'risks have risen
sharply' and Europe has to quickly resolve debt problems and restore
confidence in banks.
During the fiscal 2009-10 Gross Domestic Product (GDP) in India registered
a growth of 7.4% against 6.7% during 2008-09.
Helped by timely and appropriate measures taken by the government in the
form of fiscal and monetary stimulus, the Indian economy kept up momentum
despite weak recoveries in advanced economies.
2. Oil & Gas Industry & developments
Oil consumption
Global crude oil consumption declined by 1.4% in 2009; from 85.04 million
barrels per day (mb/d) in 2008 to 84.04 mb/d in 2009. Consumption declined
in OECD countries by 4.3%. USA and Japan, the two leading economies of the
world, registered a decline of 4.2% and 9.3% respectively. In contrast,
non-OECD countries registered 2.3% increase in crude oil consumption led by
countries like China and India.
Oil consumption is also increasing in large number of developing nations in
the Middle East, Latin America and Africa which may % Change in gas
consumption in 2009 over 2008.
25.5% respectively. A significant development in India was commencement of
new supplies from the East coast.
Demand pulls & crude oil price volatility
Sustained increase in crude oil demand up to 2007 (CAGR of 1.5% during
1997-2007; CAGR of 3.3% in case of non-OECD countries) coupled with
perceived supply constraints, complexities in the oil market and resultant
inter-plays at commodity exchanges resulted in high volatility in crude oil
The upward journey of price started in 2004 and peaked to US$ 147/bbl in
July, 2008. Thereafter there was a free fall to US$35/bbl in December 2008.
The volatility proved beyond doubt that factors other than fundamentals had
taken the driver's seat.
Demand shrinkage and collapse of oil prices forced OPEC to cut supplies by
4.2 mb/d in late 2008. As a result, oil prices started increasing since
January, 2009 to hover in the range of US$ 75-85 per barrel.
Though this price band is perceived to be in 'goldilocks range'-comfortable
for producers as well as consumers-the volatility still exists. Dated Brent
touched US$ 88/bbl in the first week of May, 2010 and within two weeks the
prices fell below US$ 70/bbl due to economic turmoil in Euro-zone; inching
up intermittently thereafter.
The gas price (Henry hub) also followed volatility of oil price curve. It
increased to US$ 12.68/mmBtu in June, 2008 only to crash to US$ 1.88/mmBtu
in September, 2009; currently hovering around US$ 4.70/mmBtu.
Prices to remain volatile as fundamentals have not changed World over oil
field depletion, declining discovery rates, insufficient new projects and
waning investment in E&P projects is a real concern which may bring in
complications for the industry in Crude oil production (MMT).
Field depletion
During the period 2000-2009, in Non-OPEC countries {other than Former
Soviet Union (FSU) countries} crude oil production declined by 6.3%. In
OECD countries oil production declined by 15%. Arresting decline in these
fields is the biggest challenge for the industry which requires systematic
technology interventions
Declining discoveries
Since 2004 more than 2,000 discoveries have been reported from different
parts of the world (Source: GlobalData), except a few large discoveries in
the Gulf of Mexico, most of the discoveries are small. Alarge number of
these discoveries are in deepwater and ultra deepwater locations for which
technology and investment remains a challenge. The mean field size post
1995 has decreased in most of the regions except those in few African and
FSU countries (Former Soviet Union) where exploratory efforts were
mobilized during last decade.
Oil & Gas Investments
In high oil price regime, the industry attracted huge investments. Total
investment in the sector doubled in just four years i.e., US$ 428 billion
in 2005 to US$ 864 billion in 2008 (Source: GlobalData). The industry
leaped forward even to take risky projects in the challenging geographical
location and unconventional sources. However, in volatile market conditions
majority of the companies revisited their capital expenditure plans, many
projects were slashed and cautious approach became the strategy the world
over. As a result investment during 2009 declined by 19% compared to 2008
(Source: GlobalData). In case the prices remain low it will discourage the
industry from making big moves.
