For Internal Circulation only

Concept of Reorganisation
ONGC
a

r
I

or an 'Organisational' system can be defined as a

series of
towards
tbe
achieve'
work
together
they
that
componenrs so interfaced and inter-related
to
convey
an
not
meant
is
This
definition
ment of objectives of the enterprise.
in
to
done
a
what
needs
be
as
to
organisation free of stress, differences of opinion
viable
in
imply
that,
any
it
does
But
specific situation, or even outright conflict.
organisation, these differences are effectively managed so that tbere is a reasonable unity
of tbrust within tbe various organisational components. Although the idea of an
organisation as a system refers to tbe functional whole, it is also clear that the vitality
or effectiveness of this system is dependent upon a series of highly interdependent
elements. For ease and convenience this 'concept' includes the whole array of semiautonomous'profi t centres'.

An 'Organisation'

There are times in the history of any institution rvhen wbat seems needed is a
overhaul, a marked charge in the strategic structure of the organisation. Implict in this
structural change are important changes in the relationships among individuals and
groups. The reporting relationsbips of some organisational components may be changed,
the influence of other may be enhanced or lessened-but, in any event, there are
recognisable changes in roles. In short, a rnajor, significant organisational change is one
that modifies the strategy of the enterprise, alters the structure, necessitates the development of a different character of relationships among the principal components of the
organisation and dictates a change in management mode. But it should be borne in
mind that this kind of change does not postulate an 'eartbquake'. Such a change

includes more specification in the area of goals, objectives and targets; increased
organisational effectiveness through new grouping of functional activities; guidelines for
delegation of authority, and improved relationships, vertical and borizontal, vital to the
success of the planned cbanges.

The Sixth Five Year Plan for ONGC envisages a production target of 89.87 million
tonnes of oil, 10878 million cubicmetres of gas, 6,1732A totrnes of LPG and 100,000
tonnes

of

Ca/Cc.

This plan envisages a plan-outlay of Rs. 4787.92 crores. Internal resourcesare

expected to be Rs. 4537.45 crores. Geological Reserves of Hydrocarbons of the order
of ?00 million tonnes are expected to be discovered during tbis plan period The goals

and objectives and the long range plans of ONGC and also the expectations from ONGC
of the societal segments like Govt. Community, Industries etc, is nothing short of 'self-

sufrciency'. This necessitates an organisational set up in which the specific role of

various segments need to be clearly related to the organisational goals, objectives and
targets. The present organisational set up will not be able to meet these requirements.

2
The last 're-organisation', or 'restructuring' of the Commission was in 1974-75
during the time of the tben Chairman, Shri N.B. Prasad. The Report of the Committee
for Review of the Oil & Natural Gas Commission headed by late Shri K.D. Malaviya
U972lhad higblighted that since 1963, there had been progressive deterioration in the
performance of the Commission. Conservative finance procedures ill informed audit
objections, bureaucratic methods adopted by the administrative machinery and inappropriate selection procedures for the top posts had all contributed to the poor performance.
The Committee also noted tlrat self reliance, which was the spirit of ONGC at its inception, had eroded in mid-sixties. The consequent 're-organisation' exercise included
some recommendations of the Malaviya Committee and some revised ideas by tbe then
Commission Members, Chairman and Ministry. This reorganised "Commission' started
functioning effectively in 1975.

'f

:!
\+.ri

of Hydrocarbons offshore in
of the resources of the Commission were diverted there which resulted in
little attention being paid to the on-shore areas, This also encouraged a 'territorial' type
of management with priority treatment to offshore and a slorv tempo of exploration
onshore. Due to a 'barrier' that developed between onshore and offshore, the exposure
to the new technology was confined only to a few people. Moreover, in the absence of
any long range corporate planning and resultant micro-pianning, adequate conceptual
plans were not developed. There had been no technicai auditing and quality monitoring
This reorganisation took into account the discovery

1974 and most

and the empbasis was more on 'quantitative performance'.

