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Directors Report of Oil India Ltd.

Mar 31, 2016

Dear Members,

On behalf of the Board of Directors, I hereby present the 57th Annual Report on the operations of the Company containing Audited Statements of Accounts together with the Auditors'' Report and Comments of the Comptroller and Auditor General of India for the year ended March 31, 2016.

1. SIGNIFICANT HIGHLIGHTS

The financial and operational performance of the Company is as under:-

A. Financial Highlights

During the year, OIL has earned total revenue of Rs. 11140.77 crore as against Rs. 11019.86 crore in FY15. The Profit before Tax (PBT) in FY16 was Rs.3463.44 crore against PBT of Rs. 3728.70 crore in the FY15. Profit after Tax (PAT) was Rs. 2330.11 crore in FY16 against PAT of Rs. 2510.20 crore in FY15.

Profitability of the Company was affected mainly on account of impairment of investments in overseas projects resulting from fall in crude prices. The summarized Statement of Profit and Loss is given below:

Particulars Financial Financial year 2016 year 2015

Income from Operations 9764.87 9748.23

Other income 1375.90 1271.63

EBDITA 4990.73 4802.02

Finance Cost 346.90 340.68

Depreciation, Depletion and Amortization 966.06 732.64

Exceptional Items 215.13 -

Profit before Tax (PBT) 3463.44 3728.70

Profit after Tax (PAT) 2330.11 2510.20

Appropriations

Interim Dividend 480.91 601.14

Tax on Interim Dividend 97.90 120.19

Proposed Final Dividend 480.91 601.14

Tax on Proposed Dividend 97.90 122.38

Transfer to Debenture Redemption Reserve 264.79 236.96

Transfer to General Reserve 907.70 828.39

During the year, Company has made planned investment of Rs. 3622 crore against budget estimates of Rs. 3917 crore which is expected to increase in future with the increase in exploratory and operational activities.

B. Operational Highlights

(i) Crude Oil Production

During the year, crude oil production was 3.247 MMT (inclusive of production from Kharsang JVC) as against production of 3.440 MMT in FY 15. Main reason for shortfall in achievement can be attributed to (a) more than expected decline rate from the mature fields (b) less than planned retrieval through drilling and workover efforts and (iii) Direct losses arising out of Bandhs, Blockades, miscreants activities etc.

(ii) Natural Gas Production

The natural gas production was 2838 MMSCM in FY16 against 2722 MMSCM in FY15 which is higher by 4.26%. The sale of natural gas was 2314 against 2181 MMSCM in FY15. This is the highest ever production and sale of natural gas in the history of OIL.

(iii) LPG Production

During FY16, LPG production was 41030 MT against 43570 MT in FY15. The sale of LPG was 41172 MT against 43456 MT in FY15.

(iv) Pipeline Operations

During the year, OIL''s crude oil pipeline transported a total of 6.37 MMT of crude oil out of which Naharkatia- Bongaigaon sector transported 3.21 MMT of OIL crude and 0.93 MMT of ONGC crude. Barauni-Bongaigaon sector transported 2.23 MMT of imported crude. OIL has also transported 1.74 MMT of products through Numaligarh-Siliguri Product Pipeline.

(v) Renewable Energy

During FY16, OIL commissioned its second Solar Energy Power Project , of 9 MWp Capacity at Ramgarh, Jaisalmer, Rajasthan. The Project was commissioned on 25th Feb 2016 and with the commissioning of this project, the total Renewable Energy Installed Capacity of the Company stands at 135.6 MW, comprising of 121.6 MW of Wind and 14 MW of Solar Projects .

During FY16, OIL generated a revenue of approximately Rs. 105.5 crore from the commercial renewable energy projects, which includes revenues accrued from the Wind as well as Solar Plants .

- The 5 MW Solar Power Plant at Ramgarh, Jaisalmer, Rajasthan produced 9 Million Units of Electricity which was sold to Jodhpur Vidyut Vitaran Nigam Limited, Government of Rajasthan.

- The 9 MW Solar Power Plant at Ramgarh, Jaisalmer, Rajasthan produced 1.52 Million Units of Electricity which was sold to Jodhpur Vidyut Vitaran Nigam Limited, Government of Rajasthan.

- The 13.6 MW Wind Farm at Ludurva, Jaisalmer, Rajasthan produced 18.25 Million Units of Electricity which was sold to Jaipur Vidyut Vitaran Nigam Limited, Government of Rajasthan.

- The 54 MW Wind Farm at Dangri, Jaisalmer, Rajasthan produced 67.78 Million Units of Electricity which was sold to Jaipur Vidyut Vitaran Nigam Limited, Government of Rajasthan.

- The 16 MW Wind Farm at Patan, Gujarat produced 34.58 million units of Electricity which was sold to Gujarat Urja Vikas Nigam Limited, Government of Gujarat.

- The 38 MW Wind Farm at Chandgarh, Madhya Pradesh produced 71.35 Million Units of Electricity which was sold to Madhya Pradesh Power Management Company Limited, Government of Madhya Pradesh.

Note : 1 Unit = 1 kilo-watt-hr

During FY16, OIL also initiated steps to undertake another 50 MW 10% Wind Energy Power Project in the state of Gujarat and/or Madhya Pradesh.

Further work on the second phase of the Wind Resource Assessment (WRA) exercise in Assam, being sponsored by OIL, has also progressed with the phase-wise Installation and Commissioning of Wind Masts and other ancillary infrastructure at the designated sites.

C. Exploration Highlights

Your Company has drilled 16 (sixteen) Exploratory Wells and carried out 2D & 3D Seismic Survey to identify New Prospects in the Petroleum Mining Lease areas of Upper Assam Basin, including spreading exploratory efforts by drilling 5(five) wells in the NELP Blocks MZ-ONN-2004/1, RJ-ONN-2004/2 & RJ-ONN- 2005/2. With the spud-in of the first High Pressure – High Temperature well in the block KG-ONN-2004/1, Your Company has stepped into a new frontier which is likely to add value to the already discovered gas in the area. The Appraisal Plan for the discovery made in 2014-15 in the NELP Block KG-ONN-2004/1 was also submitted to the Regulator. Further, all pre-drill preparatory works to spud-in the deepwater offshore well in the NELP Block CY-OSN-2009/2 were in advanced stage of completion and is expected to be spud-in the first quarter of the next financial year.

During the year, your Company has made 6 (six) discoveries in the Upper Assam Basin, of which one discovery is expected to be of significant extent and steps have been initiated for quick appraisal and production from the said find.

In overseas, 1213 LKM of 2D Seismic Data have been acquired in the Shakthi-II Block of Gabon, the interpretation of which is in progress to identify New Prospects. New discovery in the Block will quicken the process of monetisation of Lassa oil discovery. Pre- explorations studies are in progress in the 2 (two) offshore blocks of Myanmar to help the Company to decide about entry in Exploration Phase.

2. ACREAGE

Your Company''s in-country operations are spread over the onshore Petroleum Exploration License (PEL) and Petroleum Mining Lease (PML) areas in the states of Assam, Arunachal Pradesh, Mizoram, Andhra Pradesh, Puduchery and Rajasthan. Besides, your Company has ventured into shallow and deep water areas in KG Basin, Cauvery, Andaman, Mumbai and Gujarat-Kutch offshore either jointly or in partnership with other consortium partners.

Your Company is operating in 5 (five) PEL and 22 (twenty two) PML areas, allotted under the nomination regime in the states of Assam, Arunachal Pradesh and Rajasthan. In addition, as on 31.03.2016, your Company holds Participating Interest (PI) in total of 18 NELP Blocks with the right of Operatorship / Joint Operatorship in 10 Blocks and the remaining 8 (eight) Blocks as a Non-operator. In addition your Company holds 40% PI in the JV Block of Kharsang PSC, 44.086% PI in Pre-NELP block AAP-ON-94/1 and 90% PI in the CBM Block AS-CBM-2008/IV in the Upper Assam Basin.

Your Company also holds PI in the Onshore Block Shakthi-II in Gabon covering an area of 3761.25 Sq. Km. and the Offshore Blocks M-4 & YEB in Myanmar covering an approximate area of 31678 Sq. Km. alongwith the right of operatorship in all these Blocks.

3. OIL AND GAS RESERVES

Your Company has strong oil and gas reserves base for the domestic assets including JVs as furnished below:

Particulars 1P 2P 3P

Oil Condensate (MMT) 28.3828 80.7443 109.8106

Balance Recoverable 70.3646 119.4555 157.5142 Gas (BCM) *

O OEG (MMTOE) 89.7208 184.0209 244.6779

* Of these, based on projected volume of gas under various sales contracts, 1P, 2P and 3P Gas Reserves are 22.3630, 42.3140 and 62.3590 BCM respectively.

4. CAPITAL STRUCTURE

The paid-up capital of the Company is Rs 601.14 crore divided into 60,11,35,955 shares of Rs.10/- each with Government of India holding of 67.64% of total paid up capital. The Earning per Share (EPS) of the Company as on March 31, 2016 is Rs. 38.76 as compared to Rs. 41.76 at the end of previous financial year.

5. DIVIDEND

Based on the provisional financial trend, your Company paid Interim Dividend @ 80% amounting to Rs. 480.91 crore for the FY 2015-16. The Board of Directors are now pleased to recommend a final dividend @80% on the paid up capital for the FY 2015- 16, subject to the approval of the shareholders at the ensuing Annual General Meeting.

6. CREDIT RATINGS

The Company''s financial prudence is reflected in the strong credit rating ascribed by ratings agencies as given below:

Category Rating Rating Remark Agency

Long Term Moody''s Baa2 One notch Rating Investor (Stable) above India''s Service sovereign rating

Long Term Fitch Ratings ''BBB-'' At par with Rating (Stable) India''s sovereign rating

Long Term CARE Ratings CARE Highest Rating Facilities AAA awarded by CARE

Short Term CARE Ratings CARE Highest Rating Facilities A1 awarded by CARE

7. DETAILS OF THE LOANS GUARANTEES OR INVESTMENTS/DEPOSITS

Particulars of investment made, loans extended, guarantees and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statements. (Please refer to Note No 14, 15, 21 & 32.15 to the standalone financial statements}.

8. RELATED PARTY TRANSACTIONS

All contracts / arrangements / transactions entered by the Company during FY16 with related parties were in ordinary course of business and at arm''s length basis.

The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at www.oil-india.com. Attention is also invited to Note 32.4 to the financial statements and Form AOC-2 attached here with.

9. HUMAN ASSETS

Human Resource Management at OIL is an integrated approach focusing on Organization''s faith to work with people and work through them to manage change and strive for continued excellence. OIL works towards building positive employee-organization relationship through nurturing initiatives, innovations and aspirations with best HR practices and commitment and provide professional working environment. HR policies and practices are always sensitive to employee needs. As on 31st March 2016, Company has 7532 employees consisting of 1457 Executives and 6075 Unionised Employees in the Company.

10. SPORTS

OIL believes that sports today is an integral part of all round development of human personality and achieving excellence in sports has real bearing on national prestige and morale. Therefore, employees are encouraged to play and excel in sports. As a result of above encouragement, Oil India Limited participated in National and International Sports Events in Football, Volleyball, Table Tennis, Cricket, Chess etc. and brought laurels to the Company. Oil India Limited actively supports and promotes sports under the umbrella of Petroleum Sports Promotion Board (PSPB) and also under various Government of India recognized bodies.

11. IMPLEMENTATION OF GOVERNMENT DIRECTIVES FOR PRIORITY SECTIONS

The Company attempts to comply with the directives of the Government of India for priority sections of the society. The representations of various priority sections in Executive and Unionized Employees categories in the

CATEGORY SC ST OBC Minority PWD Women

Executives 195 125 323 115 08 134

Unionized Employees 410 765 1850 377 77 225

Total 605 890 2173 492 85 359

(RAJBHASHA)

In pursuance of Official Language Policy / Act / Rules / Orders of the Govt. of India efforts are continuing towards increasing the use of Hindi in Official work. Hindi Workshops were conducted regularly so as to enable officers and employees to work in Hindi conveniently and efficiently. Meetings of Official Language Implementation Committee were held in each quarter. The responsibility of the Chairmanship of Duliajan Town Official Language Implementation Committee (TOLIC) was also borne by our Company. In-house Journal "OIL NEWS" was published in Trilingual form i.e. Assamese, Hindi and English. In- house Hindi Journal "OIL KIRAN" was also published in Hindi . Hindi Month was observed in a befitting manner in all spheres of OIL. To propagate Official Language Hindi, amongst employees and school going children, various literary competitions were held during Hindi Month Celebration. Important documents, to be laid on the table of Parliament, were also brought out in bilingual form.

16. PUBLIC PROCUREMENT POLICY FOR MICRO & SMALL ENTERPRISES (MSEs)

1. OIL''s Annual plan for procurement of goods and services from MSEs during the year 2016-17 : Rs. 125 Crores

2. Achievement:

a) Total value of goods and Crore : Goods: Rs.121.16

services procured from MSEs (including MSEs owned by SC/ST entrepreneurs) : Services : Rs.32 Crore

b) % age of procurement from : Goods : 24.98%

MSE (including MSEs owned by SC/ST entrepreneurs) out of total procurement : Services : 2.16%

17. VIGILANCE

Chief Vigilance Officer, head of the Vigilance wing, functions as link between CVC, CBI and Management and acts as advisor to head of the Organisation on Vigilance matters. Vigilance placed main thrust on the preventive vigilance rather than punitive vigilance. Towards this objective, system improvement measures were undertaken on the basis of scrutiny of various Contracts & Purchases, inspections of installations both regular and surprise. CTE type intensive examinations were also carried out. The department also assisted in a CTE inspection carried out by CTE of CVC. Corrective measures were suggested based on the findings. Further, based on registered complaints received by the Department from various sources including the CVC and the Ministry, time to time investigations were also done besides suggesting the necessary action to the organization.