Bio-fuels
In recent years, bio-fuel has emerged as a preferred cost-effective
substitute. Global ethanol production increased by 158% in last six years
{from 14.9 in 2004 to 34.4 million tonnes of oil equivalent (mtoe) in
2009}; mainly due to increase in production in USAand Brazil, which account
for about 87% of the global ethanol production. During the period 2004-
2009, ethanol production in USA and Brazil increased by 216% and 78%
respectively (Source: BP Statistical Review 2010). However, ethanol as a
partial substitute may pose a big question mark over global food security.
Shale gas revolution
In a short span of time, the Shale gas revolution in USA has changed the
basics of gas business. Shale gas now accounts for 20% of the gas
production in USA which is expected to increase to 50% of the supply by
2035. However, attendant environmental concerns still remain unresolved.
The 'Game changer'
The British Petroleum (BP) operated Deepwater Horizon rig disaster, in the
Gulf of Mexico, is going to change the oil game by raising grave concerns
about offshore drilling. Tougher restrictive regulations may shortly be in
place.
3. Indian Oil & Gas Industry
Increasing consumption of petroleum products
Oil and natural gas consumption in India posted robust growth during the
recent years i.e. at a Compounded Annual Growth Rate (CAGR) of 5.1% in last
5 years (FY06 to FY'10). Consumption of most of the products increased
substantially except Naphtha and Fuel oil which were substituted by new gas
supplies.
Crude oil production
During FY'10, domestic crude oil production has been 33.51 MMT (ONGC's
share 26.46 MMT) almost same the same level as during FY'09. Production
levels could be maintained because of systematic technology and capital
infusion in old and matured fields and bringing new discovered fields to
production. RJ-ON-90/1 block, in which your Company has 30% participative
interest, commenced production from 24th August, 2009. Presently it is
producing more than 1,05,000 bopd. The peak production from the field is
expected to be around 210,000 bopd by Q4 of FY'12.
Crude oil price (Indian basket) and under-recoveries
During FY'10, average crude oil price for the Indian basket has been US$
69.76/bbl against US$ 83.57/bbl during FY'09. Though the oil prices
increased at a staggering CAGR of 20.8% during the period FY'05 to FY'09,
the Indian basket prices of four sensitive petroleum products i.e., HSD,
MS, LPG & SKO were controlled by the government to make these products
available to the consumers at affordable prices.
ONGC's average gross crude price in FY'10 has been US$ 71.65/bbl (against
US$ 86.15/bbl in FY'09); however, the net crude price realization to ONGC
has been US$ 55.94/bbl (against US$ 47.70/bbl in FY'09) after sharing
under-recoveries of US$ 15.71/bbl to Oil Marketing Companies (OMCs) as per
the government directives. ONGC's share of under-recoveries during FY'10
has been Rs. 115.54 billion (previous year ? 282.25 billion).
Natural Gas production
During FY'10 domestic natural gas production has been 47.51 BCM the
highest-ever (ONGC's share 25.59 BCM). Major upside came from the new
production from D-6 field of Reliance Industries Ltd. (RIL) in the East
Coast which commenced production from 1st April, 2009.
Share of natural gas to increase in the Indian Energy basket:
Compared to world primary energy basket, Indian scenario is slightly
different. In India, Coal remains the dominant fuel with a share of 52%
(against 29% in world) in energy basket followed by Oil with a share of 32%
(against 35% in the world).
During the year 2009, share of natural gas in Indian energy basket
increased to 10% (against 8% in 2008). However, it remains much lower than
global average share of 24%.
Big impetus tor gas Dusmess
The gas business in India got big impetus with two remarkable decisions.
Hon'ble Supreme Court of India upheld the decision of the Government to fix
a price of US$ 4.2/mmbtu for D-6 gas. Subsequently, the Government enhanced
the price of APM (Administered Price Mechanism) gas, produced by ONGC and
OIL from nominated blocks, from around US$ 1.79/mmbtu to US$ 4.2/mmbtu
(including royalty). This will help in wiping out the under-recoveries in
gas business and incentivize investment.
