ONGC

-A comparison with Oil India Limited

ONGC
-A comparison with Oil India Limited
Submitted to: Head, Corporate Training and HRD

Submitted On: December 20,2012

Authors: Alakshendra Theophilus (20121006) Soumyadeep Maity (20121055) Vijay Punjabi (20121062) Vivek Tripathi (20121063)

This report is meant to be used in training purposes, which would highlight the employees about the company. This covers the recent works done by ONGC and its financial position. Following this a comparison is done with a challenging company, Oil India Limited. Report would also raise the issue of increasing competition in Oil and gas sector and where do we stand in this market.

ONGCA Comparison with Oil India Limited

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ONGCA Comparison with Oil India Limited

ABSTRACT

With the growing energy needs of India the competition is also growing in the Oil and Gas sector. Major players like ONGC, OIL, Reliance and Cairn India would be fighting hard for their market share in the near future. Being a market leader in this segment ONGC enjoys a major part of Oil and Gas production of India. Also the recent acquisition of new blocks shows brighter aspects in terms of revenue. ONGCs subsidiary ONGC Videsh Limited (OVL) is marking its presence overseas and contributes around 13% of its total revenues. Oil India Limited (OIL) on the other hand, in spite of being similar in structure to ONGC is lagging in terms of exploration and production as compared to ONGC. But Investment Turnover Ratio is quite high (215.0) to ONGCs (87.82). It is expected that soon OIL would also start to give a major challenge to ONGC. Krishna Godavari Basin attracts many companies and here we see a strong competition between Reliance and ONGC. With the inception of NELP (New Exploration Licensing Policy) many a players have entered in the market and challenges are ahead for ONGC. With OALP (Open Acreage Licensing Policy) in the pipeline, ONGC will have to remain cautious and upfront for any opportunity it comes across. Being such huge in size India expects a lot from ONGC and fact is that ,ONGC is capable of meeting the energy demands of future.

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ONGCA Comparison with Oil India Limited

INDUSTRY OVERVIEW

India is the worlds 5th highest energy consumer and continues to grow rapidly towards 4th position. It is the 3rd biggest global coal producer, but has limited its supplies of oil & gas in the hydrocarbon reserve. Oil accounts more than 30 % of Indias total energy consumption, with its share of the mix having fallen from 35 % earlier this decade. Indias proven oil reserve is just 0.5 % of the worlds total. In terms of gas, India currently accounts for 0.4 % of global reserves and just over 1 % of production. Indias oil & gas (O&G) industry consists of three distinct segments- upstream, midstream & downstream. Upstream is associated with all the exploration & production activity of tapping hydrocarbon reserve i.e. petroleum & natural gas, then midstream is associated with transportation & storage activity of the crude oil & gas up to the refinery gate and subsequent refining and marketing of these refining petro products (fuel oil like petrol, diesel, kerosene, lube oil/lubricants, grease etc. ) constitutes downstream. Here our focus will be on the upstream sector of the oil & gas industry. In spite of the presence of the various giant foreign as well as domestic private oil companies (international oil companies (IOCs)) Indian upstream sector is dominated by the state owned oil companies (national oil companies (NOCs)). Among them Oil & Natural Gas Limited is the market leader having the maximum amount of market share and followed by the Oil India Limited , the second highest i.e. market challenger. Both these state owned public sector companies incorporate more than 80% of the exploration and production activity. The key parameters or the standards and criteria that define the upstream O&G industry as well differentiate the upstream companies are as follows-

Acreage/Blocks No. of blocks or total sedimentary basin area acquired by a company and subsequent proven hydrocarbon reserve.

Pipeline Total length & capacity of the pipeline transporting the crude. Crude Production Annual exploration & production rate of crude

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ONGCA Comparison with Oil India Limited

Overseas Block Acquisition Acquisition of basins/blocks as foreign equity oil in abroad.

Net Realisation On Sale Of Crude Net profit (NOPAT Net Operating Profit after Tax) realised after selling of the crude.

R & D Cost Total R & D cost expense for acquiring new technology for E&P activities e.g. mapping, drilling techniques etc. or up gradation or modernization of existing technology.

Exploratory & Development Drilling - Total number of exploratory and development wells and metre age drilled.

The comparisons between the two companies are as follows

Parameter

Unit Of Measurement

ONGC Ltd.