During the year, 2015-16, to create awareness and to sensitize employees of the organization about the rules and regulations on Contracts & Procurement procedures, Conduct, Discipline & Appeal Rules; twenty one programs were conducted in various spheres of the organization covering around 383 employees. The programs included "Keep in Touch" (KIT), Catch Them Young (CTY) and "Vigilance Sensitisation Programs".

During the year, as per CVC''s directive, Vigilance Awareness Week (VAW) was organized from 26th to 31st October at the registered Office & Field Head Quarters (FHQ), Duliajan (Assam), Pipeline Head Quarters-Guwahati (Assam), Project Offices (at Jodhpur, Bhubaneswar, and KGB Project at Kakinada), Branch Office at Kolkata, besides the Corporate Office, Noida. This year the theme was "Preventive Vigilance as a tool of Good Governance". At Corporate Office Noida, Vigilance Pledge had been administered on 26th October by CMD, OIL and by the respective Administrative Heads at other work spheres / installations of OIL. During this week, cycle rallies and the padayatra (procession) were marked at Corporate Office Noida, FHQ & PHQ with chanting of anti-corruption slogans to create vigilance awareness amongst the general public. Apart from the pledge taking, various other programs / competitions were organized befitting the occasion amongst OIL employees, their spouses and their children. Two interactive sessions were organized with CVO amongst the executives at Corporate Office and at FHQ.

As per renewed directive of the commission, various "outreach" programs were also conducted for the young generation. Programs included competitions for on the spot painting, essay writing, debating, poster making, cartoon, slogan writing, elocution, science model making in Vishwa Bharti Public School and Delhi Public School of Greater Noida, along with other participating Schools and Colleges of Duliajan & Guwahati in Assam. As new initiatives Vendors'' Meets had been organized giving special attention to unsuccessful vendors as was done in the last year. Quarterly issues of in-house Vigilance Journal ''In- Touch'' along with a special issue were published during the year.

18. RESEARCH AND DEVELOPMENT

The Company accords utmost importance to up- gradation of technologies and expertise in various areas of activities through its own Research & Development Centre. A number of studies and projects in the field of IOR/EOR, well stimulation, water shut-off, Oil field chemicals and work over & drilling fluids, produced water management, flow assurance & paraffin control, Geochemistry, Petroleum Biotechnology, Un-coventional Hydrocarbon etc. carried out and benefits have been derived by the Company. A number of R&D projects featured as MoU projects, which were completed within stipulated timeframe for "Excellent" MoU ratings.

In FY 2016, Company has filed two patents, namely "Stepwise Pyrolysis GC Technique to evaluate hydrocarbon potential of organically rich shale at different maturity levels" and "Method for Quantification of Low Wax Crude". A total of Rs 46.76 Crores has been spent on R&D initiatives during the year.

19. SUBSIDIARIES/ COMPANIES IN WHICH OIL HAS SHAREHOLDING

Subsidiaries

(i) Oil India Sweden AB

Oil India Sweden AB is a wholly owned subsidiary of Oil India Limited. The company was incorporated on the 20th November 2009 as a private limited company (AB). The activities of the Company are: to own shares in other companies, perform administrative tasks and associated activities; to incorporate, to participate in and to finance companies or businesses etc.

(ii) Oil India Cyprus Ltd.

Oil India Cyprus Limited was incorporated in Cyprus on 21st October 2011 as a private limited liability Company under the Cyprus Companies Law, Cap. 113. Oil India Limited holds 76% of the Share Capital of the Company. The balance 24% is held by Oil India Sweden AB.

(iii) Oil India (USA) Inc.

Oil India (USA) Inc. is a wholly owned subsidiary of OIL incorporated on 26th September 2012 having its Office at Houston, USA. It holds 20% stake in Niobrara Shale Oil and Gas Asset.

(iv) Oil India International Limited (OIIL)

OIIL, a 100% subsidiary of Oil India Limited was incorporated on 20th September, 2013. The registered office of OIIL is situated in New Delhi.

(v) Oil India International B.V (OIIBV)

Oil India International B.V, a 100% subsidiary of OIL was incorporated in Netherlands on 2nd May, 2014.

(vi) Oil India International Pte. Ltd.

Oil India International Pte. Ltd. is a wholly owned subsidiary of Oil India Limited. The company is incorporated in Singapore on 6th May 2016 as a private company limited by shares. The activities of the Company are: to act as investment holding company and Crude Petroleum and Natural Gas Production.

Companies in which OIL has shareholding:

(i) Numaligarh Refinery Ltd (NRL)

Numaligarh Refinery Limited was incorporated in 1993. NRL is a Category -I Mini Ratna PSU having a 3 MMTPA Refinery at Numaligarh, in Golaghat District of Assam. The Company is a subsidiary of Bharat Petroleum Corporation Limited. OIL is holding 26% of the paid up equity in NRL.

(ii) Brahmputra Cracker and Polymer Ltd (BCPL)

BCPL was incorporated on January 8, 2007 with the objective of establishing a gas cracker project complex at Lepetkata, Dibrugarh, Assam, inter alia, to process natural gas, naphtha or any petroleum product and to distribute and market petrochemical products in India and abroad. The registered office of BCPL is located at Guwahati, Assam. OIL holds 10% equity share capital of BCPL.

(iii) Suntera Nigeria 205 Ltd.

OIL acquired a 25% equity stake in Suntera Nigeria 205 Limited, Nigeria pursuant to a Share Purchase Agreement signed with Suntera Cyprus and IOCL on August 31, 2006. Suntera Nigeria 205 Limited was incorporated with the main object to engage in the petroleum business including the prospecting and exploration for and production and development of crude oil and natural gas. The registered office of Suntera Nigeria is at Nigeria.

(iv) DNP Ltd.

DNP Limited was incorporated on 15th June, 2007. The main object of DNP Limited is acquisition, transportation and distribution of natural gas in all forms. The registered office of DNP Limited is situated at Guwahati, Assam. OIL holds 23% equity share capital of DNP Limited.

(v) IndOil Netherlands B.V

Oil India Sweden AB owns 50% of the shares in Indoil Netherlands B.V which in turn holds 7 per cent equity interest in Petrocarabobo SA (joint venture company), Project Carabobo-1, Venezuela. The principal activity of Indoil Netherlands B.V. is making investment in companies engaged in exploration, production, marketing, trade, transport and extraction of oil, gas, hydrocarbons and minerals.

(vi) Beas Rovuma Energy Mozambique Ltd.

(BREML)

OIL holds 40% share in BREML. BREML holds 10% PI in the Rovuma Area 1 Offshore Block in Mozambique.

(vii) WorldAce Investments Ltd.

OIL (through OIIBV) holds 50% share in World Ace Investments Ltd, a company incorporated in Cyprus. World Ace Investments Ltd. holds 100% share in LLC Stimul-T, Russia which is the license holder for License 61, Tomsk Region, Russia.

(viii) Vankor India Pte. Ltd.

Oil India Limited (through Oil India International Pte. Ltd.) holds 33.5% share in Vankor India Pte. Ltd., a company incorporated in Singapore on 23rd May 2016. The activities of the Company are: to act as investment holding company and Crude Petroleum and Natural Gas Production.

(ix) Taas India Pte. Ltd.

Oil India Limited (through Oil India International Pte. Ltd.) holds 33.5% share in Taas India Pte. Ltd. , a company incorporated in Singapore on 23rd May 2016. The activities of the Company are: to act as investment holding company and Crude Petroleum and Natural Gas Production.

A report on the performance and financial position of the subsidiaries, associates and Joint venture Companies of OIL as per prescribed format (Form AOC1) of the Companies Act 2013 forms part of this annual report.

20. STATUTORY REQUIREMENTS

Your Directors have made necessary disclosures as required under various provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. Information on the conservation of energy, technology absorption, R&D, foreign exchange earnings & outgo etc. as required under Section 134 of the Companies Act, 2013 and the rules made thereunder is given in the Annexure forming part of this Report. In view of the exemptions to the Government Companies from applicability of the section 197 of the Act by the Government of India, OIL is not required to annex the details of the Employees who drew remuneration exceeding the limits laid down in the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

21. STATUTORY AUDITORS, COST AUDITORS AND SECRETARIAL AUDITORS

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s. A.K.Sabat & Co. and M/s N. C. Banerjee & Co. were appointed as Joint Statutory Auditors for the financial year 2015-16. Comments of the C&AG forms part of this Report.

The Cost Audit Report for the financial year 2014-15 was filed within the statutory time limit. M/s Chandra Wadhwa & Co. is the Cost Auditor of the Company for the financial year 2015-16. The report is being finalized and will be filed as per the schedule.

Secretarial Compliance Report confirming compliance to the applicable provisions of the Companies Act, 2013, SEBI (LODR) Regulations, 2015, Listing Agreement, SEBI guidelines and all other relevant rules and regulations relating to Capital Market of M/s RMG Associates, Practicing Company Secretaries is annexed. With respect to the qualification about the composition of the Board of Directors, OIL requested MOP&NG to appoint appropriate number of Independent Directors on the Board of the Company.

22. EXTRACTS OF ANNUAL RETURN

The extracts of the Annual Return are attached herewith as Annexure (Form MGT-9) to this Report.

23. AWARDS AND RECOGNITIONS

Oil India Limited was conferred with the following recognitions and awards/accolades, by different agencies, during the year 2015-16:

1. Credit Rating Agencies, Moody''s and Fitch, reaffirmed Oil India Limited''s Credit Ratings. While Moody''s Investor Service rated Oil India Limited as Baa2 (Stable), Fitch rated the Company as BBB- (Stable)

2. Ranking of #222 in the Platts Top 250 Global Energy Company Rankings for 2015 and ranking of 68th in the Asia Companies, declared at the (13th) Annual Platts Top 250 Global Energy Company Rankings, 2015

3. The International Federation of Training and Development Organizations (IFTDO) Global HRD award, 2016, on the topic "Customized Soft Skill Training for Workpersons"

4. The "Frost & Sullivan''s Green Manufacturing Excellence Award 2015 - Certificate of Merit - Believers Category"

5. The Oil Industry Safety Award for "Best Near Miss Incidents Reporting, Production Operation- Onshore/Offshore" for the year 2013-14

6. The 2nd Pt. Madan Mohan Malaviya Silver Award for Best CSR Practices in Education, 2015, by CSR Times.

7. Shri Gnana Kumaraswamy Batta, Senior Geophysicist with Oil India Limited, won the Petrofed Innovator of the year (Special Commendation in the Individual category) at the PETROFED Awards 2013-14

8. 3rd Prize under Best Enterprise Award in Public Sector at the 26th National Convention of the Forum of Women in Public Sector (WIPS)

9. The ''Best Company in CSR & Sustainability'' Award at the INDIA TODAY PSUs Awards, 2015

10. The following awards instituted by "World CSR Congress" at the Sustainability & Leadership Summit & Awards ceremony :

i) 50 Most Sustainable Companies of India Award

ii) Best Performing Navratna PSU Award

iii) Best CSR Practices Award

iv) Sustainable Community Leadership Award

In addition, two distinguished lady officers, namely, Ms. Reba Devi, Group General Manager- Geology & Reservoir and Ms. Debajani Bose, Head-Chemical, were conferred with the prestigious "Women at Work Leadership Award."

11. The 5th Annual Greentech CSR Award 2015 in Gold category, in Petroleum Exploration sector

12. The 15th Annual Greentech Environment Award, 2014, in Gold category in Petroleum Exploration sector

13. The 16th Annual Greentech Environment Award, 2015, in Gold category in Petroleum Exploration Sector

14. The Golden Peacock National Training Award, 2015

15. The 5th Annual Greentech HR Award, 2015 on Training Excellence

16. The 3rd Global Training & Development Leadership Award for best development programme in public sector for workers, in the category of Best Employer 2015-16, by World HRD Congress.

17. The 7th best employer of the year at 10th Employer Branding award and an award for managing health at work, both by Employer Branding Institute, India.

18. The "Dainik Bhaskar- India Pride Award 2015-16, for Excellence in Oil & Gas", in the Central Public Sector Undertaking category by the Dainik Bhaskar newspaper group Apart from the above, Oil India Limited was bestowed with several other laurels for achievements in different spheres of the Company:

1. OIL Football team became the Champions in the 7th Bodousa Cup Football Tournament, held at Tinsukia

2. OIL A Team won the runners-up trophy in Merchant Cup Golf Tournament (Division 1) held at Royal Calcutta Golf Course, Kolkata

3. Calcutta Branch was awarded the second Rajbhasha Shield for implementation of Official Language at Calcutta Branch office. Also, the Town Official Language Committee for PSUs of Kolkata gave Certificate of appreciation and memento to Calcutta Branch and Dr. V M Bareja, Senior Manager(Official Language) for his contribution towards implementation of Official Language at Calcutta Branch office.

24. CHANGES IN THE BOARD OF DIRECTORS

(i) Pursuant to Letter no. C-31014/3/2015- CA/FTS:38699 dated 30th June, 2015 issued by Ministry of Petroleum & Natural Gas (MOP&NG), Shri U.P. Singh, Additional Secretary (Exploration), MOP&NG assumed the additional charge of Chairman & Managing Director, Oil India Limited w.e.f 1st July, 2015 (FN) vice Shri S.K.Srivastava who ceased to be Chairman and Managing Director of Oil India Limited pursuant to his superannuation from the services of the Company on 30.06.2015 (after closing of working hours).

(ii) Pursuant to Letter No. C-34011/19/2005-CA dated 3rd September, 2012 issued by MOP&NG,

a) Shri Anup Mukerji, Ex-Chief Secretary, Government of Bihar

b) Shri Suresh Chand Gupta, Practising Chartered Accountant

c) Prof. Bhaskar Ramamurthi, Director, IIT, Madras

d) Prof. Shekhar Chaudhuri, Director, IIM, Kolkata

e) Prof. Gautam Barua, Mentor Director, IIIT, Guwahati have retired as Independent Directors (Non- Official Part-Time Directors) on the Board of Oil India Limited w.e.f. 03.09.2015.