4. Operational performance
Your Company has been able to maintain oil and gas production levels in
recent years through two pronged strategy; optimizing production from
existing old fields and bringing new fields to stream. Oil and gas
production profile from domestic as well as overseas assets during last
five years are as below:
Oil and gas
production FY'10 FY'09 FY'08 FY'07 FY'06
Crude Oil
Production (MMT) 32.95 33.69 34.68 33.69 30.69
ONGC 24.67 25.37 25.95 26.05 24.40
JV Share 1.79 1.76 1.89 1.84 1.71
OVL 6.49 6.56 6.84 5.80 4.58
Natural Gas
Production (BCM) 27.98 27.65 27.08 27.04 26.75
ONGC 23.11 22.48 22.33 22.44 22.57
JV Share 2.49 2.95 2.79 2.45 2.43
OVL 2.38 2.22 1.96 2.15 1.75
Accelerated and intensive exploration campaign initiated by your Company
helped in accreting good quantity of oil and gas reserves which helped in
improving position of the proved reserves (1P).
FY'10 FY'09 FY'08 FY'07 FY'06
Proved Reserves (MTOE)
Estimated Net Proved:
O+OEG Reserves 962.90 949.53 925.05 938.98 924.05
ONGC 737.31 720.18 722.21 698.72 669.36
JV share 39.60 39.12 41.76 45.50 47.85
OVL 185.99 190.23 161.08 194.76 206.84
5. Financial performance
ONGC (Stand alone)
(Rs. in million)
Particulars FY'10 FY'09 % lncrease/
(Decrease)
Income:
Crude Oil 445,053 391,718 13.62
Natural Gas 73,797 75,528 (2.29)
Value Added Products 83,212 172,247 (51.69)
Total Sales 602,062 639,493 (5.85)
Other Income 16,590 10,190 62.81
Gross Margin 396,054 378,292 4.70
EBIDTA 375,588 319,684 17.49
PAT 167,676 161,263 3.98
EPS 78.39 75.40 3.98
Dividend per share 33 32 3.13
Net Worth 864,413 780,848 10.70
% Return on net worth 19.40 20.65
Capital Employed 738,013 640,583 15.21
% Return on capital employed 50.89 49.91
Capital Expenditure 235,590 218,200 7.97
ONGC Group:
(Rs. in million)
Particulars FY'10 FY'09 % lncrease/
(Decrease)
Sales:
Crude Oil 527,312 491,127 7.37
Natural Gas 81,405 82,835 (1.73)
Value Added Products 452,998 519,978 (12.88)
Total Sales 1,061,715 1,093,940 (2.95)
Other Income 20,343 15,125 34.50
Gross Margin 489,453 492,546 (0.63)
EBIDTA 475,374 433,792 9.59
PAT 194,035 197,953 (1.98)
EPS 90.72 92.55 (1.98)
Net Worth 1,005,653 915,729 9.82
% Return on net worth 19.29 21.62
Capital Employed 869,009 752,781 15.44
% Return on capital employed 54.70 57.60
Note:
Segment information as per Accounting Standard (AS)-17, is detailed
elsewhere in the report.
6. Opportunities & Threats
In recent years India has emerged as one of the most vibrant energy markets
in the world. Demand for all forms of energy registered robust growth and
is going to sustain with fast growing Indian economy. This provides an
opportunity to your Company to meaningfully integrate in the entire energy
value-chain to leverage business opportunities.
Presently, more than 33% of the sedimentary basins in India are either
unexplored or poorly explored. Yet-to-find (YTF) hydrocarbons may be
located in these areas which may throw up opportunities for the companies
who are able to take lead in these frontier areas.
Government of India is now looking for Open Acreage Licensing Policy
(OALP), an operator friendly flexible system. Your Company will have
opportunity to leverage its vast exploration data base to its advantage.
Improving recovery factor of the existing matured fields provides enormous
opportunity in terms of production upside to your Company. These
established fields have significant scope in terms of brown-field
development leveraging superior technology. The Improved Oil Recovery (IOR)
and Enhanced Oil Recovery (EOR) techniques which your Company has mastered
over the years provide good opportunity for association and growth in
global oil business as number of operators or countries are looking for
such know-how and skills.
Presently, more than 90% of the global oil and gas reserves are controlled
by the National Oil Companies (NOCs) in various countries. Establishing
meaningful relation with the NOCs provides opportunity for growth.
