Regulatory Administrative Institutions MPA 517

1. Regulatory Administrative InstitutionsMPA 517 Lecture-27

2. Recap- Goals & Objectives • The primary goals of ministry of port and shipping are to ensure efficiency, enhance productivity and inculcate advanced practices and technology. • Enhance good governance • Rationalize port charges  • Formulate plans and policies to promote shipping sector  • Induce ship owning under the flag of Pakistan • Maintain safety and security standards as per International Maritime Organization(IMO) Convention  • Ensure and maintain quality of Pakistani seafarers in the line with international best practices  • Maintain technical control and to regulate functioning of subordinate organizations

3. Functions Of the Ministry • National Planning, research and international aspects of: Inland water transport: and Coastal shipping within the same Province. • Diverted cargo belonging to the Federal Government. • Navigation and shipping including coastal shipping but no including shipping confined to one Province; safety of ports and regulation of matter relating to dangerous cargo. • Navigation and Shipping on inland water-ways as regards mechanically propelled vessels and the rule of the road on such water-ways; carriage of passengers and goods on inland water-ways.

4. GWADAR PORT • Currently, Pakistan has two main operating international deep-sea ports: Karachi Port and Port Qasim. During the coming years, their capacity expansion programs are unlikely to keep pace with the expected growth in demand, resulting in a need for a third port to fill the gap. • In particular, Karachi Port has significant physical limitations and will not be able to grow at the same speed as the national growth in demand over the coming decades. These limitations result mainly from its location, which is within the city of Karachi itself, which has seen very rapid growth over the past years. 

5. Today’s Lecture • Oil and Gas Development Company

6. OGDCL • OGDCL is the national oil & gas company of Pakistan and the flagship of the country’s E&P sector. The Company is the local market leader in terms of reserves, production and acreage, and is listed on all three stock exchanges in Pakistan and also on the London Stock Exchange since December 2006. • The Company is all set to ride the wave of E&P activity, equipped with its Vision & Mission, Business and Strategic Plan, a debt-free and robust balance sheet and healthy cash reserves. • The Company is ready to take on the challenges of a volatile E&P industry. 

7. OGDCL Vision • To be a leading multinational Exploration and Production Company.  OGDCL Mission • To become the leading provider of oil and gas to the country by increasing exploration and production both domestically and internationally, utilizing all options including strategic alliances

8. History • Prior to OGDCL's emergence, exploration activities in the country were carried out by Pakistan Petroleum Ltd. (PPL) and Pakistan Oilfields Ltd. (POL). In 1952, PPL discovered a giant gas field at Sui in Balochistan. This discovery generated immense interest in exploration and five major foreign oil companies entered into concession agreements with the Government. • During the 1950s, these companies carried out extensive geological and geophysical surveys and drilled 47 exploratory wells. As a result, a few small gas fields were discovered. • Despite these gas discoveries, exploration activity after having reached its peak in mid-1950s, declined in the late fifties. • Private Companies whose main objective was to earn profit were not interested in developing the gas discoveries especially when infrastructure and demand for gas was non-existent. • With exploration activity at its lowest ebb several foreign exploration contracting companies terminated their operation and either reduced or relinquished land holdings in 1961.

9. Establishment of OGDC • To revive exploration in the energy sector the Government of Pakistan signed a long-term loan Agreement on 04 March 1961 with the USSR, whereby Pakistan received 27 million Rubles to finance equipment and services of Soviet experts for exploration. • Pursuant to the Agreement, OGDC was created under an Ordinance dated 20th September 1961. The Corporation was charged with responsibility to undertake a well thought out and systematic exploratory programme and to plan and promote Pakistan's oil and gas prospects.

10. As an instrument of policy in the oil and gas sector, the Corporation followed the Government instructions in matters of exploration and development. • The day to day management was however, vested in a five-member Board of Directors appointed by the Government. • In the initial stages the financial resources were arranged by the GOP as the OGDC lacked the ways and means to raise the risk capital. • The first 10 to 15 years were devoted to development of manpower and building of infrastructure to undertake much larger exploration programmes.

