Oil and Natural Gas Corporation Limited: history, ownership, mission, how it works & makes money

A Brief History of Oil and Natural Gas Corporation Limited

Oil and Natural Gas Corporation Limited (ONGC) is an Indian multinational company renowned for its extensive presence in the oil and gas sector. Established in **1956**, ONGC has grown to become one of the largest public sector undertakings in India, primarily engaged in the exploration and production of oil and natural gas.

In the early years, ONGC focused on exploring and developing oil fields in India. The company achieved its first significant success in 1966 when it discovered oil in the Mumbai High, a major offshore field. By **1976**, ONGC had become the largest oil producer in India, marking a pivotal moment in the country's energy sector.

Throughout the **1980s** and **1990s**, ONGC expanded its exploration activities both domestically and internationally. The company established joint ventures and collaborations with various international oil companies to enhance its exploration capabilities. In **1991**, ONGC was reorganized into a corporation to strengthen its operational efficiency.

In **2004**, ONGC acquired the **government's 51% stake in Hindustan Petroleum Corporation Limited (HPCL)**, demonstrating its strategy to diversify its portfolio within the energy sector. The acquisition was valued at approximately **$2.5 billion**. In **2008**, ONGC Videsh Limited, the overseas arm of ONGC, acquired **a 25% stake in the Azeri-Chirag-Guneshli oilfield** in Azerbaijan, further expanding its global footprint.

As of **2022**, ONGC produced approximately **23.5 million metric tons** of crude oil and **24.7 billion cubic meters** of natural gas. The company reported a **total income of ₹1.1 trillion** (approximately **$14.8 billion**) for the fiscal year ending March **2023**. Its net profit for the same period was approximately **₹195 billion** (around **$2.6 billion**), reflecting its operational efficiency amidst fluctuating global oil prices.

In its commitment to sustainable practices, ONGC has been investing in renewable energy, targeting **5 GW** of renewable energy capacity by **2030**. The company aims to reduce its carbon footprint significantly by diversifying its energy sources.

In recent years, ONGC has also focused on technological advancements in drilling and production processes, implementing enhanced oil recovery methods to maximize output from existing fields. The company's future strategies include tapping into unconventional resources, such as shale gas and tight oil, to sustain its growth trajectory in the evolving energy landscape.

ONGC's shares are traded on the National Stock Exchange of India and the Bombay Stock Exchange, and as of September **2023**, the stock price was approximately **₹152** per share, reflecting a market capitalization of about **₹1.93 trillion** (around **$25 billion**). The company's P/E ratio stood at **9.8**, indicating attractive valuation relative to its earnings potential.

With a commitment to operational excellence and sustainability, ONGC continues to be a cornerstone of India's energy security and a significant player in the global oil and gas industry.

A Who Owns Oil and Natural Gas Corporation Limited

Oil and Natural Gas Corporation Limited (ONGC) is a major Indian multinational company in the oil and gas sector. It is primarily owned by the Government of India, which holds a significant stake in the company.

As of the latest financial data available, the Government of India owns approximately 58.86% of ONGC's total equity. This ownership reflects the company's status as a central public sector enterprise, contributing significantly to India's energy security and economic growth.

The remaining shares are held by various institutional and retail investors. The table below outlines the ownership structure of ONGC as of the latest fiscal year.

ONGC has shown impressive financial performance, with a market capitalization of approximately ₹1.55 trillion as of October 2023. The company reported a revenue of around ₹1.07 trillion for the fiscal year ending March 2023, showcasing its pivotal role in the energy market.

In terms of production, ONGC produced approximately 23.84 million metric tons of crude oil and about 22.78 billion cubic meters of natural gas in the fiscal year 2023. This indicates the company’s substantial contribution to the domestic oil and gas output.

Additionally, ONGC's earnings before interest, tax, depreciation, and amortization (EBITDA) for the same period stood at around ₹469 billion, highlighting its operational efficiency and profitability.

As for shareholding trends, ONGC's stock has displayed resilience, with a price range of approximately ₹120 to ₹170 per share over the last year. The stock showed a year-to-date growth of about 15% as of October 2023, reflecting investor confidence amid fluctuating global oil prices.

With a strong ownership base and significant financial metrics, ONGC continues to play a pivotal role in India's energy sector while maintaining robust performance in the stock market.

Oil and Natural Gas Corporation Limited Mission Statement

The Oil and Natural Gas Corporation Limited (ONGC) operates with a clear mission to be a global leader in energy production while contributing significantly to the economic development of India. Its mission statement emphasizes a commitment to sustainable development, technological advancement, and social responsibility.

Specifically, ONGC's mission highlights the following core beliefs:

• To harness advanced technologies for efficient exploration and production of oil and gas.
• To maximize value creation by optimizing resources and ensuring energy security in India.
• To be environmentally responsible and implement sustainable practices in all operational activities.
• To enhance the quality of life in the communities where they operate.

As of the financial year 2022-2023, ONGC reported a total revenue of ₹1.17 lakh crores, with a net profit margin close to 18%. The company is focused on exploring new fields and adopting innovative technologies to improve its operational efficiency.

ONGC's mission is supported by its operational strategies that align with national policies on energy security and sustainable development. The company is committed to maintaining operational excellence while adhering to strict environmental norms and enhancing community welfare.

Throughout its organizational history, ONGC has made strides in corporate governance and transparency, ensuring that stakeholders are informed and engaged with its operational strategies and performance outcomes.