Commercialization of new sources of energy like CBM, UCG, Shale gas, etc.,
has substantial upside for growth. At the same time alternate sources of
energy have also enormous potential. Early lead in cost effective
commercialization of these sources through innovative technologies and
solutions is an opportunity.
Hydrocarbon exploration is now being principally focused in frontier areas
like-deeper pays, deepwater, ultra-deepwater and high risk stratigraphic
traps. These so called 'invisible frontiers' are becoming an increasingly
important target. Regional or 'new geology will once again become critical
as itwas in the initial wildcatting days.
Likely strict regulations for offshore E&P operations may emerge as one of
the biggest threats for E&P operations globally.
7. Risks and Concerns
E & P business due to inherent uncertainties has always been highly risky.
New technology and solutions for new plays would require concerted efforts
with substantial investment; however, volatile price regime is emerging as
a drag for the industry where focus is more on reducing costs all the while
responsibly addressing infrastructure and environmental issues.
Depleting fields in most of the matured basins is a concern for the
industry; however, designed solutions in present market conditions and
uncertainties appear to be elusive. This may have direct impact on future
supplies.
As far as India is concerned, seventy eight percent of the offshore acreage
is in deepwater and ultra-deepwater. The success in deep waters especially
in the East Coast has opened up vast area for active exploration; however,
capital and technology intensive exploration drive can only unleash
potential from these deeper challenges.
Sharing of under-recoveries on adhoc basis remains a concern for your
Company. Besides, there always remains a concern for Health, Safety and
Environment owing to very nature of E&P operation and geographical location
of its operation like high seas.
8. Strategic business pursuits
Your Company, keeping in view the dynamics of the industry and
opportunities in the energy sector, has well defined its strategies for
sustaining growth. Basic premise for the strategy evolves round-creating
energy and value assets on continuous basis for sustained growth. The
strategic pursuits of your Company are:
a. Intensive exploration to locate new oil & gas assets.
b. Expeditious development of discoveries.
c. Arresting decline from the matured fields.
d. Leverage its position as a favoured partner globally for overse as
energy projects.
e. Developing new sources of energy like-CBM, UCG, Shalegas, etc.
f. Establish alternate energy as commercially viable option.
g. Value-multiplication through integration in hydrocarbon and energy
value-chains.
Intensive exploration
Your Company has intensified exploratory efforts in recent years to locate
new oil and gas assets and accrete more and more reserves. During last 5
years (FY'06 to FY10) your Company acquired 126,222 Line Kilometer (LKM) of
2D and 111,923 Square Kilometer (Sq.Km) of 3D Seismic data and drilled 525
numbers of exploratory wellsin domestic basins.
These exploratory inputs helped your Company to accurate more than one
billion tonnes of in-place hydrocarbon reserves in domestic basins. The
average Reserve Replacement Ratio (RRR) in last five years has been 1.39
(with 3P reserves) which implies that your Company accreted more reserve
than it produced.
Expeditious Development of Discoveries
During the period 2002-2010 your Company made 134 discoveries (84 onland
and 50 offshore). Out of these 134 discoveries, 58 discoveries (56 onshore
& 2 offshore) have already been put on production. Seven discoveries will
commence production during the current fiscal i.e. FY'11. Systematic
efforts are on to bring balance discoveries to stream. Most of these
discoveries are in offshore (including deepwater) and few in Tripura which
are linked with commissioning of 726.6 MW Power Plant, forwhich lead time
for creating required infrastructure is generally more. However, most of
the shallow water discoveries will be on stream by 2012-13.
Arresting Decline
Prudent reservoir management is an established practice in your Company.
Systematic interventions are made on continuous basis to maintain the
health of the reservoirs. Since 2001, your Company has taken up 21 IOR/EOR
and redevelopment schemes in 15 major fields to arrest natural decline. Out
of these 21 schemes, 14 schemes have already been completed. So far your
Company has invested Rs. 209.44 billion in these schemes and will be
investing another Rs.156 billion in ongoing 7 schemes. These schemes helped
your Company to maintain production levels by arresting decline in the
major fields and improving recovery factor. The cumulative oil gain from
these schemes has been more than 56 MMT; 7.97 MMT during FY'10. At the same
time recovery factor of these major fields also improved from 28% in FY01
to 33.5% in FY'10.
