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Corporate presentation feb2011

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  • 1.Corporate Presentation

2. DisclaimerThis Presentation is for information purposes only and does not constitute an offer, solicitation or advertisement with respect to the purchase or sale of anysecurity of Oil and Natural Gas Corporation Limited (the "Company") and no part of it shall form the basis of, or be relied upon in connection with, any contractor commitment whatsoever.This Presentation is being furnished to you solely for your information and may not be reproduced, redistributed or published, directly or indirectly, in whole orin part, to any other person.This document contains certain forward-looking statements relating to the business, financial performance, strategy and results of the Company and/or theindustry in which it operates. Forward-looking statements are statements concerning future circumstances and results, and any other statements that are nothistorical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates","targets", and similar expressions. The forward-looking statements, including those cited from third party sources, contained in this Presentation are based onnumerous assumptions and are uncertain and subject to risks. A multitude of factors including, but not limited to, changes in demand, competition andtechnology, can cause actual events, performance or results to differ significantly from any anticipated development. Neither the Company nor its affiliates oradvisors or representatives nor any of its or their parent or subsidiary undertakings or any such persons officers or employees guarantees that theassumptions underlying such forward-looking statements are free from errors nor does either accept any responsibility for the future accuracy of the forward-looking statements contained in this Presentation or the actual occurrence of the forecasted developments. Forward-looking statements speak only as of thedate of this presentation. As a result, the Company expressly disclaims any obligation or undertaking to release any update or revisions to any forward-lookingstatements in this presentation as a result of any change in expectations or any change in events, conditions, assumptions or circumstances on which theseforward-looking statements are based. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the accuracy, completeness or correctness of anyinformation, including any projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions ormisstatements contained herein and, accordingly, none of the Company or its affiliates, its advisors or representatives or any of its or their parent or subsidiaryundertakings or any such persons officers or employees accepts any liability (in negligence or otherwise) whatsoever arising directly or indirectly from the useof this Presentation.By attending this Presentation you acknowledge that will be solely responsible for your own assessment of the market and the market position of theCompany and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of theCompanys business. This Presentation speaks as of its date. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall,under any circumstances, create any implication that there has been no change in the affairs of the Company since such date.This presentation may not be used, reproduced, copied, distributed, shared, or disseminated in any other manner. This presentation does not constitute anoffer or invitation to purchase or subscribe for any shares in the Company and neither any part of it shall form the basis of or be relied upon in connection withany contract or commitment whatsoever.2 3. ONGC Group: An IntroductionIndias Flag Bearer Significant role in defining Indias hydrocarbon landscape Largest domestic exploration acreage and mining lease owned (PEL:51%, ML: 67% andfor Energy Security reserves 58%)(1) as on March 31, 2010With Global Footprint Significant overseas investments with 34 projects in 15 countries(2) One of Indias most profitable enterprise (3) Most valuable Indian public sector enterprise by Market Capitalisation (4)Global Size & Scale MCap of INR 2,517 bn(4), Revenues: INR 1,086 bn, EBITDA: INR 475 bn; Profit:INR 194 bn in FY10 Produced 60.9 mtoe of oil / oil equivalent gas, refining capacity of 12.5mtpa and extracted 3.4mtpa of LPG, Naptha etc from gas / condensate in fiscal year 2010 Presence across the hydrocarbon value chain and strength in Exploration & ProductionIntegrated Oil & Gas In-house capabilities in all facets of upstream oil and gas businessCompany Presence across E&P, Refining, Petrochemicals, Power, LNG, & diversification into new energy sources Credit rating of A2 (Stable) from Moodys and LAAA from ICRAGlobally Acclaimed # 1 E&P company in the world(5) ; # 18 energy company in the world(5) # 155 in the Forbes Global 2000 list and a Fortune 500 Company1. Source: MoPNG; PEL Petroleum Exploration License, ML Mining Lease; Reserves only for ONGC operated fields2. Other than the 34 projects mentioned above there are 6 projects/blocks which are currently being relinquished by the ONGC Group3. Based on Net Profit For Financial Year Ending March 31, 2010.4. As on Feb 1, 2011, Bloomberg5. Platts3 4. ONGC Group: Presence Across The EnergySpectrumE&P, the core business Indian E&P Indian E&POverseas E&POverseas E&P Refinery RefinerySEZ SEZ Value-chain Value-chainPowerPower (100%)(71.6%) (26%) (50%)(26%)(23%) (49*%)Services ServicesJoint VenturesJoint Ventures Primary Subsidiaries Primary Subsidiaries(49%)(100%) (23%)(12.5%)(100%) (21.5%)(100%) (50%)ONGC Amazon Alaknanda Ltd (100%)Jarpeno Ltd (100%)Carabobo One AB* OMPL: 46% ONGC & 3% MRPL4 5. ONGC Group: A Rich Heritage 1999: Stake sale by GOI to 2011: Shale Gas IOC (10%), GAIL (2.5%) 2010: Maharatna Status 1997: Navratna Status2010: CBM, Carabobo (Venezuela) 1993/94: Divestment of 2% 2008: Acquired Imperial Energy equity by GoI; 2% offered to employees 2006: OPAL, OMPL, MSEZ & OTPC 2004: FPO (10% GOI Divestment) 1974: 1st offshore discovery -2010 Bombay High 2003: Production in Sudan & Vietnam begins 1965: Established OVL 2003: Acquired MRPL 1956: Inception of Oil & Natural Gas Commission Group CAGR (FY02FY10) (1)Turnover: 20.8%2000Net Profit: 15.3%1950ONGC Group is evolving into an integrated Oil & Gas Company with a Global Footprint(1) CAGR figures for ONGC Group5 6. Key Highlights 1 Industry Fundamentals Remain Intact6 2Experienced Management Team;With Successful Track Record & Indias National Oil Champion Robust FinancialsPoised for the5 Integrating Across E&P and Future 3 Significant International FootprintEnergy Value Chain coupled with with Demonstrated Track RecordNew Growth Diversification 4 World Class Operations and LargeReserve BaseONGC is Well Positioned to Deliver Long Term Growth6 7. Macroeconomic Environment OverviewWorld Economy is on the Path to Recovery.. Supported Primarily by Emerging Growth Engines 10Emerging10.3%8 6.5%9.7%9.6% 9.5%6 World 4.5%4%8.4%8.4%2Developed2.5%0 (2) (4) (6) 2001 2003 20052007 2009 2011 2012CY2010ECY2011ECY2012E Source: IMF- Overview of the World Economic Outlook Projections, Jan 25, 2011Source: IMF- Overview of the World Economic Outlook Projections, Jan 25, 