Gas

A PROJECT REPORT ON
STUDY OF PROCESS FOR MARKETING OF NATURAL

GAS IN ONGC
A project report submitted towards partial fulfillment of requirement of two year full time PGDM program of Institute for Technology and Management WARANGAL
SUBMITTED TO:Mr. A.K. SRIVASTAVA GM- Marketing, ONGC, Vadodara. SUBMITTED BY:Ashish Kapoor Roll No:- 08
ITM, WARANGAL
STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC
CERTIFICATE
This is to certify that the project entitled Study of Process for Marketing of Natural Gas in ONGC, which is submitted by Mr. Ashish Kapoor in partial fulfillment of the requirement for the award of Post Graduate Warangal Diploma Institute in of Management Management degree to (Warangal),
during the academic year 2008-10 has been carried out by him under my supervision and guidance. The project is the result of the candidates genuine work on the topic and is accordance with the requirement of the institution.
Prof. Rashid, Warangal Institute of Management,
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Warangal.
DECLARATION
I hereby, declare that this project work entitled Study of Process for Marketing of Natural Gas in ONGC with reference to ONGC is a genuine work done by me, and all information collected is authentic to the best of my knowledge. The work done by others referred has been properly acknowledged.
AshishKapoor Warangal Institute for Technology and Management Warangal

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ACKNOWLEDGEMENT
Every project is a synthesis of knowledge & experience of students and experts in the related field. However, no project is possible without the guidance and the help extended by the experts to the students with the sole benevolent purpose of intellectual development to generate a feeling of profound respect for them. The special thank goes to my helpful supervisor, Mr A.K. Srivastava (GM Marketing, ONGC, Vadodara). The supervision and support that he gave truly help the progression and smoothness of the internship program. The co-operation is much indeed appreciated. My grateful thanks also go to my guide Mr. Satyan Kumar (Chief Engineer, Marketing Department, ONGC, Vadodara). A big contribution and hard worked from him during the two months is very great indeed. All knowledge during the program would be nothing without the enthusiasm and imagination from him. Besides, the internship program also helped me realize the various marketing aspects of the organization and the working of the organization. Not forget, great appreciation go to Mr. I.D. Malik (Summer Training Coordinator ONGC) who gave me the opportunity to work in such an esteemed organization. I am very much thankful to our honorable director Dr. T. Dayakara Rao for allowing me to do my internship in ONGC. Last but not the least; Im thankful to my Parents and Almighty.
Thanking you, Ashish Kapoor

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PREFACE
Tell me, I will forgive. Show me, I will never do. Involve me, I will learn. As a management student our aim should not be only to learn theoretical concept in the classroom, but it becomes more important as to how we apply those concepts in practice. Our own objective should be learn through experience. Towards this aim, the practical exposure is a basic requirement for being aware of industrial practices and its relevance with theory. Knowing the importance of such practical training our esteemed Management Institute arranges 2 months internship programme. I was lucky to work with prestigious firm i.e., ONGC. The report reflects the knowledge and insight gained while working at ONGC, Vadodara.
Ashish Kapoor ITM, Warangal
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Sub :- Study of Process for Marketing of Natural
SYNOPSIS
Gas in ONGC
TITLE
WEIGHTAGE
1.
A.
INTRODUCTION
COMPANY PROFILE:- About ONGC as an organization. General Overview about ONGCs regional office at Vadodara. B. INDUSTRY STRUCTURE:C. CORPORATE STRUCTURE:D. ORGANISATION STRUCTURE:E.ENERGY SCENERIO: Indian Energy Scenario World Energy Scenario
15%
2.
PRODUCT PROFILE 20%
The information regarding the product i.e. Natural gas is to be given. The information of the product would be mentioned on the basis of following aspects: Introduction
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Fundamentals of Natural Gas Sources of Natural Gas
3. UNIVERSAL MARKETING PROCESS

A background on the marketing process followed throughout including: Situation Analysis Marketing Strategy Marketing Mix Decisions Implementation And Control
15%
4. MARKETING PROCESS FOR NATURAL GAS

Process carried out by ONGC: Identification of the market Study of the product market Level of competition Costing of the product:- pricing policy, government regulation Procedure of allocation:- sales contract, negotiation, contract administration, credit policy.
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20%
5. COMPARING THE MARKETING PROCESS OF ONGC WITH OTHER MARKETING PLAYERS:Oil:- Cairn Energy, Reliance, Oil Gas:- GAIL
15%
6. SWOT ANALYSIS OF THE MARKETING PROCESS IN ONGC

