OGDC Annual Report

INTERNSHIP REPORT

OIL & GAS DEVELOPMENT COMPANY

Date

INTERNSHIP REPORT

OIL & GAS DEVELOPMENT COMPANY LIMITED

Submitted by

Date of Submission

OIL & GAS DEVELOPMENT COMPANY

MUHAMMAD AHMER

february 28, 2009

GOMAL UNIVERSITY

OGDCL

SCHEME OF THE REPORT

1-Chapter 1

Chapter 1 covers the background of the study, purpose, scope, limitations, merits,

methodology and scheme of the study.

2-Chapter 2

Chapter 2 covers the oil industry in Pakistan, history of OGDCL and the organizational

structure comprehensively.

This chapter also presents functions, projects, product line, mission and

objectives, Product and services offered, as well.

3-Chapter 3

In chapter 3, the organizational structure and its structure is discussed comprehensively. More

attention is given to the different departments working in and under OGDCL and how these

departments operate.

4-Chapter 4

This chapter focuses on finance department of OGDCL. It explains the

administration and Finance department and its practices in the organization in detail.

5-Chapter 5

This chapter is all about SWOT analysis in which strength, weaknesses, opportunities and

threats are discussed.

6-Chapter 6

In chapter 6, problems of OGDCL are identified and then on these bases some suggestions

are given keeping in view the current situation of the organization. The effort is directed for efficient

performance

Chapter 4

7-Chapter 7

OGDCL

CHAPTER –1

INTRODUCTION

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.

1.1 Establishment of OGDC:

To review 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 programs and to plan and

promote Pakistan's oil and gas prospects.

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.

OGDCL

1.2 Initial Successes:

A number of donor agencies such as the World Bank, Canadian International Development Agency

(CIDA) and the Asian Development Bank provided the impetus through assistance for major

development projects in the form of loans and grants. OGDC's concerted efforts were very successful

as they resulted in a number of major oil and gas discoveries between 1968 and 1982. Two oil field

was discovered in 1968 which paved the way for further exploratory work in the North. During the

period 1970-75, the Company reformed the strategy for updating its equipment base and undertook a

very aggressive work programme. This resulted in discovery of a number of oil and gas fields in the

Eighties, thus giving the Company a measure of financial independence. These include the Thora,

Sono, Lashari, Bobi, Tando Alam & Dhodak oil/condensate fields and Pirkoh, Uch, Loti, Nandpur

and Panjpir gas fields which are commercial discoveries that testify to the professional capabilities of

the Corporation.

1.3 PGCL:

A wholly owned subsidiary, the Pirkoh Gas Company (Private) Limited (PGCL) was established in

1982 to undertake development of Pirkoh gas field located in Dera Bugti Agency in Balochistan with

Asian Development Bank assistance.

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.

1.4 OIL AND GAS TRAINING INSTITUTE (OGTI)

The oil and gas development company limited (OGDCL) was set up in 1961 in the public

sector under the ministry of petroleum and natural resources.

1.4.1 Aims and Objectives Of OGTI

The aims and objectives of OGTI are to identify the training needs of the industry, offer

practical training programme to professional of the petroleum industry, provide training advice and

guidance to OGDC and to help established standards for training which will meet the performance

needs in the field and on the job. OGTI is dedicated to:

Establish courses and in-house training programmes which will meet the specific needs of

OGDC and the Pakistan petroleum industry.

Designing training material that recognizes the capabilities and specific needs of newly hired

employees and those who change their job assignment. Providing refresher and upgrade training for

industry personnel in cost effective manner.

Initial Public Offering

Government of Pakistan disinvested part of its shareholding in the company in 2003.

Initially 2.5% of the equity with an additional green-shoe option upto 2.5% of equity was

offered to the general public. The said Offer received an overwhelming response from

the general public and was recorded as a landmark transaction in the history of Pakistan's capital markets.

GDR

In December 2006, the Government of Pakistan divested a further 10% of its holding in

the company. The Company is now listed on the London Stock Exchange since on

December 06, 2006.

Conversion into Public Limited Company

Prior to 23 October 1997, OGDCL was a statutory Corporation, and was known as

OGDC (Oil & Gas Development Corporation). It has been incorporated as a Public

Limited Company w.e.f. 23 October 1997 and is now known as OGDCL (Oil & Gas

Development Company Ltd.).

OGDCL

In-house basic training programmes are being designed and developed to provide a base level of

training which employees require to function in their jobs . OGDC recruits men from all across

Pakistan. The universities and technical schools do not provide the full range of subject matter

necessary for a graduate entering the petroleum industry. It is OGTI’S intention to ensure that the

individual has an opportunity to obtain this training within his first two years with OGDC . In

addition to basic training courses , OGTI will Organizes in-house technology update seminars .

1.5 BACKGROUND OF THE STUDY

Oil industry is a lifeline for an economy. It is a world of oil exploration, oil refining and oil

marketing. Pakistan understands the importance of this industry for its economic uplift. Therefore the

government of Pakistan established OGDCL in 1961. OGDCL is the leading firm providing 23% of

total consumption, saving Pakistan from imports and contributing to economy by paying different

charges to the government.

1.6 PURPOSE OF THE STUDY

This report is based on study carried out for the fulfillment of the degree requirement of the Master

in business administration at the GOMAL UNIVERSITY . The purpose of the study is to do

practical work in field and apply the knowledge of classroom lectures to the real life situations.

1.7 SCOPE OF THE STUDY

The scope of my work is focused on the working of FINANCE DEPORTMENT

Review Section of this report not only explains department’s working but also flow of work activities

among the sections. During the internship it, the observation was focused on internal managerial

matters of OGDCL, i.e. work environment, organization structure, decision-making process,

Finacial metter This research facilitates in SWOT Analysis.

1.8 LIMITATION OF THE STUDY

No matter how efficiently a study is conducted, it cannot be perfect in all respects. This study was

conducted in accordance with the objectives of the study; the study may not include broad

explanations of facts and figures due to the nature of the study. Second: limitation, which affects the

study, is the availability of required data was problem all the documents and files are kept strictly

under lock and key due to their confidential nature. Third: the problem of short time period also

FANANCIAL

OGDCL

makes the analysis restricted as one cannot properly understand and thus analyze all the operations of

an organization just in eight weeks.

1.9 MERITS OF THE STUDY

The study done will benefit the finance students in particular and all type of Management students in

general, because the analysis section of this report comprehensively encompasses all respects of

OGDCL. Furthermore, OGDCL Head office Islamabad may also benefit from the recommendations

made at the end of the report.

1.10 METHODOLOGY OF STUDY

The data collected for analysis and review includes both primary and secondary data. The methods

used for collecting primary and secondary data are as follows:

1.10.1 Primary Data

Data collected for the first time is called primary data. The methods used to collect such data include:

• Personal observations and

• Interview with organization’s employees.

1.10.2 Secondary Data

The data collected earlier by someone else and which has gone through mathematical and statistical

techniques after its collection, is called secondary data. Methods used to collect secondary data

include:

• OGDCL annual reports

• OGDCL brochures

• Internship reports on OGDCL

• Journal and

• Newspaper

• Internet

OGDCL

CHAPTER –2

PRESENT STATUS OF THE COMPANY

2.1 VISION STATEMENT

To be a leading, regional Pakistani E & P Company, recognized for its people, partnerships and

performance.

2.2 MISSION STATEMENT

Our mission is to become a competitive, dynamic and growing E & P Company, rapidly enhancing

our reserves through world class workforce, best management practices and technology and

maximizing returns to all stakeholders by capturing high value business opportunities within the

country and abroad, while being a responsible corporate citizen.

OGDCL Goals & Core Values Core Values Merit Integrity Team Work Safety Dedication Innovation Goals1.ÿFinancial2.ÿTo reduce cost and time over runs to improve financial results

3.ÿTo maximize profits by investing surplus funds in profitable avenues

4.ÿTo make investment decisions by ranking projects on the basis of best economic 5.ÿindicators 6.ÿGrowth and superior return to all stakeholders

7.ÿDouble the value of the company in next five years.

