Courage to Explore, Knowledge to Exceed, Technology to Excel

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Courage to Explore, Knowledge to Exceed,
Technology to Excel
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India Unplugged Annual India Investor
conference Kotak Institutional Equities 20
September 2006 New Delhi
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Presentation overview

• Indian Energy Scenario
• ONGC as you know
• ONGC Highlights
• Performance Profile
• ONGC
• OVL
• MRPL
• ONGC Group
• Concerns
• Initiatives
• Strategic pursuits

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• Energy Scenario

5
Energy Scenario

• Since the dawn of the Oil-age, we have consumed
  about 950 billion barrels
• 280 billion barrels (30) in last decade only

Source The End of Oil by Paul Roberts
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Energy Scenario
Energy from all fossil sources (including coal)
accounts for 88 of what makes our world go
Source BP Statistical Review 2006
7
Energy Scenario India
Coal dominant fuel in Indian energy basket
World
India
Source BP Statistical Review 2006
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India the 5th largest Energy Consumer

• CAGR (1994-2004) 4.5 against global average of
  1.7

Consumption MToe
Source BP Statistical Review 2006
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Energy Scenario

• India
• 16 of the Worlds population
• 0.5 of the Worlds Oil Gas reserves.
• Per capita energy consumption in India only 0.33
  Toe against the global average of 1.67 Toe

Source BP Statistical Review
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Energy Scenario Oil consumption

• India 6th largest consumer of Oil 3 of total
• USA 25 China 9 Japan 6 Russia 3.4
  Germany 3.2
• Oil consumption in India increased at CAGR of
  4.4 (1995-2005)
• 2nd highest among top 10 consumers
• China CAGR 7.4
• Global consumption growth _at_ CAGR - 1.7.

Source BP Statistical Review 2006
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Energy Scenario Gas consumption

• India the 19th largest consumers of gas
• Gas consumption in India increased at a CAGR of
  6.6, next only to China in Asia Pacific(10.4)
• Global consumption growth _at_ CAGR 2.6.

Source BP Statistical Review 2006
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Energy Scenario India

• Primary Energy demand to rise
• from 381 MTOE (2006-07) to
• 1,633 MTOE by 2031-32 (GDP rate 8)

Source Draft Report of the Expert Committee on
Integrated Energy Policy
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• ONGC as you know

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• ONGC is,an Integrated Oil Gas Corporate
• with interests in
• EP, Refining, LNG, Power, Petrochemicals
• New sources of energy.

emerging as reliable energy solution provider
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We produce 1 million barrels per day of Oil plus
Oil-equivalent Gas, from recoverable reserve of
1.1 Billion MT, selling Crude, Gas and Products
with a turnover of Rs. 49,440 Crore (USD 11
Billion) in 2005-06.
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• Among all Indian Companies,
• our net worth of Rs 53,593 Crore,
• market capitalization of Rs 164,959 Crore,
• and net profit of Rs 14,431 Crore
• are the highest.

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ONGCs attractive position
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Navratna PSE with 50 years of industry experience
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Strong Managerial Infrastructure Base
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Dominant position in Indian Oil Gas operations
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Highly attractive international portfolio
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Very low financial leverage and financially sound
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Strong partnerships with Global Oil Gas majors
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Strong government support
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Mission vision
Cornerstone of success
Oil gas company of global standards
Commitment towards excellence
Dynamic and progressive
Good corporate governance
Consolidate dominant position in the EP
and integration into LNG, Refining
Petrochemicals
Professionally managed company, competitive
mission to build a global integrated oil gas
major
Provide added value to all stakeholders
support national economic growth
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• Highlights

27
Highlights ONGC

• Bonus shares in the ratio of 12
• (after 11 years)
• Golden Jubilee Memorabilia
• With Shareholders approval on 19.09.06,
• Bonus shares to be issued in Nov2006
• Post Bonus Issue
• Equity Capital to be raised to Rs. 2,138.9
  Crore
• (from Rs. 1,425.9 Crore)
• Book Value of Share Rs. 251 (from Rs. 376)