Overseas operations
Over the years your Company has systematically established itself as a
favoured partner in global E&P business. ONGC Videsh Ltd. (OVL), the
flagship wholly owned subsidiary for overseas operations, has footprints
across 15 countries with 40 projects. During FY10, it sourced 8.87 MTOE of
O+OEG; the highest-ever. Production came from 9 producing assets in seven
countries.
New sources of energy
Your Company is aggressively pursuing technology intensive solutions to
leverage potential of new sources of energy like - Coal Bed Methane (CBM),
Under Ground Coal Gasification (UCG), Shale Gas, etc.
a. Coal Bed Methane (CBM)
Your Company is pursuing CBM exploration in five blocks i.e., Jharia,
Bokaro, North Karanpura, Raniganj and South Karanpura. Your Company has
submitted Final Development Plan (FDP) for approval to the Government of
India for Parbatpur area in Jharia Block with estimated in-place reserve of
17.72 BCM. However, CBM production from Pilot Project at Parbatpur, Jharia,
Jharkhand commenced in January 2010. Your Company has also taken up a
collaborative research project with University of New South Wales,
Australia for reservoir characterization and rock in-situ stress and
natural fracture characterization in Bokaro, North Karanpura and Jharia
blocks.
b. Underground Coal Gasification (UCG)
Your Company has identified Vastan Mine block in Gujarat for UCG Pilot
Project with estimated investment of US$ 15.32 million. Environmental
clearance has been obtained from the Ministry of Environment & Forest for
pursuing the pilot project. Request has also been submitted for award of
the Minning Lease (ML) for the Vastan mine block.
c. Shale Gas Exploration
Your Company launched an integrated R&D pilot project for shale gas
exploration on 23rd April, 2010 in Damodar Basin, Jharkhand, the first of
its kind in the country.
Alternate sources of energy
After successful commissioning of a 50 MW wind farm in Gujarat, your
Company is planning for another 100 MW wind farm. Further, feasibility of
setting up a 10 MW grid-connected Solar Photo Voltaic (PV) project is being
studied.
ONGC Energy Centre, a dedicated centre, created by your Company for
holistic research and development of energy sources beyond hydrocarbon and
conventional sources has taken up several projects such as -Thermo-chemical
Reactor for hydrogen generation, Bio-conversion of Coal/ Oil to methane,
SolarThermal Engine, LED project, Uranium exploration, etc.
9. Value-multiplication and integration projects
Refining
Mangalore Refinery & Petrochemicals Ltd (MRPL), subsidiary of your Company,
increased its nameplate capacity to 11.82 MMTPA from 9.69 MMTPA. The
refining capacity of the MRPL is being enhanced to 15 MMTPA; the project is
on track and is expected to be completed by 2012.
Petrochemicals
The two petrochemical plants ONGC Petro-additions Limited (OPaL) and ONGC
Mangalore Petrochemicals Limited (OMPL) promoted by your Company are
progressing well and are expected to become operational in 2012 and 2013
respectively. These projects have basically been promoted for value-
multiplication of in-house produced Naphtha at Uran, Hazira, and Mangalore
and C2-C3 components at C2-C3 extraction plant at Dahej.
Power
726.6 MW (363.3x2) gas based Combined Cycle Power Plant (CCPP) being set up
by ONGC Tripura Power Company Ltd. (OTPC), an SPV promoted by your Company,
at Pallatana, Tripura aims to monetize its idle gas assets in the state of
Tripura. This plant is scheduled to be operational in 2011-12.
10. Outlook
Exploration acreage
Your Company has been awarded 17 NELP blocks (including 4 as non-operator)
in NELP VIII round of bidding for which the contracts were signed on 30th
June, 2010. Including these, your Company holds Petroleum Exploration
License (PEL) for 93 NELP blocks (10 as non-operator). In addition, it
holds 62 PEL nomination blocks and 320 Petroleum Mining Lease (PML). Your
Company endeavours to convert most of the PEL areas into PML to have
sufficiently large portfolio of E&P assets.