8.ÿCustomers9.ÿImprove the quality of service to make it faster and more transparent

10.ÿQuality, dependability, responsible corporate citizen

11.ÿReliable and efficient company

12.ÿTo provide most reliable supplies to the customers through cost effective means

13.ÿLearning & growth14.ÿTo set up task forces with representation from all relevant departments to 15.ÿimprove internal business decision making and strategic planning

16.ÿExcel in exploration, development and commercialization

17.ÿAvailability of updated information to the shareholders and customers

18.ÿTo use most effective business practices and formulate a framework of synergic 19.ÿorganization with the change in culture

OGDCL

2.5 HISTORICAL DEVELOPMENT OF THE COMPANY

2.5.1 Establishment

The Oil & Gas Development Company Limited (OGDCL) was created under an Ordinance in

1961, to undertake comprehensive exploratory programme and promote Pakistan’s oil and gas

prospects. In 1997, it was converted into a Public Limited Company and is now governed by the

Companies Ordinance 1984.

2.5.2 Development

With a balanced, efficient and competitive structure, OGDCL explores and exploits

indigenous resources for optimum production of oil and gas, besides seeking opportunities abroad.

OGDCL has the largest acreage position in Pakistan and currently operates 17 exploration

concessions and holds non –operated working interest in another 7 exploration concessions. In

addition OGDCL has 35 Mining and Development & Production Leases, which are operated by it

besides having working interest ownership in 28 non-operated Mining and Development &

Production Leases, OGDCL has an extensive database. Services of the Company’s highly qualified

and skilled expertise in the fields of geology and geophysics are frequently availed y the local and

foreign oil companies. It also leases out its drilling rigs to the private sector and carries out seismic

surveys and data processing on contract for these companies on extremely competitive rates.

OGDCL now holds the largest shares of oil and gas reserves in the country, i.e. 48% of total

oil and 37% of total gas reserves. Its percentage share of the total oil and gas production in Pakistan

is 34% and 28% respectively. On the basis of its activities since inception, the company has until

June 30, 2003 and made 59 discoveries with a success ratio of 1:3. OGDCL’s updated estimates for

remaining recoverable oil and gas reserves as on 1st July, 2003, stood at 9.228 billion

standard cubic feet (BSCF) of gas and 164.25 million barrels of oil including company’s share in non

– operated Joint Ventures.

During the last 42 years OGDCL has grown into a technically and commercially viable

organization.

2.5.3 Name & Address of Company

Oil and Gas Development Company Limited (OGDCL). House, Jinnah Avenue, Blue Area,

Islamabad, Pakistan.

Telephone: 051-9209701

Fax No: 051-9209708

OGDCL

Business Development

Initiatives have been taken to enhance OGDCL's business canvas. OGDCL will avail opportunities, to acquire

overseas acreage by buying stakes in existing viable producing fields. OGDCL is also looking into the possibility of

E&P opportunities and joint venture collaborations outside Pakistan, which would include swap of assets for reserves

acquisition with percentage of working interest in international market.

OGDCL with an aggressive business development strategy provides an enabling environment for foreign

participation (either as a JV partner or on a stand-alone basis). The Company is also aiming at fast-track development

of its current and future projects at an aggressive pace without compromising quality and transparency

OGDCL's ordinary shares are listed in Pakistan on the Karachi, Lahore and the

Islamabad Stock Exchanges under the ticker code OGDC. OGDCL also has global

depositary shares listed on the London Stock Exchange under the ticker code OGDC.

London Stock Exchange

Karachi Stock Exchange

DISCLAIMER: The above links to sites of other parties are provided for your

convenience. OGDCL neither reviews and monitors nor has any responsibility for the

contents of these sites, and the fact that OGDCL has provided a link to these sites is not

to be interpreted as an endorsement of, or acceptance of responsibility for their contents.

Share Price Quote

OGDCL

Chapter 3

ORGANIZATIONAL STRUCTURE

3.1 MAIN OFFICES

OGDCL Head Office is situated at Jinnah Avenue, Blue Area Islamabad and Regional

Offices are located in Karachi and Multan. Besides this OGDCL has its Liaison Offices in

Hyderabad, Sukkhur, and Quetta for operational activities. The overall organizational

structure / organogram is as under

A Board of Directors comprising twelve Directors, all of whom are nominated by the

Ministry of Petroleum and Natural Resources, is responsible for policy related issues. The

autonomous Board is headed by a non-executive Chairman and there is a Managing

Director/Chief Executive Officer.

Following are the main offices located throughout Pakistan:

1. OGDCL Head Office, Jinnah Avenue Islamabad.

2. Pirkoh Gas Company Private Limited, Islamabad.

3. OGDCL Regional Office, Shafi Chamber, Karachi

4. OGDCL Regional Office, Multan

5. OGDCL Liaison Office, Quetta

6. OGDCL Liaison Office, Sukkur

7. OGDCL West Wharf Office, Karachi

OGDCL

8. OGDCL Base Store, Islamabad

9. OGDCL Base Store, Khadiji, Karachi

10. OGDCL Base Store, Korangi

11. OGDCL Base Store, Kot Addu

12. OGDCL Base Store, Kot Sarang

13. Medical Centers, Islamabad, Rawalpindi & Karachi

14. OGDCL Workshops, Islamabad

15. Oil & Gas Training Institute, Islamabad.

3.2 MAIN DEPARTMENTS

Corporate Department

1. Administration Department

2. Human Resource Department

3. Personnel Department

OGDCL

4. Security Department

5. Legal / Regulation Department

6. Communication Department

7. Procurement Department

8. Stores Department

9. Finance & Accounts Department

10. Audit Department

E&P Departments

1. Exploration Department

2. Exploitation Department

3. Production Department

4. Process Department

Technical Services Department

1. Drilling Department

2. Data Logging Department

3. Mud Engineering Department

OGDCL

4. Well Services Department

5. Cementation Department

6. Geological Well Supervision Department

7. Engineering Department

8. Wire line Logging Department

9. Geological Department,Data Processing Department

Major Oil & Gas Fields

Tando Alam

Bobi

Dhodak

Fimkassar

Lashari

Missa Keswal

Thora

Sadqal

Toot

Chanda

Daru

Kunnar

Loti

Nandpur

Qadirpur

Sono

Uch

Chak Naurang

Dakhni

Kal

Missan

Pasakhi

Rajian

OGDCL

Chairman

Board of Directors

Managing Director

Company Secretary Chief Staff Off icer

E.D (Admin)

GM

(Admin)

Manager(Admin)

General Managers

E.D (Finance/Accounts)

E.D (Exploration)

E.D (Drilling)

E.D (Corporate

Aff air)

Chief(Admin)

Dy . Chief(Admin)

Sr. AdminOff icers

AdmnOff icers

AdmnSection

Managers

ChiefAccountOff icers

SeniorAccountOff icers

AccountOff icers

Finance/AccountSections

General Managers

ChiefEngineers

SeniorEngineers

JuniorEngineers

Managers

PrincipleEngineers

ExplorationStaff /

Sections

General Managers

Managers

ChiefEngineers

Dy . Chief s(Corporate)

SeniorEngineers

JuniorEngineers

DrillingStaff /

Sections

General Managers

Managers

Chiefs(Corporate)

SeniorCorporate

Off icers

JuniorCorporate

Off icers

CorporateStaff /

Sections

PrincipleEngineers

3.3 Organizational Structure

OGDCL

BOARD OF DIRECTORS

OGDCL

3.4 COMMENTS ON THE ORGANIZATIONAL STRUCTURE

All policy related issues are dealt by the board of Directors that is headed by a non-executive

Chairman and a full time Managing director. The general direction, policies and affairs of the

Company vests in a Board of Directors, which consists of 01 Chairman, 10 Directors and 01

Managing Director (MD). MD is responsible for operational and other activities. The

OGDCL has been re-organized during the last few years; it now operates much purely as Oil

Company does. Emphasis is on Professional Competence and getting things done. OGDCL

can broadly be divided in to following three companies:

Corporate

Exploration & Production (E& P )

Technical Services

The whole organization has been streamlined on the functional basis and it has

emerged as an efficient unit, while speed and competence are its Hall Mark. It is now divided

into separate departments and each department is in a position to work independent business

unit.

For effective operational activities, different Executive Directors performs following

activities in consultation with General Managers, who are assisted by the concerned

Departmental Managers:

The Executive Director Exploration:

Supervises all the geophysical and geological and exploration activities and is assisted by

different Manager.

Executive Director Drilling:

when a potential oil or gas field has been identified through seismic surveys, it is then drilled

to assess the quality and quantity of the deposits. This process is achieved through drilling.

ED (Drilling) is responsible for all the drilling activities carried out by OGDCL in the

country.

OGDCL

Executive Director Admin:

Responsible for management of personnel. The administration department manages all the

activities from recruitment to training and development.

