Abstract

The case describes the growth strategy and diversification plans of the Government owned Oil and Natural Gas Corporation Limited (ONGC), the largest oil exploration and production (E&P) company in India. ONGC has near monopoly in India's oil E&P industry producing nearly 90 percent of the country's crude oil and natural gas. Till the late 1990s, the company was mainly confined to upstream activities of E&P. In order to reduce risks inherent in confining to one activity and to achieve financial stability and steady growth, ONGC acquired a major equity stake in Mangalore Refinery and Petrochemicals Limited so as to enter the down stream activities of refining. With this, ONGC became the first integrated oil company in India. The case examines the benefits and drawbacks of oil E&P Company entering into refining and retailing businesses. The case also discusses the possible benefits and disadvantages of ONGC's plans in 2004 to enter insurance, power generation and shipping businesses as part of its diversification program.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Examine the growth strategy of a public sector oil exploration and production company.

Keywords

Case, Oil and Natural Gas Corporation of India, Indian Oil and Energy Industry, Business Restructuring, Diversification, Vertical Integration, Financial Restructuring, Deregulation of Indian Oil Industry