(iii) Pursuant to Letter No. C-31033/1/2012- CA/FTS:18688 dated. 02.01.2016 issued by MOP&NG, Shri Sunjay Sudhir, Joint Secretary (IC), MOP&NG was appointed as Government Nominee Director on the Board of Oil India Limited in place of Shri Nalin Kumar Srivastava, Director (E-II), MoP&NG.

(iv). Pursuant to Letter No. C-31014/3/2015-CA /FTS:38699 dated 31st May, 2016 issued by MOP&NG, Shri A.P Sawhney, Additional Secretary, MOP&NG was entrusted additional charge of the post of Chairman & Managing Director, OIL. Shri U.P. Singh, Additional Secretary (E), MOP&NG ceased to be the Chairman and Managing Director of Oil India Limited after close of working hours on 31st May, 2016.

(v) Pursuant to Letter No. C-31014/4/2015-CA(Part- I)/FTS:38957 dated 13th July, 2016 issued by MOP&NG, Shri Utpal Bora has been inducted into the Board as Chairman and Managing Director of Oil India Limited w.e.f 18th July, 2016 (FN) vice Shri A.P Sawhney, Additional Secretary, MOP&NG.

25. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section134 (5) of the Companies Act, 2013 with respect to Directors'' Responsibility Statement, Directors of the Company confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

26. ACKNOWLEDGEMENT

With the initiatives emanating from the vision of making the Company as fastest growing energy company with highest profitability and with our combined zeal, commitment, experience and expertise, your Directors (v) Pursuant to Letter No. C-31014/4/2015-CA(Part- l)/FTS:38957 dated 13th July, 2016 issued by MOP&NG, Shri Utpal Bora has been inducted into the Board as Chairman and Managing Director of Oil India Limited w.e.f 18th July, 2016 (FN) vice Shri A.P Sawhney, Additional Secretary, MOP&NG.

25. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 (5) of the Companies Act, 2013 with respect to Directors'' Responsibility Statement, Directors of the Company confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

26. ACKNOWLEDGEMENT

With the initiatives emanating from the vision of making the Company as fastest growing energy company with highest profitability and with our combined zeal, commitment, experience and expertise, your Directors look forward to a year of fruitful operations. Your Directors acknowledge the guidance and support of the Ministry of Petroleum & Natural Gas, all other Ministries and Agencies in Central and State Governments. Your Directors express their gratitude and thanks to the Shareholders, Auditors, Customers, Suppliers and other business partners/associates for their continued co-operation and patronage. Your Directors wish to place on record their deep sense of appreciation for the devoted services of all Oil Indians for its success.

For and on behalf of the Board of Directors.

Sd/-

(Utpal Bora)

Chairman & Managing Director

Dated: 03.08.2016

Place: Noida


Mar 31, 2015

Dear Members,

On behalf of the Board of Directors, I hereby present the 56th Annual Report on the operations of the Company containing Audited Statements of Accounts together with the Auditors' Report and Comments of the Comptroller and Auditor General of India for the year ended March 31,2015.

1. SIGNIFICANT HIGHLIGHTS

The financial and operational performance of the Company is as under:-

A Financial highlights

During the year, OIL has earned total revenue of Rs. 11,019.86 crore as against Rs. 11,215.46 crore in FY14. The Profit before Tax (PBT) earned in FY15 was Rs.3728.70 crore against PBT of Rs. 4,410.44 crore in the FY14. Profit after Tax (PAT) was Rs. 2,510.20 crore in FY15 against PAT of Rs. 2,981.30 crore in FY14.

Profitability of the Company was affected on account of higher financing cost associated with investment in Mozambique project, adverse movement in currency exchange rate and fall in interest earnings from investment of surplus fund. The summarized Profit and Loss Account is given below:

(Rs. in Crore) Financial Financial Particular year 2015 year 2014

Income from Operations 9,748.23 9,586.82

Other income 1,271.63 1,628.64

EBDITA 4,802.02 5,195.03

Finance Cost 340.68 68.78

Depreciation, Depletion, 732 64 715 81 Amortization and impairment

Profit before Tax (PBT) 3,728.70 4,410.44

Profit after Tax (PAT) 2,510.20 2,981.30

Appropriations

Interim Dividend 601.14 1262.39

Tax on Interim Dividend 120.19 214.54

Proposed Final Dividend 601.14 30.06

Tax on Proposed Dividend 122.38 5.11

Transfer to Debenture 236.96 00.00 Redemption Reserve

Transfer to General Reserve 828.39 1469.20

Total appropriations 2,510.20 2,981.30

During the year, Company has made planned investment of Rs. 3,774 crore against budget estimates of Rs 3,632 crore which is highest in any year by OIL till date and expects to increase in future with the increase in exploratory and operational activities.

B Operational Highlights

(i) Production of Crude Oil

During the year, crude oil production was 3.440 MMT (inclusive of production from Kharsang JVC) as against production of 3.502 MMT in FY14. Main reason for shortfall in achievement is due to direct and consequential losses arising out of blockades, bundhs etc in operational areas and indirect loss due to rig days loss in work-over and drilling.

(ii) Natural Gas Production

The natural gas production was 2722 MMSCM in FY15 against 2626 MMSCM in FY14 which is higher by 4%. The sale of natural gas during the year was 2181 MMSCM against 2090 MMSCM in FY14.

(iii) LPG Production

During FY15, LPG Production was 43570 MT against 46640 MT in FY14. The sale of LPG was 43,456 MT in FY15 against 46,786 MT in FY14

(iv) Renewable Energy

During the FY15, OIL commissioned third wind energy project of 54MW which is split project in Gujarat and Madhya Pradesh in March, 2015 (16 MW Wind Farm at Patan in Gujarat on 26.03.2015 and 38 MW Wind Farm at Chandgarh in Madhya Pradesh on 28.03.2015). With commissioning of this project, total renewable energy capacity of the Company is now 126.60 MW. OIL generated revenue of Rs 67.50 crore in FY15 from renewable sources (which includes revenue from solar plants of 5.23 MW). The generation from various renewable plants is as under:

a. 5 MW Solar Power Plant at Ramgarh, Rajasthan produces 92,47,797 kWh of Electricity which was sold to Rajasthan Electricity Board (DISCOM, Rajasthan Govt.).

b. 13.6 MW Wind Farm at Ludravaa, Rajasthan produces 1,91,99,249 kWh of Electricity which is sold to Rajasthan Electricity Board (DISCOM, Rajasthan Govt.).

c. 54 MW Wind Farm at Dangari, Rajasthan produces 9,94,42,503 kWh of Electricity which is sold to Rajasthan Electricity Board (DISCOM, Rajasthan Govt.)

C Exploration Highlights

Your Company has made 12 oil and gas discoveries during the year 2014-15 of which 11 are in upper Assam Basin. The twelfth discovery is a gas find in NELP-VI block KG-ONN-2001/1 falling in East Godavari district of Andhra Pradesh and Puducherry. In addition, exploratory drilling was initiated in NELP block RJ-ONN-2004/2 in Rajasthan and in block MZ-ONN-2004/1 in the State of Mizoram.

In overseas, one of the two appraisal wells drilled over Lassa oil discovery in Gabon proved presence of oil, thus helping in appraisal of the discovery. A new overseas exploration venture was added to the portfolio of the Company by signing the contract for two offshore acreages in Myanmar, in which OIL is the operator.

2. ACREAGE

The domestic operations of the Company are spread over areas under onshore Petroleum Exploration License (PEL) and Petroleum Mining Lease (PML) in the states of Assam, Arunachal Pradesh, Mizoram, Andhra Pradesh, Puducherry and Rajasthan. Besides, your Company is venturing into shallow and deep water in KG Basin, Cauvery, Andaman and Mumbai offshore either jointly or in partnership with other consortium partners. Your Company is operating in 5 (five) PEL and 22 (twenty two) PML areas, allotted under the nomination regime in the states of Assam, Arunachal Pradesh and Rajasthan.

Your Company at the end of NELP IX bidding round as on 31.03.2015 is holding Participating Interest (PI) in total of 27 NELP Blocks out of which OIL has the right of operatorship / joint operatorship in 12 and as non-operator in 15 blocks. In addition your Company is holding 90% PI in one CBM Block (AS- CBM-2008/IV) in Assam. Your Company is also holding 40% PI in JV block of Kharsang PSC and 44.086% PI in Pre-NELP block AAP-ON-94/1.

3. OIL AND GAS RESERVES

Your Company has a strong oil and gas reserves base as on 31/3/15 which is mentioned below:

Particulars 1P 2P 3P

Oil Condensate 31.2606 83.4091 114.7743 (MMT)

Gas (BCM) 23.787 44.095 65.903

O OEG (MMTOE) 51.7616 121.3149 171.6258

Note Including OIL's PI in Kharsang JV

4. CAPITAL STRUCTURE

The paid-up capital of the Company is Rs 601.14 crore divided into 60,11,35,955 shares of Rs.10/- each with no change in the Government of India holding of 67.64% of total paid up capital. The Earning per Share (EPS) of the Company as on March 31, 2015 is Rs. 41.76/- as compared to Rs. 49.59/- at the end of previous financial year.

5. DIVIDEND

Based on the provisional financial trend, your Company paid Interim Dividend @ 100% amounting to Rs. 601.14 crore for the FY 2014-15. The Board of Directors are now pleased to recommend a final dividend @100% on the paid up capital amounting to Rs. 601.14 crore for the FY 2014-15, subject to the approval of the shareholders at the ensuing Annual General Meeting.

6. CREDIT RATINGS

The Company's financial prudence is reflected in the strong credit rating ascribed by ratings agencies as given below:

Instrument Rating Rating Outlook Remarks Agency

International Moody's Baa2 Stable One notch Debt above India's sovereign rating

Long Term ICRA AAA Stable Highest rating Debt awarded by ICRA

Long Term Fitch BBB(-) Stable At par with Debt sovereign rating

7. DETAILS OF The LOANS GUARANTEES OR INVESTMENTS/DEPOSITS

Particulars of loans given, investment made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statements. (Please refer to Note No 14, 15, 21 & 31.16 to the standalone financial statements)

8. RELATED PARTY TRANSACTIONS

All contracts / arrangements / transactions entered by the Company during FY15 with related parties were either in ordinary course of business and / or at arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transaction.

The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at www.oil-india.com. Attention is also invited to Note 31.4 to the financial statement and Form AOC 2 attached herewith.

9. HUMAN ASSETS

Human Resource Management at OIL is an integrated approach focusing on organization's faith to work with people and work through them to manage change and strive for continued excellence. OIL works towards building positive employee- organization relationship through nurturing initiatives, innovations and aspirations with best HR practices and commitment and provide professional working environment. HR policies and practices are always sensitive to employee needs. As on March 31,2015, Company has 7845 employees consisting of 1435 Executives and 6410 Unionised Employees in the Company.

10. SPORTS

OIL believes that sports today is an integral part of all round development of human personality and achieving excellence in sports has real bearing on national prestige and morale. Therefore, employees are encouraged to play and excel in sports. As a result of above encouragement, Oil India participated in National and International Sports Events in Table Tennis, Cricket, Chess and brought laurels to the Company. Oil India Limited actively supports and promotes sports under the umbrella of Petroleum Sports Promotion Board (PSPB) and also under various Government of India recognized bodies.

11. IMPLEMENTATION OF GOVERNMENT DIRECTIVES FOR PRIORITY SECTIONS

The Company attempts to comply with the directives of the Government of India for priority sections of the society. The representations of various priority sections in Executive and Unionized Employees categories in the Company as on March 31,2015 is as under:

CATEGORY SC ST OBC Minority PWD Women

Executives 188 128 310 106 7 117

Unionised 423 756 1941 389 73 235

Employees

Total 611 884 2251 495 80 352

12. IMPLEMENTATION OF SEXUAL HARASSMENT PREVENTION, PROHIBITION AND REDRESSAL ACT, 2013

In accordance with the Government Guidelines and Norms, OIL has constituted the Internal Complaints Committee (ICC) at its different spheres to look into offences related to sexual harassment of women at the workplaces. These Complaints Committees are headed by women and not less than half of its members are women. Further, to prevent the possibility of any undue pressure or influence from senior levels, such Complaints Committee involves a third party (Female), who is either principal of the educational institute or Social Worker or person of repute. The Committee is deemed to be Inquiring Authority for the purpose of such misconduct and the report of the ICC shall be considered as Inquiry Report under the Rules. During the year under review, no case was referred to the committees.

13. CORPORATE GOVERNANCE

As stipulated under Clause-49 and 55 of the Listing Agreement, the Management Discussion & Analysis Report, Corporate Governance Report and the Business Responsibility Report have been furnished as a part of this Annual Report. Your Company also complies with the Corporate Governance Guidelines enunciated by the Department of Public Enterprises, Government of India.

14. RTI ACT, 2005

In order to promote transparency and increased accountability, Company has put in place the mechanism for implementation of Right to Information Act 2005. CPIO / CAPIO at offices across the country have been nominated to provide the information to the citizen of the country under the Act. The names, designation and address of the CPIO/CAPIO are available on the website. Company has also uploaded information manual on the web portal containing details like organization structure, powers and duties of officers, rules and regulations, directory of officers, remuneration of officers, remuneration of workmen and information of the public at large. Complaints received during the year were expeditiously replied.

15. IMPLEMENTATION OF OFFICIAL LANGUAGE (RAJBHASHA)

In pursuance of Official Language Policy / Act / Rules / Orders of the Govt. of India efforts are continuing towards increasing the use of Hindi in Official work. Hindi Workshops were conducted regularly so as to enable officers and employees to work in Hindi conveniently and efficiently. Meetings of Official Language Implementation Committee were held in each quarter. The responsibility of the Chairmanship of Duliajan Town Official Language Implementation Committee (TOLIC) was also borne by our Company. In-house Journal "OIL NEWS" was published in Trilingual form i.e. Assamese, Hindi and English. Hindi Month was observed in a befitting manner in all spheres of OIL. To propagate Official Language Hindi, amongst employees and school going children, various literary competitions were held during Hindi Month Celebration. Important documents, to be laid on the table of Parliament, were also brought out in bilingual form.