OIL

Acreage/Blocks Pipeline Capacity Length Crude Production Gas Overseas Block Acquisition Net Realisation On Sale Of Crude R & D Cost Oil

KM2/Nos MMTPA KM MMT BCM

94 43.54 673 24.9 23.1 14(Q3)

69 8.4 1.193 3.6 2.4 5(Q3)

Rs. Crores) In Crores

(in

19479

929.33

500(ON Q3)

350(Q3)

Exhibit 1

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ONGCA Comparison with Oil India Limited

Road Ahead Given the need to boost development of domestic oil and gas industry in an energy starved nation like ours, State Governments need to proactively participate in development of oil and gas industry to install confidence of private participants in the States endeavours and thereby ensure success of public/private partnerships. With the growth in digital oilfields and a multitude of sensors the industrys reluctance to invest in technology and data management is changing. Newer geographies, regulatory requirements and competition mean that the O&G industry will be compelled to make renewed investments in processes and technology to increase efficiency and profitability. As operations within the O&G industry get integrated, the accuracy of data and the provisioning of standards will be the key to success. Again todays upstream oil and gas companies are focused on keeping pace with growing demand and driving incremental revenues by exploiting hydrocarbon reserves. This trend is particularly marked in fastemerging, dynamic new markets. In the drive to secure energy supplies, IOCs and NOCs are facing intense competition for upstream access in emerging markets. Accessing reserves in more stable economies has become increasingly more difficult. As a result, the focus has shifted to developing countries that are less geopolitically stable but have considerable hydrocarbon potential. Resource-holding nations in exploration hot spots, such as West Africa, are enjoying unprecedented control over the offers that investing IOCs and NOCs are makingand they are requiring that oil and gas companies become more involved in local economic and social development. The ability of oil companies to meet these expectations with offers that appeal to resource holders has become a necessity. In todays energy industry environment it is a fundamental element in the pursuit of high performance. NOCs have strengthened their ability to come up with appealing, multifaceted offers since they may uniquely understand, even share, the perspectives of the resource holder. In contrast, IOCs are often at risk of providing relatively limited offers that may not satisfy the resource holders needs and this puts pressure on IOCs in the growing competition for oil and gas reserves.

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ONGCA Comparison with Oil India Limited

The oil and gas industry today is witnessing paradigm shifts in the global value chain, from supply, demand and infrastructure, through business economics and the competitive landscape. This is creating an environment for realignment and repositioning, resulting in greater acquisition and spin-off activity.

ONGC
ONGC is one of the Maharatna companies of India having business in oil and gas sector. It works mainly on two segments, main of which is exploration & production and other, the refining business. Refining part comes from ONGCs 71.62% stake in Mangalore Refinery and Petrochemical Limited (MRPL). ONGC Videsh Limited (OVL), a 100% subsidiary which accounts for 13% of revenue is making ONGCs presence overseas too. ONGC works in full hydrocarbon value chain, it is the only company in India to do so. Diagram below explains the products and services along with its end users: Figure 1

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ONGCA Comparison with Oil India Limited

Product segment
Figure 2

ONGCs main products are oil and gas. Its stake in MRPL adds LPG, Kerosene, Naphtha, Petrol, Diesel etc. to its products portfolio. However the companys main revenue which is around 54% comes from production and exploration department.

Net Sales and Earnings Per Share (EPS):

Total production from its Bombay High Field is almost constant. Increase of crude oil price is the main cause for increase in sales. Hence net sales have increased for ONGC is last 10 years except for last few years when there was a drop in crude oil prices. Its affect can be seen in EPS as well which has shown growth since 2008.

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ONGCA Comparison with Oil India Limited

Margins and Returns:

There has been a decline in operating profit and net profit for past 6 years. The issue of decline in margin is certainly due to increased subsidy sharing. Due to this EPS is not growing as compared to increase in Net Sales. ROE and ROIC have also showed a declining trend as a result of slow growth in net profit due to decline in margins.

Exhibit 2

Debt to Equity:
ONGCs debt to equity ratio of 0.23:1 and debt/net profit ratio of 1.5 clearly shows strong financial position of company.

