OIL INDIA LIMITED
ANNUAL REPORT 2011-2012
On behalf of the Board of Directors of your Company, Oil India Limited, It
Is my pleasure to extend a very warm welcome to all of you to the 53rd
Annual General Meeting. Several major activities have been Implemented
during the year, as well as several Initiatives, In addition, have also
been taken for the growth and expansion of the company.
The Fiscal 2011-12 for your Company has been marked with a number of
significant achievements. These Include:
* Highest ever annual production of Crude oil and Condensate in the history
of the Company at 3.847 MMT which is 102.3% of the planned target. More
importantly, it has been possible to maintain the growth rate in production
over the last five years
* Highest ever total production of Natural Gas at 2633.29 MMSCM during the
* Highest ever Natural Gas sale of2093.02 MMSCM in a year
* Production of LPG was 52020 MT which is 15.57% higher than 2010-11
* Record Profit After Tax (PAT) of Rs. 3446.92 crore during the year, a
growth of 19.36% over the PAT of the previous year
* The turnover for 2011-12 is Rs. 9863.23 crore as compared to Rs.
8320.60 crore for the corresponding period last year, showing an increase
* Earnings per Share (EPS) had increased to Rs. 57.34 in 2011-12 compared
to Rs. 48.04 in 2010-11
* Highest ever Dividend payment of400% (475% on pre-bonus issue Share
* The Company issued bonus shares in the ratio of 3:2 (i.e. 3 (three)
equity shares of Rs. 10/-each fully paid up for every 2 (two) existing
equity share) by capitalization of the securities premium account
* A total of seven hydrocarbon discoveries were made in the Upper Assam
basin during the year
* Hydrocarbon reserve accretion during the year 2011-12 was 9.54
MMSKL(O+OEG)of oil and gas, thus achieving the 'Very Good' target set in
this regard in the MOU with GOI
* In its endeavour to harness Unconventional Energy, OIL commissioned a
13.6 MW wind turbine plant at Ludhureva in Jaisalmer District in Rajasthan
You will be happy to learn that your Company has received a large number
of appreciations and recognitions for its achievements in different fields
during the year. These awards and recognitions demonstrate total
dedication and concerted efforts of all Oil Indians. Salient amongst these
1. Company of the Year Award by Indian Chamber of Commerce, supported by
the Department of Public Enterprises, Government of India.
2. Golden Peacock Award for Corporate Governance.
3. Greentech Environment Award 2011 in Gold Category in the Oil and Gas
4. NDTV Business Leadership Award in the Oil and Gas Sector 2010-11.
5. The SCOPE Award for Excellence and Outstanding Contribution to Public
Sector Management-Individual Leader, PSE Category 2009-10.
6. IPE HR Leadership Award from the Institute of Public Enterprise (IPE) at
the World HRD Congress.
INDIAN E&P INDUSTRY
During the year 2011 -12, domestic crude oil production was 38.10 MMT about
1% higher than 2010-11. The country imported over 80% of its crude
requirement. The total Natural Gas production was around 47.55 billion
cubic meters, a shortfall of 8.9% over previous year. India imported 172.11
million tonnes of crude oil for domestic consumption during 2011 -12, which
was 5% above crude oil imports of 163.59 million tonnes in 2010-11.
Your Company continues to be the second largest national oil and gas
Company in India in terms of total proved plus probable oil and natural gas
reserves and production for the year 2011-12. In the first nine rounds of
NELP bidding your Company had acquired thirty three blocks, either alone or
in partnership with other national or international companies with
operatorship in twelve blocks.
During 2011-2012, your Company achieved the highest ever production of
crude oil at 3.847 MMT. The terminal crude oil production rate as on 31st
March 2012 was 3.93 MTPA. You will appreciate that this is a very
noteworthy achievement since our production comes from ageing fields in the
North East. Production of natural gas during the year was 2633.29 MMSCM
which is also the highest ever by the Company. Your Company has a strong
oil and gas reserve base and as of March 31,2012 the Company's 2P reserves
stands at approximately 1.5 billion barrels of Oil + OEG.
Your Company made seven new oil and gas discoveries during the year in the
State of Assam. These discoveries have opened up new avenues which reflect
a significant growth potential. Your Company also produced 52020 MT of LPG
during 2011-12 which is 15.57% higher than 2010-11.
Your Company has earned highest ever Profit After Tax of Rs.3446.92 crore
during the year 2011-12 against f 2887.73 crore earned during 2010-11,
a jump of 19.36%. This was mainly due to higher production of crude oil and
gas and also higher realization of crude oil and natural gas price,
increase in transportation tariff and higher interest income. This
achievement is inspite of having provided subsidy discounts to the tune of
Rs. 7351.77 crores as compared to Rs. 3293.08 crores during corresponding
period during 2010-11 to Oil Marketing Companies to compensate for their
under recoveries in line with Government policy. Improved financial
performance has helped your Company increase its net worth to Rs.17721
crores as against Rs. 15602 crore during the previous fiscal.
