ONGC has to still find a way to beat the oil volatility cycle without the help of subsidies, says ratan bhagat
To be number one on the B&E Power 100 list brings with it a crown of thorns embedded with huge responsibilities, high expectations, unexpected challenges, and continuous scrutiny, with a generous gift on the negative, from all stakeholders. And ONGC, this year’s leader on our list – with a profit of Rs.161.26 billion for the financial year 08-09 – is gifted with all the above embellishments that come with the throne.
But how did a company, which was pretty good previously, become the greatest in India, a jump that requires more than well implemented strategic intent? R.S. Sharma, Chairman and Managing Director, ONGC doesn’t play to the gallery and points to a straightforward fact, “ONGC’s story actually reflects the success of our well thought out strategy to focus on strengthening our core activity – Exploration and Production (E&P) of oil and gas.” In that order, we should say. The fact is that ONGC, in the past few years, has gone fanatically towards exploring newer positive fields in a manner never before seen in its history. The proof of the pudding comes in the fact that the figure of 28 fields discovered in the financial year ‘09 has never ever been achieved in the past. Moreover, by securing an in-place accretion of 284.81 MTOE (million tonnes of oil equivalent), an ultimate reserve accretion of 68.90 MTOE (both being the highest in almost two decades) and with a reserve replacement ratio of more than one for five consecutive years, ONGC has gone aggressive in a benchmark fashion.
But the truth is, the growth story of this PSU has had its fair share of luck – what with the crude oil price volatility from a never before high of $147 to its lowest at $37 per barrel, the ongoing economic downturn, the inflated subsidy burden of Rs.282.25 billion for the current fiscal and persistent bureaucratic interference playing their part in pulling ONGC down.
To be number one on the B&E Power 100 list brings with it a crown of thorns embedded with huge responsibilities, high expectations, unexpected challenges, and continuous scrutiny, with a generous gift on the negative, from all stakeholders. And ONGC, this year’s leader on our list – with a profit of Rs.161.26 billion for the financial year 08-09 – is gifted with all the above embellishments that come with the throne.
But how did a company, which was pretty good previously, become the greatest in India, a jump that requires more than well implemented strategic intent? R.S. Sharma, Chairman and Managing Director, ONGC doesn’t play to the gallery and points to a straightforward fact, “ONGC’s story actually reflects the success of our well thought out strategy to focus on strengthening our core activity – Exploration and Production (E&P) of oil and gas.” In that order, we should say. The fact is that ONGC, in the past few years, has gone fanatically towards exploring newer positive fields in a manner never before seen in its history. The proof of the pudding comes in the fact that the figure of 28 fields discovered in the financial year ‘09 has never ever been achieved in the past. Moreover, by securing an in-place accretion of 284.81 MTOE (million tonnes of oil equivalent), an ultimate reserve accretion of 68.90 MTOE (both being the highest in almost two decades) and with a reserve replacement ratio of more than one for five consecutive years, ONGC has gone aggressive in a benchmark fashion.
But the truth is, the growth story of this PSU has had its fair share of luck – what with the crude oil price volatility from a never before high of $147 to its lowest at $37 per barrel, the ongoing economic downturn, the inflated subsidy burden of Rs.282.25 billion for the current fiscal and persistent bureaucratic interference playing their part in pulling ONGC down.
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