2011... Resulting in Global Energy Consumption GrowthCrude Price Trends(btoe)IPE Brent Close (US$)140120Brent (US$/bbl)100Current: $99/bbl 80 5yr avg 76.2/bbl 60 40 20- 2006200720082009 20102011 IPE Brent Close (US$)Source: BP Statistical Review of World Energy June 2010Source: Current price as on Jan 31, 2011 as per Bloomberg7 8. Robust Domestic FundamentalsIndias Oil and Gas Consumption is Amongst the Highest in the World India is the 4th largest Oil consumer in the WorldOil Consumption in 2009 (mmt)Gas Consumption in 2009 (bcm)843 647405 390 198149125122 114104 104132 97 898787 78 77 7270 5952Japan IndiaChinaRussia Arabia South Korea CanadaBrazil US Germany SaudiIranJapan India Italy Russia CanadaArabia Mexico US UKUAE GermanySaudiSources : BP Statistical Review of World Energy June 2010 Sources : BP Statistical Review of World Energy June 2010Comparatively Low Per Capital ConsumptionImplying Significant Long Term Consumption Growth(mtoe)Consumption (MTOE)Sources : World Energy Outlook 2009Sources : World Energy Outlook 20098 9. Untapped Opportunities in India Despite Increasing Production, India Remains a Net Importer of Crude (1) Significant increase in Net Crude Imports over the last 10 years (153 mmt in FY10) Import value currently stands at INR 3.7 tr (FY10) One of the largest net importers of oil globally, imports ~77% of its oil needs based on consumption (1)Indias Hydrocarbon Reserves are a Small Fraction of Global Reserves (2)Oil India, GasROW, India,ROW,0.4%15%0.6% Iran,22% 0.44% of Worlds Oil reserves 16%Qatar, 0.60% of Worlds gas reservesRussia, 14%24% OPEC, FSU,77%31%Domestic Resources Remain Significantly Under-explored (3)Poorly ~1.79 mn sq. km. of sedimentary basins in IndiaExplored, 22% Explored, 22% Only 22% of basins well exploredUnexplored, ~1.35 mn sq. km. of deep waters sedimentary area 12% ExplorationInitiated,44%1) Source: MoPNG2) Sources : BP Statistical Review of World Energy June 20103) Source: DGH report 20109 10. Indian National Oil Champion : ONGC Domestic OperationsIndia Footprint Highest share of hydrocarbon acreage in IndiaDiscoveries SinceProspects Pools1 FY09 Western Onshore 7 3 Assam Shelf 2 1 2 Discovered 6 of 7 Domestic Producing Basins (1)6 Tripura 2 0 37Mahanadi 1 08 21 new notified discoveries in FY10 & 19 in FY11(2)KG Offshore2 2 Western Offshore 26 49KG Onshore 6 2 10 11 All Crudes are Sweet and large portion being lightCauvery1 35 OnshoreRegionONGC Operated Area 1,000 km 2)(1,000 km 1 Himalaya & Ganga Valley14.9 2 Rajasthan 0.2 158 bn of capital / exploration in progress(3) 3 Cambay9.4 INR Mumbai Offshore40.6 4 Kutch - Saurashtra 43.8 Kerala - Kinkan 108.8 Krishna - Godavari101.3 5 Cauveri84.9 Mahanadi - Bengal57.6 6 Assam - Arakan 16.6 INR592 bn of capex plan over FY11 and FY12 (4) 7 8 Mahanadi - Bengal - PurneaSatpura - S.Rew a - Vindhyan - 6.8Pranhita - Godavari 15.7 1) Source DGH. Category 1 sedimentary basins9 Krishna - Godavari 4.9 2) Through Jan 27, 2011 3) As of FY10 10 Cauveri5.4 4) As approved by the board of directors11 Andaman - Nicobar Offshore70.3Source: DGH; All data as on March 31, 2010.10 Principal Producing AreasDiscoveries as of Jan 27, 2011 11. ONGC: Domestic Strength in Acreage and Production ONGC awarded more than 50% of NELP blocks Cairn OIL OthersOthers4% 2% 9% Cairn 15% 10%ONGCOIL 51%13% RILRIL ONGC28% 1% 67% PEL Area (Sq. km)ML Area (Sq. km) 1) Note: PEL Petroleum Exploration License, ML Mining Lease; Includes NELP and nomination blocks 2) Source: DGHDomestic ReserveCrude Oil ProductionNatural Gas Production Strong Reserves AccretionReplacement Ratio (RRR) (FY10)(FY10) Highest in last 2 decades in RRR