ONGC Videsh Ltd, the overseas investment arm of public sector exploration major ONGC, is looking to set up a crude oil trading vertical soon. The company, which is traditionally into the business of exploration and production, proposes to set up this vertical once it has sizeable hydrocarbon volumes to sell.

OVL is in talks with international players to set up a desk overseas.

“We aspire and aim to develop our own marketing capability to capture better value of our hydrocarbons and whatever we produce — actually a downward integration to capture better value for our produce,” Narendra K Verma, OVL, Managing Director, told BusinessLine.

Narendra K Verma, Managing Director, OVL

Asked if this was meant to help the Indian public sector oil refiners in getting committed supplies and good price, he said: “This is a purely commercial decision for OVL. Right now, OVL sells its crude through a tendering process, which has its own problems. Having a trading desk will make the task easier.”

Verma, however, remained tight-lipped on how soon the vertical will be in place and who will be the chosen partner, due to commercial reasons.

From its 14 producing assets OVL has produced 4.137 million tonnes of oil and 2.558 billion cubic metre of gas for the first nine months of fiscal 2016, which was close to the same period previous fiscal (4.144 mt of oil and 2.419 bcm of gas).

While he is looking at downward integration, Verma is also aware that fall in crude oil prices has adversely affected the working of OVL, just as it has impacted the operations of other international players.  OVL had optimised its capital expenditure for 2015-16 by 20 per cent to ₹8,000 crore.

“This is a global phenomena and OVL is no different. All exploration and production companies in the international arena are impacted by the decline in crude prices. Everyone has tried to reassess, re-evaluate and optimise their capital and operational expenditure in light of the new oil price regime,” he said.

“Even super majors also reported an adverse impact on their balance sheets and we are no exception. While the crude prices decreased, the cost of exploration and production activities has not reduced at the same rate, except some expenditure on services,” Verma added.

OVL has also been going through a consolidation process, which according to Verma is a “continuous process. We keep evaluating our portfolio and balance it with reference to the new realities of the business globally.”

While the company does not want to restrict its hunt for hydrocarbon acreages to any particular region, Verma said, “Africa is a happening place for E&P. At the recently held India Africa Summit, we had some good meetings with the delegations that came. We have some leads and we will follow those.”

OVL also proposes to expand its ties with Russia. Asked what has changed in terms of doing business with Russia, as the country has its own way of doing things, including tax issues, he said,

“Russia has a typical tax regime where both high-end and low-end are capped, except two projects under the production sharing contracts — Sakhalin I & II, one of which we are partners in — all other projects in E&P are guided by their tax regime. The tax regime has got a positive as well as negative”.

“In the low oil price environment, it gives comfort to the operators as net backs don’t slide down pro rata because the government take also slides down,” he added.

ONGC Videsh celebrated the National Safety Day on Friday, March 4. The initiative was conducted as part of the National Safety Day campaign, celebrated across India every year under the National Safety Council to enhance the safety awareness among people. The theme for this year’s celebration was to ‘Strengthen the Safety movement to Achieve Zero Harm’.

Employees and families of ONGC Videsh participated with enthusiasm in poster, cartoon and slogan competition in numbers which surpassed all the previous years; this indicated the increasing awareness and commitment of ONGC Videsh towards HSE. An online quiz was also launched in which the employees of ONGC Videsh posted overseas also took active participation.

On March 4th, Mr. Narendra K. Verma, MD & CEO through his message to employees asked their individual commitment to take care of their own safety, that of their colleagues, workers and contractors.

Mr. S.P Garg, Director (Finance) and Mr. P.K Rao, Director (Operations) administered the Health & Safety pledge in Hindi and English respectively to the large gathering of employees. While speaking on the occasion Mr. S.P Garg emphasized on the importance of safety in Oil and Gas operations and stated how one single incident like Macondo can wipe of the balance sheet. Mr. P.K Rao emphasized on the high importance of safe practices while carrying out operations and also emphasized on the need to adopt the best practices from our projects.

Mr. S.P Garg Director (Finance) administering the pledge

ONGC Videsh employees taking the pledge

The print copy of Sustainability report on recycled paper was released by Director (Finance) and Director (Operations).