a). Threats b). Government Regulations c). External Factors
15%
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INDEX
SR. NO TOPIC PAGE NO.
1.
BACKGROUND
10
2.
PRODUCT PROFILE
25
3.
UNIVERSAL MARKETING PROCESS
34
4.
MARKETING PROCESS FOR NATURAL GAS COMPARING THE MARKETING PROCESS PREVALENT IN ONGC WITH OTHER MARKETING PLAYERS SWOT ANALYSIS
39
5.
50
6.
62
7.
BIBLIOGRAPHY
67
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BACKGROUND
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A.
COMPANY PROFILE
1.
Introduction:Oil and natural gas corporation limited(ONGC). A Navratna Public Sector Enterprise, is one of the leading enterprise in the country with significant contribution in its industrial and economic growth. Born in a modest corporate house within serene Himalayan settings more than 45 years ago in 1956 as commission, ONGC has grown today into a full-fledged horizontally integrated upstream petroleum company with in-house service capabilities and infrastructure in the entire range of oil and gas exploration and production and related activities. ONGC, is its self-reliance and development of core competence an E&P activities at a globally competitive level. ONGC has entered the Golden Jubilee year on August 14, 2005. In these 50 years, it has transformed from a Directorate to a Commission to a Corporation. Significant changes in the functioning and scope of activities of the organization have taken place. As the Most Valuable Corporate of the country, the logo has been redesigned so as to reflect the changes while keeping the linkages. ONGC today, is repositioning itself to foster the principle of relational enterprise through partnerships/strategic alliances/joint ventures with preferred partners and adopt a business strategy which relies on company skills and positional assets with focus on core business areas and opportunity specific diversification.
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2. Fuelling the economy:To fuel the increasing energy requirements of this developing country, ONGC has accelerated huge amount of oil-equivalent gas from domestic and foreign acreages. The cumulative crude production by ONGC till date exceeds 633 MMT, apart from it they have also produced 326 BCM of natural gas so far. ONGCs role in the national economy is going to be significantly enhanced as the projected CARG(cumulative annual rate of growth) of its products is four times that of developed countries average.
3. Financials:ONGC occupies the numero uno slot among the corporate of the country, by emerging as the most valuable company of the nation, in terms of market capitalization as well as in terms of net worth. Posted a net profit of Rs. 167.016 billion, the Highest by any Indian Company.
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Net worth Rs. 699 billion. Practically Zero Debt Corporate.
4. Joint Venture Group:ONGC has recognized the need to expand its business through profitable ventures related to petroleum and energy sectors by entering into joint ventures with other Indian and foreign companies. ONGC-Joint venture group (ONGC-JVG) has been formed to give impetus to joint venture activities in areas other than E&P. ONGC-JVG is responsible for identification and developing of following new businesses:-
a.LNG Import and Marketing:A joint venture company, PETRONET LNG LIMITED is in place with ONGC having 12.5% equity interest for import and marketing of LNG in India. Other partners in this venture are IOC, GAIL and BPCL each with 12.5% equity. The remaining 50% equity will behad been offered to strategic partners, financial institutions and public. The company is planning to install two LNG terminals (Dahej in Gujarat and Cochin in Kerala) on western coast of India.
b.EXCOM Group:The EXPLORATION CONTRACT MONITORING (EXCOM) Group is the exclusive business face of ONGC for jointly operated oil & gas exploration and production ventures
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within India. It is the nodal agency of ONGC for single window E&P business communication with companies and the government. Its functions include:-
i.
Evaluation and negotiation of bids pertaining to exploration acreages and development of discovered fields under joint venture. Negotiation, of production sharing contracts (PCSC) and joint operation agreements (JOA) with parties to the contracts. Monitoring and co-ordination. Providing opportunities to companies for assessment of prospectively of Indian basins and investment decisions through its New Delhi office.
ii.
iii. iv.
5. Strategic / Business Alliances:ONGC is engaged in E&P activities both in onshore and offshore. The corporation is now venturing out to new areas i.e. deepwater exploration and drilling, exploration in frontier basins, marginal field development, optimization of field development plan field recovery and other allied areas of services sector. Engagement in these areas will require best-in-class technology, processes and practices and savvy use of the R&D assets to their fullest advantage. ONGC is looking towards companies / services providers established in the industry for technology transfer and absorption and technological collaboration and support. We intend to achieve this objective through alliances and sustained relationship.
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6. Mission and Vision: To be a world-class oil and gas company integrated in energy business with dominant Indian leadership and global presence. World class dedicated to excellence by leveraging competitive advantage in R&D and technology with involved people. Imbibe high standards of business ethics and organizational value. Abiding commitment to safety, health and environment to Enrich Quality of community life. Focus on domestic and international oil and gas exploration and Production business opportunities. Strive for customer delight through quality products & services.
7. Global Ranking: Ranks as the Numero Uno Oil & Gas Exploration & Production (E&P) company in the world, as per platts 250 Global Energy Companies for the year 2008. Is Asias best oil and gas company, as per a recent survey conducted by US-based magazine Global Finance.
Ranks 20th among the Global publicity-listed Energy Companies as per PFC Energy 50 (Jan 2008).
It is the only company from India in the Fortune Magazines list of the Worlds Most Admired Companies 2007.
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Ranks 24th among Global Energy companies by Market Capitalization in PFC Energy 50 (December 2005) Is recognized as the Most Valuable Indian Corporate, by Market Capitalization, Net Worth and Net Profits, is current listings of Economic Times 500(4th in a row). Has created the highest-ever Market Value-Added (MVA) and the fourth-highest Economic Value-Added (EVA) as assessed in the 5th Business Today Stren Stewart study, ahead of private sectors leaders like Reliance and Infosys.
ONGC is the only public sector company in India to achieve a positive MVA as well as EVA. Owns and operates more than 11000 kilometers of pipelines in India, including nearly 3200 kilometers of sub-sea pipelines. No other company in India operates even 50 percent of this route length. Crossed the landmark of earning Net Profit exceeding Rs. 10,000 crore, the first to do among all Indian corporate, and a remarkable Net Profit to revenue ratio 29.8 percent. Has paid the highest ever dividend in the Indian corporate history. Its 10% equity sale (Indias highest-ever equity offer) received unprecedented Global Investor recognition. This was a landmark in Indian equity market, establishing beyond doubt, the respect ONGCs professional management commands among the global investor community. According to a report published in The Asian Wall Street Journal, ONGCs public issue brought in 20 foreign institutional investors (FIIs) to India, they could not ignore the company representing Indias energy security.
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The growth in ONGCs Market Capitalization is unprecedented and except WIPRO no other Indian company has seen such a phenomenal growth. ONGC group has 14 properties in 10 foreign countries. Going by the investments ONGC is the biggest Indian multinational corporation.
8. Plans Ahead: To become a $50 billion company in 5 years. To ship LNG and crude oil from overseas fields is also in the pipeline. To set up three LNG-based mega power projects at Mangalore (1500 MW), Dahej (1000MW) and Ennore (1500MW). Rs. 10,000 crore will be invested to put up two petrochemical plants. Rs. 3,500 crore investment in an LNG regasification terminal at Mangalore. To setup LNG supplies at Qatar to 7.5 mtpa. To develop 53 offshore marginal fields.
9. New Discoveries:ONGC made six new discoveries-East Lakhibari in Assam, Degam in Cambay, Sonamuri in Tripura, Sitarampuram in Krishna Godavari Onland, G-4 in KG Offshore and NMT in Western Offshore. The reserve accretion during the year was 49.22 million metric tonne
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of oil equivalent (both domestic and overseas). During the last three years ONGC added 384.01 million metric tonne of oil equivalent. All this has added to the companys growth momentum.
10. ONGC, Vadodara- The Location:-
ONGCs Western Regional office is at Vadodara, Gujarat. It used to be the hub of activities for the whole of Western Region Business Group till a few years back. After the reorganization of the whole set up of ONGC under its Corporate Rejuvenation Campaign, the powers and responsibilities have been transferred to the respective assets, Vadodara is now home to the following offices and workshops of ONGC.
Regional office. Basin headquarters of the western region.
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Regional geophysics laboratories provides geophysical services to the western region exploration group. Central repairing workshop looks after the maintenance and repair of the vehicles and rigs of the western region. Infocom section for the western region provide infocom services to the western region. Well services of western region looks after the well services. Kasturba Gandhi health center provides medical services to the employees and their families including retired employees. Regional training institute. School of maintenance practices Logistic department Finance, personnel, legal, maintenance, marketing etc. departments of the basin and the regional office.
B.
INDUSTRY STRUCTURE:-
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PRODUCT PORTFOLIO
No need of marketing, because we need to import crude oil. WeONGC could only produce 26-30 million tons, while the capacity is of 70- 80 million tons.
Here marketing is relevant.
E.g.: LPG, Naphtha etc.
C.
CORPORATE STRUCTURE:21
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D.
ORGANISATION STRUCTURE:-
Mr. R S Sharma Chairman & Managing Director/Director (Finance)
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A.
1. INDIAN ENERGY SCENARIO:-
India is relatively well endowed with both exhaustible and renewable energy resources. Coal, oil and natural gas are the three primary commercial sources of energy. Over the years, there has been a significant change in the pattern of supply and consumption of energy. The share of commercial fuels in the total energy supply in India has risen from 41% to approximately to 75%, despite the dominance of the traditional fuels in the energy sector in India. Despite the increasing share of the commercial fields in the energy mix, non-commercial fuels still hold importance in the energy portfolio. More than 60% of the Indian households still depend on traditional sources of energy like fuelwood, dung, and residue for their energy requirements. Now lets have a categorical analysis of the forms of energy.
Coal
Coal has been the most important component of Indias energy matrix for a long time, accounting for nearly 50% of the total supplies. India holds 84.39 billion tones of proven coal reserves accounting for 8.6% of the worlds total. India now ranks third among the coal-producing countries in the world. Through a sustained programme of investment and greater thrust on application of modern technologies, it has been possible to raise the production of coal from a negligible level to noticeable level.
Oil
The early oil fields discovered in India were of modest size. Oil production in India amounted to 200,00 tons in 1950 and by early 1970s production had increased to more than 8 million tons. India has thirty five major fields onshore (primarily in Assam and Gujarat) and four major offshore oil fields (near Mumbai, south of Pondicherry). The government has
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sanctioned ambitious exploration plans to raise production in line with demand and to exploit new discoveries as rapidly as possible.
Indias need for oil and petroleum-based products about 40 million tons per year-far exceeded its domestic production capabilities of 28 million tons per year in the early 1990s. Given Indias dependency on Persian Gulf resources, proposals were made to develop pipelines from Iran, Qatar and Oman that would run under the Arabian Sea to one or more west coast terminals.
Natural gas
Indian gas consumption of natural gas has risen faster than any other fuel in recent years. A major development in December 2002 was the announcement by Reliance Industries of its discovery of a large amount of natural gas in the Krishna-Godavari Basin offshore from Andhra Pradesh along Indias southeast coast. Cairn Energy also reported natural gas finds in late 2002 offshore from Andhra Pradesh and Gujarat. Most of Indias current natural gas production takes place in the Mumbai High basin and the state of Gujarat. India is investing heavily in the infrastructure required to support increased use of natural gas. Indias Foreign Investment Promotion Board(FIPB) had approved 12 prospective LNG import terminal projects in the mid-to-late 1990s, but it was never considered likely that all would be built in the near future, as their combined capacity would have exceeded even the most optimistic demand projections. The Indian government froze approvals of the new LNG terminals in 2001, and payment problems at the Enron-backed Dabhol Power Plant in Maharashtra led many to question the financial viability of some of the LNG import projects. Reforms currently being undertaken in the electric power sector may eventually change this situation. In the wake of the problems with Dabhol, firms backing several other LNG projects pulled out of India in the second half of 2001. Dhaksin Bharat Energy, a consortium including CMS Energy and Unocal, also announced the cancellation of its planned LNG project at Enron. These LNG projects were cancelled largely in response to the Indian governments decision not to extend sovereign payment guarantees to power projects which were to have among the import terminals largest customers. Indias government has been considering reforms in its natural gas pricing mechanism, which is currently set by the government. Deregulation has been
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delayed several times, and buyers of natural gas from private sources such as the LNG terminal at Dahej pay prices much higher than those purchasing from the state-owned suppliers. With the shortage of natural gas and willingness of some customers to pay more, deregulation would likely lead to higher prices if implemented.
2. WORLD ENERGY SCENARIO:Energy Developments

