ONGC pursuits & perspectives R S Sharma Chairman & Managing Director, ONGC Chairman, ONGC Group of Companies 14th DSP Merrill Lynch India Investor Conference New Delhi 10th February 2010
Presentation overview Industry scenario ONGC Introduction ONGC pursuits p Growth perspectives p p 2
Industry y scenario 3
Unprecedented demand In last 25 years World energy consumption increased by 70% CAGR 2.1%; Asia Pacific: 4.8%; Europe & America: 0.2% 4,500 4,000 2003:Asia-Pacific the largest 3982 energy consuming region 3,500 3,000 Million…
West East Energy consumption centre shifts from West to East due to demand from developing economies 1970 2008 Europe & North Eurasia Europe America 26% & 25% Eurasia North 43% America 36% Asia Middle Pacific East Asia…
Crude o oil il prices Speculators drove the prices up, subsequently, massive de-leveraging by financial institutions contributed to collapse in Crude oil prices Petro-dollars in 160 commodity exchanges Crude oil prices Dated…
The meltdown Crude oil prices Dated Brent (S/bbl) y Financial crisis led oil price crash 160 y Weaker revenue streams for oil 140 companies; less internal accruals 120 y Shrinking E&P investment 100 80 y Testing time for smaller…
Supply scenario Non-OPEC fields (excl. FSU) which were producing in 2000 declined 9.4% a year. FSU countries decline rate 6.6% Decline rate increasing steadily since last five years Percent decline in production from fields…
Supply scenario D Dependence d on OPEC crude d to t increase i (mmb/d) Demand 120 1.5% 1.0% 0.5% 100 80 OPEC Liquids 60 40 20 Non-OPEC Liquids 0 1995 2000 2005 2010 2015 2020 2025 2030 Non-OPEC Crude,…
Industry scenario y Economy showing signs of revival y Consequently, energy demand is bound to go up y Energy players task is cut outt 10
India: Growing demand 1633 MTOE 1500 1000 404 MTOE 500 0 2007* 2011 2016 2021 2026 2031 Coal Oil Natural Gas Hydro Nuclear y With development of East Coast, Coast new & marginal fields of West coast, CBM, UCG, and…
India: Dependence on imports M-East 72% Latin at Am 3% Africa Af i 19% FSU Asia Pac 2% 4% x Over dependence on oil & gas leading to import dependence from 70-85% 70 85% x 92% Import dependent on geo-politically…
India: Level of exploration Poorly explored Indian sedimentary basins with low drilling density require technology & capital intensive accelerated exploration Exploration initiated: 44% Estimated investment* required US50…
India: Hydrocarbon reserves x India with 16% of worlds population, currently known to h have with ith only l 0.5% 0 5% off worlds ld oil il & 0 0.6% 6% off gas reserve x Oil & Gas Production only 1% of the world x R/P Ratio…
ONGC Introduction
ONGC: Historical Profile 1955 Oil and Gas Directorate, Directorate GoI 1956 Oil & Natural Gas Commission 1959 Autonomous Statutory Body 1994 Public Limited Company 1997 A Navaratna PSU 2000 A Flagship Oil PSU 2010…
Oil & Natural Gas Corporation (ONGC) Shareholding pattern* Ranked 402 largest company in world - Fortune Global 500 list 2009 PSUs 10.09% FIIs Ranked a ed No. o 3 E&P & Company Co pa y in World o d 5.34% - Platts Top 250…
ONGC accounted for 79% of Indian domestic oil & gas production in FY09 Crude Oil Production Natural Gas Production (2008-09) (2008-09) OIL 7% OIL 10% ONGC ONGC 77% 81% Pvt./JV Pvt./JV 16% 9% Includes ONGCs share of…
Strategic Goals 1st Strategy Meet: Mussorie, July 2001 To double Reserve Accretion from 6 to 12 BtOE by 2020 To improve Recovery Factor from 28% to 40% by 2020 To source 20 MMTPA equity Oil & Gas by 2020 years 21
Intensified exploration FY09: In-place hydrocarbon volume: 284.81 MTOE, highest in last 2 decades Ultimate Reserves: 68.90 MTOE, highest in last 18 years 300 285 250 208 200 182 170 MToE 147 143 150 136 137 137 128…