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Highlights

• NELP-VI
• ONGC bids for 45 blocks in NELP-VI
• As operator in 35 blocks

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Highlights
NELP Exploration Licenses
ONGC awarded 59 blocks under NELPI to NELPV out
of 109
(1) Excludes blocks relinquished by ONGC but
includes KG-DWN-98/2 block (90 participating
interest)
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Highlights
NELP Exploration Licenses
Licensed Domestic Exploration Area
Leased Domestic Production Area
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Highlights ONGC

• Highest ever profit
• PAT Rs 14,431 Crore up 11
• Gross Income Rs 49,440 Crore up 4.6
• EPS 101.20 up 11
• Dividend 450

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Highlights OVL
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Highlights MRPL
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Highlights ONGC Group
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Highlights
Gas supply restored at Hazira

• Gas supply from Hazira Plant restored to full
  capacity on 8th Sept 2006, ahead of schedule

Plant was shut down due to an unprecedented flood
on 8th August 2006. Partial supply restored on
19th August 2006
36
Highlights
Historic GSA with GAIL signed on 7th July 2006

• Goodwill understanding extended legalized.

37
Highlights
Sakhalin-1 goes on stream in Oct 2005

• 3rd Producing Asset, after Vietnam Sudan
• Full oil production by 1st Qtr. 2007
• OVLs share 50,000 bpd (oil only)

38
Highlights
OVL in Brazil

• Maiden entry in Latin America
• 15 stake in BC-10 deep water block, Brazil
• Potential production 90,000 bbls/day

39
Highlights
5A field in Sudan commences production

• Crude oil production commenced on 26th June 2006
• OVL has 24.125 stake in the field
• Currently producing 38,000 bbls/ day
• Expected to reach 50,000 bbls/day by year end

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Highlights
OVL in Cuba

• OVL inks PSC with Cuba Petroleos (Cupet)
• for N-34 N-35 offshore blocks, in Gulf of
  Mexico, on 9th September 2006.
• Earlier, in May 2006, OVL acquired 30 PI
  Interest in
• 6 exploratory blocks in offshore Cuba from
  Repsol
• YPF, balance 30 Participating Interest is held
  by
• Norsk Hydro.

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Highlights
OVL signs MOU with PetroEcuador

• MOU signed on 19th July 2006 envisages
  cooperation in
• energy sector
• joint participation in Ecuador other countries.

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Highlights
OMELs international venture

• OMEL won two prospective oil gas blocks in
  Nigeria 2006 Mini Bid Round

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Highlights
ONGC, Numero Uno EP Company in the world Platts
Top 250 global energy company ranking
2006 (released on 6th Sep 2006)

• Also ranked 20th among leading global Energy
  majors
• Ranking based on
• assets, revenues, profits, and return on invested
  capital.

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Highlights
ONGC CRISIL ICRA Rating

• Highest applicable ratings for
• domestic companies by CRISIL and ICRA
• CRISIL AAA
• ICRA LAAA

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Highlights
ONGC Moodys Credit Rating

• Indicative Foreign Currency debt rating Baa1
• (Two notches higher than Sovereign Rating)
• Local Currency issuer rating A2
• (Six notches higher than Sovereign Rating)
• Outlook Stable

Highest ever credit ratings assigned by Moodys
to any Indian Corporate.
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Highlights
Awards Accolades
256th in Forbes Global 2000 list (Mar, 2006),
Topper from India
402nd in Fortune Global 500 115th in Fortune
Global 100 (July, 2006)
PFC Energy 50 18th among top 50 publicly traded
Global Oil Gas Companies (Jan, 2006)
Financial Times Global 500 158th among the
worlds largest companies (June, 2006), topper
from India
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Highlights
Awards Accolades
Moitlal Oswal CNBC Biggest Wealth Creator among
Indian Companies (Nov, 2005)
BT Most Valuable Company in India (Nov, 2005)
ET 500 No.1 by Market Cap Net Profit (Feb,
2006)
No.1 in Business Indias Super 100 list (Nov,
2005)
Businessworld-IMRB survey (June, 2006) Most
respected PSU
Best PSU Peoples Award for Excellence in
Business Economy 2006, by Planman Media (June
2006)
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Highlights
Awards Accolades