World primary energy consumption increased by 2.4% in 2007 down from 2.7% in 2006. The Asia-Pacific region accounted for two-thirds of global energy consumption growth, rising by an above-average 5%, even though consumption in Japan declined by 0.9%. China again accounted for half of global energy consumption growth. Indian consumption grew by 6.8%, the third largest volumetric increment after the China and the US. EU energy consumption declined by 2.2%, with Germany registering the worlds largest largest decline in energy consumption.
Oil
Crude oil averaged $72.39 per barrel in 2007, an increase 0f 11%. Global oil consumption grew by 1.1% in 2007, or 1 million barrels per day, slightly below the 10-year average. Consumption in the oil-exporting regions of the Middle East, South and Central America and Africa accounted for twothirds of the worlds growth. Global oil production fell by 0.2%, or 130,000 b/d, the first decline since 2002. OPEC production dropped by 350,000 b/d due to the cumulative impact of production cuts implemented in November 2006 and February 2007. Oil production growth outside OPEC remained weak, rising by 230,000 b/d in 2007. Global oil consumption grew by 1.1% in 2007. Consumption growth was robust in oil-exporting countries. International trade in crude oil and refined products rose despite OPEC production cuts and rising domestic consumption in oil-exporting countries. Much of this growth was in refined products, a reflection of imbalances and constraints in the worlds refining system. World primary energy consumption increased by 2.4% in 2007.
Natural Gas
World natural gas consumption grew by an above-average 3.1% in 2007, although only North America, Asia Pacific and Africa recorded aboveaverage regional growth. The US accounted for nearly half of the worlds gas
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consumption growth, driven by cold winter weather and strong demand for gas in power generation. Natural gas accounted for nearly all the growth in US energy consumption. Chinese consumption grew by 19.9% and accounted for the second-largest increment to global gas consumption. Gas production rose by 2.4% in 2007. EU production declined by 6.4%, with UK output falling by 9.5%, the worlds largest volumetric decline for a second consecutive year. China & Qatar recorded the second and third-largest increments to production, increasing by 18.4% & 17.9% respectively. US gas consumption increase in 2007 is 6.5%. International trade in natural gas weak again in 2007, growing by 2.3%, less than half the 10-year average. Consumption of natural gas worldwide is envisioned to increase from 100 trillion cubic feet in 2004 to 163 trillion cubic feet in 2030 in the IEO2007. By energy source, the projected increase in natural gas consumption is second only to coal. Natural gas remains a key fuel in the electric power and industrial sectors. As natural gas burns more cleanly than coal or petroleum products, and as more governments begin implementing national or regional plans to reduce carbon dioxide emissions, they may encourage the use of natural gas to displace liquids and coal.
Historically, world natural gas reserves have, for the most part, trended upward. As of January 1, 2007, proved world natural gas reserves, as
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reported by Oil & Gas Journal, were estimated at 6,183 trillion cubic feet. The largest revision to natural gas reserve estimates were reported for Kazakhstan, Turkmenistan, & China. Almost three-quarters of the worlds natural gas reserves are located in the Middle East and Eurasia. Russia, Iran, and Qatar combined accounted for about 58% of the worlds natural gas reserves as of January 1, 2007. Worldwide undiscovered natural gas is estimated at 4136 trillion cubic feet. Of the new natural gas resources expected to be added through 2025, reserve growth accounts for 2347 trillion cubic feet.
Fuel-wise Energy Consumption in 2006 (%)

