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ONGC: Embracing Sustainability
ONGC Aims To Be Global Leader In Integrated Energy Business Through Sustainable Growth
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The largest crude oil and natural gas company in India, Oil and Natural Gas Corporation (ONGC) contributes 75 per cent to India’s domestic production with a consolidated turnover RS 4,53,461 crore for FY19 (up 25 per cent from Rs 3,62,246 crore in FY18).
The last fiscal was yet again one of growth for ONGC and its business. Strong leadership at the top coupled with healthy growth in revenue and output has once again catapulted ONGC among the companies that have a found a place in BW Businessworld’s annual list of Most Respected Companies.
During the year, ONGC made a total of 13 discoveries of which eight were on land and five offshore. More importantly, the company monetised five of those discoveries during the year itself. Reserve accretion for the year stood at 63.02 mmtoe (million megatonne of oil equivalent) on 2P basis and a reserve replacement ratio of 1.41 means that the company replenished more than the total quantum of hydrocarbon produced during the period.
In terms of financial performance, ONGC recorded a gross revenue of Rs 1,09,654.6 crore in FY19 compared to Rs 85,004.1 crore in FY18. Net profit touched a record high at Rs 26,715.8 crore (an increase of 34 per cent compared to FY18 which was at Rs 19,945.3 crore). The company realised $68.19 per barrel for crude sold in the domestic market in FY19 as compared to $55.19 per barrel in FY18.
It recently adopted Energy Strategy 2040, which, as CMD Shashi Shanker stated in the annual report, “envisions ONGC as a diversified energy company with strong contribution from non-E&P businesses; 3x revenues and 5-6x market capitalisation.” Shanker further stated that Strategy 2040 aims to transform ONGC into a future-ready energy entity, one that positions itself well to respond to the challenges and opportunities of the tomorrow’s energy scene. Of course, technology, digitalisation of operations, meaningful partnerships and organisational restructuring will play critical roles in the successful implementation of the plan, he added.ONGC stands out in its persistent pursuit of new oil and gas reserves. When upstream companies the world over had turned conservative about investing in new exploration ventures over the past few years because of plummeting crude prices, ONGC has persistently been prospecting for oil and gas reserves.
ONGC began life as the Oil and Natural Gas Directorate of the Union Ministry of Natural Resources and Scientific Research in 1955. The directorate was converted into a commission and christened Oil & Natural Gas Commission on 14 August 1956. In 2010, the Indian government conferred the Maharatna status on ONGC.
One of the most valued E&P companies in the world, ONGC accounts for approximately 75 per cent of India’s crude oil production besides being one of the highest profit-making and dividend-paying enterprises. Its international arm, ONGC Videsh, has participation in 41 projects across 20 countries. Acclaimed for its corporate governance practices, Transparency International has ranked ONGC 26th among the biggest publicly traded global giants.
In fact, Shanker pointed out that even through the downturn, when the service sector costs deflated, ONGC had not implemented any cuts in its budget. “While the focus on ‘doing more with less’ has gained substantial support in the E&P community in the aftermath of the oil price crisis, it is also true, at least in the case of our country, that producing every additional barrel of oil has also become more difficult, complex and costly.”
The energy giant believes in impacting the lives of people positively, and with a CSR spend of Rs 614 crore in FY19 it targeted areas such as healthcare, poverty, environment, women empowerment and also heritage preservation.