Executive Director Corporate Affairs:

Looked after the activities of planning of different development programme and monitor the

implementation of that program. It coordinates with all the department of OGDCL and

prepares a strategic plan for the activities of OGDCL. This department also liaison between

OGDCL different Ministries.

OGDCL

3.5 NO OF EMPLOYEES

DOMICILE AND GROUP-WISE SUMMARY

OF OVERALL OFFICIALS

PAY

GROUP

DOMICILE

MeritPUNJAB SINDHURBAN RURAL TOTAL

NWFP BALUC-

HISTAN

FATA AK

TOTAL

IN THE

GROUP

MANAGEMENT CADRE

M-1 0 0 0 0 0 1 0 0 0 1EG IX 0 2 1 0 1 0 1 0 0 4EG VIII 4 3 0 1 11 0 0 0 0 9

EXECUTIVE CADRE

EG VII 3 37 6 1 7 11 1 1 0 60EG VI 12 102 18 13 31 31 10 4 5 195EG V 19 116 36 49 85 28 11 10 5 274EG IV 28 109 29 36 65 34 6 14 6 262EG III 28 178 57 46 103 28 9 7 3 356EG II 22 204 17 39 56 38 7 8 3 338EG I 15 132 28 47 75 18 7 3 2 252TRAINEES 12 69 13 20 33 15 11 8 6 154TOTAL 143 952 205 252 457 205 63 55 30 1905

OVERALL STAFF

OGDCL

PAY

GROUP

DOMICILE

MeritPUNJAB SINDHURBAN RURAL TOTAL

NWFP BALUC-

HISTAN

FATA AK

TOTAL

IN THE

GROUP

NON EXECUTIVE CADRE

16 2 163 49 14 63 22 2 1 5 25815 2 106 12 25 37 20 0 0 5 17014 0 253 58 109 167 58 7 6 13 50413 0 4 2 0 2 1 0 0 0 712 15 623 59 60 119 113 14 5 31 92011 0 1 0 0 0 0 0 0 0 110 4 148 24 56 80 34 6 2 12 2869 3 425 45 67 112 79 20 2 12 6538 5 164 35 95 130 30 11 2 9 3517 0 93 11 16 27 5 8 0 3 1366 3 670 94 166 260 102 50 7 17 11095 0 99 19 9 28 23 5 0 13 1684 0 264 28 79 107 30 63 0 17 4813 0 198 39 31 70 25 29 2 26 3502 0 324 70 220 290 41 128 1 14 7981 0 1392 103 705 808 136 566 2 45 2949TRAINEE 6 27 1 2 3 8 8 0 1 53TOTAL 40 4954 649 1654 2303 727 917 30 223 9194

2.7 FUNCTION OF OIL AND GAS DEVELOPMENT COMPANY

The main functions of the Corporation are:-

a. To plan, organize and implement programmes of exploration of development of oil and as

resources.

b. To carry out geological, geophysical and other surveys for the exploration of oil and gas.

c. To carry out drilling and other prospecting operations to prove and estimate the reserves of

oil and gas.

d. To produce, refine and sale oil and gas

e. To perform other functions as the Federal Government may from time to time assign to the

Corporation.

2.8 PROJETS

2.8.1 QADIR PUR DEVELOPMENT PROJECT

Qadirpur gas field, one of the large fields in the country was discovered in 1990. It is located

in the central Indus basin, south of kandhkot and Sui gas field.

In accordance with the consolidated revised development plan dated 30 November, 2002

phase-II “revamp project” was commissioned on 23 January 2004 to process MMscfd of gas. Under

this plan pretreatment memguard unit and new membrane elements were installed and drilling of one

well was completed.

Phase-III of this project was commissioned on 20 march 2004, by installation of two

additional membrane skids and drilling of two wells. Due to this expansion the capacity of plan has

increased to process gas up to 500 MM.

2.8.2 CHANDA DEVELOPMENT PROJECT

Chanda oil field, the over discovery in NWFP, was brought on to stream and it started giving

production from 17 July, 2004, and is currently producing 3,500 barrels of oil and 13 MMscf of gas

per day. Chanda LPG plant will also be installed by October 2004 were 25-40 M.tons of LPG will be

produced. The

OGDCL

third well at Chanda field is planned to be in third quarter of 2004-2005.This will increased

the production of field to 5,300 sbarells of oil and 19 MMscf of gas per day.

2.8.3 BOBI DEVELOPMENT PROJECT

First phase of the bobi development project has also been commissioned in June 2004 and is

producing 1,050 barells of stabilized condensate per day. Phase-II of the project is expected to be

streamlined in October 2004. On its completion, the field will produce about 2,800 barrels of oil per

day and 125 M.tons of LGP Satellite fields namely Mithrao and chak dim will

2.8.4 DHODAK PLANT ENHANCEMENT AND DAKHNI EXPANSION

Dhodak plant enhancement and dakhni expansion projects are also in progress and are

expected to be completed by some time completion, the projects will result in substantial

enhancement of production of oil, gas, LPG and sulpher.

SinjhoroA Bid to be invited

afresh $ 89 Million

Oil.: 2940 BPD

Gas: 25 MMscfd

LPG: 224 MTD

OGDCL

Projects Completion Estimated Cost Prod Capacity

Chanda

Development

Project

January, 2007 $ 9 Million

LPG: 25 MTD

Gas: 8.5 MMscfd

Dakhni

Expansion

Project

February, 2009 Rs.1803 Million

Oil.: 720 BPD

Gas: 12MMscfd

LPG: 12 MTD

Sulphur: 80 MTD

Qadirpur

Compression

Project

September, 2008

December, 2007$ 160 Million

a). To maintain

plateau of gas

production 650

MMscfd

b). Additional 100

MMscfd gas

Dhodak

Expansion

Project

A Bid to be invited

afresh $ 50 Million

Oil.: 4000 BPD

Gas: 64 MMscfd

LPG: 258 MTD

Uch-II

Development

Project

March, 2009

(As conveyed by

PPIB)

$ 250 Million

Gas: 200 MMscfd

TAY

Development

Project

A Bid to be invited

afresh $ 54.1 Million

Oil.: 2500 BPD

Gas: 28 MMscfd

LPG: 85MTD

SinjhoroA Bid to be invited

afresh $ 89 Million

Oil.: 2940 BPD

Gas: 25 MMscfd

LPG: 224 MTD

Mega Projects

OGDCL

OGDCL

Years

1.4. Products and Services Offered

Business Volume

Exploration, Development, Reserves and

Being largest E & P Company in Pakistan:

OGDCL holds 115 million barrels of oil and 10.5 trillion cubic feet (TCF) of gas as

remaining recoverable reserves. These constitute 46% of total oil and 30% of total gas

reserves of the Country.

OGDCL is the highest oil and gas producing Company in Pakistan and it produced 47%

of crude oil and 23% of Gas in 2004

Average daily production of the Company including share in operated and non

joint ventures is 39,130 barrels of oil, 919 MMcf of

OGDCL’s current concession portfolio comprises of 25 concessions and a reconnaissance

permit covering an area of 59,968.6 sq. kms which constitute 30% of total exploration

area granted to various E&P companies in Pakistan. The Comp

operated working interest in another three exploration concessions, which are operated by

other JV partners.

OGDCL has 39 Development and Production / Mining Leases which are operated by it

besides working interest ownership in 29 non

OGDCL’s major oil and gas fields are located at Kunnar, Paskhi, Bobi, Tando Alam,

Thora, Lashari, Sono, Fimkassar, Kal, Sadqal, Rajian, Missakesswal, Dhodak, Dakhni,

Chanda, Chak Naurang, Qadirpur, Uch, Pirkoh, Loti, Nandpur / Punjpir and

OGDCL so far has drilled 198 exploratory wells and 246 development wells and has

made 60 oil and gas discoveries.

1.4. Products and Services Offered

Exploration, Development, Reserves and Production

Being largest E & P Company in Pakistan:



is the highest oil and gas producing Company in Pakistan and it produced 47%

of crude oil and 23% of Gas in 2004-05.

Average daily production of the Company including share in operated and non

joint ventures is 39,130 barrels of oil, 919 MMcf of Gas and 334 Tons of LPG.



area granted to various E&P companies in Pakistan. The Company also holds non



besides working interest ownership in 29 non-operated leases.



Chanda, Chak Naurang, Qadirpur, Uch, Pirkoh, Loti, Nandpur / Punjpir and


made 60 oil and gas discoveries.



is the highest oil and gas producing Company in Pakistan and it produced 47%

Average daily production of the Company including share in operated and non-operated

Gas and 334 Tons of LPG.



any also holds non-





Hundi/Sari.