more than 1Others ONGC operated domestic10%OIL fields11% Others41% ONGC 54% ONGC 79%OIL5%Note: Excludes JVs ; RRR for 3 P reserves Note: Excludes JVs ; Reserve accretion for 3PSource MoPNG ; ONGC figures include its share in JV11 12. Significant International Footprint (OVL) 34(1) projects across 15 countries Access to International Partners / NOCs Sole Operated (11); Jointly Operated (6) and Amongst the largest overseas investors from India Non Operated (16) INR535 bn 20 years of 1P and 40 years of 2P reserves Net worth of INR116 bn Production accounts for ~11% of Indias FY10 productionSyria 1 1 Russia2 2 CubaLibya1Iraq1 Venezuela 1 1 2MyanmarNigeria2 Colombia 15Iran111 Vietnam Brazil151 Nigeria JDZ Sudan 2Egypt 19 Producing Assets 4 Under Development Assets 20 Exploration Assets Note: 34th Asset is Sudans 741km long product pipeline (1) Other than the 34 projects mentioned above there are 6 projects/blocks which are currently being relinquished by the ONGC Group12 13. Strong Relationship and Access to International Partners / NOCPartnership Across Regions and with International NOCs and Oil Companies SodecoStatoilRosneftTotal BP ExxonRepsol YPFCNPC ShellSinopec DaewooIOCL PV MOGEOIL ECOPETROL SudapetGAIL KOGASBPCL PetronasPDVSAPetrobras13 14. OVL : Key InvestmentsRussia: SudanVietnam Sakhalin-I OVL 20% stake GNOP (25%)Block 6.1 (45%) Exxon (Operator)30% , Sodeco CNPC 40% , Petronas 30%, BP (Operator) -35%, PV-20% 30% , Rosneft (20%) Sudapet 5% Produced Oil of 0.042mmt during FY10 Produced Oil of 1.532mmt during Produced Oil of 2.126mmt during Produced Gas of 1.97bcm during FY10 FY10 FY10 Produced Gas of 0.39bcm duringBlock 5A (24.125%) FY10 Petronas 67.9%, Sudapet 8% Produced Oil of 0.247mmt duringFY10 Venezuela ColombiaSyria San Cristobal (40%) MECL (50%)AFPC (Himalaya Energy (Syria) B.V. 33.3% to 37.5%) CVP (60%) Sinopec (50%) Himalaya Energy is a 50%-50% JV of Produced Oil of 0.704 mmt during FY10 Produced Oil of 0.409 mmt during FY10 OVL and CNPC Shell 66.7% to 62.5% Produced Oil of 0.718 mmt during FY1014 15. OVL : Key Investments (Contd) ImperialCarabobo BC-10, BrazilEnergy Venezuela Producing Asset in West Deepwater offshore Block Ownership interest developing SiberiaCarabobo blocks Consortium: ONGC 15%, Shell 50%, Acquired in Jan 2009 for Petrobras 35% ONGC 11%, Oil 3.5%, IOCL US$2.1 bn 3.5% First oil production on July 12th Production of 0.543 mmt in 2009 Repsol 11%, Petronas11% & FY10 PDVSA 60% Production of 0.192 mmt in Extension of one of the fieldFY10 discovered in 2010 to be put on production in the near term15 16. ONGC Group : Large and Growing Reserve BaseReserve Base (As Per Management Estimates) mtoe ONGCOVL1P 7371862P 9693573P1,175 398Diversified Reserve BasemtoeOVL22%OVL 29% GasOil ONGCONGC78% 71% Note: The management estimates of the reserves of ONGC Group are under review by independent third party and maybe subject to changes. We intend to make the outcome of that review publicly available16 17. ONGC Group: Operating PerformanceSteady ProductionWith production from OVL IncreasingDomestic Production (in MTOE)Gas (FY10)61.861.2 60.9 60.7 Onshore,23% 57.4 25.0 24.9 25.125.525.627.1 27.0 27.7 28.0 1.82.2 2.0 2.22.4 26.8FY06 FY07FY08 FY09 FY 10 Offshore, 77%ONGC (incl. JVs)OVLOil (FY10) Onshore, 30% 33.7 34.733.6 33.0 30.7 26.1 27.9 27.927.126.5 5.8 6.8 6.66.54.6 Offshore,FY06 FY07FY08 FY09 FY 10 70% FY06FY07 FY08 FY09FY 10 ONGC (incl. JVs) OVLOilGas Note: ONGC includes JVs17 18. Improved Recovery Through Prudent Measures 21 IOR/EOR &Redevelopment projectsworth ~INR209 bn of investment upto FY10Strong impetus on EOR /15 SuccessfullyIOR Process to