ONGC board revamp on lines of McKinsey suggestions

The Board of Oil and Natural Gas Corporation (ONGC) is being revamped by merging two directorships into one and creating a new position of director for corporate affairs in an attempt to breathe fresh life into the state-owned behemoth that is increasingly looking beyond oil and gas, sources said.

ONGC Board presently has six directors for exploration, onshore operations, offshore operations, finance, human resources and technical and field services. It used to be headed by a chairman and managing director.

The government earlier this month appointed Arun Kumar Singh, who had recently retired as head of oil refining and fuel marketing company BPCL, as the chairman of ONGC but not as its managing director.

While this is the first instance of a 60-year-old retired person being appointed as the head of a bluechip state-owned firm, the government also initiated a board revamp.

A post of Director (Production) has been created after merging Director (Onshore), who is in charge of all oil and gas fields located on land, and Director (Offshore) who looks after all offshore assets such as the prime Mumbai High fields, two sources aware of the matter said. A new position of Director (Strategy & Corporate Affairs) has also been created.

The post of Director (Production) will come into effect from March 1, 2023 after Director (Onshore) Anurag Sharma superannuates on February 28, 2023. The job is likely to go to Pankaj Kumar, Director (Offshore).

The new Director (Strategy & Corporate Affairs) is likely to look after information technology, communication services, safety, occupational health, environment, business development, joint ventures and marketing after a rejig of workforce between the different functions happens, the sources said.

The jobs that the new position will handle are currently rotated among directors. For instance, marketing is with the Director (Onshore).

Sources said the idea behind the board revamp is to bring greater synergies in operations and allow focussed attention on oil and gas production with a single director responsible for all fields.

The new Director (Strategy & Corporate Affairs) will also ensure undivided focus on new businesses such as renewable energy forays, downstream activities like oil refining and petrochemicals and LNG, besides marketing of oil and gas at the best rates.

The revamp is on lines of the Organisation Transformation Project (OTP) suggested by consulting firm McKinsey.

Most of the present board-level positions were created in 2001 under a McKinsey OTP plan. McKinsey’s OTP was initiated in 2000 by then ONGC chairman and managing director Bikash Bora and implemented despite resistance from within the company, by his successor (late) Subir Raha, who renamed OTP as the Corporate Rejuvenation Campaign (CRC).

In 2001, in line with McKinsey’s recommendations, ONGC’s Director – Personnel was renamed Director HR, the Director – Operations became Director – Offshore, Director – Technical became Director – Onshore while Director – Drilling became Director – Technology and Oilfield Services. The Exploration and Finance titles were unchanged.

The second phase of McKinsey’s recommendations are being implemented now, sources said, adding the company management has been discussing the board-level revamp with the parent administrative ministry of petroleum and natural gas since mid-2021.

A position of Director (Research and Development) was also suggested but this has not been implemented yet.

ONGC had in March 1997 initiated a project for restructuring of the company in consultation with international management consultant McKinsey and Company Inc. The consultants submitted their recommendations on Organisation Transformation Project (OTP) of ONGC to its management in phases during the years 1997 to 1999.

The recommendations highlighted the need to have a greater focus on ONGC’s core activities of finding and producing oil and gas, better management of skills and expertise in oil field services, greater commercial and performance accountability and quicker decision making by decentralisation.

McKinsey had called for the need for focussed attention on structural changes, and also changes in systems and procedures in the areas of exploration, reservoir management, drilling, material management, logistics, human resources, budgeting and costing, performance management systems, research and development institutes and information services.

In the first part of its report, McKinsey had suggested that ONGC should have focus on reserve accretion and increasing output, promote organisational and individual accountability and function with commercial goals uppermost in mind. It had identified four thrust areas — reserve accretion, commercial accountability, multi-disciplinary approaches and overseas opportunities essential for ONGC to maintain its dominant position in the Indian oil sector.

From a functional view, McKinsey had suggested that different departments operate in a cross-functional manner, pooling talent and expertise from other departments. ONGC in pre-2001 had four departments — drilling, operation/production, technical, and personal and accounts, which often led to fragmentation of efforts.

Besides Director (Onshore) Anurag Sharma and Director (Offshore) Pankaj Kumar, ONGC has Om Prakash Singh as Director (Technical and Field Services), Pomila Jaspal as Director (Finance) and Rajesh Kumar Srivastava as Director (Exploration).

The Director (HR) post is vacant and government-headhunter PESB has already advertised for the position.

Srivastava too is due to retire at month-end but the Public Enterprises Selection Board (PESB) is yet to seek applications for the post.

PESB is also yet to advertise to replace Sharma, who took charge on June 1, 2020 and retires on February 28, 2023. This is in line with the decision not to continue with the post of onshore director.