16. VIGILANCE

"Vigilance Wing" in the organisation is headed by Chief Vigilance Officer, which helps in ensuring functioning of the organization in a transparent manner. The main thrust of Vigilance is placed on the preventive vigilance rather than punitive vigilance. Towards this objective, system improvement measures were undertaken on the basis of scrutiny of various Contracts & Purchases. Intensive inspections were also carried out on the systems and subsequently, corrective measures were undertaken.

As per CVC's directive, Vigilance Awareness Week was organized during the year at Field Headquarters, Corporate Office, other spheres of operations and no. of programmes were conducted during the week. Programme on "Contract Management & Vigilance Perspective in PSUs" were also conducted at Field Headquarters with eminent faculty from outside the organization. To create awareness and sensitize employees of the organization about the rules and regulations on Contracts & Procurement procedures, Conduct, Discipline & Appeal Rules and Central Vigilance Commission (CVC) guidelines; eleven nos. of "Keep in Touch" (KIT) and "Vigilance Sensitisation Programme" were conducted in various spheres of the organization. A new initiative was taken by the organization by conducting a vendor Meet with Unsuccessful vendor at Mumbai in August, 2014. Quarterly issues of in-house Vigilance Journal 'In- Touch' along with a special issue were published during the year.

17. research and development

The Company accords utmost importance to up- gradation of technologies and expertise in various areas of activities through its own Research & Development Centre. During the year, the Company established state of art Petroleum Biotechnology Centre known as "Jaivalaya". In the FY15, Company has filed two International Patent applications for "System and method for screening solvents for dissolving tank Bottom sludge" and "a method for preventing deposition in Oil wells with Packers".

18. SUBSIDIARIES/ COMPANIES IN WHICH OIL HAS SHAREHOLDING

SUBSIDIARIES

1. Oil India Sweden AB

Oil India Sweden AB is a wholly owned subsidiary of Oil India Limited. The company was incorporated on the 20th of November 2009 as a private limited company (AB). The activities of the Company are: to own shares in other companies, perform administrative tasks and associated activities; to incorporate, to participate in and to finance companies or businesses etc.

2. Oil India Cyprus Ltd.

Oil India Cyprus Limited was incorporated in Cyprus on 21 October 2011 as a private limited liability Company under the Cyprus Companies Law, Cap. 113. Oil India Limited holds 76% in the Company. The balance 24% is held by Oil India Sweden AB.

3. Oil India (USA) Inc.

Oil India (USA) Inc. is a wholly owned subsidiary of OIL with Branch Office at Houston, USA. It holds 20% stake in Niobrara Shale Oil and Gas Asset.

4. Oil India International Limited (OIIL)

OIIL, a 100% subsidiary of Oil India Limited was incorporated on 20.09.2013. The registered office of OIIL is situated in New Delhi. OIIL received the commencement of business certificate on 28.02.2014.

5. Oil India International B.V (OIIBV)

Oil India International B.V, a 100% subsidiary of OIL was incorporated in Netherlands on 2nd May, 2014.

COMPANIES IN WHICH OILHAS SHAREHOLDING

1. Numaligarh Refinery Ltd (NRL)

Numaligarh Refinery Limited was incorporated in 1993. NRL is a Category -I Mini Ratna PSU having a 3 MMTPA Refinery at Numaligarh, in Golaghat District of Assam. The Company is a subsidiary of Bharat Petroleum Corporation Limited. OIL is holding 26% of the paid up equity in NRL.

2. Brahmputra Cracker and Polymer Ltd (BCPL)

BCPL was incorporated on January 8, 2007 with the objective of establishing a gas cracker project complex at Lepetkata, Dibrugarh, Assam, inter alia, to process natural gas, naphtha or any petroleum product and to distribute and market petrochemical products in India and abroad. The registered office of BCPL is located at Guwahati, Assam. OIL holds 10% equity share capital of BCPL.

3. Suntera Nigeria 205 Ltd.

Our Company acquired a 25% equity stake in Suntera Nigeria 205 Limited, Nigeria pursuant to a Share Purchase Agreement signed with Suntera Cyprus and IOCL on August 31, 2006. Suntera Nigeria 205 Limited was incorporated with the main object to engage in the petroleum business including the prospecting and exploration for and production and development of crude oil and natural gas. The registered office of Suntera Nigeria is at Nigeria.

4. DNP Ltd.

DNP Limited was incorporated on June 15, 2007. The main object of DNP Limited is acquisition, transportation and distribution of natural gas in all forms. The registered office of DNP Limited is situated at Guwahati, Assam. Our Company has acquired a 23% equity stake in DNP Limited.

5. IndOil Netherlands B.V

Oil India Sweden AB owns 50% of the shares in Indoil Netherlands B.V which in turn holds 7 per cent equity interest in Petrocarabobo SA (joint venture company), Project Carabobo-1, Venezuela. The principal activity of Indoil Netherlands B.V. is making investment in companies engaged in exploration, production, marketing, trade, transport and extraction of oil, gas, hydrocarbons and minerals.

6. Beas Rovuma Energy Mozambique Ltd. (BREML)

OIL holds 40% share in BREML. BREML holds 10% PI in the Rovuma Area 1 Offshore Block in Mozambique.

7. world Ace Investments Ltd.

OIL (through OIIBV) holds 50% share in World Ace Investments Ltd, a company incorporated in Cyprus. World Ace Investments Ltd. holds 100% share in LLC Stimul-T, Russia which is the license holder for License 61, Tomsk Region, Russia.

A report on the performance and financial position of the subsidiaries, associates and Joint venture Companies of OIL as per prescribed format (Form AOC1) of the Companies Act 2013 forms part of this annual report.

19. STATUTORY REQUIREMENTS

Your Directors have made necessary disclosures as required under various provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Information on the conservation of energy, technology absorption, R&D, foreign exchange earnings & outgo etc. as required under Section 134 of the Companies Act, 2013 and the rules made thereunder is given in the Annexure forming part of this Report. In view of the exemptions to the Government Companies from applicability of the section 197 of the Act by the Government of India, OIL is not required to annex the details of the Employees who drew remuneration exceeding the limits laid down in the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

20. STATUTORY AUDITORS, COST AUDITORS AND SECRETARIAL AUDITORS

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s. Saha Ganguli and Associates and M/s B M Chatrath & Co. were appointed as Joint Statutory Auditors for the financial year 2014-15. Comments of the C&AG forms part of this Report.

The Cost Audit Report for the financial year 2013- 14 was filed within the statutory time limit. M/s Mani & Co is the Cost Auditor of the Company for the financial year 2014-15. The report is being finalized and will be filed as per the schedule.

Secretarial Compliance Report confirming compliance to the applicable provisions of the Companies Act, 2013, Listing Agreement, SEBI guidelines and all other relevant rules and regulations relating to Capital Market, obtained from M/s RMG Associates, Practicing Company Secretaries is annexed. With respect to the qualification about the composition of the Board of Directors, OIL has brought the matter before MOP&NG and requested them to appoint appropriate number of Independent Directors on the Board of the Company.

21. EXTRACTS OF ANNUAL RETURN

The extracts of the Annual Return are attached herewith as Annexure (Form MGT-9) to this Report.

22. AWARDS AND RECOGNITIONS

Oil India Limited received the following awards during the year 2014-15

* Oil India Ltd. wins the National Safety Award (Mines) for 2012 in the category of "Longest Accident Free Period" for the "Engineering Oil Mines" on 20.03.2015.

* Oil India Limited was declared the winner of 15th Annual Greentech Environment Award, 2015.

* OIL-Center of Excellence for Energy Studies has received recognition from the Department of Scientific and Industrial Research, Govt. of India vide letter No. TU/IV-RD/1181/2014 dated 15-September 2014 as an In-house R&D unit of Oil India Limited from 21-August 2014.

* 4th Annual Greentech HR Award 2014 for 'Training Excellence (Gold Category)' by Greentech Foundation for the third consecutive year at a function at Bangalore.

* Golden Peacock National Training Award for the year 2014. The award was handed over by Hon'ble Shri Oomen Chandy, Chief Minister of Kerala at Trivandrum

* Golden Peacock National Training Award for the year 2015. The award was announced on 26th March 2015 and handed over in a ceremony held in Dubai during April 2015.

* Malaysia Best Employer Brand Award in Excellence in Training category. The award was announced on 25th March 2015.

* 'Best Company in CSR & Sustainability' Award in the India Today PSUs Awards, 2014: Oil India Limited was awarded the 'Best Company in CSR & Sustainability', in the Navratna segment, in the maiden 'India Today PSUs Awards, 2014' on 22nd August, 2014.

* OIL won the best display award in raw space category in the exhibition GEO INDIA 2015 (11th to 14th January, 2015) at Noida.

* OIL won the best stall award in the raw space category in Assam International Trade & Industrial Fair, 2015 at Jorhat, Assam.

23. CHANGES IN THE BOARD OF DIRECTORS

(i) Pursuant to MOP&NG's letter no. C-31014/4/2012-CA/FTS:22762 dated 1st August, 2014, Shri Sudhakar Mahapatra assumed the office of Director (Exploration & Development), Oil India Limited with effect from 4th August, 2014 vice Shri B.N.Talukdar who was relieved from the post of Director (E&D), OIL at the close of working hours of 5th February, 2014 on his joining as DG, DGH.

(ii) Pursuant to MOP&NG's Letter no. C-31014/1/2013-CA/FTS:23934 dated 7th May, 2015, Shri Biswajit Roy has assumed the charge of Director (HR&BD) of Oil India Limited w.e.f 8th May, 2015 vice Shri N.K. Bharali who superannuated from the services of the Company on 31st January, 2015.

(iii) Pursuant to MOP&NG Letter No. C-31033/1/2012-CA (Part-III)/FTS: 37857 dated. 7th May, 2015 Shri U.P. Singh, Joint Secretary (Exploration), MOP&NG of GOI was inducted as Government Nominee Director on the Board of Oil India Limited w.e.f 11th May, 2015 vice Shri Subhasish Panda, who had ceased to be Government Nominee Director on the Board of Oil India Limited w.e.f 7th May, 2015.

(iv) Pursuant to MOP&NG's Letter no. C-31014/3/2013-CA/FTS:26283 dated 4th March, 2015, Shri P.K. Sharma has assumed the charge of Director (Operations) of Oil India Limited w.e.f 1st June, 2015 vice Shri S.Rath who superannuated from the services of the Company on 31st May, 2015.

24. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section134 (5) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, Directors of the Company confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

25. ACKNOWLEDGEMENT

With the initiatives emanating from the vision of making the Company as fastest growing energy company with highest profitability and with our combined zeal, commitment, experience and expertise, your Directors look forward to a year of fruitful operations. Your Directors acknowledge the guidance and support of the Ministry of Petroleum & Natural Gas, all other Ministries and Agencies in Central and State Governments. Your Directors express their gratitude and thanks to the Shareholders, Auditors, Customers, Suppliers and other business partners/associates for their continued co-operation and patronage. Your Directors wish to place on record their deep sense of appreciation for the devoted services of all Oil Indians for its success.

For and on behalf of the Board of Directors. Sd/- (S.K.Srivastava) Chairman & Managing Director

Dated: 30.06.2015 Place: Noida


Mar 31, 2014

Dear Members,

On behalf of the Board of Directors, I hereby present the 55th Annual Report on the operations of the Company containing its Audited Statements of Accounts together with the Auditors'' Report and Comments of the Comptroller and Auditor General of India for the year ended March 31, 2014.

1. SIGNIFICANT HIGHLIGHTS

The financial and operational performance of the Company is as under:-

i) Financial highlights

During the year, OIL has earned total revenue of Rs.11,241.34 crore against Rs. 11,456.32 crore in the previous year. The crude oil production* was 3.466 MMT in the year FY14 against 3.661 MMT in FY13. Decrease in total revenue was due to lower crude oil production and higher subsidy share borne by the company. The Profit before Tax (PBT) earned in FY14 was Rs. 4,410.44 crore against PBT of Rs. 5,283.23 crore in the FY13. After deduction of the taxes, Profit after Tax (PAT) was Rs. 2,981.30 crore in FY14 against Rs. 3,589.34 crore in FY13, showing a decrease of Rs. 608.04 crore over the previous year.

On expenditure side, the employee cost increased to Rs.1,473.18 crore in FY14 from Rs. 1,310.63 crore in FY13 on account of higher provision for superannuation benefit. Depreciation, Depletion and Amortization (DD&A) cost has increased to Rs. 1,177.02 crore in FY14 from Rs. 837.63 crore in FY13 due to higher write off of dry wells and higher capitalization of assets & wells. Other components were comparable with previous year.

During the year, Company has made plan investment of Rs. 2,938 crore which is highest in any year by OIL till date and expects to increase in future with the increase in exploratory and operational activities. The summarized Profit and Loss Account is given below:

*Excluding JV Share.

(Rs. in crore)

PARTICULARS 2014 2013

Income from Operations 9612.70 9947.57

Other income 1628.64 1508.75

EBDITA 5656.24 6123.46

Finance Cost 68.78 2.60

Depreciation, Depletion, 1177.02 837.63 Amortization and impairment

Profit Before Tax (PBT) 4410.44 5283.23

Profit after Tax (PAT) 2981.30 3589.34

Appropriations

Interim Dividend 1262.39 1382.61

Tax on Interim Dividends 214.54 224.29

Proposed Final Dividend 30.06 420.80

Tax on Proposed Dividend 5.11 71.51

Transfer to General Reserve 1469.20 1490.13

Total Appropriations 2981.30 3589.34

ii) OPERATIONAL HIGHLIGHTS

PRODUCTION OF CRUDE OIL

The crude oil production was 3.466 MMT against production of 3.661 MMT in FY13. Main reason for shortfall in achievement is direct, indirect and consequential losses arising out of blockades, bundhs etc in operational areas and more than expected decline rates in well head potential of existing wells.