Even though, highly efficient and well trained men were available in various departments of the Commission, they often rvorked in isolation and parallelism, resulting in
their under-utilization. The exploration and developmeut drilling was virtually devoid
of tecbnical monitoring and accountability. This resulted in the piling up of inventory of
sick wells and uncertainties in confirmed oil reserves. The expioration work lagged
behind and there was no 'synergetic' approach to evolve an effective'Exploration
Strategy'. In the absence of any serious push in exploration, the volume of produc[ion
was being determined on most conservative basis. There had been no significant addition
to the total reserves after the discovery of Bombay High in 1974 [only now there has
been some enhancement due to South Bassein and B-57 discoveries]. A chart placed
at Annexure A shor,vs various curves related to Production Performance from the
1,973-74 to 1980-81. It will be noted that even after tbe 'reorganisation' in 1974-75
there has been

(a) insignificant addition to the recoverable resources;

(b) annual oil production shows a downward trend in 1980-81

(c)

total effectiveness of exploration [tonnesimetre] has gone down and has risen
oniy in 1980 with discovery of Soutb Bassein and R-7 but still lower tban what
it rvas at tbe time of discovery of Bombay High;

(d)
(e)

effectiveness of exploration on laad shows a dismal picture;

percentage

of

annual oil production of balance recoverable reserves has gone

oil production

down from 43% tl974J to 2o/o [980] and percentage of annual

v,.
J.

(f)

of initial geological reserves bas gone down from 0.90/6 fi A35a/o. [The world
figure for this is 2)( Russia/Americal.
the percentage of flowing oil well to the total oil wells is very low. The world
figure is aboutg}/o as compared to 46.5/" at tbe end of 1980.

chart-Growth of oil industry in India, placed at Annexure B shows the

crude production as compared to the total consumption. It rvill be noticed that production performance between 1974-75 and 1981-82 has not been impressive.

second

is thus clear that for the targets now laid dorvn for the 6tb Five Year Plan, the
preseot organisational structure will not be able to match up to the required massive

It

ar

exploration push.

G0ats ANp OBJECryES OF O\GJ

In order to achieve the'Flan-Goals'the objectives of the ONGC could be summed
upas:
continue and expand exploration efforts to convert in the fastest time possible,

-to
country's hydrocarbon
-consistent

prognosticated resources to established reserves.

with ideal reservoir practices

to maximise

production profile

of oil

and gas.

technology, scientific knowledge and expertise in the relevant

techniques, exploitation practices and technology, engineering
and construction and processing of petroleum products, for achieving self-sufficiency and obtaining a share in tbe world market.
updating the state of art in all relevant technology and management in
-constantly
the industry to the best of international standard and practices.
and maximisation of internal financial resources for enhancing growth,
-generation
consistent with environmental requirements and maximisation of the rate of
return on investment.
emphasise growth as measure of strength and requirement for diversification of
-toactivities
in tbe energy sector for meeting new challenges'
reliance in tire sector of oil industry equipment and flacilities.
-to promote self
scientific and technological capabilities internationally.
-to augment and market
continue to seek new opportunities of growth in areas where commission is
-to
capable and can make a contribution.
in all its areas of activities.
-to maximise its cost effectivenessof knowledge by intensifying fesearch'basic and
constantly expand frontiers

up relevant
-buitd
areas of exploration

ttt

-toapplied to oPtimise
-marketing

gains.

of petroleum products.

.SWOT' ANALYSIS
Keeping the above goals and objectives in view,
opportunity profile emerges using the SWOT Analysis :

the following brcad problem-

srRENSIgg

l.
2.

Geological reserves available to increase production capabilities.

Availability of highly skilled, trained and willing Geoscientists and Engineers.
Its expertise has been built over last 25 years.
Sound financial position.
Research and Development capabilities available by way of three Institutes.

3.
4.
5. Availability of plant and equipment facilities.
6, Support and back-up of a most powerful organisation, i e. Government of India.
7, Large infra'structure and reasonable technological base available in the country.
8. Good image of ONGC at home and abroad.
9. We are in a business which has punch and power.
10. Acquisition of latest tecbnology.

1
;

11. Great potential for development of human resources.

12. A good data base.
WgAKNESSES

1.
2.
3.
4.
5.
6.

Significant dependence on borrowed technology

on self reliance-tend to lean to soft options.
Significant time-lag in updating of technology.

and equipment-Weak

accent

Lack cf Equipment Management System and Safety Engineering.

Weak decision making process and control system.
Lack of goal congruence between individuals and Commission.
Dys-functional conflict oriented organisation design-this has encouraged lots
of internal friction.
7 Authority not linked to and commensurate with responsibility.
8. Accountability not elearly defined. Delegation rigid and improved delegation
centered around individual's capabilities lacking.
9, Lack of succession and career planning resulting in inadequate matching of men
to posts, particularly at tbe bigber levels.
10. Lack of MIS and effective control system,
ll. Weak logistics and communication system.
12. Cost consciousness flowing from ownership concept lacking.
13. Ineffective reward and punishment system.
14. High Lead time delay decisions, procurement and operations.