Exploration programme
In first three years (FY'08, FY09 & FY'10) of XI plan period itself, your
Company over achieved 2D seismic survey targets (110,275 LK against XI
target of 54,359 LK) and achieved 89% (67,886 sq km against XI plan target
of 76,398) of 3D seismic survey target. Total 1,023 wells (Exploratory
wells: 332 & Development wells: 691) were drilled during the period (62% of
the XI plan target of 1,651 wells). Your Company accreted 718 MToE of O+OEG
in-place hydrocarbon in first three years of plan against XI Plan target of
1,000 MToE. With the present deployment of 120 drilling rigs (78 owned and
42 charter-hired) your Company plans to drill 728 wells (Exploratory: 254 &
Development: 474), including 30 deepwater wells, during balance two years
of the plan period (FY'10 & FY'11).
New field development
Your Company has taken up a number of new offshore fields for development
with envisaged investment of Rs. 181,060 million. Notable among these
projects are: C-Series, G-1 & GS-15, B-22, B-193, B-46, D-1, North Tapti
and Cluster-7. C-series field has already commenced production and other
fields will be on stream from 2011-12 and have potential to provide
substantial upside to O+OEG production starting from 2011-12. Expeditious
development of Daman fields-Daman (Main), Daman (North), B-23 & B-24, is
also being taken up.
Your Company discovered natural gas in NELP-1 block KG-DWN-98/2. The block
is currently under appraisal stage and is divided into two discovery area
Northern Discovery Area (NDA) consisting of discoveries like-Padmavati,
Kanakdurga, Annapuma, N-1, D/KT, U, A, W and E in the water depth of 594 to
1,283 meters and Southern Discovery Area (SDA) consisting of UD-1 discovery
in ultra-deepwater at a water depth of 2,841 meters. Field Development
Plans (FDP) shall be in place after appraisal of discoveries. However, your
Company has already submitted request for Declaration of Commerciality
(DOC) to DGH for NDA on 16th July, 2010.
Plan expenditure
During the year FY'11, your Company has earmarked a budget of ? 265,230
million for domestic operations; about 9.3% for seismic survey; 31.9% for
exploratory drilling; 13.7% for development drilling; 36.8% for capital
projects and purchases; 5% for domestic E&P JVs and balance 3.2% is for R&D
and integration projects.
In first three years of XI Plan period, plan expenditure for domestic
operations has been Rs. 630,701 million against total plan outlay of
Rs.759,838 million (i.e., 83% of the total plan outlay.
About 56% (Rs.256 billion) of the XI Plan outlay of Rs 453 billion for OVL
has already been invested towards overseas E&P operations and acquisitions
in the first three years of the plan period. OVL's plan expenditure during
two terminal years of XI plan will be more guided by acquisition of new E&P
projects for which OVL is aggressively scouting for.
Overseas E & P
Presently (as on 31st March, 2010), OVL has reserve base of 356.78 MTOE (2P
reserves) which translates to R/P ratio (Reserve to Production ratio) of
more than 40 years at present production level (i.e., 8.87 during FY' 10).
Participation in Carabobo project is going to enhance 2P reserves of OVL by
45 MMT.
As expected, production from three major assets-GNOP (Sudan) and Sakhalin-1
(Russia)-have entered into decline phase; however, OVL recorded highest-
ever O+OEG production in FY10 due to contribution from the new assets like
BC-10 (Brazil), Imperial Energy (Russia), etc. Production from Imperial
Energy fields in Russia was enhanced to 16,700 barrels of oil per day
(bopd) from 6,000 bopd at the time of acquisition in January 2009.
BC-10 deepwater field in Brazil commenced production from 12th July 2009
and is currently producing about 72,500 bopd. Blocks A1 and A3 in Myanmar,
in which OVL has 20% stake, are expected to commence production from mid-
2013. First oil from Carabobo project is expected to flow in 2012-13 with
estimated peak production of 400,000 barrels of extra heavy oil per day in
2014-15 (OVL's share 44,000 bopd).
11. Internal Control Systems
Over the years your Company has developed robust internal control systems
for all gamuts of its operations. A dedicated group -Performance Management
and Benchmarking Group (PMBG) - monitors performance of all the business
units on continuous basis. Besides technical and quality monitoring teams
at business unit level continuously monitors technology and field
operations. Internal audit is conducted in-house as well as through
outsourcing in certain areas requiring specialization. Statutory auditors
are appointed by Comptroller and Auditor General of India (C&AG) for fixed
tenures. Oil Industry Safety Directorate (OISD) conducts safety audits
periodically.
