A year back when this message went out the world was just months intoa terrain that was entirely unfamiliar - the COVID-19 pandemic was at the front and centreof our collective consciousness as its emergence and global spread which disrupted alleconomies humanity and pushed the extremes'. Now after more than a year thepandemic which is still around has already completely redefined what new normal is andhowever difficult it is we will have to learn to live with it.
More than anything else we realize there is just no going back to asthings were - and although all of us have suffered during this painful period for somethis pandemic has been a period of acute agony and deep personal loss. Our feelings go outto all those who have lost someone close to them. Within our organization we also lostsome of our beloved fellow colleagues who succumbed to the deadly virus. We salute each ofour brave energy soldiers for their supreme sacrifice.
India a major lynchpin of the global economy and an energy powerhouseunfortunately had to pass through unprecedented sufferings especially during thesecond wave' of the pandemic. Although general threat perception today is ashade lower on account of substantially lower case-counts and steadily expanding vaccinecoverage we must remain ever vigilant to combat the virus and to avert another brutalsurge of the infections. Virus is still lurking around and may raise its ugly head withsimilar virulence if we lower our guard.
As the country's premier energy explorer ONGC is steadfastlycommitted to its overarching objective of contributing to country's energy security.Although providing energy is our raison d'etre these are truly exceptional times sowe cannot but be more humane and reasonable in the manner we choose to carry on ouroperations. Our COVID-Response was premised on preserving Men Material andResources'. Resource optimization was carefully planned for all business-criticalactivities while ensuring strong adherence to COVID-related SOPs. Our massive crew changeoperation at both our offshore and onshore sites best exemplified that balanced approach.
Health Safety and Environment (HSE) is fundamental to the conduct ofour business and ONGC attaches highest priority to occupational health safety andprotection of environment in and around its operational areas. The recent incident duringcyclone Tauktae in western offshore was a very unfortunate one. While we deeply mourn theloss of lives it has further strengthened our resolve and made us revisit our internalSafety Management System comprehensively. Several actions have been initiated in thisregard including revisiting our emergency response plans and strengthening our marineoperations to handle such unprecedented cyclonic situations. Your Company is also in theprocess of benchmarking its safety standards to the best practices in the E&Pindustry.
Beyond delivering consistently in its business what further marks outONGC is its worthwhile contributions beyond its business mandate specifically in times ofcrisis and national emergencies. In the last one year when the pandemic ravaged majorparts of our country your Company in addition to providing those vital volumes of oiland gas that supported domestic economy recovery efforts also doubled down on its CSRefforts focusing largely on Healthcare. Specific to COVID-19 your Company contributed asum of Rs 3000 Million to the PM Cares Fund and undertook CSR projects worth almost Rs 300Million thereby benefiting over 44 lakh people across the country during FYRs 21. Duringthe current fiscal i.e. FYRs 22 as the country was in the grip of debilitating secondwave ONGC picked up an exclusive gauntlet of responsibility to support the communities totide over the oxygen crisis. ONGC is setting up 15 medical grade oxygen generation plantsat various parts of the country to strengthen medical oxygen infrastructure. ONGC is alsoprocuring one lakh oxygen concentrators on behalf of Govt. of India encouraging a largenumber of domestic vendors and boosting local manufacturing. ONGC is also procuring andproviding Cold Chain Logistics Equipment for COVID-19 vaccination to several statesthrough ONGC Foundation.
Dear shareholder the global energy landscape is transitioning at apace faster than anticipated. Multiple forces are at play therefore there are wide-ranging uncertainties on the shape of things to come within the industry - be it globalconsensus on climate change and sustainability energy efficiency growing consumerawareness volatility in international trade relations and technological breakthroughs.While this is a journey that will require patience by the dint of strength and clarity inour business strategies today will enable us to succeed in the energy transition as wesee this transition as part of the inevitable evolution of the energy sector. Our goal isto become a more valuable company for its shareholders and deliver more benefits for thesociety at large. However it is critical that the companies manage their operations inmost sustainable and energy efficient manner.