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ONGCA Comparison with Oil India Limited

Above analysis shows net sales have increased and company has maintained good debt position. Figure 3

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ONGCA Comparison with Oil India Limited

Expectations in Future
Short Term ONGC had plans to launch FPO in around September 2011. But stock was not performing well and due to this, less interest by investors, company decided to launch it at a later date. Financial Position is stable for past few years and expectations are that it will continue to be. Also in past years it has shown growth in Profit and Net Sales. Few projects are at the verge of completion; however it would not add much profit to bottom line. Company has plans to invest about Rs 15,340 ($2.894 billion) for ultra deep sea projects in Krishna Godavari Basin, UD-1 by 2016-17. This project shows a positive addition on the revenues in long term as it would around 20MMSCMD of gas in a period of 14-15 years. During FY11 ONGC had to bear 38.8% extra as compared to earlier practice of 33.3% of total subsidy. Of 38.8%, company had to bear 82% of entire subsidy (accounting to Rs 24,892 Crs). If government revises contribution to 33.3%, company may benefit in short term. Long Term Demand of Crude Oil and NG (Natural Gas) Major revenue is from Crude oil and gas. A temporary drop could be seen in the prices but long term prospects are quite good as demand is going to high due to wide variety of derivatives. Gas demand is increasing as an alternative fuel in India. Decrease in output as expected from KG-D6 would raise the demand further and this will benefit ONC in future.

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ONGCA Comparison with Oil India Limited

ONGC and Krishna-Godavari (KG) block

ONGC plans to invest around $4billion for ultra deepwater projects which has prospects pf two trillion cubic feet of gas from KG basin block. It is expected that production would start from 2014-15. ONGC has 90% interest in block. Rest stake is of Cairn India. This step will help to meet future demand while increasing the companys production as well.

Role of NELP
ONGC sits above 50% of total acreages allotted through NELP. 120 blocks out of 238 blocks in 8 rounds under NELP makes ONGC stand apart. With its audacious growth it is expected that the growth will continue in years to come.

Rs 4580 crore rig acquisition drive

Exhibit 3

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ONGCA Comparison with Oil India Limited

When ONGC decide to drill at a site, it first requires a drilling rig. For this it made an investment of around $1 billion for buying 14 rigs. Also it is going acquire 10 onshore rigs of Rs 900 Cr from BHEL and in pipeline are four offshore rigs, needing an investment of around Rs 3,680 Cr.

Sector Prospects
Indian oil and gas is significantly linked with the economy growth. It grew at a fair rate annually and will continue to gain momentum in coming years. This would increase Indias energy needs many times. With this context and being fact that India remains unexplored as only a small portion of basins had been explored and developed. This sector provides many opportunities. Having a strong presence ONGC is definitely going to be benefitted from this opportunity.

Concerns:
Subsidy: Government does price regulation through subsidy of petro products. ONGC has to share a part of that with the government. This acts a burden for the company. In 2011 subsidy outgo is accounted at Rs 24892 Crs compared to net profit of Rs 22824 Crs. Competition: Until few years only ONGC and OIL were major players in this business from India. But now sector has attracted many foreign and private players like Reliance, British Petroleum, Cairn, BPCL . However OIL remains to be one of the big competitor of ONGC. Its presence has increased competition in NELP rounds. Hence we can observe that ONGC has big expansion plans and demand is only going to increase in the sector.

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ONGCA Comparison with Oil India Limited

Figure 4

SWOT ANALYSIS OF ONGC

Strengths:
State-owned Efficient & Professional Management Team Growing Demographics Good Quality Of Product Maximum number of Exploration License, including competitive NELP rounds Strong Infrastructure

Weakness:
State-owned Low Production From Aging Reservoirs

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ONGCA Comparison with Oil India Limited

Opportunities:
Expansion of offshore operations Increase Economic Activity

Threats:
Ever Changing Government Policy Chinas Growing Demand Rapid Change in Technology Threat of Alternative Fuel Changes in Policy by Foreign Governments

OIL INDIA LIMITED

Key Information
Oil India Limited (OIL) is the oldest exploration & production company in the upstream oil and gas sector owned by Government of India. Its operations comprise exploration, development and production of crude oil and natural gas; production of LPG and transportation of crude oil. It owns and operates 13 drilling rigs and 14 work-over rigs. OIL undertakes transportation of crude oil in south-east Asia through crude oil pipelines. The company also provides services related to exploration and production. It also owns and operates approximately 1432km of cross country crude pipeline. It offers a wide range of onshore oil and gas production related services such as, installation, wellbore servicing, operation and maintenance of modern surface handling facilities, and well completion. The company has operational presence in India, Gabon, Iran, Libya, Nigeria, Sudan, Timor Leste, Venezuela and Yemen. It is a wholly owned Indian government enterprise and holds 26% equity in Numaligarh Refinery Ltd. OIL is incorporated in 1959 and headquartered in Noida, India. As on 31st March, 2012 the company has employee strength of 8096. Total turnover in India in USD $ of 1.6 billion.