Your Company revised the Book of Delegated Powers (BDP) in 2009 for
financial and administrative delegations with focus on fiscal and
administrative discipline and decentralization of certain powers. All
transactions in the company are carried out on SAP R/3 ERP based business
portal which was upgraded from mySAP 4.6c to ECC 6.0 to leverage the new
functionalities of the latest ERP system consisting of Production Revenue
Accounting (PRA), Governance, Risk & Compliance (GRC), Master Data
Management (MDM), Identity Management (IDM), Occupation Health (OH), Mobile
Asset Management (MAM).
Your Company has institutionalized Invoice Monitoring System (IMS) and all
payments are made electronically through a time-bound monitored process.
Even all payments to the employees are now system based including
Performance Related Pay (PRP), Perks and other claims and re-imbursements.
Audit & Ethics committee of the Board oversees the functioning of Internal
Audit and control systems. Your Company implemented Whistle Blower policy
w.e.f. from 1st December 2009. The Company is in the process of formulating
a fraud prevention policy.
12. Human Resource Development
Your Company is priviledged to have experienced pool of technical and
professional manpower who dedicate themselves for excellence. ONGC,
recognized as the best company to work in core sector in India (Business
Today; 7th Feb 2010 edition), kept its promise to strengthen its HR
activities through innovative initiatives.
Some of the significant initiatives towards human resource development have
been: Coaching & Mentoring scheme, Business Games, Employee Engagement
Survey, HR Audit, Assessment Development Centre (ADC), etc. Structured
initiatives have been taken to institutionalize Multi Disciplinary Team
(MDT) concept throughout the organization for its core activities.
Your Company has been able to contain attrition in recent years due to
proactive managerial interventions and policies. During the year FY110,57
executives left the organization compared to 150 during FY09 and 328 during
FY'08.
Beginning 2010, more than 1,500 people will be superannuating every year.
Keeping this in view your Company has also firmed up long-term recruitment
plan for accelerated induction and training of manpower for core E&P
activities ensuring availability of talent.
13. Corporate Governance
The initiatives taken by your Company are detailed in the Corporate
Governance report, a part of the Annual report.
14. Corporate Social Responsibility (CSR)
Initiatives taken by your Company towards CSR are detailed in Directors'
Report.
15. Cautionary Statement
Statements in the Management Discussion and Analysis and Directors Report
describing the Company's objectives, projections and estimates, are
forward-looking statements and progressive within the meaning of applicable
laws and regulations. Actual results may vary from those expressed or
implied, depending upon economic conditions, Government Policies and other
incidental factors. Readers are cautioned not to place undue reliance on
the forward looking statements.
SECRETARIAL AUDIT REPORT
To
The Board of Directors,
Oil and Natural Gas Corporation Ltd
Regd. Office:
Jeevan Bharti.Tower II,
124, Indira Chowk,
NewDelhi-110 001.
We have examined the registers, records and documents of Oil and Natural
Gas Corporation Ltd. (the Company) for the financial year ended on
31.3.2010 according to the provisions of:
The Companies Act, 1956 and Rules made under the Act;
The Depositories Act, 1996 and the Regulations and Byelaws framed under the
Act;
The Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997;
The Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992;
The Equity Listing Agreement with the Bombay Stock Exchange Ltd. and the
National Stock Exchange of India Ltd. and
Guidelines on Corporate Governance for Central Public Sector Enterprises as
stipulated in the O.M.No. 18(8)/2005-GM dated 14th May, 2010 of the
Ministry of Heavy Industries and Public Enterprises, Government of India
('the DPE Guidelines on Corporate Governance').
Based on our examination and verification of records produced to us and
according to the information and explanations given to us by the Company,
in our opinion, the Company has complied with the provisions of the
Companies Act, 1956 ('the Act') and Rules made under the Act and the
Memorandum and Articles of Association of the Company with regard to:
(a) Maintenance of statutory registers and documents and making necessary
entries therein;
(b) Filing of the requisite forms and returns with the Registrar of
Companies, NCT of Delhi and Haryana within the time prescribed under the
Act and the Rules made thereunder.