15. No management audit-no mechanism to waigh the defect of a .decision'.

16. Weak management at Unit level.
17. Government control is excessive.
18, Lacking adequate autonomy.
19. Present R & P Regulations inhibit the achievement of excellence.
20. Absence of scientific inventory control methods.
21. Absence of proper planning and monitoring system.

Jt

OPPORTUNITIES

1.
2.
3.
4.
r

Existence ofstill large unexplored/inadequately explored areas, both onshore

and offshore in India.
Unexplored Basins abroad.
Energy crisis and developing market for various scientific and tecbnological
services abroad.

Being a Government of India Organisation, tremendous opportunities for

selling skills and expertise particularly in Middle East where Indians command
respect.

5.

1"

{}

Avowed policy of the Government for rapid development

of indigenous

energy

sources.

6.

Govt. supportive of increased activities of ONGC'

THREATS

1..

Competition

by Foreign Oil

Companies

to

explore

in Indian

sedimentary

basins.

2.

Unstable socio-political situation particularly

in

Assam resulting

in

lower

production.
High cost and non-availability of specialised equipment and facilities.
bxternal financial assistance may shrink.
Demand constraints in the Eastern Region.

3.
4.
5.
'rg. Political instability abroad as in lraq, Iran etc.
. 7. Extension of the economic zone to offshore areas.
8. Danger of obsolescence due to fast growth of technology.
9. Brain Drain.
10. Vulnerability of offsbore area to external threats. '

s,

"
1
-

KEYRESULT

AREAS

\'

t. Plans-corporate plans-short term and long term plans.

2. Exploration Strategy and Strategies for Operations.
3. Production Volume.
4. Organization DeveloPment.
5. Management Information System.
6. Personnel policies for improved motivation.
7. Facilities planning and maintenance.
8. Training in critical areas.
It is thus clear that any 'Restructuring' attempt must be directed towards creat-

ing conditions conducive to initiating a major integrated Exploration ptogramrne.

The first 'charge' on exploration will be the replacement of currently exploited oil
reserves. Thus the task for Exploration will be :
new
by

6
(a)

Discovery of oil and gas at a rate which is adequate to replace

rate of depletion of known oil and gas fields by exploitation;

the annual

(b) Discover additional oil at a supportable cost in the real economic environment
of tbe period covered by tbe exploration plan;
(c) Prepare the areas with more expensive exploration costs for future operations
(i.e. when the higher prices justify higher risks ard costs.)

EXISTING LEVEL OF ACTIVITY

Since the inception of ONGC, 367 party years have been spent on Geological
Surveys, discovered, 80 oil or gas bearing structures, drilled 1824 wells 984 explo.
ratory and 840 development, produced 82.17 million tonrles cude oil and 8245
million cubic metres of natural gas, set-up 3 specialised R&D Institutes, and a Com'
puter Centre to process Geophysical data. Today, itopqrates 4i drilling rigs both
onshore-offshore and bas set up full-fledged production and process platforms as also
a sub-sea pipeline. It bas set-up at lJran, a crude stabilisation plant and a LPG Plant.
It employs over 28,000 people in various disciplines.

\)

During 1981-82, 12 Geological Survey parties, 35 Seismic survey patties, 5 gravitymagnetic survey parties were planned to operate onshore. Onshore drilling programme
.ouir"g.r drilling of 102 wells with a meterage of 237.7 thousand and production of
5.10 million tonnes of oil and 815 miilion cubic metres of gas. Offshore, 20500line
kms. of seismic surveys, drilling of 5l wells with a metreage of 107.6 thousand and
production of 8.40 million tonnes of oil, 605 million cubic metres of gas and 82,120
iooo.r of LPG are planned. Plan outlay both for Onshore and Offshore during the
current Year is Rs. 816'43 crores'

EXISTING ORGANISATION STRUCTURE

presently, Commission consists of a Chairman, five full-time and three part.time
Members. These part-time Members are representatives from Ministry of P&C,
planning Commission and Ministry of Finance. Very recently, a Member (Exploration)
Members are:nas joinea the Commission on 18.12.81. Responsibilities of full-time

Member (Onshore)

a.