Release of Sustainability report

An informative video on ‘How to avoid accidents’, HSE report by Head HSE on activities during the year were some of the highlights of the programme. Prizes were distributed to the winners and their entries were also screened. All the entries were much appreciated by all those present. The day finally concluded with a vote of thanks and with the resolve to achieve goal zero.

Director (Finance) and Director (Operation) distributing prizes

On 23^rd Feb 2016, the ONGC Videsh G&G Centre of Excellence at Houston, USA was inaugurated by Mr. Narendra K Verma, CEO and Managing Director, ONGC Videsh along with Mr. A.K. Dwivedi, Director (Exploration), ONGC and Mr. S.P. Garg, Director (Finance), ONGC Videsh.

The G&G Centre of Excellence has been conceptualized and formed to act as a think tank and resource base to augment the efforts of ONGC Videsh in its exploration, development and producing assets. The Centre has come up from scratch, literarily built brick by brick over last one year. The Centre is manned by a very competent team of G&G professionals with high education qualifications (all six G&G employees hold PHDs from renowned US and UK Universities) and work experience of major E&P companies of the world.

During the interaction with the team, Mr. Verma laid out his vision for the Centre wherein he elaborated that this team needs to develop work flows in their respective disciplines based on the best practices which they have witnessed and experienced in the major E&P companies. The first set of project data has been delivered to the team and MD mentioned that he expected the team to add value to the company through exploration success and managing and increasing production from developing and producing assets. Mr. Dwivedi was impressed with the credentials of the team and mentioned that if need be, the centre should also cater to the needs of ONGC. Mr. Garg wished the best to the team and hoped that the team can help ONGC Videsh in realizing its growth targets.

Glimpses from the event. Seen in the pictures are Managing Director, ONGC Videsh, Director (F) ONGC Videsh and D(E), ONGC along with new recruits of the G&G Centre, Mr. S.K. Pathak, ED, Hazira, ONGC Videsh team and Mr. Kartikay Sonrexa, Executive Advisor, G&G Centre and Mr. Rajarshi Gupta, CM-Houston.

After the inauguration, MD, D(F) and D(E), ONGC held a Video Conference from G&G Centre with the team of MECL and Colombia Country Office and reviewed the activities of Colombia.

Mr. S.P. Garg, Director (Finance), ONGC Videsh was awarded the prestigious CA CFO ‘Oil and Gas Sector Award by the Institute of Chartered Accounts of India in a ceremony held on 16^th January, 2016.The nominations were screened by a jury of eminent personalities headed by Mr. Kumar Mangalam Birla and the selection was made among members from the entire industry segment in India.

Mr. S. P. Garg carries an experience of more than 35 years. He is a Fellow Member of the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and an Associate member of the Institute of Cost Accountants of India. Mr. Garg has played a vital role as a top leadership team of ONGC Videsh for the phenomenal growth of the company which is now present in 17 countries with 36 projects all around the globe.

Speaking on the occasion, Mr. Garg stated that the award is attributable to the efforts of his entire team and appreciated the support, dedication and hard work of team ONGC Videsh for this recognition.

During visit to Sudan, Director (Operations) of ONGC Videsh Limited, Mr. P.K. Rao steered a Corporate Social Responsibility (CSR) initiative, under the aegis of ONGC Nile Ganga BV (ONGBV) i.e. organization of a free medical camp on 21^st November 2015.

The free medical camp has been organized at Elhala Eljadida area, under the guidance of Commissioner of Ombadda, Khartoum.

Warm Welcome to Director (Operations) by Commissioner of Ombadda and State authorities, Khartoum, Sudan

This medical camp was inaugurated by Director (Operations), ONGC Videsh, which was attended by all ONGBV expats and various state authorities such as Mr. Abdel Eltif Abdalla Fedaili, Commissioner of Ombadda, Mr. Elbasha, Manager of Social Welfare, Ombadda, Mr. Atif Hassan, Manager of Education, Ombadda and hundreds of local people.

Director (Operations), addressing the gathering at the Medical Camp

On request of ONGBV, seven local doctors, including one from ONGBV and seven paramedical staff participated in above medical camp. The Commissioner of Omdurman thanked Director (Operations) and the Country Manager, ONGBV for extending such welfare services to local communities in Sudan. Around 1100 patients got benefit from the said medical camp making the CSR initiative a huge success.

