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A look at ONGC-I - Views on News from Equitymaster
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A look at ONGC-I
Sep 24, 2007

Over the next few articles, we will look at ONGC’s fundamentals using the accounting equation framework to capture the following questions:

  1. Where does the company source its money? (Equity and liabilities)
  2. How is the money then deployed? (Assets)

  3. What does the deployment lead to? (Expenses and Income, resulting in a profit or loss).

Assets
We begin with assets first because they are the most important element in understanding ONGC, which primarily engages in the exploration of oil and natural gas (upstream activity). However it also has refining, petrochemicals, power and SEZ assets.

Upstream assets

  1. Domestic oil and natural gas fields held:
    • Independently

    • Through joint ventures

    • Through production sharing contracts (contract for allocation of reserves discovered) with the government in blocks under New Exploration Licensing Policy (NELP-a government initiative to attract private investment in exploration).

  2. International oil and natural gas fields held through:
    • Subsidiary- ONGC Videsh Limited. (OVL)
    • Subsidiaries of OVL
    • Joint ventures of OVL
Downstream assets
  1. Refineries held through:
    • Subsidiaries-MRPL
  2. Petrochemical complexes through:
    • Joint ventures-OPal & OMPL
Other non-hydrocarbon assets
  1. Upcoming power plant in Tripura
  2. SEZ projects at Dahej, Mangalore and Kakinada.

Important financial assets

  1. Equity investments in Indian Oil Corporation and GAIL.

  2. Government of India oil bonds.
  3. Fixed deposits with banks.

Domestic upstream assets
Oil and gas deposits are found in fields (accumulation of oil and gas) within basins (geological depressions on the Earth’s surface filled with sedimentary material).

Independently
Where? The principal domestic basins in which ONGC has independent operations are -Mumbai Offshore, Cambay, Krishna Godavari (KG), Cauvery and Assam & Assam-Arakan. The company is also present in CBM-BPM Basin near Kolkata and Frontier Basin near Dehradun. It may be noted that ONGC is also present in these basins through several joint ventures.

Basins in which ONGC is present
Name States Area (Sq. Km) Discovery Production Stage
Mumbai Offshore Basin Gujarat, Maharashtra 116,000 1974 1976 Mature & declining
Cambay Basin Gujarat 51,000 1958 1961 Mature & plateaued
Krishna Godavari Basin Andhra Pradesh 52,000 1984 1986 New & increasing
Cauvery Basin Tamil Nadu 55,000 1985 1989 New & increasing
Assam & Assam-Arakan Basin Assam, Tripura, Nagaland 116,000 1960 1965 Mature & plateaued

How many? ONGC operates 330 fields independently in these domestic basins.

State-wise/Basin-wise oil and gas fields as on 1.4.2006
State Basin Oil Fields Gas Fields Oil & Gas Fields Total Fields
ONSHORE
Gujarat Cambay 2 7 83 92
Assam Upper Assam 0 0 29 29
Assam A&AA 0 4 2 6
Rajasthan Jodhpur 0 7 0 7
Andhra pradesh K.G. Basin 0 32 11 43
Tamil Nadu Cauvery 0 7 18 25
Tripura AAFB 0 7 0 7
Nagaland A&AA 2 0 1 3
OFFSHORE
East Coast Cauvery Offshore 0 1 3 4
East Coast KG Offshore(Shallow) 0 4 5 9
East Coast KG Offshore(Deep) 0 9 2 11
East Coast Andaman 0 1 0 1
West Coast Cambay 0 0 2 2
West Coast Mumbai Offshore 4 23 59 86
West Coast Kutch 0 4 1 5
Total 8 106 216 330

Joint Ventures
ONGC has entered into 61 joint ventures for exploration and production out of which 44 of the JVs are operated solely by the company, 2 are operated jointly and 15 are operated by others. ONGC has varying participating interests (share of production) in these JVs.

NELP Blocks
The company has entered into PSCs with the government of India in respect of 29 NELP blocks where the company has 100% participating interest.

This is a brief overview of ONGC’s domestic upstream assets. In the next article, we shall profile the oil and gas reserves that the company holds in these assets.

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