For decades, ONGC was a virtual monopoly when it came to oil and gas in India. Now, CMD R.S Sharma finds that players like Reliance and Cairn can outsmart and outrun it. ratan lal bhagat analyses his dilemma.
The quiet gurgling told me two things: first, that oil and gas will remain the source of massive profits, massive lobbying, bitter corporate feuds and much more for decades to come. Second, I couldn’t but help empathise with CMD Sharma who knows he has a tough job at hand. In his simple and sober sixth floor office in Jeevan Bharti building in the heart of Delhi, Sharma was quite philosophical when he said, “ E&P remains the most challenging business where inputs are deterministic and outputs are probabilistic”. It took me a while to figure out that Mr Sharma was basically saying that you can put all the money you want into exploring for oil and gas; but it will always remain a gamble.
About 1,500 kilometres away from his 6th floor office, the drilling and separator sites of ONGC tell the same story in a quiet and understated manner. And I can’t help wonder: Is Mr Sharma worrying about the fate that befell his predecessor Subir Raha who started publicly asking questions from the masters about the functional autonomy for the company? Or is he more worried about the spectre of Reliance Industries led by Mukesh Ambani dislodging ONGC as the number one oil and gas company of the country? Not to mention the giant oil fields discovered by Cairn in Rajasthan that promise to produce as much as 20% of the total oil output of India? Incidentally, ONGC is a 30% partner in the Rajasthan oil field and is now wondering how it will benefit. Particularly, if the government treats it like a step child. In one of his more candid moments during an exclusive interview, this is what A.K Hazarika, the Director, Onshore of ONGC had to tell B&E, “Though the discovery has been made by Cairn, the licensee is ONGC. And as per the policy, the royalty for this has to be borne by the licensee. Today, ONGC owns 30% of the blocks and has to pay royalty for the rest 70% also. This is going to badly impact the financial standings and profitability of ONGC. The government has promised to reimburse the amount but we have got nothing but sympathy so far”.
The quiet gurgling told me two things: first, that oil and gas will remain the source of massive profits, massive lobbying, bitter corporate feuds and much more for decades to come. Second, I couldn’t but help empathise with CMD Sharma who knows he has a tough job at hand. In his simple and sober sixth floor office in Jeevan Bharti building in the heart of Delhi, Sharma was quite philosophical when he said, “ E&P remains the most challenging business where inputs are deterministic and outputs are probabilistic”. It took me a while to figure out that Mr Sharma was basically saying that you can put all the money you want into exploring for oil and gas; but it will always remain a gamble.
About 1,500 kilometres away from his 6th floor office, the drilling and separator sites of ONGC tell the same story in a quiet and understated manner. And I can’t help wonder: Is Mr Sharma worrying about the fate that befell his predecessor Subir Raha who started publicly asking questions from the masters about the functional autonomy for the company? Or is he more worried about the spectre of Reliance Industries led by Mukesh Ambani dislodging ONGC as the number one oil and gas company of the country? Not to mention the giant oil fields discovered by Cairn in Rajasthan that promise to produce as much as 20% of the total oil output of India? Incidentally, ONGC is a 30% partner in the Rajasthan oil field and is now wondering how it will benefit. Particularly, if the government treats it like a step child. In one of his more candid moments during an exclusive interview, this is what A.K Hazarika, the Director, Onshore of ONGC had to tell B&E, “Though the discovery has been made by Cairn, the licensee is ONGC. And as per the policy, the royalty for this has to be borne by the licensee. Today, ONGC owns 30% of the blocks and has to pay royalty for the rest 70% also. This is going to badly impact the financial standings and profitability of ONGC. The government has promised to reimburse the amount but we have got nothing but sympathy so far”.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human FaceProf. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