Director (Operations), reviewing the facilities at Medical Camp

Distribution of medicines to beneficiaries by Director (Operations), at the Camp

Indian, Russian and Vietnamese investors of Block 06.1 Offshore Gas Project in Vietnam celebrated in Hanoi recently the production landmark of 300 million barrels of oil equivalent. Another milestone was 13 years of safely operating Block 06.1, during which more than 29 million safe man-hours were achieved.

On this occasion, ONGC Videsh Ltd., the largest stakeholder in Block 06.1, was awarded Prime Minister’s Merit Certificate in recognition of its contribution to the development of hydrocarbon industry in Vietnam and 13 years of safe operations.

The ONGC Videsh team consisting of  Mr. Ajeet Kumar Deshwal, Regional President, Asia Pacific, Mr Tapas Kumar Mandal, Country Manger and Mr N K Gupta, Manager (HR) received the award on behalf of ONGC Videsh Limited.

Addressing the ceremony, HE Mr. Cao Quoc Hung, Vice Minister Industry & Trade, Socialist Republic of Vietnam appreciated the valuable contribution to the gas industry of Vietnam by Block 06.1 investors – ONGC Videsh Ltd. Vietnam Oil and Gas Group (Petrovietnam), and Rosneft Oil Company in the Operator role.

“The gas production from Block 06.1 served as a feedstock for about 12% of the electricity generation of this country in 2015, in addition to the efforts towards the development of community in the region”, said Mr. Ajeet Kumar Deshwal, Regional President – Asia Pacific of ONGC Videsh Ltd. He also shared that the successful journey of ONGC Videsh in the E&P sector practically began with the discovery in Block 06.1 offshore Vietnam, this being one of the initial successes. He also brought out the fact that MD, ONGC Videsh Limited ,Mr Narendra K. Verma was a well site geologist while drilling were carried out in Blcok06.01 during early 90’s indicating the emotional and historical bonding of ONGC Videsh Limited with Block 06.01.

ONGC Videsh’s presence in Vietnam dates back to 1985, when it signed a technical assistance contract with Petrovietnam. Thereafter Exploration License was awarded for Block 06.1 and Production Sharing Contract was signed in 1988 with 100% Participating Interest(PI). Presently, ONGC Videsh is a partner with largest PI of 45%, along with Rosneft as the Operator and Petrovietnam.

ONGC Videsh, as one of the first entrants in the oil and gas industry of Vietnam, has contributed in a big way for the development of this industry in Vietnam. After acquiring the Exploration License of Block 06.1 in 1988, ONGC Videsh has made a cumulative investment of USD 423.7 million as of 30^th June 2015.

Block 06.1, where ONGC Videsh is the largest stakeholder, consists of the Lan Tay and Lan Do natural gas fields, 370km offshore southeast of Ba Ria Vung Tau Province, Vietnam and fuels approximately 12% of Vietnam’s electricity generation.

Block 06.1 investors are ONGC Videsh Ltd. with largest stake of 45%, Rosneft Vietnam with stake of 35% and PetroVietnam with the remaining 20%.

The second Enterprise Risk assessment for five functional groups and preparation of ERM manual was carried out from 23-27 Novemebr 2015 at Tomsk by a HQ team comprising Mr. Shambhu Nath Gupta, DGM(D) and Mr. Bimlesh Kumar Singh under the guidance of Mr. Arun Mittal, DGM(D)-CRO , ONGC Videsh with overwhelming support, participation & co-operation of entire Imperial Energy team.

This was a follow-up to the Risk management Committee’s decision in Sept 2015. The ERM system was initially rolled out in March 2014 and risk assessment carried out in line with ISO 31000: 2009 and an  independent ERM structure , Policy & Risk register for five functional groups were established in May the same year. The detailed risk identification and assessment exercise were performed for each functional group namely Production, Drilling, Exploration & development, Finance and Legal departments  with involvement of all Risk owners, risk team,  CRO-Imperial Energy and top management team.

In total 31 numbers of business risks were firmed up and assessed with their causes and mitigation factors and the team also finalized the ERM Manual for Imperial Energy. The closure meeting was held recently wherein the CEO expressed his satisfaction and enjoined upon all concerned to develop and propagate the organizational  risk culture in their  day to day activities.