He is responsible for all the onshore operations. ,At Headquarters he

is

assisted by

DirectorlOperations) Director (Operations tr{eview), Director (Geology), Director

line
Chief Engineer [Production].
[Geophysics], Chief Engineer lCivil] and
^In
arrangement, three Regional Heads [Western Region,-Eastern Region.and .Central

negionl report

to him. In

Calcutta, also rePorts

),.

1.

addition, Director [Exploration], who is based at

to him.

Member (Offshore)
offshore operations. He is based at Bombay. In dis'
is assisted by three General Managers [Operations,
be
his reponsibilities,

He is ,eqponsible for all the

charge of
Production and Construction].

@t

At

corporate headquarters, he is assisted by a Senior Director IF&AI A Senior

Director tF&Al based at Delhi, also resports to him. In addition to Finance
functions he is also responsible for the perspective planning function. To discharge
this function, he is assisted by Superintending Geologist at Headquarters.
Member IPersonnel]

4-

In effective discharge of his responsibilities he is assisted by Director [Manpower

Developmentl, Director [Personne I , Director [Administration] and Additional
Director findustrial Relations] at Headquarters. Joint Director, Delhi office also
reports to him. This post is lying vacant and this function is also being looked
after by Member [Financei.

L-

\v
e..

5.

Member lMaterials]

He is responsible for Stores & Purchase function, inspection, transportation &

shipping and public relations. He is assisted by Director [Stores & Purchase],
Superintending Engineeer IMechanical], Additional Director IF&Al and Joint
Director IPR].
Organisation structure consists of three-tier arrangements. There
set up, regional set up and project set up.

is a

headquarters

For R&D support there are three Research Institutes. The Institute of Petroleum
Exploration is located at Dehra f)un and is beaded by a Senior Director. Institute for
Reservoir Studies, which is located at Ahmedabad, is headed by a Director. Third
institute is coming up at Dehra Dun for Drilling Technology. This is headed by a
Senior Director.

Chairman, full-time Members IExcept Member Offshore] and functional Director are
based at headquarters at Dehra Dun. Regional offices are located at Baroda for Western Region, Nazira for Eastern Region, Calcutta for Central Region, Bombay for
Bombay offshore Project.

During the process of developing the restructuring concept the organisation structures of various international Oil Companies were studied. Suggestions given by Members, Directors and others were also taken into consideration, Discussions were also
held with Members and Directors. This 'concept' is translated into a chart placed at
Annexure C. The concept was also presented in the Commission meeting held on l2th
November, 198 l.

The Commission will be headed by a Chairman who will be the Chief Executive,
There will be six functional Members, one each responsible for Exploration, Drilling,
Technical, Operations, Personnel, Finance; thus taking care of the total gamut of oil
Exploration and Exploitation. The remaining two Members will be the representatives
of Ministries of Petroleum and Finance [Part time].

The Exploration, Drilling, Technical uol oo..ur"ns will act as Business groups and
will be the profit centres, supported by Personnel & Finance functions.

Material provisioning which is a major handicap is proposed to be decentralised.

The Operations group will play the role of Operator-Owner of the hydrocarbon
resources. Exploration, Drilting and Technical groups will play the contractors role
for Exploration, Drilling and various other ancilliary services needed by Operations
Group. Member (Personnel) rvill be responsible for developing the Manpower resources
and meeting the demands of various groups. Member (Finance) beside providing the
financial resources will act as a 'Mirror' to various groups about their financial performance.

t)

Chairman will also have under him the Corporate Planning function and International Operations wbich will be controlled through Hydrocarbons India Limited.

For the effective functioning of Members, Executive Directors, on

the basis of
These
provided.
Directors
will
with
be
been
delegated
have''
areas of responsibilities,
Powers.
Financial
and
Administrative
the necessary

The three existing research institutes, namely, IPE, IRS, IDT and the proposed
Design group have been appropriated to tbe corresponding Business groups. Institutionalised budget provision for R & D activity in respect of futuristic and long term
objectives will be made for the research Institutes. For other activities, the Institutes
will generate their own funds by working as profit centres.
Various Executive Directors will be assisted by Directors and General Managers
with appropriate responsibility, autbority and accountability. Responsibility and
commensurate authority will be delegated down the line in various Business Groups.
Based on the Corporate Plan, micro planning will be carried out by individual
functional members. These micro-plans will be rolled into a performance budget for
action. Within the concept described, the whole process of exploration and exploitation
will be gone tbrough. Various individual functional set-up distributing workload have
been put on charts and annexed at D. As the main theme is on development
of functional expertise, diversion in growth to general management will be from the
superintending level only. The responsibilities of general management will be so
the General Managers
designeO as not to ear the growtb of line expertise. As such,
will not have a say in technical/scientific decisions involved in the operations. Such
technical and scientific decisions will only be taken by the superior in the technical or
scientific stream. Both General Managers and Technical stream will converge at the
Executive Director's level.