LPG PRODUCTION

During 2013-14, LPG production was 46640 tonnes against production of 46010 tonnes in FY 2013. Along with LPG, a total of 24385 tonnes of condensate were also recovered as by-product.

NATURAL GAS PRODUCTION

The natural gas production of 2625.81 MMSCM was achieved from fields in Assam, Arunachal Pradesh and Rajasthan during the year. The Sale of Natural Gas during the year was 2090.11 MMSCM.

RENEWABLE ENERGY

The 13.6 MW and 54 MW Wind Energy Power Projects were established in Jaisalmer, Rajasthan in the Financial Years 2011-12 & 2012-13, produced 21.0 million units and 85.51 million units respectively in the FY 2013-14 resulting in a revenue of Rs. 58.24 crore (including generation based incentives etc.).

2. ACREAGE

Your Company''s current in-country operations spreads over 5 (five) onshore Petroleum Exploration License (PEL) and 22 (Twenty Two) Petroleum Mining Lease (PML) areas in the states of Assam, Arunachal Pradesh, Mizoram, Andhra Pradesh, Puduchery and Rajasthan. Besides, your Company is venturing into shallow and deep water in KG Basin, Cauvery, Andaman and Mumbai offshore either jointly or in partnership with other consortium partners.

Your Company, at the end of NELP IX bidding round as on 31.03.2014 is holding Participating Interest (PI) in total of 27 NELP Blocks out of which OIL has the right of operatorship / joint operatorship in 12 blocks and as non-operator in 15 blocks. In addition your Company is holding 40% PI in one CBM Block (AS-CBM-2008/ IV) in Assam.

3. OIL AND GAS RESERVES

Your Company has made seven oil and gas discoveries during the year, six from Upper Assam Basin and one from its operated Shakthi block, Gabon.

Your Company has a strong oil and gas reserves base as furnished below:

Particulars 1P 2P 3P

Oil Condensate (MMSKL) 38.9238 97.3055 138.0075

GAS (BCM) 24.7170 47.4380 69.8040

O OEG (MMSKL) 63.5801 143.5286 205.9580

4. CAPITAL STRUCTURE

The paid-up capital of the Company is Rs 601.14 crore divided into 60,11,35,955 shares of Rs.10/- each. During the year, the Government of India transferred 47,53,745 (0.79%) of its holding in OIL in favour of CPSE Exchange Traded Fund (ETF) on 27.03.2014.

Consequently, the Government of India''s holding in OIL reduced from 68.43% to 67.64%. The Earning per Share (EPS) of the Company as on March 31, 2014 is Rs. 49.59/- as compared to Rs. 59.71/- at the end of previous financial year.

5. DIVIDEND

Based on the provisional financial trend, your Company paid First and Second Interim Dividend @ 110% and 100% respectively for the year, totaling to Rs. 1262.39 crore. The Board of Directors is now pleased to recommend a final dividend @ 5% on the paid up capital amounting to Rs. 30.06 crore, subject to the approval of the shareholders at the ensuing Annual General Meeting.

6. HUMAN ASSETS

Human Resource Management at OIL is an integrated approach focusing on Organization''s faith to work with people and work through them to manage change and strive for continued excellence. OIL works towards building positive employee-organization relationship through nurturing initiatives, innovations and aspirations with best HR practices and commitment and provide professional working environment. HR policies and practices are always sensitive to employees needs. As on 31st March 2014, Company has 7813 employees consisting of 1441 Executives and 6372 Unionised Employees in the Company.

7. SPORTS

OIL believes that sports today is an integral part of all round development of human personality and achieving excellence in sports has real bearing on national prestige and morale. Therefore, employees are encouraged to play and excel in sports. As a result of above encouragement, Oil India participated in National and International Sports Events in Table Tennis, Cricket, Chess and brought laurels to the Company.

8. IMPLEMENTATION OF GOVERNMENT DIRECTIVES FOR PRIORITY SECTIONS

The Company attempts to comply with the directives of the Government of India for priority sections of the society. The representations of various priority sections in Executive and Unionized Employees categories in the Company as on March 31, 2014 is as under:

CATEGORY SC ST OBC Minority PWD Women

Executives 187 127 312 108 7 107

Unionised 439 743 1884 410 56 250

Employees

Total 626 870 2196 518 63 357

9. CORPORATE GOVERNANCE

As stipulated under Clause-49 and 55 of the Listing Agreement, the Management Discussion & Analysis Report, Report on Corporate Governance and the Business Responsibility Report have been incorporated as Annexure to the Directors'' Report. Your Company also complies with the Secretarial Standards issued by ICSI and Corporate Governance Guidelines enunciated by the Department of Public Enterprises, Government of India.

10. RTI ACT 2005

In order to promote transparency and increased accountability, Company has put up in place the mechanism for implementation of Right to Information Act 2005. CPIO / CAPIO at offices across the country have been nominated to provide the information to the citizen of the country under the Act. The names, designation and address of the CPIO/CAPIO are available on the website. Company has also put up an information manual on the web containing details like organization structure, powers and duties of officers, rules and regulations, directory of officers, remuneration of officers, remuneration of workmen and information of the public at large. Complaints received during the year were expeditiously replied.

11. IMPLEMENTATION OF OFFICIAL LANGUAGE (RAJBHASHA)

In pursuance of Official Language Policy / Act / Rules / Orders of the Govt. of India efforts are continuing towards increasing the use of Hindi in Official work. Hindi Workshops were conducted regularly so as to enable officers and employees to work in Hindi conveniently and efficiently. Further, the Company has formulated various incentive schemes for promotion of

Hindi. Meetings of Official Language Implementation Committee were held in each quarter. The responsibility of the Chairmanship of Duliajan Town Official Language Implementation Committee (TOLIC) was also borne by our Company. In-house Journal "OIL NEWS" was published in Trilingual form i.e. Assamese, Hindi and English. Hindi Month was observed in a befitting manner in all spheres of OIL. To propagate Official Language Hindi, amongst employees and school going children, various literary competitions were held during Hindi Month Celebration. Important documents, to be laid on the table of Parliament, were also brought out in bilingual form.

Further, story collections of Dr Nagen Saikia, a famous writer of Assamese was translated and published in Hindi by OIL Corporate Office, Noida. This is in appreciation of close link between the two languages and to popularize Assamese writings in hindi.

Nominated Executives and Employees of the Company participated in Official Language Conference of Petroleum PSUs held under the direction of MOP&NG at Kochi on 14th and 15th February, 2014. OIL Management always encourages participation of its employees in various seminars and conferences, including Vishwa Hindi Sanmelan held Overseas.

12. VIGILANCE

"Vigilance Wing" is headed by Chief Vigilance Officer, which helps in ensuring functioning of the organization in a transparent manner. Main thrust is placed on the preventive vigilance rather than punitive vigilance. Towards this objective, several Contract & Procurement Operation & maintenance related system improvement measures were undertaken. Intensive inspections were carried out and corrective measures were suggested.

A Vigilance Awareness Week was organized during the year at corporate office and other office locations. In order to spread awareness and sensitize employee against harmful effects of corruption, various competitions were organised across your Company. KIT (Keep In Touch) and CTY (Catch Them Young) awareness programs were conducted for executives of all levels to sensitize them on Contracts & Procurement procedures, Conduct, Discipline and Appeal Rules and Central Vigilance Commission (CVC) guidelines etc.

13. RESEARCH AND DEVELOPMENT

The Company accords utmost importance to up- gradation of technologies and expertise in various areas of activities through its own Research & Development Centre. During the year, the Company formulated Revised R&D Policy keeping in view the DPE Guidelines on R&D. Further, Company undertook various R & D projects during the year over and above those committed under the MoU. The details of specific areas of Research and Development (R&D), benefits derived as a result of R&D efforts, future plan of action and R&D expenditure are given in the Annexure to the Report.

14. RECENT DEVELOPMENTS

14.1 Acquisition of 4 per cent. participating interest in Mozambique Offshore Area Rovuma 1 field OIL, together with OVL, acquired a 10 percent participating interest in the Mozambique block in the Area 1 Rovuma Field by acquiring the shares of Videocon Mozambique Rovuma 1 Limited (name changed to Beas Rovuma Energy Mozambique Ltd). OIL holds a 40 per cent stake in BREML which translates to 04 per cent participating interest in Area 1, Rovuma off shore.

14.2 Acquisition of 45 per cent. participating interest in Bangladesh offshore block SS04 and block SS09.

During the Bangladesh offshore bidding round 2012, OIL and OVL combine won bid for SS04 and SS09 blocks. The award was announced in February,2014. SS04 and SS09 are shallow sea blocks expected to contain oil and gas. OIL and OVL have PI of 45% each and 10% PI belongs to BAPEX (Bangladesh Petroleum Exploration and Production Co. Ltd.)

14.3 Acquisition of 50% shareholding of WorldAce Investments Ltd (Licence 61 in Tomsk region Russia)

On 4th July 2014, OIL completed acquisition of 50% shareholding of WorldAce Investments Ltd., a Cyprus based wholly owned subsidiary of M/s. Petroneft Resources Ltd. (PTR) which owns Licence 61 in Tomsk region in Russia through LLC Stimul-T, a

Russia based wholly owned subsidiary. This marks OIL''s entry into Russia and a significant contribution to company''s overseas E&P portfolio.

14.4 Acquisition of 60 per cent. participating interest in Myanmar offshore block M-4 and block YEB

OIL together with M/s. Oil Max Energy Pvt. Limited, M/s. Mercator Limited and M/s. Oil Star (local company of Myanmar) (known as OIL consortium) won two blocks namely M-4 and YEB in bidding round announced by Government of Myanmar. The blocks were awarded in May,2014. M-4 is gas bearing block and YEB is oil bearing block. OIL''s participating interest is 60% in each block and OIL is the operator. The Production Sharing Contracts for the blocks are yet to be signed.

14.5 Acquisition of 5 per cent equity interest in IOCL

In February 2014, the GoI approved the sale of 10 per cent. equity interest in IOCL, which is equivalent to 242,795,248 shares of IOCL. The acquisition of these shares took place on 14th March 2014 in an off-market transaction, with OIL and ONGC each acquiring five per cent of the issued share capital of IOCL.

15. SUBSIDIARIES/ COMPANIES IN WHICH OIL HAS SHAREHOLDING

15.1 Subsidiaries

i) Oil India Sweden AB

Oil India Sweden AB is a wholly owned subsidiary of Oil India Limited, India. The company was incorporated on the 20th of November 2009 as a private limited company (AB). The activities of the Company are: to own shares in other companies, perform administrative tasks and associated activities; to incorporate, to participate in and to finance companies or businesses etc.

ii) Oil India Cyprus Ltd.

Oil India Cyprus Limited was incorporated in Cyprus on 21st October 2011 as a private limited liability Company under the Cyprus Companies Law, Cap. 113. Oil India Limited holds 76% in the Company. The balance 24% is held by Oil India Sweden AB.

iii) Oil India (USA) Inc.

Oil India (USA) Inc. is a Wholly Owned Subsidiary of OIL with Branch Office at Houston, USA. It holds 20% stake in Niobrara Shale Oil and Gas Asset. The Company was incorporated on 26th September, 2012.

iv) Oil India International Limited (OIIL)

OIIL, the 100% subsidiary of Oil India Limited was incorporated on 20.09.2013. The registered office of OIIL is situated in New Delhi. OIIL received the commencement of business certificate on 28.02.2014.

v) Oil India International B.V

Oil India International B.V, a 100% subsidiary of OIL was incorporated in Netherlands on 2nd May, 2014.

15.2 Companies in which OIL has shareholding

i) Numaligarh Refinery Ltd (NRL)

Numaligarh Refinery Limited was incorporated in 1993. NRL is a Category -I Mini Ratna PSU having a 3 MMTPA Refinery at Numaligarh, in Golaghat District of Assam. The Company is a subsidiary of Bharat Petroleum Corporation Limited. OIL is holding 26% of the paid up equity in NRL.

ii) Brahmputra Cracker and Polymer Ltd (BCPL)

BCPL was incorporated on January 8, 2007 with the objective of establishing a gas cracker project complex at Lepetkata, Dibrugarh, Assam, to, inter alia, process natural gas, naphtha or any petroleum product and to distribute and market petrochemical products in India and abroad. The registered office of BCPL is located at Guwahati, Assam, India. OIL holds 10% equity share capital of BCPL.

iii) Suntera Nigeria 205 Ltd.

OIL acquired a 25% equity stake in Suntera Nigeria 205 Limited, Nigeria pursuant to a Share Purchase Agreement signed with Suntera Cyprus and IOCL on August 31, 2006. Suntera Nigeria 205 Limited was incorporated with the main object to engage in the petroleum business including the prospecting and exploration for and production and development of crude oil and natural gas.

iv) DNP Ltd.

DNP Limited was incorporated on June 15, 2007. The main object of DNP Limited is acquisition, transportation and distribution of natural gas in all forms. The registered office of DNP Limited is situated at Guwahati, Assam. Our Company has acquired a 23% equity stake in DNP Limited.

v) IndOil Netherlands B.V

Oil India Sweden AB owns 50% of the shares in Indoil Netherlands B.V which in turn holds 7 per cent Equity interest in Petrocarabobo SA (joint venture company), Project Carabobo-1, Venezuela. The principal activities of Indoil Netherlands B.V. are holding in exploration, production, marketing, trade, transport and extraction of oil, gas, hydrocarbons and minerals.

vi) Beas Rovuma Energy Mozambique Ltd. (BREML)

OIL holds 40% share in BREML. BREML holds 10% PI in the Rovuma Area 1 Offshore Block in Mozambique.

vii) WorldAce Investments Ltd.