OGDCL

Product Lines

The main product lines of the company are as under:

1.4.1. Crude Oil

Crude oil is the mixture of petroleum liquids and gases (including impurities such as sulphur) that is

pumped out of the ground by oil wells. Main production Oilfields of the company are Dakhni, Dhodak,

Bobi, Tandoalam, Chanda, Toot & Rajian.

1.4.2. GAS

A mixture of hydrocarbon compounds and small quantities of various non

gaseous phase or in solution with crude oil in natural underground reservoirs. The major gas fields of the

company are Dakhni, Dhodak, Qadirpur, Nandpur, Pan

1.4.3. Liquefied Petroleum Gas (LPG)

A mixture of hydrocarbons found in natural gas and produced from crude oil, used principally as a

feedstock for the chemical industry, home heating fuel, and motor vehicle fuel. The major fields of

company having LPG production facilities are Dakhni, Dhodak, Sadkal, Kunner and Bobi.

1.4.4. Naphtha

Naphtha is a group of various volatile flammable liquid hydrocarbon mixtures used primarily as

in refineries and petrochemical industry.

product of the company and is extracted from various oil / gas fields.

1.4.5. Solvent Oil

A simple or complex liquid mixture of hydrocarbons that can be refined to yield gasoline, kerosene, d

fuel, and various other products. This product is extracted from various oil fields of the company.

1.4.6. Kerosene Oil

Kerosene oil has been distilled from petroleum, and generally used as a fuel for lighting etc. This residual

product is extracted from various oil fields of the company.

1.4.7. High Speed Diesel Oil

It is the hydrocarbon Oil suitable for use as fuel in Compression Ignition Engines; extracted from various

oil fields of the company.

1.4.8. Sulphur

A yellow mineral extracted from petrol

sulphur is produced at the Dakhni oil & Gas field near Jand, Attock

The main product lines of the company are as under:



Bobi, Tandoalam, Chanda, Toot & Rajian.

mixture of hydrocarbon compounds and small quantities of various non-hydrocarbons existing in the


company are Dakhni, Dhodak, Qadirpur, Nandpur, Panjpir, Pirkoh and Uch.

Liquefied Petroleum Gas (LPG)


feedstock for the chemical industry, home heating fuel, and motor vehicle fuel. The major fields of


Naphtha is a group of various volatile flammable liquid hydrocarbon mixtures used primarily as

in refineries and petrochemical industry. It is also used in solvent applications. Naphtha

product of the company and is extracted from various oil / gas fields.

A simple or complex liquid mixture of hydrocarbons that can be refined to yield gasoline, kerosene, d



from various oil fields of the company.

High Speed Diesel Oil


A yellow mineral extracted from petroleum for making fertilizers, pharmaceuticals and other products. The

sulphur is produced at the Dakhni oil & Gas field near Jand, Attock



hydrocarbons existing in the



feedstock for the chemical industry, home heating fuel, and motor vehicle fuel. The major fields of the


Naphtha is a group of various volatile flammable liquid hydrocarbon mixtures used primarily as feedstocks

Naphtha is the residual

A simple or complex liquid mixture of hydrocarbons that can be refined to yield gasoline, kerosene, diesel




eum for making fertilizers, pharmaceuticals and other products. The

OGDCL

Product Units

Crude Oil Thousands

Barrels

Gas MMcf

LPG M.Tons

Sulphur M.Tons

White

Petroleum

Products

Thousands

Barrels

PRODUCTION OF CRUDE OIL

S.No. Name of Company

1 OGDCL

2 BP-Pakistan

3 POL

4 PPL

5 OPI

6 BHP

7 Eni

8 MOL

9 OMV

10 Petronas

TOTAL

2002-03 2003-04 2004-05 2005-06 2006

8,535 8,705 9,413 9,941 13,045

217,927 245,537 274,006 277,408 329,385

77,402 93,136 90,304 101,322 120,063

16,670 23,234 15,889 18,917 25,884

998 989 859 890 885


2007-08

Name of Company Barrels per day

31,370

16,559

10,324

3,645

1,880

1,714

330

153

98

22

66,095

2006-07 2007-08

13,045 12,956

329,385 336,059

120,063 128,654

25,884 22,006

885 959

Barrels per day

OGDCL

PRODUCTION OF NATURAL GAS

S.No.

1 OGDCL

2 PPL

3 OMV

4 MGCL

5 Eni

6 BHP

7 BP-Pakistan

8 OPI

9 POL

10 Others

TOTAL


16%

OGDCL

OPI

OMV

PRODUCTION OF NATURAL GAS

2007-08

Name of Company MMCFD

856

799

554

445

389

258

230

66

42

46

3,685

PRODUCTION OF CRUDE OIL (Barrels per Day)

47%

25%

16%

6%3% 3%

0%

OGDCL BP-Pakistan POL PPL

BHP Eni MOL

Petronas

MMCFD

OGDCL

LPG(M.Tons)

0

20000

40000

60000

80000

100000

120000

140000

2002-03 2003-04

PRODUCTION OF GAS (MMCFD)

12%

11%

7%6%2%

OGDCL PPL

Eni BHP

POL Others

04 2004-05 2005-06 2006-07 2007-08

PRODUCTION OF GAS (MMCFD)

23%

2% 1% 1%

15%

22%

OMV MGCL

BP-Pakistan OPI

OGDCL

Sulphur (M.Tons)

White pertoulem products (Barrels)

0

5000

10000

15000

20000

25000

30000

2002-03 2003-04 2004

0

200

400

600

800

1000

1200

2002-03 2003-04 2004

White pertoulem products (Barrels)

2004-05 2005-06 2006-07 2007-08

2004-05 2005-06 2006-07 2007-08

OGDCL

2.1. Internship Duration & Rationale

Since my area of specialization is “Finance”, the organization I have chosen for

internship is “Oil and Gas Development Company Limited (OGDCL)” a major Oil &

Gas Company of Pakistan having Head Office in Islamabad.

this organization for 6 weeks

Exploration, Drilling and Production of Oil & Gas resources through

Consisting of 13 Technical Departments and 17 Serving Departments, it is the major Oil

and Gas Company in Pakistan. The company has achieved all time high net sales revenue

of Rs. 51.294 billion during 2005

The report covers the overall operations of the company with specific emphasis on its

Finance & Accounts Department. It also discusses financial growth in profitability of the

company due to new discoveries of Oil & Gas reservoirs in Sindh & Panjab areas and the

use of latest technology in exploration, drilling and production operations of the

company.

2.1. Internship Duration & Rationale for Selection



Gas Company of Pakistan having Head Office in Islamabad. I have done

this organization for 6 weeks

Exploration, Drilling and Production of Oil & Gas resources through-out Pakistan.


Gas Company in Pakistan. The company has achieved all time high net sales revenue

of Rs. 51.294 billion during 2005-2006, representing 14% growth over last year.


nce & Accounts Department. It also discusses financial growth in profitability of the





internship in

out Pakistan.


Gas Company in Pakistan. The company has achieved all time high net sales revenue

2006, representing 14% growth over last year.


nce & Accounts Department. It also discusses financial growth in profitability of the



in Finance Department. The company is engaged in

OGDCL

STRUCTURE OF THE FINANCE

Finance & Accounts Department plays a vital role in the organizational structure.

OGDCL has acquired the services of highly qualified professionals like CAs, CMAs,

MBAs and M. com for its Finance and Accounts Department. The

(Finance), heads the Finance & Accounts Department. GM (Finance), GM

(Accounts) and GM (Treasury) and Managers assist the Executive Director (Finance)

for effective and efficient controlling of OGDCL financial activities. Different

sections of Finance department are headed by Sectional In

Managers. The main role and function of ED, GMs, and Managers are as under:

Jr. Accounts Assistant

Accounts Assistant

Assistant Accountant

Accountant

Sr. Accountant

Dy Chief Accountant

Chief Accountant

Manager

General Manager

Executive DirectorFinance

TURE OF THE FINANCE DEPARTMENT



MBAs and M. com for its Finance and Accounts Department. The Executive Director




ions of Finance department are headed by Sectional In-charges who reports to


Jr. Accounts Assistant

Accounts Assistant

Assistant Accountant

Accountant

Sr. Accountant

Dy Chief Accountant

Chief Accountant

Manager

General Manager

Executive DirectorFinance

DEPARTMENT



Executive Director




charges who reports to


OGDCL

EXECUTIVE DIRECTOR (Finance)

Director Finance is a member of Board of Directors and represents the Finance

and Accounts Department.