Fuel Oil Natural Gas Coal Hydro Nuclear Total India 28.42 08.45 56.17 06.01 00.94 100.00 World 35.76 23.67 28.41 06.33 05.84 100.00
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PRODUCT PROFILE
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I. NATURAL GAS
Natural gas, crude oil, and coal are collectively known as hydrocarbons. Also called petroleum compounds, hydrocarbons are made up of the elements hydrogen and carbon, plus impurities. A wide variety of distinctly different hydrocarbon compounds, each with a different proportion of these two main elements, is encompassed within the general terms natural gas and crude oil. The lower the number of carbon molecules, the lighter the compound, and the more likely the hydrocarbon will be found in the gaseous phase. Crude oils contain longer chains of carbon molecules and are heavier than gas; they are more likely to be found in liquid phase. Coal is usually found in the solid phase and contains even longer chains of carbon molecules. As a strict definition, natural gas consists of hydrocarbons that remain in the gas phase (not condensable into liquids) at 20C and atmospheric pressure, conditions considered to be standard temperature and pressure (STP). This effectively limits the definition to components with four or fewer carbon molecules: methane (C1H4), ethane (C2H6), propane (C3H8), and butane (C4H10). Hydrocarbons with more carbon molecules are liquid at standard conditions but may exist in gaseous phase in the reservoir. A more practical definition of natural gas (see figure below) includes the C5+ components that are produced with natural gas. Pentane (C5H12) begins the series that includes condensates. Natural gas definitions do not include components heavier than hexadecane (C16H34) that are produced and found as liquid or solid waxy compounds. These may be considered compounds in the crude oil family.
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Methane is the main component of natural gas, usually accounting for 70%90% of the total volume produced. If gas contains more than 95% methane, it is sometimes termed dry or lean gas, and it will produce few, if any, liquids when brought to the surface. Gas containing less than 95% methane and more than 5% of heavier hydrocarbon molecules (ethane, propane, and butane) is sometimes called rich gas or wet gas. This gas usually produces hydrocarbon liquids during production. Methane is the most common component transported by pipelines and converted to liquefied natural gas (LNG). LNG is the liquid product produced by cooling methane to 161.5C. Methane may also be converted to liquid fuels through gas-to-liquids (GTL) processes. Methane is the main component of natural gas that power stations and industrial and residential users consume. Liquefied petroleum gas (LPG) refers specifically to propane and butane when they are stored, transported, and marketed in pressurized containers. Natural gas liquids (NGLs) include components that remain gaseous at both reservoir and surface conditions. These include ethane, propane, and butane, and components that exist with the gas in the reservoir but become liquid on the surface, such as condensates and natural gasoline. Condensates are lowdensity liquid mixtures of pentanes and other heavier hydrocarbons. Natural gas can also contain non hydrocarbon components such as carbon dioxide (CO2), hydrogen sulfide (H2S), hydrogen, nitrogen, helium, and argon. All of these impurities, especially the first two, CO2 and H2S, must be removed from the natural gas stream prior to sale. Gases with high levels of H2S are also called sour gas, referring to the sour smell of sulfur. Conversely, gases with low levels of H2S are termed sweet gases and can be directly sold to consumers. Sour gases usually require treatment to remove sulfur prior to sale.
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II. FUNDAMENTALS OF NATURAL GAS
Natural gas is a gaseous fossil fuel consisting primarily of methane but including significant quantities of ethane, propane, butane, pentane and higher hydrocarbons as well as carbon dioxide, nitrogen and hydrogen sulphide. It is found in oil fields in either dissolved or isolated conditions (as associated gas), in gas fields (as free or non-associated gas) and in coal beds(as coal bed methane).
Constituents of Natural Gas:The composition of natural gas, as produced from the earth, varies widely depending on the field, the formation, or the reservoir from which it is produced. It is a complex mixture of hydrocarbons normally consisting of Methane, Ethane, Propane, Butane and heavier hydrocarbons, which can exist in gaseous form in ambient pressure and temperature. Its components are normally called by the number of carbon atoms in the component molecule as C1 (Methane), C2 (Ethane), C3 (Propane), etc. Methane is the major constituent of natural gas. All the hydrocarbon components of natural gas can be used as fuel for power plants and as fuel for other industries and domestic purposes. The C1 (Methane) component is used as feedstock for fertilizer industry. The C2,C3 components are used as feedstock in petrochemicals industry. The C3 & C4 fractions of natural gas are extracted in 1:1 weight ratio to make Liquefied Petroleum Gas (LPG). The other heavy hydrocarbon components are used as solvents and feedstock for various other chemical industries. Prior to the separation of heavier hydrocarbon components (C3+), the gas is known as rich gas and after extraction of the heavier hydrocarbon (the balance being C1&C2), the gas is known as lean gas. From marketing
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viewpoint, it is important to remember that while all fractions of the rich gas can be as such used by fertilizer and power plants as feedstock or fuel, the value added to the C2, C3, C4, C5 and heavier fractions is greater when they are used for the production of LPG.
Natural Gas Processing:-
All natural gas is processed in some manner to remove unwanted water vapour, solids and/or other contaminants that would interfere with pipeline transportation or marketing of the gas. Natural gas is processed to separate those non-methane hydrocarbon fraction to store, transport and market them in liquid states that have higher value as separate products. Most of the carbon dioxide in natural gas is removed to prevent corrosion and can be injected into crude oil reservoirs for enhanced oil recovery. In addition to gas conditioning and liquids production, gas processing performs vital functions, both economically and technically, in the recovery of crude oil through reservoir pressure maintenance, miscible floods.
Liquefied Natural Gas (LNG):LNG is natural gas reduced to a liquid state by cooling it to 161 C. Once liquefied, the natural gas is more compact occupying 1/600th of its gaseous volume. This compares to a volume reduction by a factor of around 80 for Compressed Natural Gas (CNG) at 80 bar and normal temperatures. Natural gas, in liquid state, can be cost effectively transported from far off gas fields to the user markets.
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LNG is transported in special ocean going tankers and brought to the receiving shore based regasification terminal and transported through a pipeline to consumers.
Merits & Advantages of Natural Gas:-
Natural Gas is clean fuel offering higher thermal efficiencies and better feedstock for fertilizers. Gas turbine power plants have lower capital cost, shorter generation period and have shorter start-up time to cater to peak load of power requirement. It contains low sulphur making it ideal fuel for transportation purpose. It is lighter than air and therefore safer as in case of leakage it does not tend to accumulate and settle down. There is no storage needed at the users end which means that they can productively use the space and not worry about running out of stored fuel. Consumers are billed for the fuel that actually enters their premises unlike in all other fuels where they are billed for the quantity that has gone out of the supplier premises.
III.
SOURCES OF NATURAL GAS:-
Gas Reserves:Total proven reserves of natural gas in India, as of 01.04.2007, are estimated at about 1,055 BCM, which is a mere half per cent of total gas reserves worldwide.
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At the current production level, Indias reserves are likely to last only around 30 years against 67 years worldwide. Offshore reserves account for nearly 70 percent with onshore contributing to the remaining 30 per cent of Indias proven gas reserves.
Gas Supply:The gas supply scenario in India could be studied under the following five categories of supply:-
i. ii. iii. iv. v.
Domestic Supply The LNG Option Trans border pipelines CBM Gas Other Supply Sources
i.
Domestic Supply:The country witnessed a boom between 1980 & 1996 when natural gas production grew almost ten times from 2.36 BCM to 22.64
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BCM. Gas production witnessed a more sedate growth from 23.25 BCM in 1996-97 to 32.27 BCM in 2007-08.
Projected Production of Natural Gas during the 11th Five Year Plan (2007-12)
All figures in MMSCMD
Company ONGC OIL
200708 60.55 8.58
200809 61.73 8.79 61.78 132.3
2009-10 62.38 8.9 80.58 151.86
2010-11 62.99 8.99 78.82 150.8
201112 60.27 9.75 103.2 173.22
JV/Pvt.Cos 23.42 Total 92.55 Production
Around 70% of Indias gas production comes from offshore fields, with onshore fields contributing the remaining 30%. The key onshore gas producing regions in India are Gujarat, Andra Pradesh & the North East. Reliance, GSPC & ONGC have made significant gas discoveries in Krishna Godavari Basin. The Reliance discovery, which was made in 2002, is expected to bring about 40 MMSCMD of gas to the market in early 2009. GSPC, which made it discovery in September 2005 is expected to bring gas to the market by 2011-12.
ii.
The LNG Option
LNG is the most immediate source of gas supply. LNG is the most secure option under certain geo-political situations, it is also
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viable if the distance between the producing nation and the user nation is over 1000 km. Indias proximity to the Middle-East and to the South-East Asia has made LNG a considered or preferred gas import option because of the perceived high political risks associated with piped gas options. Besides the 5 MTPA Dahej LNG terminal and the 2.5 MTPA LNG terminal at Hazira, which are already optional, the 2.5 MTPA Dabhol LNG Terminal is expected to be operational by 2009-10. A fourth LNG Terminal at Kochi which can be expanded to 5 MTPA is being implemented by PLL and is expected to be commissioned by 2010-11.
iii. Cross-border Pipelines
In India, projects such as Iran-Pakistan-India pipeline, the Myanmar-India pipeline & the Turkmenistan-Afghanistan-PakistanIndia pipeline are receiving the highest attention from their respective governments. The Iran-Pakistan-India pipeline project seems to be moving ahead the fastest.
iv. CBM Gas
Coal Bed Methane (CBM) gas is a natural gas found in association with coal. The CBM development, extraction and processing are more capital intensive than the conventional gas business chiefly due to low yield per well. The DGH is the nodal agency for the regulation and development of CBM in India. There have been three rounds of bidding under the national CBM policy framed in 1997. The policy allows the developer to sell the CBM
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within India to customers on purely commercial principles and the market determined prices. About 26 CBM blocks have been awarded in three rounds so far. These blocks are located in Jharkhand, Madhya Pradesh, Chhattisgarh, West Bengal, Maharashtra, Rajasthan, Gujarat & Andra Pradesh. About 13,600 sq. km. of area is currently under the exploration and the total reserves in these blocks are estimated to be 1,374 BCM with a product potential of 38 MMSCMD.
Proposed CBM production during11th Plan (MMSCMD)