OIL holds 50% share in World Ace Investments Ltd, a company incorporated in Cyprus. WorldAce Investments Ltd. holds 100% share in LLC Stimul-T, Russia which is the license holder for License 61, Tomsk Region, Russia.

16. STATUTORY REQUIREMENTS

None of the Directors of your Company is disqualified as per provisions of Section 164(2) of the Companies Act, 2013. Your Directors have made necessary disclosures as required under various provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Information as required under Section 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I forming part of this Report. Details of the Employees who drew remuneration exceeding the limits laid down under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 (as amended from time to time) are uploaded on OIL''s website.

17. STATUTORY AUDITORS AND COST AUDITORS

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s Saha Ganguli & Associates and M/s B M Chatrath & Co. were appointed as Joint Statutory Auditors for the financial year 2013-14. Comments of the C&AG forms part of this Report.

The Cost Audit Report for the financial year 2012-13 was filed within the statutory time limit. M/s Mani & Co. is the cost auditor of the Company for the financial year 2013-14. The report is being finalized and will be filed as per the schedule.

18. AWARDS AND RECOGNITIONS

Oil India Limited received the following awards during the year 2013-14:

(i) Corporate Excellence Award 2013 for Best Investor Relations in June, 2013 instituted by Star of the Industry Group.

(ii) "BT Star Best National PSU" and "BT Star Best PSU in Excellence in Market capitalization" in June, 2013 conferred by Bureaucracy Today.

(iii) The Golden Peacock Environment Management Award in July, 2013.

(iv) The 1st edition of the PSU awards in the category- Human Resource Utilization, in July, 2013.

(v) The Minetech Award 2013.

(vi) The reputed "EFI (Employers'' Federation of India) national award for excellence in employee relations for strong commitment to employee relations" in the pan India category in October, 2013.

(vii) In the 7th ENERTIA Awards 2013 - India''s Awards for Sustainable Energy & Power, OIL was declared "Winner" in the Category V: Fuels & Resources- Award for Best Energy Resources & Oil & Gas Sector Organisation / Company of the year.

(viii) Case Study on Project "RUPANTAR" a flagship and award winning CSR Project of OIL received the Best Case Study Award.

(ix) The India Pride Award 2013-14, in December 2013, for Excellence in CSR in the category Public Sector

Undertakings – Central instituted by the Dainik Bhaskar group.

(x) "Best Employer, India 2013" award by M/s Aon Hewitt, the HR Consulting and Outsourcing Agency. The Company also bagged "The Aon Hewitt Voice of Employee Award, Public Sector Enterprises, India 2013."

(xi) In Petrotech-2014 held at the India Exposition Mart Ltd., Greater Noida, OIL stall was declared the Winner in the Best Display in Raw Space category.

(xii) In January,2014, OIL received Greentech Environment Award 2013 in Gold Category in Petroleum Exploration Sector for sustainable achievement in environment management.

(xiii) New Delhi Institute of Management (NDIM), a premier MBA School, awarded OIL for exemplary leadership and for contributing immensely to the societal issues. The award is in recognition of OIL''s various social welfare programs/activities and CSR projects.

(xiv) Vigilance Excellence Award 2013-14 at a Conclave of Vigilance Officers organized by the Institute of Public Enterprise (IPE) at Hyderabad.

(xv) CIDC Partners in Progress Trophy 2014 in March,2014, for its display of utmost commitment & drive to create a vibrant work environment for the construction fraternity especially for achieving targets of "Mission Skilling India", under various CIDC initiatives.

(xvi) OIL was conferred with ''CAG Pick of the Year'' award by Dalal Street Investment Journal (DSIJ), India''s No.1 investment magazine which organized the PSU Awards 2013 to honour the Public Sector Undertaking (PSU) for their commendable performance.

(xvii) The Greentech HR Award for training Excellence in "Gold Category" and Asia''s Best Employer Brand for Excellence in Training.

19. CHANGES IN THE BOARD OF DIRECTORS

(i) Pursuant to MOP&NG Letter No. C-31014/1/2012-CA dated. 29.07.2013, Mrs R.S. Borah assumed charge of the post of Director (Finance) of Oil India Limited w.e.f 01.10.2013 vice Shri T.K. Ananth Kumar who superannuated from the services of the Company on 30.09.2013.

(ii) Pursuant to MOP&NG Letter No. O-23012/1/2012- ONG-I dated. 31.01.2014, Shri B.N.Talukdar was relieved from the post of Director (E&D), OIL on 05.02.2014 and he took charge of the post of Director General, DGH on 06.02.2014.

(iii) Pursuant to MOP&NG Letter No. C-31033/1/2012-CA/ FTS:18688 dated. 26.02.2014, Shri Subhasish Panda, Director (E-III), MOP&NG was appointed as the Government Nominee Director (w.e.f 26.02.2014) on the Board of Oil India Limited vice Mrs Rashmi Aggarwal, who had ceased to be Government Nominee Director on the Board of Oil India Limited w.e.f 20.01.2014.

20. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March 2014, all applicable accounting standards have been followed along with proper explanations relating to material departures;

(ii) that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors had prepared the accounts for the financial year ended 31st March 2014 on a ''going concern'' basis.

21. ACKNOWLEDGEMENT

With the initiatives emanating from the vision of making the Company as fastest growing energy company with highest profitability and with our combined zeal, commitment, experience and expertise, your Directors look forward to a year of fruitful operations. Your Directors acknowledge the guidance and support of the Ministry of Petroleum & Natural Gas, all other Ministries and agencies in Central and State Governments. Your Directors express their gratitude and thanks to the Shareholders, Customers, Suppliers and other business partners/associates for their continued co-operation and patronage. Your Directors wish to place on record their deep sense of appreciation for the devoted services of all Oil Indians for its success.

For and On behalf of the Board of Directors.

Sd/- (S K Srivastava) Chairman & Managing Director

Dated : 14.07.2014 Place : Noida


Mar 31, 2013

Dear Members,

The behalf of the Board of Directors, I hereby present the 54th Annual Report on the business and operations of the Company containing its Audited Statements of Accounts together with the Auditors'' Report and Comments of the Comptroller and Auditor General of India for the year ended March 31, 2013.

1. SIGNIFICANT HIGHLIGHTS

The financial and operational performance of the Company is as under:-

i) FINANCIAL HIGHLIGHTS

During the year, OIL has earned total revenue of Rs. 11456.32 crore against Rs. 11279.90 crore. The Crude Oil production* was 3.661 MMT in the year against 3.847 MMT in FY 12. Increase in total revenue was contributed by increased realization on account of Natural Gas, LPG and condensate, claims towards under recovery of Natural Gas and other Income which rose to Rs. 1509 Crore from Rs. 1416 Crore in previous year. The PBT earned was Rs. 5283.23 against PBT of Rs 5101.86 crore in the FY12. After deduction of the taxes, PAT was Rs.3589.34 Crore against PAT of Rs. 3446.92 crore in FY 12, registering an increase of Rs. 142.42 Crore over the previous year.

On Expenditure side the cess increased drastically from 17% to 28% in FY 2012-13 on account of increase in cess rate from Rs. 2500 per MT to Rs. 4500 per MT. It resulted in additional burden of Rs 747.00 Crore as statutory levies. Other components were comparable with previous year.

During the year, company has made capital investment of Rs.2890 Crore which is highest capital expenditure incurred by OIL till date and expects to increase in future with the increase in exploratory and operational activities. The summarized Profit and Loss Account is furnished below:

*Excluding JV Share.

(Rs. in Crore)

Particulars 2013 2012

Income from Operations 9947.57 9863.23

Other income 1508.75 1416.67

EBDITA 6123.46 5996.47

Finance Cost, Depreciation, 840.23 894.61 Depletion, amortization and impairment

Profit Before Tax 5283.23 5101.86

Profit After Tax 3589.34 3446.92

APPROPRIATIONS:

Interim Dividend 1382.61 841.59

Tax on Interim Dividends 224.29 136.53

Final Dividend 420.80 300.56

Tax on Proposed Dividend 71.51 48.77

Transfer to General Reserve 1490.13 2119.47

TOTAL APPROPRIATIONS: 3589.34 3446.92

ii) OPERATIONAL HIGHLIGHTS PRODUCTION CRUDE OIL

The crude oil production* was 3.661 MMT which is marginally lower than production of 3.847 MMT in FY 2012. Main reason for shortfall in achievement is direct, indirect and consequential losses arising out of blockades, bundhs etc in operational areas and more than expected decline rates in well head potential of existing well. Such incidents affected the operations in FY 2012-13.

LPG PRODUCTION

During 2012-13, LPG Production was 46010 tonnes which is as per the MOU target of 46000 tonnes set in financial year 2012-13, however 6010 tonnes lesser than previous financial year 2011-12. Along with LPG, a total of 24380 tonnes of condensate were also recovered as by-product. The LPG produced is delivered to IOCL. The plant efficiency was 99.01% compared to designed figure of 98.00% and availability of LPG recovery plant was 99.71%.

NATURAL GAS PRODUCTION

The highest ever natural gas production of 2639.21 MMSCM achieved from Assam, Arunachal Pradesh and Rajasthan fields during the year. Accordingly, sales of 2080.23 MMSCM of Natural Gas was achieved during the year.

ACREAGE

Your Company''s current in-country operations spreads over onshore Petroleum Exploration License (PEL) and Petroleum Mining Lease (PML) areas in the states of Assam, Arunachal Pradesh, Mizoram, Andhra Pradesh, Puduchery and Rajasthan. Besides, your Company is venturing into shallow and deep water in KG Basin, Cauvery, Andaman and Mumbai offshore either jointly or in partnership with other consortium partners. Your Company is operating in 7 nominated PEL and 21 PML areas, allotted under the nomination regime in the states of Assam, Arunachal Pradesh and Rajasthan.

Your Company at the end of NELP IX bidding round as on 31.03.2013 is holding Participatory Interest (PI) in total of 27 NELP Blocks out of which OIL has the right of operatorship / joint operatorship in 12 and as non-operator in 15 blocks. In addition your Company is holding 40% PI in one CBM Block (AS-CBM-2008/ IV) in Assam.

OIL AND GAS RESERVES

Your Company has made eleven oil and gas discoveries during the year from Assam and Rajasthan of which nine discoveries are from Upper Assam basin and two from Bikaner Nagaur Basin of Rajasthan.

Your Company has a strong oil and gas reserves base as furnished below:

Particulars 1P 2P 3P

Oil Condensate (MMSKL) 41.42 95.14 135.08

GAS (BCM) 28.76 50.53 73.57

O OEG (MMSKL) 70.18 145.66 208.65

2. CAPITAL STRUCTURE

During the year, Company rewarded the shareholders with bonus shares in the ratio of 3:2 in the month of April 2012. Post bonus paid-up capital of the Company is Rs 601.14 crore divided into 60,11,35,955 shares of Rs.10/- each. Further Government of India divested 10% paid-up capital of the Company (60113157 shares) to the general public through Offer for Sale (OFS) route in February, 2013 and it was very successful. OFS got oversubscribed 2.6 times with participation of many FIIs and Govt could realize Rs 3141.39 crore. Post OFS, Government holding reduced to 68.43%. The Earning per Share of the Company as on March 31, 2013 is Rs.59.71/- as compared to Rs. 57.34/- at the end of previous financial year.

3. DIVIDEND

Your Company paid 1st and 2ndInterim Dividend @ 110% and 120% respectively totaling to Rs 1382.61 crore, based on the provisional financial trend of the Company. The Board of Directors is now pleased to recommend a final dividend @ 70% on the paid up capital amounting to Rs 420.80 crore, subject to the approval of the shareholders at the ensuing Annual General Meeting.

4. HUMAN ASSETS

Human Resource Management at OIL is an integrated approach focusing on Organization''s faith to work with people and work through them to manage change and strive for continued excellence. OIL works towards building positive employee- organization relationship through nurturing initiatives, innovations and aspirations with best HR practices and commitment and provide professional working environment. HR policies and practices are always sensitive to employees needs. As on 31st March 2013, Company has 8076 employees consisting of 1446 Executives and 6630 Unionised Employees in the Company.

5. SPORTS

OIL believes that sports today is an integral part of all round development of human personality and achieving excellence in sports has real bearing on national prestige and morale. Therefore, employees are encouraged to play and excel in sports. As a result of above encouragement, Oil India participated in National and International Sports Events in Table Tennis, Cricket, Chess and brought laurels to the Company. Besides this, 6 Oil Indians are part of National Squad of Golf.

6. IMPLEMENTATION OF GOVERNMENT DIRECTIVES FOR PRIORITY SECTIONS

The Company complies with the directives of the Government of India for priority sections of the society. The representations of various priority sections in Executive and Unionized Employees Categories in the Company as on March 31, 2013 is as under:

CATEGORY SC ST OBC Minority PWD Women

EXECUTIVES 169 125 307 110 07 102

UNIONISED EM- 440 761 1947 435 56 266 PLOYEES

Total 609 886 2254 545 63 368

7. CORPORATE GOVERNANCE

As stipulated under Clause-49 and 55 of the Listing Agreement, the Management Discussion & Analysis Repoort, Report on Corporate Governance and the Business Responsibility Report have been incorporated as Annexure to the Directors'' Report. Your Company also complies with the Secretarial Standards issued by ICSI and Corporate Governance Guidelines enunciated by the Department of Public Enterprises, Government of India.

8. RTI ACT 2005

In order to promote transparency and increased accountability, Company has put up in place the mechanism for implementation of Right to Information Act 2005. CPIO / CAPIO at offices across the country have been nominated to provide the information to the citizen of the country under the Act. The names, designation and address of the CPIO/CAPIO are available on the website. Company has also put up an information manual on the web containing details like organization structure, powers and duties of officers, rules and regulations, directory of officers, remuneration of officers, remuneration of workmen and information of the public at large. Complaints received during the year were expeditiously replied.

