Vol 2, PW 24 (23 Dec 98) Exploration & Production

It is worth spending a few minutes examining some of the key terms used by McKinsey in its effort to encourage the modernisation of ONGC.

In years to come these terms will be the standard jargon of ONGC in its domestic and international dealings with other oil companies. PERFORMANCE CONTRACT: This is the contract that all of ONGCs Asset Managers (until now just from Neelam, but later from all its assets beginning with Ankleshwar, Mehsana and Ahmedabad) will have to sign with ONGCs Steering Committee, making them accountable directly to ONGCs board, and no-one in between.

KEY RESULT AREAS (KRA): Each performance contract will require the Asset Manager to maintain detailed records of reservoir health, costs, safety and personnel working on the asset (oil or gasfield). KEY PERFORMANCE INDICATORS (KPI): A grading system which every four months will be used to review the performance of the asset (ie.

Neelam) detailed in the KRAs. SERVICE LEVEL AGREEMENTS (SLA): This is by far the most revolutionary aspect of the reform process and if implemented will result in the creation of an internal market in ONGC.

McKinsey writes: "SLAs are being created to define the quantity, quality, cost, schedule and terms of the service that will be provided to the asset. An SLA is an internal agreement between the user and the service provider (ie.

two separate ONGC units) that helps ensure better planning and co-operation".