improvecompleted Projects global recovery factorby 2020 Arresting ArrestingProductionProductionDeclineDeclineFast track development 6 Projects under of discoveriesimplementationRecovery Factor Cumulative oil gain of improving from 28% inmore than 56 mmt FY01 to 33.5% in FY1018 19. E&P Infrastructure And Capabilities Exploration Facilities(1)Integration Across E&P Value Chain 28 Seismic Survey107 Well Stimulation58 Workover Rigs 77 Drilling Rigs CrewsUnits 26,598 km of pipelines in IndiaProduction & Transportation6,707 km of sub-sea pipeline Facilities(1)~34% of the Entire Nations 198 Offshore25 Offshore Supply240 Onshore Crude Pipeline InstallationsVesselsInstallationsAnkleshwar and Gandhar, GujaratHandling Capacity: 0.1 mmtpa Oil & 1 mmscmd Gas Products: LPG, NapthaTatipaka, Andhra Pradesh Handling Capacity: 0.1 mmtpa Oil ProcessingProducts: Naptha, SKO, HSD, Hazira, Gujarat Fuel OilInfrastructure Handling Capacity: 42 mmscmd Sour Gas Products: LPG, C2-C3, LAN Kuthalam, Kaveri, Tamil NaduUran, MaharashtraProducts: Naptha, SKO,Handling Capacity: 20 mmtpa Oil & 16 mmscmd Gas heavy cutProducts: LPG, ARN, SKO, ATF, Propane, HSD (1) Does not include 6 seismic crews, 47 drilling rigs, 21 workover rigs, 1 simulation vessel and 36 OSV/SMSVs charter hired19 20. Integration into Refining Acquired MRPL(1) in March 03 (holds 71.6%) Current Plant Turned around in less than 4 quarters post acquisition Overview Market value up 737%(2); Market Cap of INR116 bn (3) Capacity: 11.82 mmtpa; T-Put: 12.5 mmtpa and 106% Utilization in FY10Strong Revenue of INR360 bn in FY10 ; PAT of INR11 bn Financials Strong Credit rating - ICRA IR AAA & CRISIL CCR AAA Current PlantStrong Flexibility to process diverse crude varieties (24-46 API) Technological Designed to maximize middle distillatesCapabilities Capability to produce high grade fuels Captive Power Plant with capacity of 112.5 MW IntegratedExpansion Project All weather port at Mangalore Infrastructure Mangalore-Hassan-Bangalore product pipeline Expansion to 15 MMTPA at cost of INR 121.6bn (scheduled completionExpansionin Dec, 11) MRPL is Well Positioned to leverage Improving Refining Fundamentals 1. MRPL: Mangalore Refinery and Petrochemical Limited 2. 2003 till February 1, 2011 3. As on February 1, 201120 21. Integration Across Energy Value Chain OPALONGC : 26% Incorporated in FY07GSPC : 5% Dual feed cracker & polymer plantsGAIL : 19% Scheduled completion Q3, 2013 SIs/FIs: 50% ONGC Mangalore Petrochemicals Ltd Incorporated in FY07 ONGC : 46% Aromatic Petrochemical Complex for manufacturing paraxylene MRPL : 3% Scheduled completion Q4, 2012 ONGC Tripura Power CompanyONGC : 50% OTPC incorporated in FY2005 ILFS: 26% 726.6 MW (2x363.3) Power Project in Tripura Govt. Tripura: 0.5% Scheduled Completion Q2, 2012 Others: 23.5% Dahej SEZ Limited Incorporated in FY05ONGC : 23% Proposed SEZ for petrochemical industries GIDC : 26% Scheduled completion Q3, 2011 Mangalore SEZ Limited ONGC : 26% Incorporated in FY06 KIADB : 23% Proposed SEZ for petrochemical industries ILFS+KCCI: 51% Scheduled completion Q3, 201321 22. New Growth Initiatives : Others Shale Gas Integrated Pilot project launched in Damodar valley (eastern India) in April, 2010 Shale In association with SchlumbergerGas First well spudded on 21st Sept 2010; Created exploration landmark on Jan 25, 2011 as Gasflowed from the R&D well in Durgapur Coal Bed Methane CBM Operating in 5 CBM blocks CBM production from Parbatpur, Jharia (Pilot project) commenced from Jan, 2010 MoU with Arrow Energy, Australia Underground Coal Gasification Collaboration with Skochinsky Institute of Mining (SIM), Russia UCG Site at