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ONGCA Comparison with Oil India Limited

Vision Statement OIL is a Responsible Corporate Citizen deeply committed to socio-economic development in its areas of operations. Core Purpose "The fastest growing energy company with a global presence providing value to the shareholder" Oil India Limited Key Recent Developments Sep 14, 2012: Geo Global Resources Provides Operations Update. Aug 13, 2012: OIL Invites Tenders For Hiring Of Services For 2D Seismic Data Acquisition. Aug 10, 2012: OIL Invites Tenders For Laying And Lifting Of Pipeline. Aug 06, 2012: OIL Invites Tenders For Services Of Internal Inspection And Further Refurbishment Of Crude Oil Storage Tank. Aug 06, 2012: Indian Oil Companies Face Threat Of Nationalization Of Venezuelan Assets. Jul 28 2012: OIL Invites Tenders To Hire 1400 HP Capacity Drilling Rig Packages. Jul 26 2012: Geo Global Resources Provides Update On RJ20 And RJ21 Blocks. Jul 24 2012: OIL Invites Tenders For Acquiring 2D Seismic Data Of 3000 Shots. Jul 24 2012: OIL Invites Tenders For Acquiring 3D3C Seismic Data Of 9000 Shots.

SWOT Analysis Strength/core competencies

Oil India Limited has the unique distinction of being fully integrated in the up-stream business with core competencies in conducting various oil-field services activities like seismic surveys, drilling, well completion, well logging, data processing, etc., which are normally out-sourced by the oil companies. In order to ensure fast growth and value creation, the company could look into the possibilities of strengthening the entire up-

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ONGCA Comparison with Oil India Limited

stream value chain including the oil-field services business through the M & A route conducted on a global scale. As far as growth in other petroleum value chains is concerned, the company may consider expanding along the natural gas value chain, where it has some core competencies. This would include acquisition of gas fields, and diversifying into gas transportation and distribution business through pipeline and LNG business.

Weakness Problem is exacerbated by the tight schedules within which the projects have to be completed. The accelerated level of investments coincided with sustained spurt in oil prices, which most of the developing countries including India, found very difficult to pass ultimately onto consumers.

Opportunities The next obvious step of diversification would be to participate in the gas based petrochemicals value chain. These diversifications would adequately protect the company from wide fluctuations in crude oil price.

The company recorded revenues of INR95,491.8 million ($2,094.1 million) during the financial year ended March 2011 (FY2011), an increase of 7.8% over FY2010. The operating profit of the company was INR47,934.6 million ( $1,051.2 million) during FY2011, an increase of 14.6% over FY2010. The net profit was INR28,837.3 million ($632.4 million) in FY2011, an increase of 10.3% over FY2010. Threats Coal to Liquids and Synthetic Natural Gas technologies offer the prospect of supplementing natural gas as well as crude oil. (The technology components involved are well proven and require a multi party involvement for successful application.)

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ONGCA Comparison with Oil India Limited

For the past several years, riding on the high price of oil, the industry has witnessed acute shortage of offshore drilling rigs, particularly of deepwater floaters. The market for deepwater rigs is still very strong. Utilization is almost 100% and there is still a substantial gap between demand and supply. But, if low oil price scenario persists, this could dampen investment climate of deepwater exploration.

PRODUCTION AND SALES

Company has set another record of achieving the highest ever production of crude oil and natural gas.

Crude Oil

Highest ever terminal production rate of 10,765 MTPD (3.93 MTPA). Highest total production of 3.847 MT for a year, 102.3% of planned target.

Natural Gas

Highest ever total production of 2,633.29 MMSCM in a year. Highest ever total sale of 2,093.02 MMSCM in a year.