G M - Finance/Accounts/Treasury

General Managers reports to DF and is responsible for overall activities of

Finance & Accounts Department.

Department and the relevant category of professionals is given on next page.

Managers - Finance/Accounts/Budget & Accounts/Joint venture

Managers reports to GMs and is responsible for smooth running of their

respective sections.

Sectional Incharges

Sectional Incharge reports to respective Manager and is responsible for specific

job/assignments of their section only. They assisted by Deputy Chiefs, Senior

Accountants, Accountants and assistants.

STRUCTURE OF FINANCE

MANAGER (Finance)

Manager (Finance) reports to GM (Finance). Following section reports

to Manager (Finance).

MANAGER (Budget & Accounts)

Manager (Budget & Accounts) reports to GM

Budget & Accounts is distributed between six sections.

EXECUTIVE DIRECTOR (Finance)


and Accounts Department.

Finance/Accounts/Treasury


Finance & Accounts Department. The overall structure of the Finance


Finance/Accounts/Budget & Accounts/Joint venture




Accountants, Accountants and assistants.

STRUCTURE OF FINANCE AND ACCOUNTS DEPARTMENT


to Manager (Finance).

Imports section

Bank / Cash section

Sales Section

MANAGER (Budget & Accounts)

Manager (Budget & Accounts) reports to GM (Finance). The work of

Budget & Accounts is distributed between six sections.



structure of the Finance





AND ACCOUNTS DEPARTMENT


(Finance). The work of

OGDCL

MANAGER (Stores & Fixed Assets)

Manager (Stores & Fixed assets) reports to GM

After the whole inventories, fixed assets and material in transit of the

Organization. Following sections are the part and parcel of this

Segment:

MANAGER (JV Accounts)

Manager (JV Accounts) reports to GM (Finance). He manages the

Joint Ventures of OGDCL and Other exploration Companies which are

broadly divided into the following two divisions:

Budget and AFE Section

Final Accounts

MR section

EDP Management and Training

Projects

MANAGER (Stores & Fixed Assets)

Manager (Stores & Fixed assets) reports to GM (Finance). He looks


Organization. Following sections are the part and parcel of this

Local Stores

Foreign Stores

Material in Transit

Fixed Assets

Petrol, oil & lubricants

Reconciliation

MANAGER (JV Accounts)



broadly divided into the following two divisions:

Operated Joint Venture

Non Operated Joint Venture

(Finance). He looks




OGDCL

MANAGER (Accounts)

Manager (Accounts) reports to GM (Accounts). Following sections are

supervised by Manager (Accounts):

Other section

1. IMPORT SECTION

2. Bank section

3. Sales Section

4. Payroll section

5. Accounts payable section

6. Employee’s advance section

7. Field Imprest Section

8. Final account section

Number of Employees working in Finance Department

Total employees working in the Finance & Accounts Department are 254, out of which

there are 74 Officers and 180 staff members.


supervised by Manager (Accounts):

Payroll

Accounts Payable

Field Imprest

Accounts payable section

Employee’s advance section

Field Imprest Section



and 180 staff members.




OGDCL

OF PERSONNEL DEPTT

FUNCTIONS

OF›FINANCE› DEPT .

1. Import section

2. Bank section

3. Sales Section

4. Payroll section

5. Accounts payable section

6. Employee’s advance section

7. Field Imprest Section

8. Final account section

Accounts payable section

Employee’s advance section

Field Imprest Section

finace dept plays a vital role in ogdcl.

finance dept has divided into main different section

where each and every dept is responsible

to do it own work. and each section of finance dept

are conected each other through computer system. they

use ORACLE computer software. through which they record

and transmit the data to each other and to uper managment.

10. Budget and AFE Section

9. Joint venture

OGDCL

ADVANCE SECTION

In this section they work on computer based ORACLE soft ware system

typically they prepare the records /transaction of loan/advances and also

prepare the record of the recovery of loan. along with interest

majorly they approve loan /advance of

1) purchase of conveyance

2) passages/ marriages

3) house building/ hiring

these facilities are granted regular/permanent employees with accordance to

their job nature and time period and they also provide other loans like travel

loan, petty cash loan for(purchase of different things),hotel stay, etc expenditure

but these loan are recovered(compensated) earlier as soon as possible

after availing the loan/advance the loan are being compensated in PAYBLE and

BANK section.

The proper record are being kept via manually and on computer ORACLE SW

so chance of error is very minimum

RECOVERY OF LOAN

Recovery of loan based upon the nature of loan which is given to employee. in

some clauses they charge interest and some time not.

CASE=

there is case of death of an employee, died in July 2008 who had

availed the facility of loan Rs 54,624 in June 2005 he had been

charged monthly 921.40 to June 2008.

so in the net figures 30,034.2 and 24,580 balance along with the interest

11,338 (total 35918.80) is remaining for the recovery of balance. and

now the lumsum amount will be deducted from his

pension/compensation

OGDCL

WHEN THE ORGANIZATION DONOT CHARGE INTEREST

they don not charge interest when an employee do not getting

interest on GP fund and other balances OGDCL give the the facilities of interest to an employee who avail or not.

HOUSE BUILDIND LOAN

there are 180 installment of loan for staff (1-16)scale employee and 150

installment for officers(OG) 17 and above.

the organization will not lend any type of house building loan when the time of

job is remaining less then 5 years

there is no prefixed amount house building loan is sum of 60 basic pay for

officers and 100 basic pay for staff.

HOUSE HIRING(package)

CEILING

OGDCL extend/lend the loan t employee for house hiring in shape of cash

payment.

As per employee deed/contract. there is contract b/w employee and OGDCL. if

the OGDCl give accommodation facilities to an employee. So OGDC extended the

loan in advance to employee as per contract (in clause of ceiling)

after all cash will be compensated in PAYBLE and BANK section.

In ceiling they pay a lumsum payment to employee at once or partially but in

week.

OR per month which will be added in his/her salary. If the rent becomes higher

after some tome the OGDCL will not be responsible for that.

There is contract committee which prefix the amount of ceiling according

to the

1) nature of job

2) scale of an employee

3) place of accommodation

OGDCL

HOUSE RENT(package)

as per employee deeds/contract. If the OGDCL give the house rent facility to an

employee. there is three parties

1) employee

2) owner of house

3) OGDCL Contract committee

Contact committee or Administration dept will make contract with the owner of

house and fix the house hiring rent.

In this contract the contract is made b/w OGDCL contract committee and owner

of house. this contract will not be concerned with employee. employee will be

free. Some time The Organization pay lumsum amount and sum time per month

but according to contract

This contract is made for 2/3 year maximum.

Any how The ADVANCE section also treat This function/contract also.

CONVEYANCE LOAN

OGDCl also give the facility of conveyance loan to permanent/regular employees.

there is 60 installments of conveyance for staff and officer both.

If the employee job time is remaining is less then 5 year then he can not apply

for conveyance/house building loan.

the amount of conveyance loan is prefixed which is of 100,000 Rs

MARRIAGE LOAN

OGDCl also give the facility of marriage loan to any regular employee or those

employees who are on contract(staff only) with OGDCL .

there is 40 installment for marriage loan. And the amount of marriage loan is

25,000, which is prefixed.

OGDCL

FORMULAEE FOR THE RECOVERY OF LOAN

HOUSE BUILDING LOAN

FOR OG/OFFICER = Total amount / 150 =$amount of installments

FOR STAFF = Total amount / 180 =$amount of installments

HOUSE HIRING

FOR OG/OFFICER = Total amount / 2*12(months) =$amount of installments

FOR STAFF = Total amount /3*12(months) =$amount of installments

COVEYANCE LOAN

FOR (OG/STAFF) = Total amount / 60 =$amount of installments

MARRIAGE LOAN

FOR (JUST FOR STAFF) = Total amount / 40 =$amount of installments

OGDCL

Function and Responsibility of Imprest section

Imprest section plays vital and impotent roll in Fiancé and Account section of

OGDCL. To

Control manage and transfer of funds to field and location

Replenishment of head office impret

Payment of land compensation to all field/land owners

Checking punching and posting of field imprest data in Oracle Financial

sys and reconciliation and there of.