Reserve Position As on 01.04.2009, Total Reserves (3P): 1,591.53 MTOE 1,592 Oil Gas Total 1P 2P 3P 1 139 1,139 1,344 ONGC 569.51 569.27 1,138.77 930 950 720 PSC JV 22.93 23.06 45.99 407 371 46 OVL 236.75 170.02 406.77 44…
Sustaining production Marginal shortfall in production during FY09 FY 09 Aggregate: (-1%); ONGC: (-0.9%) 70 MTOE 61.81 61.22 60 50 40 30 20 10 0 FY FY'00 00 FY FY'01 01 FY FY'02 02 FY FY'03 03 FY FY'04…
Arresting Decline Natural N t ld decline li arrested t d tto ggreatt extent t tb by IOR/ EOR campaign & redevelopment projects Investment more than Rs. Rs 300 Billion 14 Projects completed 7 under implementation Cumulative…
Arresting Decline IOR/ EOR C Campaign i yielding i ldi results lt 35 Incremental gain from IOR/EOR in FY09: 7.45 MMT 30 25 Cumulative Gain through IOR/ EOR 48 MMT 20 Offshore 15 10 5 Onshore 0 15 major…
Indian matured fields defy global trends 27
OVL: Equity Oil & Gas 6 Under 39* Projects in 15 Countries 23 Exploration Development 9 Producing Venezuela 1 2 R i Russia Cuba 2 2 3 Myanmar Colombia 5 1 1 2 Vietnam Brazil 4 1 Libya 3 1 Iran Nigeria 2 Nigeria JDZ 1 1…
OVL: Overseas Reserves FY09: Ultimate Reserve accretion 135.08 MTOE the highest-ever 135.08 R Reserves position i i (as on 31.03.09) (MTOE) Oil Gas O+OEG Ultimate 267.77 180.05 447.83 46.73 Reserve Cumulative 31.02…
MRPL: A Mini Ratna Ratna 6 Installed capacity 9.69 9 69 MMTPA 6 Being raised to 15 MMTPA with capability p y of handling g low grade, low price crude oils (API: 24-43; High sulfur: up to 3%; High TAN: up to 1.5%) 31
MRPL Capacity 130% (12.59 MMT) utilization Highest-ever Rs. 427.19 billion (+14%) Turnover Highest ever Highest-ever Rs Rs. 11.93 11 93 billion (-6.4%) ( 6 4%) PAT Fall due to inventory valuation loss 32
Financials: ONGC Group Turnover, PAT, Net worth R Billion Rs. Billi 1093.94 7.4% Turnover 1018.35 862.68 197.96 0.4 % PAT 198.72 177.7 915.73 774.13 18% Networth 661.99 2008-09 2007-08 2006-07 33
SWOT 6 Capability & experience in E&P W 6 Matured fields S operations T E R 6 Oil and gas reserves & infrastructure A 6 Ageing infrastructure & workforce E K N G 6 Strong balance sheet N 6 Increasing operational expenses T E H S 6…
Growth Perspectives p
XI Plan (2007- (2007-12) XI Plan (2007-12) XI Plan outlay Overseas Integration E&P Rs.1,300.43 billion against 453.33 41.89 3% Rs. 740.60 billion in X Plan 35% Domestic E&P 717.95 55% MRPL 87 26 87.26 7% Domestic…
XI Plan (2007- (2007-12) ONGC, XI Plan outlay*: Rs. 759.84 billion 265 243 218 185 Capex in first three years 179 177 estimated to be Rs.637 billion 150 (84% of total outlay) 124 123 0 2007-08 2007 08 2008-09 2008…
Envisaged growth Crude oil production New major additional oil producers 2008-09 (Actual) : 25.4 MMT Cluster 7 WO Series B-193 2012-13 (Likely) : 28 MMT D-1 B-22 Additional Natural Gas production New major additional gas…
New Sources of Energy Coal Bed Methane (CBM) . production commenced since Jan 2010 39
Value--multiplier projects Value ONGC Petro Petro-additions additions Ltd. Ltd ONGC Mangalore Petrochemicals Ltd. ONGC Tripura Power Company Ltd. 40
Alternate Energy ONGC Energy Centre Trust Holistic Research beyond H d Hydrocarbons b Honble Prime Minister laid the foundation stone of Rajiv Gandhi Urja Bhavan- to house ONGC Energy Centre Trust 41
Report of the Expert Group Mr. Kirit S. Parikh, Chairman of the Expert Group 6 MS and HSD prices to be market determined. determined 6 Additional Excise Duty for HSD car owners. 6 Subsidy on LPG/ SKO through Smart Cards. 6…
Gas business under- under-recoveries 5.73 5.57 2008 09 with 2008-09: ith ROCE as per TC /mmbtu 4.60 120 4.20 Rs. billion 100 23.22 ROCE as per TC 80 60 1.93 40 80.74 56 51 56.51 20 0 Total cost Realization Loss -20…
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