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ONGC SWOT Analysis-IV - Views on News from Equitymaster

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ONGC SWOT Analysis-IV
Dec 17, 2007

In the previous articles , we looked at the strengths and weaknesses of ONGC. In this article, we look at the opportunities available to the company. Opportunities
Increased domestic exploration and development
ONGC has intensified its exploration and development efforts, primarily through a significant expansion of its deep-water exploration activities, with the goal of increasing its hydrocarbon reserves substantially. The company has taken a major initiative, the deep-water campaign, or “Sagar Sammriddhi”, to explore and develop the deepwater acreage granted to it under the NELP. The deep-water campaign involves the deployment of advanced deepwater drilling ships and the involvement of international consultants for geological and geophysical studies and deep-water drilling, technology, testing and completion services.

In addition to its deep-water program, the company intends to increase its efforts to explore existing shallow-water offshore basins as well as explored and unexplored onshore basins.

Improved oil and gas recovery and gas utilization levels
ONGC has implemented a number of advanced recovery technologies to redevelop its maturing fields and improve recovery of its crude oil reserves with a goal of substantially increasing its current average recovery rates. These measures include the greater use of extended-reach horizontal drilling, side tracks, infill drilling, water injection and other advanced techniques, as well as technologies using chemical and thermal methods to enhance oil recovery. The company has laid particular importance to the redevelopment of Mumbai High, its largest producing oilfield.

Increased international production
ONGC intends to increase and diversify its production by significantly expanding its international output of crude oil and natural gas. To meet this goal, the company plans to exploit its existing overseas exploration and production acreages, pursue attractive opportunities to acquire or obtain participation interests in additional producing assets, and obtain exploration and development concessions in promising overseas locations. The company already has presence in Vietnam, Sudan, the Russian Far East, Myanmar, Iran, Iraq, Libya and Syria. The company intends to identify additional areas in these and other foreign countries to pursue attractive exploration and production opportunities. In those geographic areas where it has limited experience and expertise, it intends to structure its investments as joint ventures, alliances or partnerships with entities possessing relevant experience and expertise.

Diversified operations through downstream integration
ONGC is pursuing a strategy of vertical integration in order to diversify its sources of revenue, currently concentrated in oil and gas production, into downstream sectors such as refining, processing, distribution and retailing, and to improve its profitability by extending our operations into higher-margin segments of the product value chain. It has implemented this strategy to date through several important investments. It has a majority shareholding in MRPL and an equity interest in Petronet MHB Limited, the owner and operator of the Mangalore-Hassan-Bangalore pipeline. It also has a stake in Petronet LNG Ltd. The company intends to seek and develop additional vertical integration opportunities as they arise.

We shall continue with our SWOT analysis in the next article.

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