During the year under review, your Company has issued bonus shares in the
ratio of 3:2 (i.e. 3 (three) equity shares of Rs.10/- each fully paid up
for every 2 (two) existing equity share of Rs.01- each fully paid up), by
capitalization of the securities premium account.
DIVIDEND AND CONTRIBUTION TO EXCHEQUER
Your Board of Directors are pleased to recommend a final dividend of Rs. 5
per equity share (50%) on the post-bonus issue share capital, subject to
the approval of the shareholders at the ensuing Annual General Meeting. The
total dividend for the year 2011-12 on the pre-bonus issue share capital
will be Rs. 47.50 (previous year Rs. 37.50) per equity share of Rs.10
each. Your Company also made substantial contribution both to the State and
Central exchequer in terms of Cess, Royalty, Sales Tax etc. The
contribution to the State Exchequer during the year was Rs.1865.53 crore
and that to the Central Government was Rs. 3908.62 crore. It is also a
matter of great pride that your Company's audited annual accounts have
'Nil' comments from the Comptroller and Auditor General of India for the
Tenth year in succession.
STRATEGY FOR GROWTH
The key focus areas for growth of your Company broadly cover the following:
* Intensive Exploration to enhance reserves base;
* Acquisition of discovered/producing properties for in-organic growth;
* Intensification of IOR/EOR activities;
* Highest emphasis in the areas of HRD, HSE and Corporate Governance;
* Selected diversification in the E&P value chain and non-conventional
energy (CBM, Shale Gas, Shale Oil, LNG and renewable energy).
EXPLORATION AND PRODUCTION
Your Company's focus remains on our core business of exploration and
production of hydrocarbons and we continue to accelerate our Exploration,
Development and Production activities. High-tech interventions through
improved oil recovery (IOR) and enhanced oil recovery (EOR) schemes, and,
optimal reservoir management in the existing mature fields remain the top
priority of your Company. Through induction of state-of-the-art and fit for
purpose technology, it has been possible to achieve growth in production on
a year on year basis over the last few years from these matured fields.
PRODUCTION OF NATURAL GAS
Your Company achieved the highest ever production and sale of 2633.29 MMSCM
and 2093.02 MMSCM respectively during the year. The present gas production
potential is about 7.0 MMSCMD from our Assam and Arunachal Pradesh fields
and about 0.80 MMSCMD from the Rajasthan fields. We are working towards
building up its gas production potential to a level of 10 MMSCMD in the
North East by drilling of non-associated gas wells and workover of shut-in
gas wells and adoption of the new well completion technology. In the last
bid round for CBM, your Company won a CBM block along with M/s Arrow Energy
(now Dart Energy Ltd), who will act as the operator. Work is in progress in
the block as per work programme.
RESEARCH & DEVELOPMENT
Your Company gives due importance to continuous upgradation of technologies
and expertise in various areas of activities through its own Research and
Development Centre. In its well equipped R&D centre, your Company continues
to undertake applied research activities to find solutions to different
Your Company now has overseas presence in nine countries, with acreage of
38695 Sq kms. In Areas 86 and 102/4 in Libya (comprising of 5 Blocks),
where your Company has 50% Participating Interest (PI) as operator, minimum
work programme (MWP) has been completed in both the blocks and actions are
in hand for relinquishment of the same. In the other non-operated blocks
95/96 acquisition of 2D seismic and first phase of 3D seismic survey have
been completed. In Gabon, exploratory locations have been identified for
drilling of 2 committed wells to be started by September 2012-13 and to be
completed by early next year. In Timor Leste, one well drilled did not
encounter any hydrocarbon and consortium has initiated action to relinquish
the block. In the Farsi Offshore Block in the Islamic Republic of Iran,
three rounds of negotiations for the development service contract (DSC)
were held with Iran authorities. Work progress during the year was severely
affected due to the ongoing geo-political situation. In Yemen, physical
activities in the block area have been badly affected due to political
crisis in Yemen. Currently, seismic data acquisition is in progress in
block 83. In Nigeria, the JV block license has been converted to mining
lease OML142. Seismic data acquisition in the block is expected to start
shortly. In Egypt, civil unrest in the MENA region has affected operational
activities in some of the overseas assets of your Company. In the Project
Carabobo 1, Venezuela, as per the work programme, drilling of stratjgraphic
wells has started and 4 Nos of stratigraphic wells have been completed. All
other activities related to different contracts, civil works, seismic,
drilling rigs hiring etc are ongoing at a good pace to bring the first oil
All the three segments of pipeline operations ensured uninterrupted
throughput, achieving a throughput of 99.57% of the off-take in 2012
against 99.5% in 2011. The crude off-take at 6.740 MMT was 11.15% higher in
2012 from 6.064 MMT in 2011. The crude oil pipeline operations thus ensured
uninterrupted operation. Our revenue from transportation increased by
89.06% to Rs. 460.38 crore in fiscal 2012 from Rs. 243.51 crore in fiscal
In its endeavour to harness Unconventional Energy, your Company
commissioned a 13.6MW Wind Turbine plant at Ludhureva in Jaisalmer District
in Rajasthan. The plant was commissioned on 31st March, 2012. OIL'S wind
farm was successfully connected to the power grid of Rajasthan Rajya Vidyut
Utpadan Nigam Ltd (RRVUNL).