• ONGC receives NDTV Profit Business Leadership
  Award
• in Oil Gas category
• July 28, 2006

49
Highlights
Awards Accolades
Golden Peacock Award 2005 for Corporate Governance
Golden Peacock Global Award 2005 for Corporate
Social Responsibility (May, 2006)
Amity Corporate Excellence Award (Feb, 2006)
National Award for Excellence in Cost Management
(Dec 2005)
Enterprise Excellence Award by Indian Institution
of Industrial Engineers (May, 2006)
All India Public Sector Sports Promotion Board
the best sports promoter among all PSUs
(24.06.2006).
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Highlights
FIIs shareholding 9.24
(As on 18th Sept 2006)
FIIs holding in
IPO
Paid-up Share Capital Rs.1,425.93 Crore
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• Performance Profile

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• Performance Profile
• ONGC

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ONGC New Finds
10 New oil gas finds in 2005-06
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ONGC Reserve Accretion

• Oil Oil-equivalent Gas
• Production 46.97 MTOE
• Reserve Accretion 51.53 MTOE

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ONGC Oil production (MMT)(excluding PSC JVs)
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ONGC Gas Production (BCM) (excluding PSC JVs)
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ONGC OOEG Production (MMT) (excluding PSC JVs)
48.74
50.25
49.64
49.45
46.97
12.27
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ONGC Gas Sales (BCM) (excluding PSC JVs)
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ONGC VAP Production (MMT)
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PSC JVs Production (MTOE) (ONGCs share)
2.97
3.25
4.32
3.78
4.14
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• Performance Profile
• ONGC Financials

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Gross Income (Rs Crore)

• Highest ever Gross Income
• Up 4.6

CAGR 20
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Net Profit (Rs Crore)

• Highest ever Net Profit
• Up 11

CAGR 23.5
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Capital Investment

• Highest-ever Capex

CAGR 30
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Capex analysis (2005-06)
99.7 on EP
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How each Rupee was earned
2004-05
2005-06
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Return on Capital Employed
68
Current Ratio
69
Debt-Equity Ratio
70
Earning per Share
Highest ever Earning per Share
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Book Value
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Contribution to Exchequer (Rs Crore)
73
Dividend

• Highest ever by any Indian Corporate
• Dividend to Govt. of India 4,757 Crore

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• Performance Profile
• ONGC Videsh Ltd.

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ONGC Videsh Ltd.
24 Projects (36 Assets) in 14 Countries
2006-07 OVL in Brazil, Cuba OMEL in Nigeria
Includes Sudan Pipeline project
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ONGC Videsh Ltd.

• 9 acquisitions in 05-06 against 6 in 2004-05
• Sole Operator in 8 Assets
• Joint operator in 2 Assets

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ONGC Videsh Ltd.

• OVLs share of Production
• Greater Nile Project 3.413 MMT of oil
• Vietnam 1.672 BCM of gas
• Syria 0.957 MMT of crude oil
• Sakhalin Limited oil and Gas production

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ONGC Videsh Ltd.
OOEG Production up 25
0.25
3.87
5.09
6.34
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ONGC Videsh Ltd.

• Turnover up 36

Rs Crore
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ONGC Videsh Ltd.

• Net profit up 18

Rs Crore
81

• Performance Profile
• MRPL

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• MRPL
• Exports doubled
• Direct sales goes up
• Distillate yield improves
• Best in Energy Management
• Remarkable Turnaround Management

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MRPL

• Highest capacity utilization 125

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MRPL

• Turnover up 36

CAGR 49
Rs Crore
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MRPL

• Net profit down 58

Rs Crore
86
MRPL
Highest-ever Export Sales Export sales increased
by 92 2006 Rs 11,917 Crore FY 2005 Rs 6,191
Crore
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MRPL
Debt/Equity ratio reduced 31st March 2003
9.71 31st March 2006 0.871
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MRPL
Awards Accolades