The main functions and responsibilities of Imprest section are as under

FIELD REMITTANCE

Field remittances means transfer of funds from Head Office Islamabad to

Various (52) fields/parties/ location against the following

"ÿAuthorized Imprest

1.ÿ1st fort night

2.ÿ2nd fort night

"ÿPayroll

1.ÿwages/salaries

2.ÿbonus

3.ÿarrears

4.ÿadhoc/ advance wages

"ÿAdditional funds

1.ÿprojects cost

2.ÿland compensation

3.ÿhiring vehicles

4.ÿHO approvals

5.ÿmedical bills

6.ÿunion agreement (arrear of DA, H2s allowance, EWA etc)

"ÿmessage issued for information against remittances to all concerned locations

"ÿpreparation of MIS reports on monthly bases

"ÿmonthly reconciliation of bank imprest in transit account

"ÿadjustment/ rectification , if any ,required

"ÿpreparation of variance analysis report

Head Office Imprest

Total head office imprests are 29

Most of the depts. / section are holding petty cash imprest, to meet their day to

day requirements, on replenishment bases, and Personals are processing

the cases under the OGDCL rules

OGDCL

Head Office Imprest

Total head office imprests are 29

Most of the depts. / section are holding petty cash imprest, to meet their day to

day requirements, on replenishment bases, and Personals are processing

the cases under the OGDCL rules

Action / Activities

1.ÿchecking of imprest files along with relevant documents

2.ÿpreparation of cash / bank payment vouchers

3.ÿmaintaining of imprest control register

4.ÿmonthly reconciliation of cash / bank imprest account

5.ÿadjustments / rectification ,if any required

6.ÿvariance analysis if any

Field imprest

Responsibilities of account representatives at fields / locations

"ÿpreparation of bank receipt voucher

"ÿcash withdrawals from bank

"ÿpayment of bills

"ÿrelease of security deposit and in earnest money

"ÿprocess conveyance loan

"ÿrecording of unclaimed wages and allowances

"ÿadjustments of advances

"ÿdisbursement of cash

"ÿpayment of unclaimed wages and land compensation

"ÿadvance payment for purchase, travel and daily allowances

"ÿcash payment for miscellaneous items

"ÿrecord transaction on cash , bank, and advance book

"ÿmaintain control register for

1.ÿhead office approvals

2.ÿutility bills

3.ÿland, Cop and Tree compensation

4.ÿpayment of projects in progress etc

OGDCL

"ÿbank Reconciliation statements

"ÿpreparation of bank summery statement

"ÿpreparation of cash summary, leave encashment and advances statement

"ÿpreparation of report for accrued expenditure on quarterly basis

"ÿpreparation of expenditure analysis report

"ÿpunching, posting of imprest data in the system on daily basis

"ÿdispatch of imprest data , along with required documents , to HO by 1st

of each month

OGDCL

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OGDCL

Bank sectionListing of activities

1. Arrange / manage funds to meet the daily operational requirements.

2. Prepare and control of cheques issue on receipt of payment vouchers.

3. Collect and deposit sales proceeds for crude, natural gas, LPG,

sulphur.

4. Collect and deposit money received through drafts / cheques on

account of tender documents, auction proceeds and other

miscellaneous receipts.

5. Invest excess funds in short term and long term investment.

6. Encash short term and long term investment and maturity if

required.

7. Transfer funds to fields, rigs, field's parties, Karachi regional office,

8.ÿwest wharf and imp port accounts.

9.ÿTransfer of funds between bank accounts as required.

10.ÿReconcile General Ledger with bank statement on a monthly basis.

11.ÿPrepare fund position statement on daily basis and submit it to

12.ÿmanagement on weekly basis.

13.ÿPrepare receipts and payments statements for each rupee bank

ÿaccount on a monthly basis.

14.ÿMaintain dividend accounts.

15.ÿMaintain account for receipt of earnest money.

16.ÿRefund earnest money upon completion of project or contract.

17.ÿMake necessary arrangements for authentication, issuance and

ÿencashment of bank guaranties on request of other departments.

18.ÿProvide funds to cash section as required.

OGDCL

19.ÿCalculate and control interest on deposits.

20.ÿMaintain OGDCL locker with bank.

21.ÿPayment of with holding tax.

22.ÿControl of payment / receipt vouchers and other record.

23.ÿPayment of security, performance bond and bank guarantee received in cash.

OGDCL

Sales sectionPurpose and objectives:Sales section in OGDCL has the following purposes.

"ÿIt prepares the bills for the sales of products and services of OGDCL.

"ÿIt collects the receipts generated by the sales.

"ÿIt collects the government levies from the consumers and sends the

accounts to the government of Pakistan. The government levies on the

sales of OGDCL's offering are discussed later in the report.

PRODUCTS AND SERVICES

OGDCL deals in the following products and services. Later in the report the

pricing mechanism of few products are also discussed.

PRODUCTS"ÿKAROSENE

"ÿSILVENT OIL

"ÿHSD

"ÿNaphta

"ÿCrude oil

"ÿLPG

"ÿGas

"ÿHi-Speed diesel

SERVICES

"ÿTelephone Dhodak

"ÿAir Craft Services

"ÿGrand R Labs

"ÿ Water Supply

OGDCL

"ÿTelephone Dhakni

"ÿSeismic Survey

"ÿMaterial Transport Service

"ÿCementation Service

"ÿMud Logging Service

REPORTS GENERATED BY SALES SECTION AND GOVERNMENT

LEVIES

Sales section generates the following reports

1.ÿINVOICES

Invoices are made by the section using financial Oracle. The invoice by this

section usually contains the following components.

"ÿOGDCL letter head

"ÿName, Address, e-mail, fax number, bank account number and

national tax number of both the parties.

"ÿDate of invoice.

"ÿCredit period.

"ÿDue date of payment.

"ÿSales quantity.

The invoice is signed by Chief (Sales/Financial planner). One copy of the

invoice is sent to Accounts officer (DGCP), one is sent to Acting manager

(Marketing Department OGDC), and another is retained for the office.

2.ÿEXCISE DUTY REPORTS

Government levies Fields Excise Duty on sale of Gas at the rate of Rs. 5.09 /

MMBTU of gas. The sales section keeps the comprehensive record of the

Excise Duty on periodical basis.

OGDCL

Excise Duty on periodical basis.

3.ÿGST REPORTS

Government levies GST at the rate of the total values added. Total value

added implies the addition of excise duty and sales value. The sales section

keeps the comprehensive recode of the GST on periodical basis.

4.ÿROYALTY REPORTSGovernment levies royalty at the rate of 12.5% of the total sales revenue.

The sales section keeps the comprehensive record of the royalty on

periodical basis.

PROCESS FLOW IN THE SALES SECTION

The above diagram shows the process flow in the sales section of OGDCL.

OGDCL

The products from fields (Gas, Crude Oil, LPG etc) come to the consumer

(SSGCL, SNPL etc) and the production report comes to the marketing

department of OGDCL. The marketing department verifies the report and

sends it to the sales section of Finance and Accounts Department. Sales

section then sends the invoice to the consumer. The invoice to the consumer

contains of following components."ÿSales value

"ÿExcise duty

"ÿGSTConsumer pays sales section through check. Excise Duty and GST becomes

government revenue when sales section deposits GST and Excise Duty in

the National Bank of Pakistan.

PRICING MECHANISM

OGDCL has different pricing polices for different products. The pricing

policies are affected by the National and International regulatory authorities

such as OGRA and OPAC. The pricing mechanism for different products is

as under.

1.ÿGAS

The price of GAS is set by OGRA (Oil & Gas regulatory authority) for a

period of six months. These prices are revised in January and July. OGRA

sets a certain amount against IMMBTU. For example, in 2004 OGDCL

signed a "Chanda Gas Agreement" with SSGCL in which OGDCL was

supposed to provide Gas to SSGCL at the rate of Rs. 178/MMBTU.

2.ÿSULPHURE

OGDCL extracts Sulphur from Dakhni Field. After extraction sulphur is

auctioned to the consumers. The minimum price at the auction is the price

equal to the price of the nearest exporting country, which is India. The major

consumers of sulphur are sugar mills and pharmaceutical mills and

laboratories.

3.ÿCRUDE OIL

Pricing of the crude oil is determined by "Oil Gram Plates". Oil gram plate

is a manual which is published worldwide and mentions the prices of Crude

oil of all exporting countries. OGDCL sets the price of Crude oil equal to the

average price nearest exporting countries which are Dubai and Oman.

CREDIT TERMS USSUALY SET BY SALES DEPARTMENT

Credit terms differ from agreement to agreement but in most of the cases the

credit terms are of such nature and format as discussed below.

