Hungry OVL angry with absent parent ONGC
Usually, parents nurture their children and provide support and the means to grow.
But that's not so with ONGC and its wholly owned subsidiary ONGC Videsh. ONGC today stands accused of slowing down OVL's growth by delaying project approval.
"OVL is totally dependent on ONGC funds to buy assets," says an industry source. "But ONGC management always questions the need to spend money; acquisition opportunities slip away." As with all global oil producers, OVL's revenue from production has dropped sharply.
Income for the six months to September 30 (2016) fell by 8.45% from Rs3776cr last year to Rs3457cr. "In these hard times," he adds, "OVL needs more support from ONGC." At OVL, seething resentment is also evident over the burden of financing two expensive and arguably pointless acquisitions: Imperial Energy for $2.1bn in 2009 and Area-1 in Mozambique for $2.48bn in 2013.
"Neither is generating any revenue!" we hear. High on OVL's agenda is to increase its Latin America, Africa and the CIS portfolio but without ONGC's help this can't happen.
"Internal OVL studies and by McKinsey and the Boston Consulting Group show we need at least 1000 officers," adds another source. "But we have only 330, all loaned from ONGC." With stakes in 37 global assets, OVL prides itself as the growth engine of stagnating ONGC where production is declining.
Sadly, no one at the top is taking any notice.