Yadvendraa
Jaipuria Institute of Management
Introduction of ONGC
 It was established in the year 1956.
 Its Head quarter is in Dehradun.
 The chairman and MD of ONGC is Mr. Radhey S.
Sharma.
 Its revenue was $24.032 billion in the year 2008.
 Currently there are 34000 employees.
Cont…
 ONGC is business organization involved in the exploration
and production of hydrocarbons in India and abroad.
 ONGC is the leader in the upstream petroleum sector and
a leading Navratna public sector.
 ONGC set up OVL in 1996 as a wholly owned subsidiary.
Cont…
 It is the largest Oil exploration and production (E&P)
company in India.
 It has market share over 84% in crude oil and gas
production.
 Around 57 % petroleum exploration licenses in India
for over 588 thousands of area belongs to ONGC.
Cont…
 It major products includes petroleum, crude natural
gas, liquefied petroleum gas (LPG), kerosene and
petrochemical products.
Reason for Expansion ONGC
business
Licensing Policy
 Demand of Crude Oil
 Oil Prices
 Competition
 Burden
 Dependency

 Licensing Policy:- by this private sector can also
participate in the exploration and production.
 Demand of crude oil:- demand was increasing day by
day.
 Oil Prices:- The trend of international prices was
volatile and rising.
 Competition:- Domestic competition was increasing.
 Burden:- Increasing burden on the country due to
the rising oil import bill.
 Dependency:- The bottom-line was crude oil prices.
Major strategic decisions taken…
 ONGC changed from a Commission to a company.
 ONGC appointed MC kinsey as a consultant for
complete revamping and restructuring of the
organization.
 ONGC expanded its global operation through its
subsidiary OVL.
Cont…
 ONGC bought 71% stake in the MRPL refinery.
 ONGC decided to acquire equity oil abroad through
the endeavors of the OVL.
 Human resource development.
Objectives of ONGC…
 Doubling reserves to 6 billion tones by 2020.
 Improving average recovery from 28% to 40%.
 Tying 20 MMT per annum of equity of hydrocarbon
from abroad.
Internationalization Strategy of
ONGC
Carried out in house studies of various moderate
and semi-major, major offshore and onshore fields.
 Came up with about 400 Oil and Gas blocks.
Evaluated these fields with available data
 Came up with the priority list for foreign foray
Combination of marketing entry strategy of:
 Joint venture with equity participation in producing
oil/gas fields.
 Joint venture with equity participation for exploration
and development blocks.
 Consortium approach, pooling other Indian oil
companies, such as IOC Ltd, GAIL, etc.
 Operator ship contracts (management contracts)
 Turkey engineering Contracts.
Countries where OVL has its
producing assets
 Producing assets of OVL :
a. Having 20 percent holding in Sakhalin(Russia)
b. Having 45 percent stake in partnership with British
Petroleum.
c. Having 25 percent equity in the Greater Nile Oil
Project in Sudan.
Countries where OVL having discoveries
and exploration
 OVL assets with discoveries & exploration :
a. Having 100 percent interest in Appraisal &
Development in Qatar.
b. Having 70 percent interest in Exploration & Appraisal
in Egypt.
c. 15 percent interest in Development Phase in Brazil.
d. 20 percent participation interest in Myanmar.
OVL Operations
Vietnam
Myanmar
Sudan
Sakhalin-I
Critically evaluate the reasons
influencing ONGC’s international
expansion?
Factors influencing expansion  New exploration licensing policy
 Lack of new discoveries
 Domestic competition
Identify the key factors affecting
OVL’s country selection.
 Opportunity in the area of oil exploration.
 Future relationship with the countries.
 Size of the other company or its growth
OVL made use of strategic alliances and
joint ventures for its international
expansion ventures rather than opting
for complete ownership. Do you agree
with such a kind of approach?
Reasons for Joint Ventures and Alliances
 Gain Access to a Particular Resource
 Risk and Cost Sharing
 Learning
 Speed to Market