The energy industry remains vital to the recovery of global economicactivity in the aftermath of pandemic- induced recession. Oil and gas has for long beenvital to forging modern societies and economies and they will remain key sources of energyas we start the process of rebuilding and a long transition. Our business models will nowhave to be safer more sustainable and less energy intensive. Sustainability needs to be acentral tenet of all future energy business plans and strategies. While ONGC has alwaysbeen guided by the principles of energy equity and sustainability as part of our longterm strategic roadmap Energy Strategy 2040 we are going to further sharpen our focus onclimate-related aspects of our operations in order to remain relevant in tomorrow'senergy ecosystem. To achieve that vision we are extending our footprints thoughtfully andmeaningfully beyond our core E&P activities - at the same time we are also taking allnecessary measures to make our core activities more sustainable and less energy-intensive.
Coming to performance FYRs 21 numbers were affected largely due topandemic related stresses. Despite the disruptions your Company as well as ONGC Groupentities recorded important milestones during the year reaffirming our pre-eminentstature in the domestic energy space. Also during these trying times despite the severalroadblocks ONGC brought online the country's eighth producing basin - the BengalBasin - with the flow of oil from Ashokenagar-1 well. Exploration continues to make steadyprogress despite depressed and volatile energy prices. You will be happy to know thatduring FYRs 21 ONGC made 10 new discoveries and could successfully monetize 12discoveries of which 2 are from FYRs 21 itself. While we have consistently replaced morethan what we produced consecutively for the last 15 years fast- tracked monetization ofhydrocarbon discoveries in the recent years our track record lends credence to theimproving commerciality of ONGC's exploratory efforts. As a National Oil Company(NOC) besides the prolific and producing basins we are also expanding our exploratoryfootprints in the virgin or under-explored areas and data gathered from such pursuits willboost the nation's hydrocarbon prospects. To further expand our exploratoryfootprints we are bidding aggressively in the OALP bid rounds. In the recently concludedOALP-V round your Company acquired 7 of the 11 blocks on offer. We are hopeful ofunlocking new territories and thereby further bolstering the potential of more indigenoushydrocarbon supplies down the road.
Domestic oil and gas production (including JV's production) stoodat 45.35 MMTOE versus 48.25 MMTOE in the preceding fiscal. The Company remains positive ofa turnaround in output in FYRs 22 as the threat of further disruptions mirroring the onein the first half of 2020 has abated a bit and the industry too readjusts its modusoperandi to this new normal' of sustaining operations and doing businesses.Looking forward by the year 2024 we are projecting hydrocarbon domestic production inexcess of 60 MMTOE with the portfolio clearly tilted in favour of cleaner sources drivenby strong output from our KG deep-water field in the Eastern Offshore as well as Heera inthe shallow waters of Western offshore. Currently 15 major projects are underimplementation with a total projected cost of around Rs 605015 Million with envisagedgain of more than 110 MMTOE.
In view of increasing significance of gas in the future energy mixyour Company has acquired 5 percent stake in the India Gas Exchange India's firstGas Exchange which provides automated platform for trading of natural gas. The Board hasalso approved creation of a new wholly owned subsidiary Company for Gas & LNG businessvalue-chain subject to further necessary approvals. However the dismally low domesticgas prices continue to dent the profitability of our gas business. It is however believedthat these early choices will improve optionality and future pay off as the energytransition takes off.
Despite a year of disruptions and sub-optimal energy prices yourCompany returned a profit in each of the individual quarters. Our gross revenue stood atRs 681411 Million and we registered a net profit of Rs 112464 Million despite incurringlosses in our gas business for the fourth successive year. ONGC's total dividendpay-out would be Rs 45289 Million at Rs 3.60 per share (72 percent) with pay-out ratio of40.27%. We also continue to maintain stable CAPEX program. CAPEX for FYRs 21 was Rs268593 Million while planned outlay for FYRs 22 stands at Rs 298000 Million.
ONGC Videsh our overseas arm made a significant oil strike in itsonshore block CPO-5 in Colombia during the FYRs 21. Oil and Gas production from ONGCVidesh was 13.04 MMTOE in FYRs 21 despite the output cuts in our projects in UAE Russiaand Azerbaijan as part of the OPEC+ Group. Turnover and Net Profit of ONGC Videsh duringthe FYRs 21 was Rs 119558 Million and Rs 18910 Million respectively.
Performance across the value-chain for ONGC- group entities has beenimpressive during the year. Our subsidiary HPCL registered a throughput of 16.42 MMT witha capacity utilization of more than 100 percent in spite of overall demand contraction.