ONGC Private/JV Total 200708 0.82 0.44 1.26 200809 2.14 1.31 3.45 200910 2.14 3.07 5.21 201011 2.14 5.48 7.62 201112 2.05 8.76 10.81 Total 9.29 19.06 28.35
Planning Commissions report of the sub group on natural gas for the 11 five year plan estimates that CBM production during the 11th plan period could be 28.35 MMSCMD. A third of this quantity is to be produced by ONGC and the rest by private sector or JV firms.
th
v.
Other Supply Sources
Apart from the above, other supply sources include gas hydrates and underground coal gasification. As there is no appropriate
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commercial proven technology for production of gas from gas hydrates therefore this source is highly unlikely to fructify in the near future. As for the underground coal gasification (UCG), ONGC has plans to produce 2.7 MMSCMD of gas through UCG process.

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Under the marketing concept, the firm must find a way to discover unfulfilled customer needs and brings to market products that satisfy those needs. The process of doing so can be modeled in a sequence of steps: the situation is analyzed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are made, the plan is implemented and the results are monitored.
The Marketing Process Situation Analysis
Marketing Strategy
Marketing Mix Decision

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Implementation & Control
I. Situation Analysis:-
A thorough analysis of the situation in which the firm finds it serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. In addition to indentifying the customer needs, the firm must understand its own capabilities and the environment in which it is operating.
The situation analysis thus can be viewed in terms an analysis of the external environment and an internal analysis of the firm itself. The external environment can be described in terms of macro-environmental factors that broadly affect many firms, and micro-environmental factors closely related to the specific situation of the firm.
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The situation analysis should include past, present, and future aspects. It should include a history outlining how the situation evolved to its present state and an analysis of trends in order to forecast where it is going. Good forecasting can reduce the chance of spending a year bringing a product to market only to find that the need no longer exist.
If the situation analysis reveals gaps between what consumers want and what currently is offered to them, then there may be opportunities to introduce products to better satisfy those consumers. Hence, the situation analysis should yield a summary of problems and opportunities. From this summary, the firm can match its own capabilities with the opportunities in order to satisfy customer needs better than the competition.
There are several frameworks that can be used to add structure to the situation analysis:
5C Analysis:- Company, customers, competitors, collaborators, climate. Company represents the internal situation, the other four cover aspects of the external situation.
PEST Analysis:- for macro-environmental political, economic, societal, and technological factors. A PEST analysis can be used as the climate portion of the 5 C framework.
SWOT Analysis:- strengths, weaknesses, opportunities, and threats- for the internal and external situation. A SWOT analysis can be used to condense the situation analysis into a listing of the most relevant problems and opportunities and to assess how well the firm is equipped to deal with them.
II. Marketing Strategy:42 ITM, WARANGAL
Once the best opportunity to satisfy unfulfilled customer needs is identified, a strategic plan for pursuing the opportunity can be developed. Market research will provide specific market information that will permit the firm to select the target market segment and optimally position the offering within that segment. The result is a value proposition to the target market. The marketing strategy then involves:
Segmentation Targeting(target market selection) Positioning the product within the target market Value proposition to the target market.
III. Marketing Mix Decisions:

Detailed tactical decisions then are made for the controllable parameters of the marketing mix. This include the:4 P Analyses-Product, Pricing, Place, Promotion. These four elements are often referred to as the marketing mix, which a marketer can use to craft a marketing plan. The 4 Ps can be more easily analyzed by the following representation:Product Solution Promotion Information Price Value
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Place Access
IV. Implementation and Control:At this point in the process, the marketing plan has been developed and the product has been launched. Given that few environments are static, the results of the marketing effort should be monitored closely. As the market changes, the marketing mix can be adjusted to accommodate the changes. Often, small changes in consumer wants can address by changing the advertising message. As the changes become more significant, a product redesign or an entirely new product may be needed. The marketing process does not end with implementation continual monitoring and adaptation is needed to fulfill customer needs consistently over the long-term.
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MARKETING PROCESS FOR NATURAL GAS
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Marketing Process that is followed in ONGC :There are certain things which are common but how it is followed individually is different. In this part I am trying to explain the same fact. ONGC as a company has various process of marketing, though this department is very small. But as we say the eyes are very small part of a body but there importance is much more than its size, this is the same case with ONGC. Now the process that is followed here is as follows:-
1.
Identification of the product :-
In this part the product that were mentioned earlier are identified through technical process and thus further action is take the products are divided according to the demand of the product. The production party determines the products that are found inside the earth and accordingly they are further marketed.
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2.
Study of the product market :-
When you have competitors like reliance and various global competitors. So in such a case you need to study the product market deeply and find out various rules that are to be followed, in case of ONGC they also need to take into consideration the government rules & regulations and then take action.
3.
Level of competition :-
ONGC faces competition that can be matched with the competition in FMCG sector. It has to direct the competition from the global arena as well as the domestic field. ONGC has to work according to particular norms. Direct competitors are a large external pressure for ONGC. This is not just for ONGC though. The oil & gas industry is a very intense industry. Possibly the biggest and most formidable that ONGC has faced has been the China National Petroleum Corporation. ONGC already faced fierce competition and lost to CNPC twice in 2005for bids in oil fields. They lost in the $4.2 billion takeover of PetroKazakhstan and the billion Ecuador oilfield sale by North American producer EnCana. Some major competitors in the oil & gas industry are Chevron Corp, Total, Exxon Mobile CP, BP PLC & Petrochina CO ADS. These are huge players and one that ONGC is very far from competing with. Even the smaller companies are threatening ONGC.
4.
Costing of the product :-
Pricing policy, government regulation. Procedure of allocation sales contract (GSA & COSA), negotiation, contract administration, credit policy. These are the various facts that are to be considered. Since ONGC is a government embedded company that deals in oil and gas so it has to follow the global price as well as the government set price through NELP.
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Gas Transportation:The existing gas transportation infrastructure in India can handle transmission / distribution of about 140 MMSCMD. Most of this infrastructure is concentrated in western & north western India. It facilitates the bringing of gas onshore from the western offshore fields & its transmission to end users. The largest cross-country transmission system is the HBJ trunk pipeline system (2700 km long) which runs through Gujarat, Madhya Pradesh, Rajasthan, Uttar Pradesh, Haryana & Delhi. A 23 MMSCMD capacity pipeline connecting Dahej to Vijapur (610 km) has also been completed. In Gujarat, besides GAILs network, Gujarat Gas has a pipeline system of 116 km of transmission lines and 1800 km of distribution lines. In Assam, Assam Gas Company has an additional network of 560 km of trunk pipelines and 1150 km of distribution pipelines. Gas retail companies such as Indrapastha Gas and Mahanagar Gas have their pipeline networks. In addition, there is the ambitious national grid being developed by GAIL. GAIL & Reliance, among others, are also planning city gas distribution projects across the country.
Gas Demand
The demand for natural gas continues to outpace supply. The first major consumption surge during 1985 to 1995 coincided with the formation of GAIL and the laying of the HBJ
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pipeline. With increasing gas supply from private and JV parties as well as LNG companies, government has done away with allocations except for the public sector fertilizer and power industries. The two biggest natural gas customer segments in India are power plants and fertilizer producers. This is followed by other segments petrochemicals, city gas (CNG/PNG), LPG / Other Liquid Hydrocarbons and sponge iron / steel sector. The demand from the power segment comes from gas fired power plants, located along the HVJ pipeline and in Tamil Nadu, Andhra Pradesh and Maharashtra including Mumbai. NTPC is the biggest consumer. Other key customers include, Maharashtra State Electricity Board, Gujarat Powergen Energy Corporation, GVK Power & Infrastructure and Spectrum Power Generation. The customers in the fertilizer segment are urea producers with nitrogen based plants. The biggest customers in this category include, IFFCO, National Fertilizers Limited, Oswal Fertilizers. Industrial users are mainly from the sponge iron, petrochemicals, textiles and glass industries. Major industrial customers include, IPCL, Essar Steel, Ispat Steel, Usha and Maruti Udyog.
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GAS PRODUCING REGIONS IN ONGC:-
ONGC is the largest natural gas producer in India. In 2006-07, ONGCs natural gas production was about 77% of the total gas produced in the country. Natural gas is produced by ONGC both at offshore and onshore locations in India. The major production is in the offshore (about 74% in 2006-07). Details of producing locations are given below:-
Mumbai High Asset Western Offshore Neelam & Heera Asset Bassein & Satellite Asset Ahmedabad Asset Mehsana Asset Ankleshwar Asset Rajasthan, Western Onshore Basin
Western on shore Region
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Eastern Region
Assam Asset Tripura Asset
Southern Region
Rajahmundry Asset
DECISION FLOW DIAGRAM FOR SALE OF GAS
Information of gas availability
Due vetting from IRS & profile confirmation for quantity, pressure & duration
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IRS confirms 53 the profile
NO
YES Market Survey for probable consumers including DM and Institutional buyers like GAIL, GSPCL.
YES
Finalise allocation to the consumer as per ONGC policy
NO
Get approval for the consumer/price Negotiate and sign GSA with the Consumer
Get approval for calling tenders for finalizing the consumer and follow approved terms & conditions
Issue allocation letter to the selected consumer and construct CTP and start supply
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Gas Processing
The type and extent of natural gas processing depend on the original gas composition and the specifications of the consumer. Most produced gas must be treated before the consumer can use it, and there were nearly 2,000 gas processing plants operating around the world as of mid-2006. These plants range from relatively simple plants, where oil, impurities (if present), and water are removed from the produced gas, to complex plants. In the latter, various hydrocarbon compounds are separated from the gas stream and large quantities of gas, liquids, and water are handled, as per figure below.
Gas processing is necessary for the following reasons:

Sales gas specifications. Customers demand that gas delivered to them meets certain compositional and pressure specifications. Pipeline transport. Pipelines, especially those that aggregate gas from multiple gas fields, often specify the composition of the feed gas to maintain pipeline flow and reduce corrosion. Produced field gas may be processed to remove solids (such as sand), water, CO2, and H2S. CO2 and H2S are highly corrosive compounds, and they may have to be removed prior to transportation or further processing, or both. Liquids recovery. NGLsethane, propane, butane, and condensates that can be recovered as liquids on the surface are often removed from the natural gas stream and sold separately. Petrochemical and other consumers often buy NGLs directly from the gas producer, which may transport NGLs to them by ship or dedicated pipelines.
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LNG (and GTL) feedstock specifications. LNG plants have rigid and tight specifications for their feed gas. Any impurities in the gas, especially water, CO2, and heavier hydrocarbons, will seriously impact their LNG production. Thus, gas producers selling to LNG plants will be required to pretreat all feed gas to the LNG plants.
Water, which is often produced with natural gas, must be removed to prevent corrosion.
Gas Production
Gas production methodology is a function of the type of gas reservoir and the production stage in the life of the particular reservoir. A simple oil and gas reservoir may initially produce high volumes of oil relative to gas, but as the oil production and reservoir pressure decline, an increasing amount of gas may be produced. This increases the gas/oil ratio (GOR) of the produced hydrocarbons. Reservoir management may dictate producing oil first, using the natural gas pressure to increase oil recovery rates. As the GOR increases, reservoir pressure may be too low for natural production, and without secondary production methods, production will eventually cease from the reservoir. In this case, the total recovery factor could be as low as 20%40%, leaving 60%80% of the original hydrocarbonsboth oil and gasin place. Field development plans incorporate reservoir models derived from all available reservoir information. Petroleum engineers use these models to plan the location of field development wells. The figures below show a typical onshore and offshore field development. The main difference between the two developments is that offshore development wells are usually tied to a fixed platform with a set number of slots or well bores. An offshore platform may have a large number of slots, each leading to a well deviating away from the platform, draining a specific portion of the reservoir.
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Drilling The process of drilling a gas well is quite easy to understand. The sequence is shown below.
Frame 1 shows the drilling pipe with the drill bit penetrating virgin rock. Drilling mud, indicated by arrows, is pumped inside the drill pipe. Drilling mud allows rock cuttings to be brought to surface, cools the drilling bit, and maintains hydrostatic pressure in the well bore, preventing reservoir fluid from rising to the surface. After drilling to a certain depth, the drill pipe is removed, and casing pipe is inserted into the well and cemented in place. Frame 2 shows a smaller drill bit drilling beyond the depth of the initial casing. At a deeper point, the drill pipe and bit are removed, and a smaller diameter casing is inserted and cemented in the newly drilled section. This process is repeated (in
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Frame 3) with a smaller drilling bit and smaller casing diameter until the desired reservoir depth is reached. At that point, the well is perforated to allow reservoir fluids to enter the well bore. Smaller pipes, called tubing, are usually inserted in the well bore to channel the flow of hydrocarbons from the subsurface to the surface valves and pipelines.
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COMPARING THE MARKETING PROCESS PREVALENT IN

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ONGC WITH OTHER MARKETING PLAYERS
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MERGEFORMATINET
CAIRN ENERGY
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Cairn India is the fourth largest oil & gas exploration & production company in India and has a working interest in 14 blocks. Two of these are currently producing hydrocarbons. Cairn India is focused on creating shareholder value by developing its world class resource base in Rajasthan and seeks to continue with its track record of exploration success. Cairn Indias portfolio is fostered in both mature & frontier areas, as well as in regions & basins where the current data set can be optimized or reinterpreted.
Cairn India has two processing plants, 11 platforms, 200 km of sub-sea pipelines & operations spanning the Indian continent. The company operates the largest producing oil fields in the Indian private sector and has pioneered the use of cutting-edge technology to extend production life. Three of the fields Ravva, Lakshmi & Gauri are already producing more than 80,000 barrels of oil equivalent per day on behalf of Cairn and its joint venture (JV) partners.
Cairn India has maintained a low operating cost base through efficient operations. Part of its strategy, the Companys has focused on life-cycle planning & continuous monitoring & control of operational costs as well as applying innovative operating concepts & technologies. Cairn India sells its oil to four major refineries across India and its gas to both public and private sectors.
Exploration
More than 30 Hydrocarbon discoveries: Onshore Shallow Offshore Deep Offshore
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Development
Fast-track development Lakshmi gas field discovery in May 2000 and first gas by October 2002. Ravva developed from a 3,700 bopd field to 35,000 bopd field in 26 months, now producing over 50000 bopd. Mangala FDP approved within 30 months from discovery.
Production
Operates the largest producing field in Indian Private Sector Combined field direct opex of Ravva & Cambay is $1/boe Pioneered use of cutting edge technologies to extend production life.
Sales
Gas sales contract with public and private buyers Oil sales to four major refineries across India Efficient sales management of $1 bn gross annual revenue in 2006.
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MERGEFORMATINET
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RELIANCE INDUSTRIES LIMITED