PROFIT AFTER TAX (PAT) The Company has made a record Profit After Tax (PAT) of Rs. 3,446.92 crore during the year, a growth of 19.36% over the PAT of the previous year. ACREAGE Company holds 1,56,890 sqkm of acreage, including those in India and overseas, covering seventy eight blocks, of which it holds in India 13 NELP as Operator, 1 NELP as Joint Operator, 19 NELP as Non-Operator, 2 as JV, 8 Nominated PELs, 1 CBM Block and 21

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ONGCA Comparison with Oil India Limited

PMLs. Company holds 3 blocks as Operator, 8 as Non-Operator and 2 as JV partner overseas.

OIL AND GAS RESERVES

Company has made a total of seven hydrocarbon discoveries in the Upper Assam basin during the year. This year the accretion to recoverable reserves is 9.54 MMSKL (O OEG) of oil and gas, thus achieving the Very Good targets set in this regard in the MOU with GOI. Company has a strong oil and gas reserves base as furnished below, which reflects a significant growth potential.

1P CRUDE OIL (MMSKL) 43.64 Natural Gas (BCM) OFOEG(MMSKL) 31.62 75.26

2P

3P

95.36 54.15 149.51

139.68 77.21 217.59

Exhibit 4

Financial performance of ONGC VS OIL

The total revenues of ONGC for the year 2011-12 witnessed a growth of 12.88%.Total revenues during the year 2011-12 were Rs.813400 (millions) as compared to last year 2010 -11 Rs.720557 (millions).It has also been observed from annual report of ONGC that net retained earnings have increased by 51%.Whereas if we see total revenues of OIL for the year 2011-12 are Rs.9863 crore as compared to last year 2010-11 Rs.8320.60 crore. This means that OIL has growth percentage of 18.53%. All this financial strength mentioned above shows that ONGC is a market leader of Indian oil & gas industry whereas OIL is its competitor. We can also infer that OIL growth is much faster than ONGC but still they have a long way to go. From past years data it is clearly evident that ONGC has been continuously increasing

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ONGCA Comparison with Oil India Limited

dividend per share and also their net operating profit per share has grown from Rs.77.34 to Rs.89.43 which shows that company besides growing has concern for shareholders wealth also similar findings are reported by OIL which are also raising their dividend per share every year. From profitability ratio we can infer that net profitability of both ONGC and OIL is decreasing continuously from past years which are not good signs for this industry. One can easily identify that capital structure which comprises debt and equity is continuously changing for both companies year after year according to changing market conditions.

Key Financial Ration comparison (ONGC VS OIL)

Sr No.

Ratio Type

Year 2011-12
ONGC OIL

Year 2010-11
ONGC OIL

Year 2009-10
ONGC OIL

Investment valuation Ratio

1.

a) Face value b) Dividend per share c) Net operating profit per share Profitability Ratio

5 9.75 89.43

10.00 47.50 715.9

5 8.75 77.34

10.00 37.50 483.3

10 33 281.7

10.00 34.00 394.5

2.

a) PBIT b) Gross Profit Margin (%) c) Net Profit Margin (%) d) Return on Net worth (%)

35.90 37.99 31.02 22.24

19.64 21.29 18.47 19.45

47.01 50.87 26.43 19.56

28.30 31.16 22.55 18.31

51.02 53.87 26.35 19.39

29.72 32.60 25.08 18.98

Exhibit 5

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ONGCA Comparison with Oil India Limited

Liquidity And Solvency Ratios

3.

a) Debt Equity Ratio b) Current Ratio Efficiency Ratio

4.

0.04 0.99

.. 2.91

0.18 1.36

0.07 2.39

0.19 1.39

2.95

a) Investments Turnover Ratio b) Total Assets Turnover Ratio Cash flow indicator Ratio
5.

14.88 0.65

32.28 0.97

94.69 0.58

224.4 0.69

87.82 0.58

215.0 0.69

a)Earning Retention Ratio b)Dividend Payout Ratio Net Profit

54.72 38.49

61.49 38.51

53.67 45.98

68.59 36.34

49.54 49.02

64.81 36.58

Exhibit 5 (Continues)

Asset turnover shows how much sales are generated for every unit price of capital employed. Though ONGC is market leader of Oil & Gas industry but still they have lower Asset turnover ratio as compared to Oil that means they should either increase their sales or dispose of some of the assets. Earning retention ratio for both companies is increasing year on year basis which means more percent of earnings is credited to retained earnings. in other words we can say both companies are retaining more of net income rather than paying dividends. OIL has more retention ratio every year as compared to ONGC which means that OIL retains more of earnings to their account than paying dividends.