"ÿPayment for the Gas in respect of each seller members share as

"ÿspecified in the sale invoice shall be made to each seller member

"ÿdirectly in its designated bank account within 30 days from the date

of the receipt of the sales invoice. Payment of the receipt of the sale

invoice relating to excise duty and taxes shall be made within 10 days

of the receipt of the sales invoice.

"ÿIf the payment made by the buyer is received later then the last

business day (I-e a day at which the banks in Islamabad operate) in the

period specified above then shall bear late payment surcharges (LPS)

from the date of payment at the purchase rate for the latest applicable 3

months Pakistan T-Bill rates, as announced by the state bank of

Pakistan from time to time. If such bills rate ceases to be notified by the

state bank of Pakistan, then any other such rate notified by the

competent authority in place of three months T-Bill rates.

PRICING"ÿProduction reports received from fields.

"ÿInvoices are prepared on monthly basis.

"ÿSale + excise duty + sales Gan.

6. Booking of accruals of service invoices on monthly basis

1. Import section is responsible to arrange and establish the letter of credit with regard to import the material both locale and foreign as requested by the

procurement deportment

2. Confirm and earmark the source of fund for the establishments of letter

of credit i.e cash foreign exchange and own resource

3.ÿCommunication with bank for amendment. extension and

4.ÿenhancement of LCs at the request of supply Chain management

deportment

4. Maintain record of shipping advice to monitor consignment arrives

5. Process and forward negotiable document West Wharf office, Karachi

and CM &CIDA Islamabad

6. Arrange the endorsement of shipping guaranties or airway bills for timely

clearance of consignment at the request of supply chain management or

the DCMMO Karachi

7. Maintain source wise record of letter of credit

8. Reply quires regarding demurrages

9. Prepare monthly statement of LCs, established out of various funds for

onward submission to the budget section

10. Prepare weekly position of utilization of funds for onward transmission

bank section

11. Reconciliation of Cash foreign exchange allocated by State Bank of

Pakistan and monitor its proper utilization

12. Prepare vouchers for recording the expenditure and transfer of funds for

reconciliation for bank account

13. Custodians of performance bonds and bank guaranties

14 Forward complete set of retired documents to store accounts dept

for the reconciliation of material received with FRS on monthly basis

IMPORT SECTION

HIRING OF SERVICES

1. Establish, enhance, emend, and extend letter of credit for hiring of

services, both local and foreign, as and win required by the supply

chain mgt dept

2. Verify, control, and process service invoices

3. Reply audit quires regarding service invoices

4. Submit monthly statement of payment to service contractor

5. Calculate tax deduction to be withheld from foreign contractor's invoices

after consultation with tax section

6. Booking of accruals of service invoices on monthly basis

MAIN FUNCTION OF IMPORT SECTION IMPORT OF MATERIALS1ÿArrange establishment of letters of credit for import of equipment, spares and

Chemicals etc for OGDCL fields /locations

2 Maintain complete record of LCs established and paid

3 Manage and dispatch original shipping document to OGDCL West Wharf office

Karachi or CIDA. store for clearance of goods/ consignment

4 check the paid shipping documents with contract to maintain accuracy of

payments made against LCs

LOCAL PROCUREMENT OF MATERIAL

1ÿArrange establishment of in land LCs for procurement of material locally

against Local Purchase Order

PAYMENT OF FORIEGN CONTRACTORS (SERVICES)

1ÿArrange establishment of invisible LCs for payment of services rendered by

2ÿcontractors at OGDCl different field/locations

3ÿMaintain complete record of LCs established and paid.4ÿPayment to service contractors in hundred % Pakistani Rupees

MANAGE CASH FORIEGN EXCHANGE ALLOCATION

1ÿArrange cash foreign exchange from ministry of Finance for Import of

material and hiring of services on case to case basis with in the

limit of approved budget for this purpose By GOP

OGDCL

Expansion towards a

multinational Company

Latest Technology

Expansion towards

Exploration & drilling

Activities

unproductive wells

Marketing Opportunity for

LPG & Sulphur

World Market

Off-shore drilling Safety Issues / Tribal Issues

CHAPTER –5

SWOT Analysis table for OGDCL

STRENGTHS WEAKNESSES

Highly Skilled Professionals Political Influences

Vast Experience Limited Customer

Joint Ventures with Foreign

Oil Companies Working in

Pakistan

Limited Marketing

Opportunity

Major oil & Gas Company of

Pakistan

Political Appointments

High market cap and revenue Inadequate Financing for off-

shore drilling

OPPRTUNITIES THREATS

OGDCL

2.3 SWOT ANALYSIS

SWOT analysis is a tool for auditing an organization and its environment. It is the first

stage of Strategic planning and helps managers to focus on key issues.

strengths, weaknesses, opportunities, and threats.

factors. Opportunities and threats are

Strengths and weaknesses are

STRENGTHS

Largest Oil and gas company in the

Monopoly of the company and having confidence due to govt. support.

Dynamic & Strong Financial Position due to the 45 years experience.

A new, Exploration and innovative of Wells.

Best location of business which is choosing after long process.

Quality processes and procedures.

Large number of field of oil and gas.

Experienced and Technical Staff involving no. of expert Geologist.

Confidence of the Customers.

All other aspect of the company that adds value to the product or service.

WEAKNESSESS

Lack of marketing expertise.

Undifferentiated products or services (i.e. in relation to the

Lack of coordination of operations.

Government Influence.

Untrained Staff.

Slow promotion process which reduces the performance.

Lack of Check and balance.

Weak quality goods or services (can be only one of more than one)

analysis is a tool for auditing an organization and its environment. It is the first

stage of Strategic planning and helps managers to focus on key issues. SWOT

strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are

factors. Opportunities and threats are external factors.

Strengths and weaknesses are internal factors.

Largest Oil and gas company in the Pakistan.



A new, Exploration and innovative of Wells.

Best location of business which is choosing after long process.

uality processes and procedures.

Large number of field of oil and gas.

Experienced and Technical Staff involving no. of expert Geologist.

Confidence of the Customers.


Lack of marketing expertise.

Undifferentiated products or services (i.e. in relation to the competitors)

Lack of coordination of operations.

Government Influence.

Slow promotion process which reduces the performance.

Lack of Check and balance.

Weak quality goods or services (can be only one of more than one)

analysis is a tool for auditing an organization and its environment. It is the first

SWOT stands for

Strengths and weaknesses are internal




competitors)

OGDCL

Opportunities and threats are

OPPORTUNITIES

A developing market such as the Internet.

Mergers, joint ventures or strategic alliances

Moving into new market segments that offer improved profits

A new international market

A market vacated by an ineffective competitor.

Large workshops for training and development.

Support of the Ministry of

Better Competitive Position.

THREATS

A new competitor in the home market.

Price wars with competitors.

Fear of Privatization.

Tuff Competition

Globalization is the factor which brings the strong companies in Pakis

A competitor has a new, innovative product or service.

Competitors have superior access to channels of distribution.

Future prospects of the organization

Currently OGDCL is operator in Nineteen Exploratory Blocks and working interest in

nine non-operated blocks. In addition company has got 34 mining and D & PL leases.

Targets have been based on risks and opportunities. Physical targets for the year 200

was envisage drilling of fourteen wells (nine exploratory and five development), 2950

Km of seismic survey, production of 28,111 barrels per day, 730 MMcf per day gas, 313

metric tons per day pf LPG and 60

activities by covering 3,200 km of seismic Survey and drilling of 12 exploratory wells

with the clear objective of a net increase in oil and gas reserves. It is expected that

Opportunities and threats are external factors. For example:

A developing market such as the Internet.

Mergers, joint ventures or strategic alliances

Moving into new market segments that offer improved profits

A new international market

A market vacated by an ineffective competitor.

Large workshops for training and development.

Support of the Ministry of P&NR (Petroleum and Natural Resources).

Better Competitive Position.

A new competitor in the home market.

Price wars with competitors.

Globalization is the factor which brings the strong companies in Pakis

A competitor has a new, innovative product or service.

Competitors have superior access to channels of distribution.

Future prospects of the organization


operated blocks. In addition company has got 34 mining and D & PL leases.

Targets have been based on risks and opportunities. Physical targets for the year 200

as envisage drilling of fourteen wells (nine exploratory and five development), 2950


per day pf LPG and 60 tons per days pf sulphur. To accelerate exploration



P&NR (Petroleum and Natural Resources).

Globalization is the factor which brings the strong companies in Pakistan


operated blocks. In addition company has got 34 mining and D & PL leases.