RIL is the largest Oil & Gas acreage holder among the private sector companies in India with 33 domestic exploration blocks covering an area of about 337,000 sq. km. This is in addition to its interest in three exploration blocks in Yemen, two each in Oman and Columbia and one each in East Timor and Australia covering an area of about 38,000 sq. km. RIL also has 5 coal bed methane (CBM) blocks covering an area of about 4,000 sq. km. RIL is Indias first private sector company in the Exploration and Production (E&P) sector to have discovered large gas reserves. The E&P strategy of RIL is aimed at further enhancing the level of vertical integration in its energy business, and realizing value across the entire energy chain, while fulfilling important national priorities. Exploration and production of oil and gas is critical for Indias energy security and economic growth. Reliances oil and gas exploration and production business is therefore inexorably linked with the national imperative. Exploration and production, the initial link in the energy and materials value chain, remains a major growth area and Reliance envisions evolving as a global energy major.
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GAIL (INDIA) LIMITED

GAIL (India) Limited, is Indias flagship Natural Gas company, integrating all aspects of the Natural Gas value chain (including Exploration & Production, Processing, Transmission, Distribution and Marketing) and its related services. Ina a rapidly changing scenario, we are spearheading the move to a new era of clean fuel industrialization, creating a quadrilateral of green energy corridors that connect major consumption centers in India with major gas fields, LNG terminals and other cross border gas sourcing points. GAIL is also expanding its business to become a player in the International Market. Every cloud has a silver lining and every adversity hides an opportunity. GAILs Exploration and Production (E&P) unit was born in just such a scenario. As the Indian Economy opened up around the year 2000, the business environment changed dramatically. For GAIL, liberalization meant competition in our core business i.e. midstream and downstream national gas distribution. No longer could we rely on statutory support mandating secured sources of Natural Gas for GAIL. The reserves contained in existing contracted fields were fast depleting. The writing was on the wall that we had to find new sources. Apart from securing sources for Natural Gas, there were other compelling reasons for GAIL to get into E&P: Integration in supply-chain Large gap in Gas demand and supply National Gas security Balancing of Business portfolio Global opportunity
August 2001, therefore, saw the launch of GAILs Exploration & Production (E&P) unit. Initially, NELP rounds were targeted, and we won 12 blocks under four NELP rounds. GAIL also clinched a chunk of the much sought after A-1 block in Myanmar, in its maiden international E&P venture.
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The year 2004 placed GAIL firmly on Indias E&P map, with the dual strike of gas in Myanmar and oil in Cambay. We are also acquiring international acreages and actively pursuing various international E&P opportunities.
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MERGEFORMATINET
OIL INDIA LIMITED
OILs systematic and scientific approach to exploration has been rewarded with a high success ratio of 65% of exploratory wells drilled. OIL also possesses 2D and 3D seismic data acquisition capabilities, with excellent support services ranging from satellite navigation systems to remote blasting units.
OIL owns a vast array of advanced computing systems and experienced personnel to process and interpret geo-scientific data through integrated
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exploration applications such as Remote Sensing, Structural and Stratigraphic Interpretation, Seismic Attribute Analysis, Source Rock Evaluation, Biostratigraphy, Petrophysics, Sequence Stratigraphy, Basin Analysis etc.
To minimize land acquisition time, OIL has resorted to cluster well drilling to develop its oil and gas fields, which has resulted in protection of green belts surrounding OILs operational areas.
OILs all round excellence in performance is attributed in part to efficient well drilling by the rig building team and proper maintenance of equipment at the companys well equipped Workshop, which has achieved a peak performance level of over 20,000 m/rig year.
Analysis
Political Environment
The political environment in India is one of a federal republic. ONGC is state-owned but this does not mean that the GoI is good for ONGC or doing things in the best interest of ONGC right now. The proposed mergers of HPCL, BPCL, with ONGC, and Oil India with IOC were the GoIs ideas. This produced an uproar and the mergers we set aside, but not without the GoI stating that the government will have to restrict the respective companies to their core businesses. ONGC is also being made by the GoI to focus on the exploration and production (E&P) of oil and gas. ONGC had been starting to move downstream and diversify its business by going into
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the refining and retailing business but the GoI put a halt to this. The positive side of having the political backbone of ONGC is that it gives the company stability and some security. When ONGC started they had multiply protection policies in place that kept them safe from global competition. As the years went by, the GoI deregulated the industry and took away the state protection policy that kept ONGC safe. This has lead to new opportunities but it has also opened the door to a lot more threats. With the GoI focusing so much on oil & gas E&P and forcing ONGC to focus on it as well, it is seemingly making E&P core rigidity for the company.
Economical Environment
India is one of the fastest and largest growing countries in the world right now. Indias population has already reached over one billion people and continuous to grow rapidly. India is a part of the B.R.I.C., which stands for Brazil, Russia, India and China, which are four of the fastest emerging
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and rapidly growing countries. With all these economic developments have also brought about a huge demand for energy, in which ONGC is the main player in India. This gives them a great advantage because there is a huge economic demand for oil & gas.
Technological Environment
The technological environment in India is rapidly increasing. As the country continues to grow, so also is the technology. With respect to oil industry, ONGC was behind technologically, but has since put much needed money and focus on technology. ONGC realized that they were behind in the technological environment and this was creating a huge weakness with respect to their competitors. ONGC has turned what once was a weakness into strength though. One such example was the acquisition of technology to meet Euro II standards through the purchasing of MRPL. ONGC also implemented advanced technologies such as Increased Oil Recovery, Enhanced Oil Recovery and Supervisory Control and Data Acquisition. Another great technology that they implemented, that really gives them a competitive advantage of the Virtual Reality Interpretation Center, which is regarded as one of the ten bests such systems in the world for applications in exploration. This greatly enhances their ability for oil recovery and also for a competitive advantage. Other great technological advance was the implementation of an ERP, MIS and inventory control system. ONGC also implemented a completely digitized magnetic media seismic library, which is considered the one of the best in the world. This was a much needed improvement in technology overall their previous year to help compete on the world market. It cannot be emphasized enough how important
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technology is in a large corporation like this battling in a market that is very tough and depleting.
Global Environment
The global environment is a very competitive environment with respect to oil and gas exploration. With the continued depletion of these nonrenewable fossil fuels the competition to secure oil and gas reserves is very intense. In 2005, ONGC lost a bid to the Chinese company China National Petroleum Corporation to secure oil reserves in Canada and has since lost more battles such as this. On the world market ONGC is not the biggest player. Globally, the giant oil companies have seen an integration into other downstream elements of the oil industry to create a competitive advantage. ONGC not only faces competition from the global market, they also are in a race with each other with regards to integration and the way these major oil companies are run.
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FIVE FORCES
THREAT OF ENTRANTS
The threat of new competition all depends on what the existing barriers there are to enter that market. Such types of barriers include: economics of scale, product differentiation, capital requirements, switching costs, access to distribution channels, cost disadvantage independent of scale, and government policy. ONGC is at the top of their game. It is the leading oil company in India. This company is the most valuable company in India, contributing 77% of Indias crude oil production and 81% of Indias natural gas production. At this point ONGC is buying all the shares from other oil companies in India. It will take a lot of start up costs and good land to even begin. After 45 years, ONGC is not going anywhere, but probably spreading itself out even further.
THREAT OF BUYERS
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Buyers have a lot of power over how well ONGC does. Without buyers there is no business. If whole company decides to stop buying ONGC products that could very well hurt ONGC. It is important to stay close with customers so that they do not adventure elsewhere. ONGC must try to find the right to charge for its products. If the gas becomes too much, people will eventually goes elsewhere.
THREAT OF SUBSTITUTES
People are becoming very concerned about the environment and want to do everything in their power to preserve it. If oil and gas are harming the environment then ONGC will lose a lot of customers. Natural gas and electric are safer for the environment. ONGC must find better ways of exploration and production because if they do not someone else will. There are thousands of labs full of people trying to figure out the best alternative resource. Since people do need energy though, ONGC will not be out of business anytime soon.
THREAT OF SUPPLIERS
At this point in ONGCs age, suppliers can be easily replaced. This company is so big now days that any supplier would love to work with it. It is always better to be on the safe though. People can never really trust anyone to be fair when money is involved. As ONGC expands and begins to outsource more, the company must make sure that it is not working with the wrong type of people. This company has to be careful because it has so many people and other businesses working with it.
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THREAT OF RIVALRY
ONGC has become a leading energy company. There is not much competition in India with this company. ONGC is ranked 1st among E&P companies in Asia, 3rd among global E&P companies and 23rd among Global Energy Companies-Platts top 250 Global Energy Company Ranking 2007. There is not much completion with this company. Most of the oil companies in India are already working with this company.
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SWOT ANALYSIS
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Strengths and Opportunities:One of the core strengths and core competencies of ONGC is that they have the leading market share in India. They also have the majority of the oil fields in India and they own the largest oil field in India, Bombay High. Bombay High accounts for about 38% of all domestic production and is one of the most-prolific producers of Sweet and Light crude in the world. This is a very strong asset to ONGC and one that is a core competency. The ONGC infrastructure is also strength for the company. The company implemented some well needed improvements to the infrastructure and created strength for the company. Along with this were the HR development that occurred and the improvements in the HR department. Both of these substantial and costly improvements gave ONGC a strength for the company. Another strength for ONGC is the technological advancements that were implemented over the last few years. The advancements were substantial and improved the companys ability to extract the greatest amount of oil and gas. The addition of HPCL and their state of the art refinery is another strength and great asset to ONGC. Not only did this add new technological advancements, it also added diversification into the downstream businesses. This was a great addition to ONGC and helped diversify the company and give it a competitive advantage. It also gives them opportunities in the future because all their eggs wont be in one basket. ONGC controls nearly 85% of the Indian upstream segment of the oil and gas sector. It stills has nearly 1.1 billion metric tons of reserves to be recovered. And has human assets of 40280 employees working with the company.
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Besides, all the crude produced by ONGC is sweet and light, crude is nearly 76% having physical specifications of sulphur content ranging from 0.02-0.10% and having API Gravity (a measure of fluid density) in the range of 26-46 degrees. This crude is comparable with Nigerian Bonny Light, which normally trades at a premium. Through ONGC Videsh, the company has earned international credibility and acclaim. ONGC puts a lot of money into its employees to create strong leaders and good decision makers. The company has a strong infrastructure, starting from the management down.
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Weaknesses and Threats:One large weakness for ONGC is that they are not differentiated enough and diversified enough. It lags in technological advancements compared to its international peers and delay in decision-making caused due to the PSU mode of functioning. ONGC, till recently had a very low Reserve accretion rates, as reflected in lower Reserve Replacement (RR) ratio, which has depicted signs of improvement over the past two years. All their focus is on one industry right now and if that industry goes down then the whole company goes down. They are also focused so much on the productivity of Bombay High. This oil field will not sustain them forever. The oil field is also aging and this is one of the reasons why the production levels have been down. ONGC needs to get other oil fields but have lost almost every bid that they have put up. This is due either to losing out to
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other competition or due to the GoI blocking the bids. This leads to ONGC biggest weakness and the reason for ONGC biggest external threat, the GoI. Even though the GoI initially helped the ONGC, they are the biggest source for concern right now. The GoI continually forces ONGC to focus just on one industry and do not let them diversify. They also are stopping ONGC from bidding on other outside sources of oil fields. Hands down the largest weakness that ONGC is facing right now is coming from the GoI.
CONCLUSION:Competitive Advantage/Company Analysis/Action Plan