11. Transition to a self financing entity • Noting the Company's success, due to major oil and gas discoveries in the eighties, the Government in July 1989, off-loaded the Company from the Federal Budget and allowed it to manage its activities with self generated funds.The financial year 1989-90, was OGDC's first year of self-financing. It was a great challenge for OGDC. • The obvious initial target during the first year of self-financing was to generate sufficient resources to maintain the momentum of exploration and development at a pace envisaged in the Public Sector Development Programme (PSDP) as well as to meet its debt servicing obligations. • OGDC not only generated enough internal funds to meet its debt obligations but also invested enough resources in exploration and development to increase the country's reserves and production.

12. Core Values • Merit  •  Integrity •   Team Work •   Safety •   Dedication •   Innovation

13. Goals Financial • Build strategic reserves for future growth/expansion Growth and superior returns to all stakeholders • Double the value of the company in the next five years. • Make investment decisions by ranking projects on the basis of best economic indicators • Maximize profits by investing surplus funds in profitable avenues • Reduce cost and time overruns to improve performance results.

14. Goals Customers • Continuously improve quality of service and responsiveness to maintain a satisfied customer base. • Improve reliability and efficiency of supply to the customer • Be a responsible corporate citizen 

15. Goals Learning & growth • Motivate our work force, and enhance their technical, managerial and business skills through modern HR practices.  • Acquire, learn and apply state-of-the-art technology. • Emphasize organizational learning and research through effective use of knowledge management systems. • Fill the competency gap within the organization by attracting and retaining best professionals. • Attain full autonomy in financial and decision making matters.

16. Goals Internal Processing Goals • Evolve consensus through consultative process inter-linking activities of all departments • Excel in exploration, development and commercializationBe transparent in all business transactions • Synergize through effective business practices and teamwork • Have well-defined SOP’s with specific ownerships and accountabilities • Improve internal business decision making and strategic planning through state-of-the-art MIS • Improve internal controls • Periodic business process reengineering.

17. Business strategy As the leading exploration and production company in Pakistan, OGDCL’s primary objective is to enhance its reserves and production profile and ultimately maximize value for shareholders. In order to achieve this goal, the Company seeks to execute the following strategies: •   Accelerate Production Growth: by continuing to accelerate production growth through utilizing cutting edge technologies, allowing the Company to utilize its significant reserves base and capitalize on the strong economic growth and accelerating energy demand in Pakistan. 

18. Exploit Exploration Opportunities: by building the Company’s future reserves portfolio through its large onshore exploration acreage. During the fiscal year 2008-09 target of drilling is 52 wells. • Maintain Low Cost Operations: OGDCL’s operating environment, namely the geographic concentration of its reserves base within Pakistan, will be a major factor in allowing it to control its low cost structure. • Within Pakistan, the Company’s leading position also enables it to access economies of scale across its significant reserves base and operations.  

19. Pursue Selective International Expansion: while domestic expansion remains OGDCL’s core focus, the Company intends to grow and diversify its portfolio through selective international expansion in the medium to long-term.  •  Implementing International Best Practice: by ensuring an efficient organizational structure and business processes that are focused on core production

21. Highlights 2010 Financial • The company's sales revenue increased by 9.0% to PKR 142.6 billion (2008-09: PKR 130.8 billion) • Net realized prices of crude oil and gas averaged US$ 61.37/bbl and PKR 186.47/thousand cu ft respectively (2008-09: 55.53/bbl and PKR 174.78/thousand cu ft) • Profit of the company before taxation rose by 9.40% to PKR 88.6 billion (2008-09: PKR 80.9 billion) • After tax profit of the company rose by 6.5% to PKR 59.2 billion (2008-09: PKR 55.5 billion) • Earnings per share increased to PKR 13.76 (2008-09: PKR 12.91) • The company declared dividend of PKR 5.50 per share (2008-09: PKR 8.25 per share) • Total assets of the company increased to PKR 228.9 billion from PKR 178.0 billion

22. In early 2007, the company had a market capitalization of PKR 51.9 Billion in Karachi Stock Exchange • The remaining recoverable reserves of OGDCL stood more than 142 million barrels (22,600,000 m3) of oil and 9,997 billion cubic feet 9,997 billion cubic feet (283.1 km3) of gas as of June 30, 2010.

23. Summary • Oil and Gas Development Company

24. Next Lecture • Ministry of Overseas Pakistanis & Human Resource Development