Targets have been based on risks and opportunities. Physical targets for the year 200-02

as envisage drilling of fourteen wells (nine exploratory and five development), 2950


per days pf sulphur. To accelerate exploration



OGDCL

exploratory program will result in increase in OGDCL reservoir in oil and Gas

to the country‘s reservoir.

To develop the already discovered oil and gas fields with a view to enhance production

and improve revenues of US$ 35 million per annum and 24,500 barrels of oil per day

and 565,605 Mmcfd of gas is expected to be pr

wells are being drilled on various points i.e.

Sanjharo , Norijagir, Ghari, &, Chanda etc; from these points oil and gas are discoved to

achieve the future targets.

To modernize, replace and effectively maintain the

equipment in order to keep the equipment in sound operating condition at all times.

To develop OGDCL‘s human resources through transfer of technology and training.

To rationalize stores and spares inventory to the optimum

OGDCL is providing gas to IPPs like Uch power from Uch Gas Filed Project and from

Nandpur / Panjpir to Fauji Kabirwala Power Limited. All these projects are contributing

a lot of income to the OGDCL’s current revenues. Despite number of Joint ven

competitors in the oil and gas sector, OGDCL has drilled different concessions

independently as well as it has ventures with other company’s successfully. OGDCL

Seismic Crews are busy in G&G

Ranpathani, Sanghar and Zin etc.

FUTURE GOALS & STRATEGY:

OGDCL plans to drill 45 wells during current financial year (2005

drillable prospects. The Company has also started three new development projects

Tando Allah Yar, Sinjhoro and Uch

track completion of these projects and on progressive project management concepts.

exploratory program will result in increase in OGDCL reservoir in oil and Gas



and 565,605 Mmcfd of gas is expected to be produced during 1999-2000. Exploratory

wells are being drilled on various points i.e.


To modernize, replace and effectively maintain the drilling, seismic and processing



To rationalize stores and spares inventory to the optimum level.



a lot of income to the OGDCL’s current revenues. Despite number of Joint ven



Seismic Crews are busy in G&G survey on different concession like Kharar, Basal,

pathani, Sanghar and Zin etc.

FUTURE GOALS & STRATEGY:

OGDCL plans to drill 45 wells during current financial year (2005-06), to explore new

drillable prospects. The Company has also started three new development projects

Tando Allah Yar, Sinjhoro and Uch-II. The Company has placed great emphasis on fast

ck completion of these projects and on progressive project management concepts.

exploratory program will result in increase in OGDCL reservoir in oil and Gas and also



2000. Exploratory


drilling, seismic and processing





a lot of income to the OGDCL’s current revenues. Despite number of Joint ventures and



survey on different concession like Kharar, Basal,

06), to explore new

drillable prospects. The Company has also started three new development projects –

II. The Company has placed great emphasis on fast

ck completion of these projects and on progressive project management concepts.

OGDCL

Quarterly comparison of actual verses budgeted expenditure is carried out

to ascertain weakness and cost over

Timely payment to the vendor, su

image building of OGDCL. To achieve this, internal procedure should be

well defined which will reduce time in these payments.

To save time of the employees chasing their payments employee related

payments shoul

All accountants should be given training on different accounting modules

and chart of accounts. So that monopoly and dependence on few is

eliminated.

Rotation of duties should be made at regular interval to impr

work output and to keep the interest of the employee intact.

Responsibility of clearing/correcting the entries should be fixed with the

section generating the activities

A professional Accountant should be assigned the job to the review

AFEs with the collaboration of technical professionals for proper and

effective control to avoid cost over runs.

For effective cost control, standardization of different stationery items and

consumable is approved for purchasing in bulk from the manufa

directly.

A good internal Control is a key to success for an organization, but in

OGDCL there is a lack of internal control, which should be improved and

implemented effectively.


to ascertain weakness and cost over-runs.

Timely payment to the vendor, supplier and contractors is effective tool for


well defined which will reduce time in these payments.


payments should be excluded from the ambit of pre-audit.



Rotation of duties should be made at regular interval to improve the overall

work output and to keep the interest of the employee intact.


section generating the activities

A professional Accountant should be assigned the job to the review


effective control to avoid cost over runs.


consumable is approved for purchasing in bulk from the manufa



implemented effectively.


pplier and contractors is effective tool for





ove the overall


A professional Accountant should be assigned the job to the review of



consumable is approved for purchasing in bulk from the manufacturer



OGDCL

Conclusion

The production of oil and gas is contributing a lot in re

Power generation by IPPs (Industrial Power Projects) in the country is a major source

of energy. OGDCL’s Uch Gas field and Panjpir/ Nandpur Gas Fields are the two main

fields, which have now started supplying Gas to pow

meeting the requirement of the IPPS but also contributing a lot towards meeting the

demand of electricity in the country.

OGDCL’s contribution to the national exchequer in the form of royalty; excise

duty, debt servicing, and taxes are a huge support as compared to the other state owned

organizations.

OGDCL entered into new JV agreements in various exploration Blocks with the foreign

oil companies to boost up the efforts for increasing the Oil & gas demand of this

country...

Oil and gas Training Institute (OGTI) is providing training facilities and meeting

the requirements of highly trained, motivated, and improved human resources. OGTI

designs and implements programme to develop and expand the technical and

managerial skills of professional to meet the fast changing challenges to the company.

A total of about 150 courses in service disciplines are conducted during every year.

The quality of an organization is dependent on the quality of its work force. OGDCL has

engaged top professionals in Geology, Drilling, Engineering, and production that are

working day & nights for the search of Oil & gas. Besides this, the corporate sector is

equipped with professionals having qualification of CAs, MBAs, M.Coms, which support

the technical wings. The time bound necessity is that all these professionals be given a

targets and their performance indicators be clearly defined. A good leadership and the

motivation will surely boost-

reservoir of Oil or Gas INSHALLAH.

The production of oil and gas is contributing a lot in reducing the country’s import bill.



fields, which have now started supplying Gas to power companies. This not only


demand of electricity in the country.


taxes are a huge support as compared to the other state owned



il and gas Training Institute (OGTI) is providing training facilities and meeting



of professional to meet the fast changing challenges to the company.



ofessionals in Geology, Drilling, Engineering, and production that are



l wings. The time bound necessity is that all these professionals be given a


-up the efforts and the collective efforts will result in a hug

reservoir of Oil or Gas INSHALLAH.

ducing the country’s import bill.



er companies. This not only



taxes are a huge support as compared to the other state owned



il and gas Training Institute (OGTI) is providing training facilities and meeting



of professional to meet the fast changing challenges to the company.



ofessionals in Geology, Drilling, Engineering, and production that are



l wings. The time bound necessity is that all these professionals be given a


up the efforts and the collective efforts will result in a huge

OGDCL

References

1. Ministry of Petroleum and Natural Resource’s site.

2. www.ogdcl.com

3. www.google.com.pk

4. www.kse.com.pk

5. Pakistan industrial Reviews

6. Annual Reports of OGDCL

7. Business Recorder “ News Paper”

8. Observer Journals.

9. Interview of OGDCL MD.

Ministry of Petroleum and Natural Resource’s site.

Pakistan industrial Reviews

Annual Reports of OGDCL

Business Recorder “ News Paper”

Interview of OGDCL MD.

http://www.ogdcl.com.pk/

OGDCL

Acknowledgment

All the praise is for Allah, the most merciful and beneficent, who blessed us

the knowledge, gave us the courage and allowed us to accomplish this task. We are

especially indebted to our supervisors and teachers.

Their inspiring guidance remarkable suggestions, constant encouragement, keen

interest, constructive criticism, and

efficiently. Without their support and proper guidance, it would be almost impossible to

accomplish this task successfully.

We offer our heartiest tribute and cordial gratitude to present our thanks

General Manager OGDCL whose cooperation helped us to achieve our target. We have

fortunate of having a very nice company of friends and seniors especially who cooperated

with us in all matters relating to the report.

Acknowledgment

All the praise is for Allah, the most merciful and beneficent, who blessed us


especially indebted to our supervisors and teachers.


interest, constructive criticism, and friendly discussion enabled us to complete this report


accomplish this task successfully.

We offer our heartiest tribute and cordial gratitude to present our thanks



with us in all matters relating to the report.

All the praise is for Allah, the most merciful and beneficent, who blessed us with



friendly discussion enabled us to complete this report


We offer our heartiest tribute and cordial gratitude to present our thanks to



OGDC Annual Report

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