This is your Company's maiden venture into renewable energy sector. Your
Company has plans to take up larger projects in the ensuing financial year
in both Wind Power and Solar Power.
HUMAN RESOURCE-OUR ASSET
With immense happiness and pride I wish to state that your Company has a
great team of employees. We firmly believe that the prosperity of our
business depends on successfully developing an integrated community of
motivated and innovative employees, who possess a high level of morale by
availing opportunities for challenging work, personal development, growth
and recognition. Accordingly, we nurture an environment to sustain a
positive culture and core values which would continuously inspire human
resources to achieve excellence in all endeavors.
We have a strong team of 8096 employees, who, through their competence,
commitment and exemplary endeavors are giving shape to our corporate vision
and are building a robust future for the Company and the nation.
HEALTH, SAFETY, ENVIRONMENT
Your Company is deeply committed to the preservation of the environment and
ecology, sustainable development and enrichment of the quality of life of
employees, customers and the community around its operational areas.
Some of the new initiatives taken by your Company towards preservation of
the environment and safety are:
* Mapping of carbon footprint has been completed for all the operational
areas of OIL and initiated corrective measures for the same
* Another comprehensive audit of High Pressure wells have been carried out
to make an assessment of water resources, accessibility and vulnerability
for preparedness in the event of a disaster
* A municipal solid waste disposal and treatment plant for Duliajan
township has been set up.
* Action has been initiated for a consultative study to achieve Zero Flare
of Natural gas Your Company with its deep conviction as a responsible
corporate citizen adheres to the following three basic principles viz. -
Production without pollution; All injuries and accidents are preventable;
and Care and protection of our planet is a responsibility of each
Your Company makes an attempt to invest technology with a human face
through its social welfare and community development initiatives which
focus on the key areas of education, healthcare and the overall development
of basic infrastructure in and around its operational areas. Under our
various schemes we also continued to provide assistance to various
localities and villages for augmenting infrastructure by building roads and
bridges, rural electrification etc. As per the guidelines we earmark 2% of
our net profit for CSR activities.
With a view to meet the Country's growing _ energy demands, your Company
has -accelerated its exploration programme in - frontier areas in the North
East, which have i proven hydrocarbon resources and i increased its
drilling operations in the region. i We are accelerating our work in our
NELP i blocks and success in our exploration I ventures in these blocks and
overseas will I augment the production potential further. H Down-stream
integration, City-Gas ' distribution, new Pipeline business and entry into
the non-conventional energy sector are new horizons to be conquered as the
We have always been proud of our robust and transparent processes and
structures in place. These progressive systems ensure proper accountability
and effective timely disclosures/reporting. The effectiveness is evident
from the fact that the Company has consistently had clean audit reports.
Our Corporate Governance practices meet the stipulations of Regulators
including the DPE Guidelines. Your Company also gives due importance to
It has been my privilege to preside over this AGM of your Company. The
excellent performance of the Company on all fronts has been recognized by
the market and your efforts have been duly rewarded by sustained positive
market sentiments. Your belief and faith in OIL will take your Company to
new heights in the coming years.
In conclusion, on behalf of the Board of Directors of your Company I thank
all our stakeholders for their continued support, whose trust and
confidence are pillars of strength in all our endeavors.
The Board wishes to thank the Government of India, various State
Governments, Ministry of Petroleum and Natural Gas and other related
ministries and the Governments of all the countries where OIL operates for
their valuable support and guidance in your Company's business. .
I also take this opportunity to thank all Shareholders, Investors, Bankers,
Financial Institutions, Business Associates, Customers and other
stakeholders who have been a source of strength.
Finally, your Company's achievements and dreams for the future are the
result of untiring efforts, commitment and dedication of each and every
member of OIL family and we owe our gratitude to them. I would also like to
thank my colleagues on the Board of the Company for their valuable
contributions in steering the Company to higher level of achievements.
Let me re-assure you that, it shall always be our sincere endeavour in
continuing the efforts to maintain OIL as a world class organisation, in
line with the Company's Vision. Wish you all the best! Jai Hind
Date : 15.09.2012 (S.K. Srivastava)
Place: Duliajan Chairman and Managing Director
NOTE: Excerpts from the Chairman's Statement at the 53rd Annual General
Meeting held on 15th September, 2012 at Duliajan, Assam. This does not
purport to be a record of the proceedings of the Annual General Meeting.
Newspaper: THE FINANCIAL EXPRESS