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ONGCA Comparison with Oil India Limited

Capital structure parameters (ONGC VS OIL)

Sr No. Parameters ONGC (In Rs. Cr.) OIL (In Rs. Cr.)

Authorized Capital 1. 15000

2000

Issued Capital 2. 4277.76

240.45

8555490120 3. Shares (nos)

240454382

Face Value 4. 5

10

Exhibit 6 From above table we can infer that ONGC on the basis of capital structure parameters is giant company as compared to OIL. The maximum amount of capital authorized to ONGC by registrar of companies is Rs.15000 crore as compared to that of Rs.2000 crore of OIL.Out of total authorized capital ONGC has issued capital of Rs.4277.76 which is 28.51% whereas Oil has issued capital of Rs.240.45 crore out of 2000 which comes out to be 12% that means ONGC has greater portion of capital with their shareholders as compared to OIL.

Physical Indicators
Implications of below table: 1. The total economic resource owned by ONGC is Rs.117456.7 crore which has grown by 2.03% over last year whereas OIL has asset of Rs.17731.47 crore only but they have grown by 5.29% over last year. 2. The total sales volume of ONGC is Rs.661549 which is very large as compared to Rs. 9863.23 that of OIL.

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ONGCA Comparison with Oil India Limited

Sr No.

Indicators 2010-11

ONGC 2011-12 117,456.76 in Rs. Cr.)

Growt h Rate (%) 2010-11 2.03% 16,793.1 4 (in Rs.Cr.)

OIL 2011-12 17,731.4 7 (in Rs. Cr.)

Growt h Rate %

1.

Assets

115,068. 70 (in Rs. Cr.)

5.29%

2.

Sales volume

661549

761291

13.10%

8320.60

9,863.23

15.64% ...

3. 4.

Employees Operating capacity (production)

... 62.05 MMTOE

32,862 61.18 MMTOE -1.42%

8,634 34.29 (MMTOE) 38.10 (MMTOE) 11%

Exhibit 7

Strengths In technology ONGC VS OIL

ONGC strengths 1. Stacking of released locations and Handling over a Drilling & Oil Mining. 2. Land acquisition. 3. Preparation of approach roads and drill sites. 4. Preparation of GTO (Geological Technical Order) and other related technical data. 5. Collection of subsurface geological data during drilling 6. Monitoring of day to day drilling operations for healthy/timely well completion.

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ONGCA Comparison with Oil India Limited

10. Planning and execution of work over jobs. 11. Documentation of the data for each well. 12. Budget preparation Well completion reports, Cost reduction planning Other miscellaneous jobs related to DRILLING.

OIL strengths
1. Seismic API(2D & 3D) 2. Drilling 3. Wire line logging 4. Field development 5. Production 6. Field & reservoir management 7. OIR/EOR 8. Transportation of oil

Market presence
ONGC :
Figure 5

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ONGCA Comparison with Oil India Limited

ONGC has market presence in 15 countries and they are presently involved in 40 projects out of which 23 projects are based on exploration, 7 are related to development of oil fields and 9 are of producing oil wells.
Sr No. 1 2 3 4 5 6 7 8 9 Country Vietnam Sudan Sudan Russia Russia Colombia Syria Venezuela Brazil Project Block 06.1 (offshore) GNPOC (IJV) Block 5A (onland) IEC Sakhalin-I (offshore) MECL (IJV) Himalaya (4 PSCsonland) PIVSA (IJV) BC-10 Current asset Producing Natural Gas & Condensate Producing Oil Producing Oil & under further development Producing Oil Producing Oil & Gas, and under further development Producing Oil Producing Oil & Gas. Producing Oil Producing Oil

Exhibit 8

OIL
OIL has market presence in 8 countries which includes Libya, Egypt, Nigeria, Sudan,

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ONGCA Comparison with Oil India Limited

Crude Oil & Natural gas production ONGC VS OIL

Natural gas production of ONGC vs OIL (in Billion cubic meter)

Exhibit 9 In indian oil and gas industry total production of natural gas in yr 2012 was 47.56 BCM against 52.22 BCM in yr 2011 that means there was decline of 9% in gas production in india. Ongc is still the largest Producer of natural gas in india with 54% market share as compared to oil which has only 4.5% market share. Earlier in natural gas production ONGC had market share of 79.2% during year 2005-06 as compared to 10% of OIL