In addition to operational targets, ONGC places a strong emphasis on research and development. The company allocates approximately 2% of its annual revenue to R&D initiatives, focusing on innovative technologies that enhance exploration efficiency and reduce environmental impact.

With ongoing projects and future expansions in renewable energy sectors, ONGC is not only looking to increase its fossil fuel production but also aims to diversify its portfolio into cleaner energy alternatives, in line with global trends towards sustainability.

How Oil and Natural Gas Corporation Limited Works

Oil and Natural Gas Corporation Limited (ONGC) is a major player in India’s petroleum sector, known for its role in the exploration and production of oil and natural gas. As of March 31, 2023, ONGC reported a total revenue of ₹1,02,234 crore (approximately $13.1 billion), showcasing a year-on-year increase from ₹90,328 crore in the previous fiscal year.

ONGC operates in various segments, notably upstream operations involving the exploration and production of hydrocarbons, as well as downstream activities including refining and marketing.

Financial Performance

In the fiscal year 2022-23, ONGC's net profit stood at ₹25,892 crore (around $3.2 billion), reflecting a growth of 10% compared to ₹23,557 crore in the fiscal year 2021-22.

The following table summarizes key financial metrics for ONGC over recent years:

Operational Overview

ONGC operates 21 producing basins, offshore, and onshore fields. Its largest discoveries include the Mumbai High Field, which is characterized by a production rate exceeding 300,000 barrels per day. In 2023, ONGC reported an average crude oil production of approximately 19.3 million metric tons and natural gas production of 22.9 billion cubic meters.

Strategic Initiatives

ONGC has been actively investing in technology and innovation. In the fiscal year 2022-23, the company allocated ₹30,000 crore (around $3.8 billion) towards capital expenditure, aiming for enhanced oil recovery techniques and the exploration of new blocks.

Market Position

As of September 2023, ONGC's share price was approximately ₹149 per share, with a market capitalization of about ₹1,94,000 crore (around $24 billion). ONGC holds approximately 70% of the country's hydrocarbon reserves, firmly establishing itself as a market leader.

Dividend Policy

ONGC is known for its robust dividend policy. In the fiscal year 2022-23, the company declared a dividend of ₹5.25 per share, reflecting a dividend payout ratio of over 30% of its net profit.

Additionally, the company is diversifying its portfolio, focusing on renewable energy projects, with an investment of ₹10,000 crore (approximately $1.27 billion) planned for renewable sources by 2025.

Global Influence

ONGC’s international operations are significant, with interests in 16 countries, producing around 20 million barrels of oil equivalent from overseas fields. ONGC Videsh, its overseas arm, reported a revenue contribution of ₹15,000 crore (around $1.9 billion) in the last fiscal year.

Future Outlook

Looking ahead, ONGC aims for a production target of 25 million metric tons of crude oil and 30 billion cubic meters of natural gas by 2025. The global oil demand is anticipated to rise in tandem with economic recovery post-pandemic, positioning ONGC to capitalize on this trend.

ONGC's commitment to sustainable practices and diversified energy sources illustrates its strategic approach to aligning with global energy transition trends.

How Oil and Natural Gas Corporation Limited Makes Money

Oil and Natural Gas Corporation Limited (ONGC), a critical player in the Indian energy sector, primarily generates revenue through the exploration, production, and sale of oil and natural gas. As of FY 2022-2023, ONGC reported a total revenue of ₹1,27,921 crore (~$15.8 billion), reflecting a substantial increase compared to ₹1,13,121 crore (~$14.1 billion) in FY 2021-2022.

ONGC operates on several key revenue streams:

• **Crude Oil Production**: ONGC's total crude oil production during FY 2022-2023 averaged 21.7 million metric tonnes, contributing significantly to the revenue. The average price of crude oil during this period was approximately $86 per barrel.
• **Natural Gas Production**: In the same fiscal year, ONGC's natural gas production was around 24.5 billion cubic meters, with an average selling price of ₹6,500 per thousand cubic meters (~$80 per thousand cubic meters).
• **Refining and Marketing**: ONGC, through its subsidiary, operates refineries that enhance its revenue-generating capacity. In FY 2022-2023, refining throughput was approximately 14.0 million metric tonnes.
• **Joint Ventures and Partnerships**: Collaborative ventures with other companies have enabled ONGC to diversify its revenue streams. The company has partnered in various projects both domestically and internationally, which further bolsters its financial stability.

In terms of production capacities and contributions to revenue, the following

Additionally, ONGC's operational efficiency is reflected in its profit margins. The company reported an Operating Profit Margin of **29.8%** and a Net Profit Margin of **17.4%** in FY 2022-2023.

ONGC’s strategic investments also play a vital role in its revenue generation. The company allocated approximately ₹30,000 crore (~$3.7 billion) towards capital expenditure in FY 2022-2023, focusing on exploration and development projects, including offshore drilling, which promises to yield long-term returns.

The evolving energy landscape is pushing ONGC to explore renewable energy sectors as well. Investments in solar and wind energy projects are expected to contribute to future revenue streams, aligning with global shifts towards sustainability.

Market conditions significantly affect ONGC's profitability. Global crude oil prices, influenced by geopolitical tensions and OPEC+ decisions, directly impact ONGC's earnings. For example, in late 2022, Brent crude peaked around $120 per barrel, significantly boosting ONGC's revenue during that quarter.

In summary, ONGC's revenue model is multifaceted, relying heavily on its oil and gas production capabilities, refining operations, and strategic investments in joint ventures, all while adapting to market changes and evolving energy demands.