(c) Service of documents by the Company on its members and the Registrar of
Companies.
(d) Closure of Register of Members and Share Transfer Books of the Company
from 15th September 2009 to 23rd September 2009 (both days inclusive).
(e) Notice of Board Meetings and Committee meetings of Directors;
(f) Convening and holding of the meetings of Directors and Committees of
Directors including passing of resolutions by circulation;
(g) The 16th Annual General Meeting held on 23rd September 2009.
(h) Minutes of proceedings of General Meeting and meetings of Board and its
committees.
(i) Constitution of Board of Directors and appointment, retirement and re-
appointment of directors;
(j) Appointment of Chairman and Managing Director, Whole Time Directors and
non-executive Directors and their remuneration.
(k) The Directors disclosed their interests and concerns in contracts and
arrangements, shareholdings and directorships in other companies and
interests in other entities and their disclosures have been noted and
recorded by the Board.
(l) Transfers and transmission of shares and issue and delivery of original
and duplicate certificates of shares; dematerialization/ rematerialization
of shares;
(m) Declaration and payment of dividend including interim dividend;
(n) Transfer of certain amounts as required under the Act to the Investor
Education and Protection Fund;
(o) Investment of Company's funds including intercorporate loans and
investments.
(p) Appointment and remuneration of Auditors.
(q) Appointment of Cost Auditors under Section 233B of the Act.
(r) The Company made application to the Central Government seeking
exemption from provisions of Section 212{1) of the Act in relation to its
subsidiary companies for the year 2009-10. Approval of Central Government
has been received vide letter No.47/506/2010-CL-l II dated 04.06.2010.
(s) The Company wherever necessary has kept in abeyance rights to dividend
declared at the Annual General Meeting held on 23rd September, 2009 and
interim dividend declared on 18.12.2009, pending registration of transfer
of shares in compliance with the provisions of the Act.
(t) The Company has not invited/accepted any deposits falling within the
purview of Section 58A of the Act during the financial year.
(u) The Company has not made any secured borrowings during the financial
year ended on 31st March, 2010.
(v) The Company has not bought back any shares during the financial year.
(w) The Company has not altered any provisions of its Memorandum of
Association or Articles of Association during the financial year.
(x) The Company has created a trust, namely, the ONGC Employees
Contributory Provident Fund Trust for its employees. The Company has
deposited both the employees' and employer's contribution with the above
Trust with in the prescribed time pursuant to Section 418 of the Act.
(y) The Company has substantially observed the Secretarial Standards issued
by the Institute of Company Secretaries of India, although recommendatory
in nature.
(z) There was no prosecution initiated against or show cause notice
received by the Company and no fines or any other punishment was imposed on
the Company, its Directors and officers during the financial year for any
offences under the Act.
2. We further report that the Company has complied with the provisions of
the Depositories Act, 1996 and Regulations framed there-under with regard
to dematerialisation/rematerialisation of securities and reconciliation of
records of dematerialized securities with all securities issued by the
Company.
3. We further report that:
(i) The Company has complied with the requirements of Equity Listing
Agreements entered into with the Bombay Stock Exchange Ltd and the National
Stock Exchange of India Ltd. except that the Board of Directors does not
comprise of the required number of independent and nonexecutive directors
as per clause 49(I)(A) of the Listing Agreements.
(ii) The Company has complied with the provisions of Securities and
Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 with regard to disclosures and maintenance of records
required under the Regulations.
(iii) The Company has complied with the provisions of Securities and
Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992
with regard to disclosures and maintenance of records required under the
Regulations.
4. In our opinion and to the best of our information and according to
explanations given to us by the management, we certify that, except the
composition of the Board of Directors with regard to independent Directors,
and appointment of one independent Director on the Boards of its subsidiary
companies, the Company has complied with the DPE guidelines on Corporate
Governance.
For A.N. Kukreja & Co.
Company Secretaries.
(A. N. Kukreja)
Proprietor
CP No. 2318
Place: New Delhi
Date : 20th July, 2010.
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