Vastan, Gujarat selected Environmental clearance obtained for the Pilot Project in Feb, 2010 Mining Lease awaited from GoI Wind Farms 50 MW Wind Farm commissioned in Sep FY08 - in Gujarat Estimated financial benefit to the tune of INR 450 mn per annum Plan approved for another 100 MW Wind Farm in Rajasthan22 23. Key Industry Themes Oil & Gas Production Forge New Partnerships (Eg. from Overseas Assets Recent Framework Agt.) Equity Oil Enhance ProductionInorganic Growth (IOR/EOR) Integration Projects Subsidy Sharing Mechanism23 24. Visionary Leadership and Strong Management Team Board Of DirectorsChairman & Managing DirectorShri A.K.Hazarika* Functional Director Functional Director Government GovernmentIndependent Independent Special Invitees Special Invitees(Full Time)(Full Time) NomineesNominees Directors DirectorsShri Sudhir Bhargava Shri R.S.Butola Shri R.S.Butola Director (Onshore) Director (Onshore) Shri Sudhir Bhargava Shri S.Balachandran Shri S.BalachandranAddl. Secretary, MOP&NGMD, OVL MD, OVL Shri A.K.Hazarika Shri A.K.HazarikaAddl. Secretary, MOP&NG Director (T&FS)Smt.L.M.VasSmt.L.M.Vas Shri S.S.Rajsekar Director (T&FS)Shri S.S.Rajsekar Shri U.N.BoseAddl. Secretary, MOFAddl. Secretary, MOF Shri U.N.Bose Director (Finance) Director (Finance)Shri Santosh Nautiyal Shri Santosh NautiyalShri D.K.SarrafShri D.K.Sarraf Director (Offshore) Director (Offshore)Smt. Anita DasSmt. Anita DasShri S.VasudevaShri S.VasudevaManagement Team with significant experience in the Oil & Gas industry * Officiating Chairman and Managing Director24 25. ONGC Group: Consolidated Financial PerformanceTotal Revenues (INR in bn)EBITDA (INR in bn)Sustained PerformanceImproving EBITDA Margins 43.7%1,1061,0361,086 47540.6%39.2% 434421FY08FY09 FY10 FY08 FY09FY10PAT (INR in bn) Cash from Operations (INR in bn)Maintaining ProfitabilityStable Cash flows19.2% 17.9%17.9%290290288 199 198194 FY08FY09 FY10FY08FY09 FY1025 26. ONGC Group: Consolidated Financial Performance (Contd)Networth (INR in bn) EPS (INR / share)Strong Reserves 1,00692.55 92.91 90.72 916 774FY08 FY09FY10FY08 FY09FY10Dividend (INR in bn), Payout Ratio (%) Debt Equity Ratio (INR in bn)High Dividend Payouts 36.6% 34.2% 34.4%71 0.05x 68 68 0.01x0.01xFY08 FY09FY10 FY08 FY09FY1026 27. ONGC: Standalone 9 month FY11 Result OverviewOverviewRevenue (INR bn) 21% Revenue growth of 11.4% during nine month 11%Rs 506 Rs 186Rs 154 period ended December 31, 2010Rs 454 Q3 revenue up by 21.4% Net Profit up by 24% during nine month period 9M FY10 9M FY11 Q3 FY10Q3 FY11EBITDA (INR bn) ended December 31, 2010 45% 18% Q3 Net Profit up by 132%Rs 331 Rs 135 Rs 93 Rs 281 For 9M FY11Gross Realisation of US$83.00/bbl For 9M FY11 Net Realisation of US$58.72 /bbl 9M FY10 9M FY11Q3 FY10Q3 FY11Net Profit (INR bn)24% 132%Rs 71 Rs 161 Rs 130Rs 319M FY10 9M FY11Q3 FY10Q3 FY1127 28. The Subsidy Impact .Overview of the Subsidiary Mechanism Subsidy sharing mechanism devised by Government of India in 2004 Under-recovery is on the production from nominated fields ONGC Group continues to realize international prices on production from PSC JVs and OVL There is no surrender of Profit Petroleum to Government on revenue from nominated fields Subsidy and Impact of Subsidy on PAT (INR in bn) 282 158128116 66 73200920109M FY1128 29. Corporate Governance and CSR Policies First Sustainability Report as per GRi-G3 guidelines published Health Safety and Environment Framework in place CSR allocation increased to 2% of net profit in FY10 from 0.75% ONGC Whistle Blower Policy in place Robust IT Infrastructure in place Environmental Focus Whistle Blower PolicyCSR Initiatives29 30. Thank you