Apart from above business centres the field survey parties, electrologging groups
under Member (Expl.), cementing, DST, workover and stimulation under Member
ibrilling) will also work as separate sub-units profit centres. These sub-units can be

i
-{}

in the areas of requirement by different Groups and render the

beck and call of the client. Such sub-unit profit centres can keep abreast
with the fast cbanging technology and at the same time render services to the clients
at the level of international standards.
organised and located
services

at

Exploration for oil is capital intensive and requires sophisticated and complex
machinery most of which is imported. Advancement in technology, metallurgy, constructional toleranceso degree of conformity, has made equipment worthy to stand increasingly severe conditions in oil drilling. Today, operational life, profitability and reliability
of machines and mechanism in general, are rarely limited by break-down or defect of
parts. Improved material performance, modern fatigue calculating methods and techniques of controlling parts are continuously eliminating serious accidents. On the
other hand, mechanisms are limited in their life span and performance by maintenance
failure consequently wear. The essential functions of maintenance are to eliminate/
reduce down time by avoiding/preventing immobilisation of the machine.

Similariy considerable strides of advancement have been made in improved maintenance technology and systems. What to speak of introduction of advanced technology
of maintenance even the basics of maintenance are missing in the Organisation. The
brief guidelines suggested by BPE pertaining to maintenance wbich are as below are
also not taken care of in the Organisation

:-

(a) The Maintenance Organisation in each enterprise should be reviewed and

suitably upgraded. Maintenance organisation has to be recognised as an effective tool
for increasing productivity and not merely as an Organisation incidental to Production.

(b)

Each Enterprise should set

for itself norms for down time seperately for

scheduled maintenance and non-scheduled repairs

the set targets.

(c) In

and watch the performance against

the long range, endeavour should be to arrive at the calculated optimal

maintenance policy and the policy has to be reviewed from time to time.

+
*

(d) Proper planning

and control of scheduled

maintenance and major overhauls

has to be practised by Enterprises.

(e) System should be developed to collect annual maintenance costs of each equipment in order to recognise the point of time when it is likely to become uneconomical
to maintain further and to require replacement.

(f)

Standardisation should be achieved and indigenous sources

of

spare parts

should be deveioped.

(g) Training courses should be organisgd for maintenance, staff and supervisors
on a systematic and sustained basis.
An

awareness needs

to be created that

maintenancs aspect

of the

deserves consideration even before the equipment is purchased i.e. even

equipment

from the

design

stage. There is, therefore, need to involve top level maintenance Engineers froo the
planning and equipment ordering stage. This would ensure maintenance eflectiveness.

10

One of the major influences of proper maintenance is tbe availability of adequate

spares. The importance of optimum utilisation of valuable productive assets can bardly
be over emphasised. This too is dependent on the operatirg efficiency of the equipment.
The health of the machinery is directly dependent on the state of their maintenance aod
it will certainly be not possible to put through well planned and well organised maintenance schedules without corresponding backing of an efficient spare parts planning
and control, organisation.
Every operation will be broken up into items and sub-items of work in terms of
time and cost. Any deviation has to be watched by tbe finance very closely. This will
be essential for maintaining required efficiency and optimum productivity.
The personnel aspect will be taken care of by the individual business groups within
the overall policies and guidelines of the Commission. Any industrial relations

problem will be tackled by the individual business groups as far as possible, but in areas
where more than one group are operating and if there is a commonality in the problem
this will have to be taken care of by Operations Group which is the Repository"
However, if the problem is beyond the Operation Group it will have to be taken care
of by Member (Per.) himself.

Although material function has been decentralised amongst various business groups
for uniformity the guidelines will be provided by Member (Technical). The inventory
control will be the responsibility of the individual business groups but uniform guidelines
on this will also be provided by ldember (Technical) under whom a small centralised
inventory group will function.

,-)

rl
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