• Jawaharlal Centenary Gold Medal for Energy
  Management, 2nd consecutive year, from CHT,
  MOPNG
• Golden Peacock Award for best Environment
  Management
• 5 Star Rating from British Safety Council

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MRPL upgradation expansion 9.69 MMTPA to 15
MMTPA Investment Rs 8,000 Crore
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• MRPL
• At 15 MMTPA Capacity
• 84 distillate yield out of crude run
• Improved yield pattern/ product range
• Increased capability to use cheap, heavy, sour
  high TAN crude oil

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• MRPL
• At 15 MMTPA Capacity
• integrated Aromatic Complex 0.9 MMTPa Px
• _at_ Rs 5000 Crore
• Integrated Olefin Complex _at_ Rs 12,000 Crore
• (under feasibility study)

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• Performance Profile
• ONGC Group

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ONGC Group

• Oil production down 3.6

26.30
27.76
31.14
31.86
30.69
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ONGC Group

• Gas production up 1.2

25.42
25.99
26.16
26.43
26.75
95
ONGC Group

• OOEG production down 1.5

51.72
53.75
57.29
58.30
57.45
96
ONGC Group

• Turnover up 19

Rs Crore
CAGR 33
97
ONGC Group
98
ONGC Group

• Net Profit up 7

Rs Crore
CAGR 25
99
ONGC Group

• Net worth up 17

Rs Crore
CAGR 19
100

• Concerns

101
Concerns

• Subsidy payout
• Gas pricing

102
Concerns Subsidy payout

• Sharing subsidy on price sensitive petroleum
  products with downstream oil companies

Rs Crore
103
Concerns Gas pricing

• ONGC gets USD 1.93/mmbtu
• (USD 1.17/mmbtu in NE)
• PMT JV gets USD 4.75/ mmbtu

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• Initiatives

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Initiatives

• Shallow gas exploration
• Cambay KG basins
• Cambay Confirmed presence of commercially
  exploitable gas in Ankleshwar field
• KG Data acquisition in progress

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Initiatives

• Sea-bed Logging
• Contract awarded to M/s EMGS, Norway
• API on all 12 SBL prospects completed
• 2 additional prospects identified and survey in
  progress

107
Initiatives

• Integrity Pact
• MOU signed with Transparency International India
  (TII) on 17th April 2006
• First corporate in the country, public and
  private combined, to adopt Integrity Pact (IP)

108
Initiatives
PEL agreements with Govt. of Nagaland

• PEL agreements signed on 1st May 2006
• 3 nomination and 2 NELP exploration blocks
• ONGC operations suspended since May 1994 due to
  environmental constraints.

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Initiatives

• Collaboration with
• Ente Nazionale Idrocarburi (ENI), Italy
• Norsk Hydro, Norway
• M/s Cameron

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Initiatives

• Domain Experts for
• Seismic interpretation process validation,
• Basin modeling, Petroleum system analysis,
• advance reservoir characterization,
• sequence stratigraphy

111
Initiatives
Quality, Health, Safety Environment

• 100 QHSE accreditations for all operational
  facilities obtained last year.
• Ensured sustenance proper maintenance of
  accreditations by getting surveillance audits
  conducted at all locations.

112
Initiatives

• Project Saraswati
• MOU signed with Water Power Consultancy
  Services (India) Ltd. (WAPCOS)
• Detailed studies in 13 districts of Western
  Rajasthan

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• Strategic Pursuits

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Strategic Pursuits
Monetizing Assets
Assetizing Money

• Stabilizing output from producing fields
• Bringing New Marginal fields into production

• New facilities
• Facility renewal
• Value addition
• New business
• Acquisitions

Integration
Clean Coal opportunities

• Power Tripura Plant, Wind Power
• Refinery MRPL Expansion
• Petrochemicals Dahej, Mangalore
• SEZ - Dahej, Mangalore,

• CBM production from 2007
• UCG production from 2008
• SCG Collaboration with Shell