In conclusion, ONGC has been a very successful oil & gas company in India, but the future is not looking as bright for them. They have made some great changes internally to help them compete globally but they in an industry that has
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hit the mature stage. The oil fields are scarce and the competition is very tough. ONGC is not a big enough company in the industry to stand up against the competition. Bombay High is also having some questions on how it will be able to produce in the coming years and this a cause for alarm for ONGC. What ONGC needs to do is diversify and differentiate itself from its competitors and leverage its current power into another industry. The reason why this is difficult and why ONGC has not been able to achieve this is due to government intervention. ONGC is state-owned and thus is affected by the way the GoI wants to run the company. The industry is not an attractive industry due to high barriers of entry and exit and tough competition. The capital requirements are very large and the industry is hitting the mature stage. They should try to leverage their power and get into alternate forms of generating power and use R&D to develop new ways of sustainable energy production. As the oil fields run out the world will be looking for these new forms of energy production and ONGC should try to get a foot hold into this market while they can. Growth in the industry they are in is not going to happen, so they need to look for another one. But they will never be able to do this with the GoI constantly prodding them to focus on oil and gas E&P. They are in a no win situation and they need to figure out how to get out of it. That starts with leveraging their powers and using it to sway the government and give them more control. It is a tough task, but one that is necessary if ONGC wants to be around for another 50 years. In my opinion it is also a very bad idea for growth with regards. ONGCs hope of diversifying into the insurance and shipping business. These fields are completely unrelated to their own fields and not very attractive fields to jump into. Any success they might find from these ventures will be minimal, if any. They need to stick to the industries that they are used to or fields related to this and go after that.
79 ITM, WARANGAL
BIBLIOGRAPHY
80 ITM, WARANGAL
BIBLIOGRAPHY
BOOKS
Marketing Management Philip Kotler (11th Edition)
ONGC Annual Report
WEBSITES
www.ongcindia.com www.gailonline.com www.cairnenergy.com

81
ITM, WARANGAL

www.oil.com www.google.com www.ril.com www.natgas.info www.dgh.com
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A PROJECT REPORT ON

STUDY OF PROCESS FOR MARKETING OF NATURAL

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Prof. Rashid, Warangal Institute of Management,

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

AshishKapoor Warangal Institute for Technology and Management Warangal

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Thanking you, Ashish Kapoor

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Ashish Kapoor ITM, Warangal

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Sub :- Study of Process for Marketing of Natural

PRODUCT PROFILE 20%

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Fundamentals of Natural Gas Sources of Natural Gas

3. UNIVERSAL MARKETING PROCESS

4. MARKETING PROCESS FOR NATURAL GAS

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

6. SWOT ANALYSIS OF THE MARKETING PROCESS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

UNIVERSAL MARKETING PROCESS

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Net worth Rs. 699 billion. Practically Zero Debt Corporate.

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

10. ONGC, Vadodara- The Location:-

Regional office. Basin headquarters of the western region.

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Here marketing is relevant.

E.g.: LPG, Naphtha etc.

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Mr. R S Sharma Chairman & Managing Director/Director (Finance)

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

1. INDIAN ENERGY SCENARIO:-

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

2. WORLD ENERGY SCENARIO:Energy Developments

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Fuel-wise Energy Consumption in 2006 (%)

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

II. FUNDAMENTALS OF NATURAL GAS

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Natural Gas Processing:-

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Merits & Advantages of Natural Gas:-

SOURCES OF NATURAL GAS:-

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

i. ii. iii. iv. v.

STUDY OF PROCESS FOR MARKETING OF NATURAL GAS IN ONGC

Company ONGC OIL