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ONGCA Comparison with Oil India Limited

Crude oil production of ONGC Vs OIL

(in million metric tonnes)

Exhibit 10 The total production of crude oil production during year 2012 in india was 38.09 million metric tonnes Which is 1% higher than year 2011(37.68). ONGC produced 33.13 MMT of crude oil in year 2012 which is less as compared to its last year 2011(34.04) whereas OIL produced 3.85 MMT of crude petroleum in year 2012 which is higher as compared to 3.59 MMT of last year. Earlier ONGC had market share of 81.5% in crude oil production during year 2005-06 whereas OIL has market share of 10% But today scenario has changed ONGC enjoys a market share of 71% in year 2011-12 only whereas Oil has increased its market share as compared to last years.

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ONGCA Comparison with Oil India Limited

Downstream Market share ONGC VS OIL :

Figure - 8

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ONGCA Comparison with Oil India Limited

Research & Development capabilities

ONGC
1. 2. 3. 4. 5.
6.

Development of well plan for high dip, high pressure in Cachar field. Well plan for geothermal wells in india and abroad. Techno-economic study of using 7" liner completion instead of 5-1/2" casing upto surface. Expertise in drilling fluid technologies, cementation and cementing materials. Providing solutions to the down hole drilling problems. The company with expertise in well completion, deep water production and subsea technologies, artificial lift system, sand control, water shutoff, stimulation, process facilities design & optimization completed around 120 research and development projects all over globe.

OIL
1. A premier institute focusing research on petrochemicals ,residue gasification coal to liquid ,gas to liquid, alternative fuels, synthetic lubricants, Nano technology etc. 2. 3. 4. 5. Oil has R&D capabilities in Diesel hydro testing technology. India first hydrogen-CNG dispensing station was commissioned by oil. Oil in collaboration with Baba atomic research center developed 12 inch instrumented pig for use in gauging cross country pipelines. Indalin + technology for conversion of naphtha /condensate to LPG/MS.

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ONGCA Comparison with Oil India Limited

Conclusion
When it comes to oil and gas industry specifically upstream sectors the two Indian giants ONGC & OIL have always dominated this sector. These two companies have always competed with each other trying to beat to get the lead. As per the present scenario there is a clear domination of ONGC & Oil seems far behind. Though both being govt. run companies enjoys almost same technology, subsidy & other regulatory benefits but still there is a huge gap in all aspects whether in EPS, Revenue or its no of employees. But the globalization has made certain changes which have resulted into the ingression of foreign players. The scenario is going to change rapidly. With OALP in the pipeline it is expected that private players will be giving major challenge to ONGC. Undoubtedly the competition is going to be intense in near future and to maintain their dominance in this sector these companies (ONGC & OIL) have to make serious efforts.

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ONGCA Comparison with Oil India Limited

References
1) Oil India Limited Business Operations, Strategies, SWOT and Financials OG Analysis, Retrieved on 11 December 2012. http://www.researchandmarkets.com/research/fdaa7b/oil_india_limited 2) 53rd Annual Report of Oil india limited on the economics times Retrieved on 13 December 2012. http://economictimes.indiatimes.com/oil-india-ltd/directorsreport/companyid4547.cms 3) Oil india limited balance sheet and profit and loss account of last 5 years from the economic times Retrieved on 11 December 2012. http://economictimes.indiatimes.com/oil-india-ltd/profitandlose/companyid4547.cms 4) Will the subsidy burden, overburden this oil and gas major? Retrieved on 6 Dec 2012. http://stockshastra.moneyworks4me.com/learn/about-ongc-company-fundamentalanalysis-report/ 5) Financial Analysis of ONGC from scribd Retrieved on 6 December 2012. http://www.scribd.com/doc/19208923/Financial-Analysis-of-ONGC 6) Annual report of ONGC India 2012 Retrieved on 13 December 2012. http://www.ongcindia.com/ 7) Annual report of Oil India limited 2012 Retrieved on 13 December 2012. http://www.oil-india.com/ 8) Corporate presentation of ONGC in 2012 Retrieved on 11 December 2012. http://www.ongcindia.com/

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ONGCA Comparison with Oil India Limited

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