The refiner also added 2158 new retail outlets which is highest everin any particular year totalling retail outlets to 18634. HPCL also commissioned 112 newLPG distributorship during the FYRs 21 taking number of total distributorship to 6192 asof 31st March 2021. During the FYRs 21 HPCL achieved its highest ever NetProfit of Rs 106639 Million on the back of improved refinery margins helped by inventorygains and robust operational performance. HPCL has drawn up detailed plans for futureexpansions in both core and non-core areas; some key projects in the pipeline are Vizagrefinery modernization green-field refinery cum Petchem complex in Rajasthan and LNGre-gas terminal at Chhara Gujarat.
Our other refiner MRPL also did well despite the year-long turmoil inits global export markets due to the pandemic. Its throughput for the year was 11.50 MMTand its standalone turnover was Rs 510192 Million. MRPL is focused on setting up andexpediting own retail outlets. It has also partnered with the OMCs to increase sale ofproducts in the country thereby offsetting its reliance on foreign markets to an extent.MRPL after having acquired 49 percent of ONGC's stake has assumed full ownership ofOMPL during the year thereby establishing synergistic value addition across the productchain.
In the petchem vertical OPaL is performing very well with around 90%capacity utilisation during FYRs 21. Revenue from the operations stood at Rs 114860Million. Despite global slowdown in petchem markets caused by the pandemic it isheartening to share that OPaL has posted positive PAT in the last quarter of FYRs 21.
OTPC our power venture in the country's Northeast region ismeeting about 35% of total power requirements of the North-eastern states and has recordedtotal income of Rs 16456 Million while netting a PAT of Rs 2206 Million in FYRs 21.
Looking ahead your Company is committed to sustaining its operationalexcellence and material growth in its core E&P business and also expanding itsnon-E&P investments through its Group entities collaborations with other leadingplayers in the industry. Our long-term blueprint - Energy Strategy 2040 - articulates thisaspiration. Given that the transformation will take place within the context ofsustainability technology will be the most critical lever and safety its vital planks.
Your Company is also pursuing opportunities in the field of Renewablesin India and abroad. We added another 6 MW of solar capacity taking our total installedcapacity in excess of 30 MW. A study for pilot project in Offshore Wind has already beencommissioned for assessing the opportunities in this niche segment. We have also taken upthe country's first geothermal energy project in Ladakh. Our total installed capacityin renewables space has exceeded 325 MW and that we have a long distance to cover as weare targeting 10 GW of installed renewable capacity by 2040.
You will be happy to know that concerted actions over the years tooptimise resource and energy usage within the Company have positively impacted in the formof reduced carbon foot print. Emission intensity (CO2 emission per barrel ofoil produced) of the business has decreased by 12 percent in the last five years and thegains will only further intensify. The Company is also undertaking a thorough assessmentof its Scope 1 and 2 emissions to identify potential savings opportunities through anindependent assurer. These are early signs of your Company pivoting towards a moresustainable and value-accretive energy entity while remaining abundantly relevant to thecountry's evolving energy ecosystem.
Your Company is committed to conduct the business in a legal ethicaland transparent manner and observes highest standards of corporate governance.
Accordingly your Company has been continuously rated"Excellent" grade for its compliances with the DPE Guidelines on corporategovernance. As the country's foremost energy explorer and among the biggestdiversified energy conglomerates we reaffirm our commitment to helping secureIndia's energy supplies safely and sustainably with highest standard of corporategovernance and adhering to ethics & transparency for years to come to advancenation's growth.
I also place on record my deepest admiration for our employees.Throughout this challenging year ONGCians - the brave energy soldiers have showncharacteristic determination and delivered beyond their mandate despite enduringsignificant personal sufferings. Such superlative efforts were the basis of ONGC'ssustenance in these exceptional times and it is their commitment that allows us to aimhigher every time.
Finally dear Shareholders the Company is grateful to you for yourcontinued support and confidence in our endeavours. Our lasting association has enduredthe test of times and has proved to be an invaluable asset. Fuelled by this mutual trustyour Company is now more deeply committed to work towards the energy independence of thecountry while continuing to generate more and more value for its shareholders in comingdays through several verticals of energy.
I hope all of you take good care of yourself and stay safe ascollectively we put together the building blocks of a new energy era for the country.
|Jai Hind! || |
| ||Sd/- |
| ||Subhash Kumar |
| ||Chairman & Managing Director |