9. IMPLEMENTATION OF OFFICIAL LANGUAGE (RAJBHASHA)

In pursuance of Official Language Policy / Act / Rules / Orders of the Govt. of India efforts are continuing towards increasing the use of Hindi in Official work. Hindi Workshops were conducted regularly so as to enable officers and employees to work in Hindi conveniently and efficiently. Meetings of Official Language Implementation Committee were held in each quarter. The responsibility of the Chairmanship of Duliajan Town Official Language Implementation Committee (TOLIC) was also borne by our Company, to attend Hindi training classes and to write more and more words in Hindi through Incentive Scheme formulated by the Company. In-house Journal "OIL NEWS" was published in Trilingual form i.e. Assamese, Hindi and English. Hindi Month 2012 was observed in a befitting manner from 01.09.12 to 30.09.12 at Field Headquarters Duliajan. To propagate Official Language Hindi, amongst employees and school going children, various literary competitions were held during Hindi Month Celebration. Important documents, to be laid on the table of Parliament, were also brought out in bilingual form.

10. VIGILANCE

"Vigilance Wing" is headed by Chief Vigilance Officer, which helps in ensuring functioning of the organization in a transparent manner. Main thrust is placed on the preventive vigilance rather than punitive vigilance. Towards this objective, several Contract & Procurement Operation & maintenance related system improvement measures were undertaken. Intensive inspections were carried out and corrective measures were suggested.

A Vigilance Awareness Week was organized during the year at corporate office and other office locations. In order to spread awareness and sensitize employee against harmful effects of corruption, various competitions were organised across your company.

KIT and CTY awareness programs were conducted for executives of all levels to sensitize them on Contracts & Procurement procedures, CDA rules and CVC guidelines etc.

11. RESEARCH AND DEVELOPMENT

The Company accords utmost importance to up- gradation of technologies and expertise in various areas of activities through its own Research & Development Centre. Ministry of Heavy Industries and Public Enterprises has placed great emphasis on the role of R&D in Central Public Sector Enterprises (CPSEs). Although an informal R&D policy was in existence in OIL since inception of R&D, a New R&D Policy was formulated and was approved for implementation by the Board of Directors. Company undertook various R & D projects during the year besides those committed under the MoU. The details of specific areas of Research and Development (R&D), benefits derived as a result of R&D efforts, future plan of action and R&D expenditure are given in Annexure -I.

12. SUBSIDIARY/JOINT VENTURE SUBSIDIARIES

i) Oil India Sweden AB

Oil India Sweden AB is a wholly owned subsidiary of Oil India Limited, India. The company was incorporated on the 20th of November 2009 as a private limited company (AB). The activities of the Company are to conduct owning of shares in other companies, perform administrative tasks and associated activities; to incorporate, to participate in and to finance companies or businesses etc.

ii) Ind Oil Netherlands BV

Oil India Sweden AB owns 50% of the shares in Indoil Netherlands B.V. The principal activities of the 50% owned joint venture Indoil Netherlands B.V. are holding in exploration, production, marketing, trade, transport and extraction of oil, gas, hydrocarbons and minerals.

iii) Oil India Cyprus Ltd

Oil India Cyprus Limited was incorporated in Cyprus on 21 October 2011 as a private limited liability Company under the Cyprus Companies Law, Cap. 113. Oil India Limited holds 76% in the Company. The balance 24% is held by Oil India Sweden AB.

iv) Oil India USA Inc.

OIL formed 100% wholly owned subsidiary in Texas, USA in the name of Oil India (USA) Inc with Branch Office at Houston started functioning from end Sept. 2012.

JOINT VENTURES

i) Numaligarh Refinery Limited (NRL)

Numaligarh Refinery Limited was incorporated in 1993. NRL is a Category -I Mini Ratna PSU having a 3 MMTPA Refinery at Numaligarh, in Golaghat District of Assam. The Company is a subsidiary of Bharat Petroleum Corporation Limited. OIL is holding 26% of the paid up equity in NRL.

ii) Brahmaputra Cracker and Polymer Limited (BCPL)

BCPL was incorporated on January 8, 2007 with the objective of establishing a gas cracker project complex at Lepetkata, Dibrugarh, Assam, to, inter alia, process natural gas, naphtha or any petroleum product and to distribute and market petrochemical products in India and abroad. BCPL received its certificate of commencement of business on September 12, 2007. The registered office of BCPL is located at Guwahati, Assam, India. OIL holds 10% Equity Share Capital of BCPL.

iii) Suntera Nigeria 205 Limited

Our Company acquired a 25% equity stake in Suntera Nigeria 205 Limited, Nigeria pursuant to a share purchase agreement dated August 31, 2006 with Suntera Cyprus and IOCL. Suntera Nigeria 205 Limited was incorporated with the main object to engage in the petroleum business including the prospecting and exploration for and production and development of crude oil and natural gas. The registered office of Suntera Nigeria is at Nigeria.

iv) Duliajan Numaligarh Pipeline (DNP) Limited

DNP Limited was incorporated on June 15, 2007. The main object of DNP Limited is acquisition, transportation and distribution of natural gas in all forms. The registered office of DNP Limited is situated at Guwahati, Assam. Our Company has acquired a 23% equity stake in DNP Limited, pursuant to a Supplemental Agreement dated March 17, 2009.

13. STATUTORY REQUIREMENTS

Section 274(1) (g) of the Companies Act, 1956 is not applicable to the Government Companies. However, none of the Directors of your Company is disqualified as per provisions of Section 274 (1) (g) of the Companies Act, 1956. Your Directors have made necessary disclosures as required under various provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement. Information as required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I forming part of this Report. Details of the Employees who drew remuneration exceeding the limits laid down under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 (as amended from time to time) are attached as Annexure II.

14. STATUTORY AUDITORS AND COST AUDITORS

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s SRB and Associates and M/s Saha Ganguli and Associates were appointed as Joint Statutory Auditors for the financial year 2012-13. Geographical Segment Reporting annexed as Annexure III. Comments of the C&AG forms part of this Report.

The Cost Audit Report for the financial year 2011-12 was filed with in the statutrytime limit. M/s Mani & Co. is the cost auditor of the Company for the financial year 2012-13. The report is being finalized and will be filed as per the schedule.

15 AWARDS AND RECOGNITIONS

Oil India Limited received the following awards/ recognitions/certifications during the year 2012-13:

- ''IPE CSR Corporate Governance Award-2012'' conferred by Institute of Public Enterprise (IPE) in recognition of its best practices followed in CSR activities.

- Petrotech 2012 - Special Technical Award in Sustainability & Corporate Social Responsibility awarded during Petrotech 2012 at New Delhi.

- ''Golden Peacock Award for Corporate Social Responsibility'' for the year 2012 in the National Category in recognition of OIL''s ongoing CSR activities, awarded at the "Dubai Global Convention- 2012 and 7th International Conference on Social Responsibility" held at Dubai in April, 2012.

- The ''13th Annual Greentech Environment Award - 2012'' awarded by Greentech Foundation, New Delhi.

- The ''Golden Peacock Occupational Health and Safety Award (GPOHSA) - 2012,'' presented at the 14th World Congress Environment Management held in July, 2012 at New Delhi.

- The Annual Greentech HR Award 2012-13 under Gold Category for "TRAINING EXCELLENCE" for the 2nd consecutive year.

- Rajbhasha Prerak Shield awarded to OIL, PHQ, Guwahati by the Rastrabhasha Swabhimman Nyash (Bharat), New Delhi on the occasion of All India Official Language Conference held at New Delhi in April, 2012.

- 1st Rajbhasha Running Shield awarded to PHQ, Guwahati by Town Official Language Implementation Committee (PSU''s), Guwahati in December, 2012 for the second consecutive year.

- 1st Rajbhasha Shield awarded to PHQ, Guwahati by the Official Language Department, Ministry of Home Affairs, Govt. of India in April, 2013 for the 3rd consecutive year.

- Shri SK Srivastava Chairman and Managing Director, received the Global Excellence Award in the Petroleum Sector at the 3rd World Petrocoal Congress, New Delhi, for his contribution to the Petroleum industry.

- Shri S.K.Srivastava was also awarded the "CEO with HR Orientation" by the World HR Congress at Mumbai in February, 2013.

- Shri T.K.Ananth Kumar, Director (Finance) was awarded the "CFO 100 Roll of Honour" for the second time in succession, under the category "Winning Edge" in Risk Management.

- Shri N.K.Bharali, Director (HR&BD) received an award and citation at the EQ Leadership Summit, February, 2013, Mumbai, for "Outstanding contribution to leadership development in OIL."

- Fire Service, Duliajan & Moran re-certified by M/s. DNV Kolkata for ISO 9001:2008 (Quality Management System), ISO 14001:2004 (Environmental Management System) and OHSAS 18001:2007.

- OIL Corporate Office Building, at Sector: 16A, Plot: 19, Noida, accredited with Bureau of Energy Efficiency (BEE) - 3 Star Label Certification with effect from 20th March,2013 for a period of 5 years up to 19th March, 2018 under the ''Composite Climate Zone'' category.

- Duliajan PowerStationhascompliedwithrequirements of ISO 9001:2008 till 26th January 2013. Thereafter a new contract was awarded for which audit is to be carried out for recertification.

16 CHANGES IN THE BOARD OF DIRECTORS

In terms of letter No. C-34011/19/2005-CA dated 03.09.12 issued by MOP&NG, Prof. Shekhar Chaudhuri, Shri. Anup Mukerji, Prof. Gautam Barua, Shri. S.C. Gupta and Prof. B. Ramamurthi were appointed as Non Executive Independent Directors w.e.f. September 16, 2012. CA Pawan Kumar Sharma, Prof. Sushil Khanna, Shri. Vinod K. Misra, Shri Ghanshyambhai H. Amin and Shri Alexander K. Luke ceased to be Directors on September 15, 2012. In terms of letter no. C-31033/1/2012-CA dated. 13.08.2013, Shri Nalin K. Srivastava, DS (E-11), MoP & NG was appointed as Government Nominee Director Vice Shri Atul N. Patne.

17 DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under the Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that: (i) In the preparation of the annual accounts for the financial year ended 31 st March, 2013, all applicable accounting standards had been followed, along with proper explanations relating to material departures; (ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31.03.2013 and of the profit of the Company for the year ended on that date; (iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) The Directors had prepared the accounts for the financial year ended 31st March, 2013 on a ''going concern'' basis.

18 ACKNOWLEDGEMENT

With the initiatives through the renewed vision of enlarging the Company''s contribution and with our combined zeal, commitment, experience and expertise, your Directors look forward to another year of fruitful operations. Your Directors acknowledge the guidance and support of the Ministry of Petroleum & Natural Gas,all other Ministries and agencies in Central and State Governments. Your Directors express their gratitude and thanks to the Shareholders, Customers, Suppliers and other business partners/associates for their continued co-operation and patronage. Your Directors wish to place on record their deep sense of appreciation for the devoted services of all Oil Indians for its success.

For and On behalf of the Board of Directors.

Sd/-

(S K Srivastava)

Chairman & Managing Director

Dated : 24.08.2013

Place : NOIDA


Mar 31, 2012

The behalf of the Board of Directors of the Company, take great pleasure in presenting the 53rd Annual Report on the working of the Company for the financial year ended 31st March 2012, along with the Audited Statement of Accounts, Auditors' Report and the Review of Accounts by the Comptroller and Auditor General of India.

Your Company has just completed 53 eventful years of its glorious existence on 18th February 2012 and is marching ahead to meet larger goals with a renewed vision and higher levels of commitment of all OIL Indians.

1.0 SIGNIFICANT HIGHLIGHTS

Your Company, a Navratna PSE, while helping the nation in attaining hydrocarbon self- sufficiency, is expected to maintain its own competitive advantage and support the nation in its drive to eventually become a global giant.

PRODUCTION AND SALES

Your Company has set another record of achieving the highest ever production of crude oil and natural gas.

Crude Oil

- Highest ever terminal production rate of 10,765 MTPD (3.93 MTPA).

- Highest total production of 3.847 MT for a year, 102.3% of planned target.

Natural Gas

- Highest ever total production of 2,633.29 MMSCM in a year.

- Highest ever total sale of 2,093.02 MMSCM in a year.

PROFIT AFTER TAX (PAT)

The Company has made a record Profit After Tax (PAT) of Rs. 3,446.92 crore during the year, a growth of 19.36% over the PAT of the previous year.

ACREAGE

Your Company holds 1,56,890 sqkm of acreage, including those in India and overseas, covering seventy eight blocks, of which it holds in India 13 NELP as Operator, 1 NELP as Joint Operator, 19 NELP as Non-Operator, 2 as JV, 8 Nominated PELs, 1 CBM Block and 21 PMLs. Your Company holds 3 blocks as Operator, 8 as Non-Operator and 2 as JV partner overseas.

OIL AND GAS RESERVES

Your Company has made a total of seven hydrocarbon discoveries in the Upper Assam basin during the year. This year the accretion to recoverable reserves is 9.54 MMSKL (O OEG) of oil and gas, thus achieving the "Very Good" targets set in this regard in the MOU with GOI.

Your Company has a strong oil and gas reserves base as furnished below, which reflects a significant growth potential.