115
Strategic Pursuits EP Business

• Deepwater Frontier basin thrust areas
• Early monetization of new discoveries
• Technology solutions for improving Recovery
  Factor
• Expeditious development of small marginal
  fields
• Refurbishment of surface facilities
• Technology induction
• Domain Experts

116
Strategic pursuits EP Business
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Strategic pursuit EP Business
Development of Marginal fields

• 153 marginal fields identified
• 79 onshore 74 offshore
• 38 fields monetized
• 36 onshore 2 offshore
• 94 fields under monetization
• 39 onshore 55 offshore
• 21 fields planned to be monetized
• 4 onshore 17 offshore

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Strategic Pursuits EP Business
Rejuvenation of Matured fields

• 8 IOR/ EOR projects completed (Rs 1,703
  Crore)10 under implementation (Rs 12,138 Crore)

Envisaged Oil Gain 110 MMT (2020)
Contribution of IOR/ EOR Schemes in 15 major
fields

• Decline of 7.0 per annum arrested trend
  reversed
• Production rate increased by 2.25 per annum

25 IOR Projects identified in other medium fields
119
Strategic Pursuits EP Business
IOR/ EOR Projects under implementation (Rs 12,137
Crore)
25 IOR Projects identified in other medium fields
120
Strategic Pursuits IT
Project SCADA

• Estimated investment Rs 281 Crore
• to operate every well as Profit Centre
• through real-time monitoring optimization
• Keystone to efficient production

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Strategic pursuit Technology

• Technology Induction
• Seismic Acquisition, Processing Interpretation
• Drilling related services
• Logging, Well Stimulation, Well Control
• Info-com applications
• Facilities Logistics

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Strategic pursuit Technology

• Seismic API
• Q-Marine, GXT,
• Seismic Vessel - MV Sagar Samiksha
• Multi-component Seismic survey
• EM Pulse source, Virtual Drilling
• RTOC, Air Borne Electromagnetic survey
• 4C-4D Project
• Digital oil field monitoring
• Digital Geophone
• Accelerated Weight Drop

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Drilling Field Services
Strategic pursuit Technology

• Drilling Hi-Tech, Multilateral, ERD Side Track
  wells
• Non-damaging fluid
• Low Toxicity Synthetic Oil Based Mud (LTSOBM)
• Hydraulic Stage Collars
• Riser-less drilling
• Expandable casing
• Medium Radius Drain Hole (MRDH)

124
Production Technology
Production

• FPSO
• Intelligent well completions, segmented
  completion
• Onshore control room for offshore operations
• Dispersible smart plug
• New generation PWC-CFU
• Produced water re-injection
• Custody transfer meter
• Jack-up facility for B-173
• H2S scavenging for B-173
• Intelligent platform

125
Strategic Pursuits Power

• 740 MW Power Project in Tripura
• Monetizing idle gas
• 2 x 50 MW Wind Farm in Gujarat Karnataka

126
Strategic Pursuits SEZ

• Mangalore SEZ Ltd.
• incorporated on 24th Feb 2006
• ONGC Equity 26
• Petrochemical complex, LNG, C2-C3, Power Plant,
  Services etc.

127
Strategic Pursuits Petrochemicals

• Dahej SEZ
• Dahej Petrochemicals
• C2-C3-C4 extraction at Dahej

128
Strategic Pursuits Petrochemicals

• Mangalore SEZ
• Aromatic Complex
• To produce 0.95 MMTPA Paraxylene 0.15 MMTPA
  Benzene

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Strategic Pursuits CBM

• Coal Bed Methane (CBM)
• Commercial production
• targeted 2007
• MOU with SCCL

130
Strategic Pursuits UCG

• Underground Coal Gasification (UCG)
• Collaboration with
• Skochinsky Institute of Mining (SIM), Russia
• MOUs with
• CIL, GSPC, GMDC, NLC, SCCL

131
Strategic pursuits SCG

• Surface Coal Gasification (SCG)
• Collaboration with Shell
• MOU with SCCI on 15th April 2006
• followed by CIL and others

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Thank You
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Courage to Explore, Knowledge to Exceed,
Technology to Excel