Corporate Social Responsibility at ONGC Ltd.

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Case Details:

Case Code : BECG066
Case Length : 22 Pages
Period : 1996-2006
Organization : ONGC Ltd.
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : Oil and Natural Gas

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

ONGC's origin can be traced to the mid-1950s. After India achieved independence, the development of the petroleum industry was an important issue for the Government of India (GoI). It was crucial not only for the industrial development of the country but also for strategic reasons. Till 1955, exploration for hydrocarbon resources within the country's boundaries was mainly undertaken by private oil companies like Assam Oil Company⁶, Burmah Oil Company⁷ (both of which operated in Assam), and the Indo-Stanvac Petroleum project⁸ (in West Bengal). In 1955, the GoI decided to undertake exploration and production activities for oil and natural gas resources in different regions of the country.

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In the same year, an Oil and Natural Gas Directorate was set up as a subordinate office under the then Ministry of Natural Resources and Scientific Research. In August 1956, the Directorate was elevated to the status of a commission and named the Oil and Natural Gas Commission.

In 1959, with the Oil and Natural Gas Commission Act 1959, the Commission became a statutory body. Its main objectives were "to plan, promote, organize, and implement programs for development of petroleum resources and the production and sale of petroleum and petroleum products."

In 1991, as part of the liberalization initiatives of the GoI, core sectors like petroleum were deregulated and de-licensed. Consequently, in 1993, the Oil and Natural Gas Commission was converted into a public limited company, ONGC Ltd., under the Company's Act, 1956.

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6] Assam Oil Company was incorporated in 1889 as a separate wing of the British owned Assam Railway and Treading Company Limited (AR&T Co. Ltd.) to look after petroleum exploration and extraction work. It started its operations at Digboi oilfield, the first oilfield discovered in India (in 1889).

7] Burmah Oil Company (BOC) of UK took over the operations of Assam Oil Company (AOC) in 1921. Later it formed Oil India Limited as a joint venture between AOC/BOC and Government of India in 1959. In 1981, OIL became a wholly-owned GoI enterprise.

8] The Indo-Stanvac Petroleum project was a joint venture between Government of India and Standard Vacuum Oil Company of USA for exploration of oil in various parts of India. Under the project, several exploratory wells were drilled in the West Bengal basin. However, no oil or gas was located.