1P 2P 3P

Crude oil (MMSKL) 43.64 95.36 139.68

Natural Gas (BCM) 31.62 54.15 77.21

OfOEG (MMSKL) 75.26 149.51 21759

2.0 FINANCIAL HIGHLIGHTS

Brief financial highlights of the Company for the year 2011-12 on a standalone basis, and a comparison with the performance in the previous year is given below:

(Rs. Crore)

2012 2011

INCOME

Sales 9,058.43 7,764.41

Income from transportation 460.38 243.51

Other operating income 344.42 312.68

Other income 1,445.37 873.89

Total Income 11,308.60 9,194.49

EXPENDITURE

Changes in inventories of finished goods (8.82) (7.64)

Employee benefit expenses 1,517.54 1,204.90

Finance cost 9.37 13.13

Depreciation, depletion, amortization and impairment 1,008.82 819.67

Statutory levies 2,394.83 2,087.59

Other expenses 1,285.00 763.64

Total Expenditure 6,206.74 4,881.29

Profit before tax 5,101.86 4,313.20

Provision for taxation

Current tax (including Wealth Tax) 1,727.26 1,297.32

Deferred tax (72.32) 128.15

Total tax expenses 1654.94 1425.47

Profit: after tax 3446.92 2887.73

APPROPRIATIONS

Interim dividend 841.59 432.82

Tax on interim dividends 136.53 71.89

Final dividend 300.56 468.88

Tax on proposed final dividend 48.77 76.06

Transfer to general reserve 2,119.47 1,838.08

Total appropriations 3,446.92 2,887.73

a) The Shareholders' Funds as on 31.03.2012 were Rs. 17,721.34 crore. The Debt: Equity ratio of company is very healthy at 0.001:1, as against 0.066:1 in the previous year.

b) Based on post bonus share capital, the earnings per share (EPS) had increased to Rs. 57.34 in 2011-12 as compared to Rs. 48.04 in 2010-11.

3.1 BONUS

The Company has issued bonus shares in the ratio of 3:2 (i.e. 3 (three) equity shares of Rs. 10/- each fully paid up for every 2 (two) existing equity share of Rs. 10/- each fully paid up), by capitalization of the securities premium account. Credit/ dispatch of the bonus shares has been completed on 4th April 2012.

3.2 DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 5 per equity share (50%) on the post-bonus issue share capital, subject to the approval of the shareholders at the ensuing Annual General Meeting. In addition, your Company paid an Interim Dividend @ 250% and Second Interim Dividend @ 100% based on the provisional financial trend of the Company on the paid up capital. The total dividend for the year 2011-12 on the pre-bonus issue share capital will be Rs. 47.50 (Previous year Rs. 37.50) per equity share of Rs. 10 each.

4.0 RESEARCH AND DEVELOPMENT

The Company gives due importance to continuous upgradation of technologies and expertise in various areas of activities through its own Research and Development Centre. The details of R & D activities carried out are given in Form - B of this Report.

5.0 HUMAN ASSETS

Your Company has 8,096 employees on the rolls of which 1,340 personnel are in the executive cadre. Team Oil India is a workforce dedicated to meet the vision of your Company and is always endeavoring to take your Company to challenging heights.

6.0 INDUSTRIAL RELATIONS

Harmonious and cordial relations were maintained with employees' recognized union, namely, IOWU and other registered unions operating in OIL. The employees' unions extended full co-operation to the Management and actively participated in sorting out employees' problems and grievances. Regular and periodic interactions with registered unions were very effective in dealing with industrial relations issues.

7.0 RECOGNITIONS

1. Company of the Year Award by Indian Chamber of Commerce supported by the Department of Public Enterprises, Government of India, for its all-round performance on the physical, financial, HSE, CSR and sustainability parameters.

2. Golden Peacock Award for Corporate Governance.

3. Greentech Environment Award 2011 in Gold Category in the Oil and Gas Sector.

4. NDTV Business Leadership Award in the Oil and Gas Sector 2010-11.

5. The SCOPE Award for Excellence and Outstanding Contribution to Public Sector Management - Individual Leader, PSE Category 2009-10.

6. IPE HR Leadership Award from the Institute of Public Enterprise (IPE) at the World HRD Congress.

7. 2nd Annual Greentech HR Gold Award 2012, in the Training Excellence category for the Corporate sector.

8.0 CORPORATE GOVERNANCE

As stipulated under Clause-49 of the listing agreement, both the Management Discussion and Analysis Report and the Corporate Governance Report have been incorporated as separate sections forming part of the Annual Report. Your Company also complies with the secretarial standards issued by ICSI and the corporate governance guidelines enunciated by the Department of Public Enterprises, Government of India. The Ministry of Corporate Affairs, Govt of India has issued a set of voluntary guidelines on corporate governance in December 2009. The guidelines provide for good governance practices which may be voluntarily adopted by corporates. Oil India Limited complies with most of these guidelines and would endeavour to comply with the other guidelines that are applicable to a government company.

9.0 CHANGES IN THE BOARD OF DIRECTORS

Shi N.M Borah, Chairman & Managing Director superannuated from the service of the company on 30th April, 2012. The Board wishes to place on record its sincere appreciation of his invaluable contribution to the company.

In terms of the Letter No. C-31014/6/2010-CA dated 21st March, 2012 issued by the Ministry of Petroleum and Natural Gas, Shri

S.K.Srivastava, Director General, Directorate General of Hydrocarbons assumed the post of Chairman & Managing Director of Oil India Limited w.e.f. 1st May, 2012 vice Shri N.M Borah.

The tenure of Shri A.K.Gupta as Independent Director ended on 29.07.2011

Shri D.N Narasimha Raju, Joint Secretary, MOP&NG ceased to be Government Nominee Director on the Board of OIL w.e.f 05.01.2012 consequent to his transfer from MOP&NG. Shri Aramane Giridhar, Joint Secretary, Ministry of Petroleum & Natural Gas, of India was appointed as Government Director vide MOP&NG Letter No. C-31019/1/2006-CA dated 28.02.2012.

Smt. Rashmi Aggarwal, Director (E-III), MOP&NG and Shri Atul Patne, Dy. Secretory (E-II), MOP&NG were appointed as Government Nominee Director on the Board of OIL vide MOP&NG letter No. C-31033/1/2012-CA dated 03.08.2012 vice Shri Aramane Girdhar, JS (E), MOP&NG and Dr (Smt.) Archana S Mathur, Economic Advisor, MOP&NG.

10.0 STATUTORY REQUIREMENTS

Section 274 (1)(g) of the Companies Act, 1956 is not applicable to government companies. However, none of the directors of your Company is disqualified as per these provisions. Your Directors have made the necessary disclosures as required under various provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement. Information as required under Section 217 (1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I which forms a part of this Report. Details of the Employees who drew remuneration exceeding the limits laid down under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 (as amended from time to time) are attached as Annexure-II.

11.0 STATUTORY AUDITORS

The Statutory Auditors of your Company are appointed by the Comptroller and Auditor General of India (C & AG). M/s SRB and Associates and M/s Saha Ganguli and Associates are the joint statutory auditors for the financial year 2011-12. The auditors' remuneration for the year 2011-12 has been fixed at of Rs. 9 lakh each plus travelling and out-of-pocket-expenses.

12.0 COST AUDIT

The Cost Audit Report for the financial year 2010-11 was filed with the government on 26th September 2011, a day before the due date. M/s Mani and Co. are the cost auditors of the Company for the financial year 2011-12. The report is being finalized and will be filed as per the schedule.

13.0 DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to the directors' responsibility statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts for the financial year ended 31st March, 2012, all applicable accounting standards had been followed, along with proper explanations relating to material departures;

(ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31st March 2012 and of the profit of the Company for the year ended on that date;

(iii) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The directors had prepared the accounts for the financial year ended 31st March, 2012 on a 'going concern' basis.

14.0 ACKNOWLEDGEMENT

With innovative initiatives through the renewed vision of enlarging the Company's contribution and with our combined zeal, commitment, experience and expertise, your Directors look forward to another year of fruitful operations, together with an overall improvement in efficiency during the year 2012-2013. Your Directors acknowledge the guidance and support of the Ministry of Petroleum and Natural Gas, and of all other ministries and agencies in the Central and State Governments. Your Directors also express their gratitude to the shareholders, customers, suppliers and other business partners and associates for their continued co-operation and patronage. Your Directors wish to place on record their deep sense of appreciation for the exemplary services of all Oil Indians towards the Company's success.

For and on behalf of the Board of Directors

Sd/-

(S K Srivastava)

Chairman and Managing Director

Dated : 08.08.2012

Place : Noida


Mar 31, 2011

Dear Shareholders,

On behalf of the Board of Directors of the Company, l take great pleasure in presenting the 52nd Annual Report on the working of the Company for the financial year ended 31st March 2011, along with the Audited Statement of Accounts, Auditors' Report and the Review of Accounts by the Comptroller and Auditor General of India.

Your Company has just completed eventful 52 years of its glorious existence on 18th February 2011 and is marching ahead with a renewed vision and commitments of all Oil Indians for greater growth.

We believe that the only way is going upwards; as it is always our endeavor to go from strength to strength. We look for ideas, new ways of working and aim for moving ahead while maintaining our work culture. We believe that creativity is contagious and induces enthusiasm. We look at problems as opportunities and overcome setbacks by gaining in strength. We do it big, we do it right, and we do it with class. Nevertheless, we do not believe in speaking about our achievements. We believe in what others say about us, which is a true reflection of our achievements.

1.0 SIGNIFICANT HIGHLIGHTS

Navratna Status

Your Company is now a Navratna PSE since first quarter of the 2010. The grant of Navratna status is in recognition of the tireless efforts and contribution of all the Oil Indians towards helping the nation in attaining energy security and it is envisaged to bring competitive advantage by supporting its drive to eventually become a global giant.

Excellent MoU Rating

Your Company has been rated "Excellent " in the MOU with GoI for the year 2009-10 and is expected to be rated at the same level during 2010-11.

Production and Sale

Your Company has set another record of achieving the highest ever production of crude oil and condensate at 3.609 MMT. The production of natural gas and LPG was 2352.71 MMSCM and 45010 Tonnes respectively. We transported 5.95 MMT of Crude oil and 1.069 MMT of products through our pipelines. This helped to achieve the highest sales turnover of Rs. 8113.22 crores during the year and set a new record of 10.62 % increase in Profit after tax at Rs. 2887.73 crores compared to the previous year, despite bearing a burden of subsidy to the tune of Rs. 3293.08 crores to PSU Oil Marketing Companies on the price of Crude Oil and LPG as per the administrative order of the Ministry of Petroleum and Natural gas.

Acreage

Your Company holds 165865 Sq.Kms. of acreages both indigenously and overseas covering seventy six blocks out of which in India, 11 NELP as Operator, 1 NELP as Joint Operator, 18 NELP as Non-Operator, 3 as JV, 9 Nominated PELs and 21 PMLs. In overseas, 3 as Operator, 8 as Non-Operator and 2 as JV.

Oil & Gas Reserves

Your Company has made a total of six new hydrocarbon discoveries in Upper Assam basin during the year. This resulted in an accretion to recoverable reserves by 9.57 MMKLs (O OEG) of oil and gas achieving the "Excellent" targets set in this regard in the MOU with GoI.

Your Company has a strong oil and gas reserves base as furnished below, which reflects a significant growth potential.

MMSKLOE

1P 2P 3P

Crude oil 44.51 92.84 137.87

N.Gas 35.73 57.32 80.29

Total 80.24 150.16 218.16

2.0 Research and Development

Your Company gives great importance in continuous up-gradation of technologies and expertise in various areas of activities through its own Research & Development Centre. The details of activities carried out are given in Form-B of this Report.

3.0 Human Assets

Your Company has 8634 employees on the rolls, of which 1708 personnel are in executive cadre. Team Oil India is a workforce dedicated to meet the vision of your Company and is always endeavoring to take your Company to challenging heights.

4.0 Industrial Relations

Harmonious and cordial relations were maintained with the employees. The employees' Union extended full co-operation and actively participated with the management in sorting out employees' problems and grievances. There was no incidence of man-days loss due to industrial relations problems.

5.0 Recognition

Your Company was accorded recognition for its meritorious services to its stakeholders as follows:-

i. First Prize for Oil Industry Safety Award in Oil & Gas Assets (Onshore) Category;

ii. Gold Award for the year 2011 in Petroleum Sector for Outstanding Achievement in Safety Management by the Greentech Foundation, Hyderabad;

iii. Best Environment Management and Sustainable Development Award by Indian Chamber of Commerce.

iv. Greentech Environment Excellence Award for the year 2010 by the Greentech Foundation, Hyderabad;

v. Golden Peacock Global Award for CSR for the year 2010 at the 5th Global Conference on Social Responsibilities organized by World Council for Corporate Governance in Lisbon, Portugal, for CSR in recognition of Company's social and environmental concerns ,economic value addition and social good;

vi. Greentech HR Excellence Gold Award 2010 for Outstanding Achievement and Innovation in Employee Retention Strategies;

vii. Motivational Leadership Award at the Global HR Excellence Awards 2010-11 during the World HRD Congress;

viii. HR Leadership Award honored Shri N.K.Bharali Director (HR&BD) at the 5th Employee Brand award ceremony in appreciation of Individual or Organization who have made a shining contribution and made the HR Industry proud; and

ix. Recognizing Winning Edge 2010 in Raising Capital / Capital Restructuring by CFO 100 honored Shri. T. K. Ananth Kumar, Director (Finance) as Best CFO for excellence in the abovementioned category;

6.0 Corporate Governance

As stipulated under Clause-49 of the listing agreement, the Management Discussion & Analysis Report and the Corporate Governance Report have been incorporated as separate sections forming part of the Annual Report. Your Company also complies with the Secretarial Standards issued by ICSI and corporate governance guidelines enunciated by the Department of Public Enterprises, Government of India. The Ministry of Corporate Affairs, Govt. of India has issued a set of voluntary guidelines on Corporate Governance in December 2009. The guidelines provide for good governance practices which may be adopted by corporates voluntarily. Oil India complies with most of the provisions of the guidelines and would endeavour to comply with the other provisions that are within the domain of a Government Company.

7.0 FINANCIAL HIGHLIGHTS-Table-I

The summarized Profit & Loss Account is furnished below:-

(Rs. in Crores)

2011 2010

INCOME

Sales 8113.22 7748.56

Income from Transportation 190.16 156.99

Other Income 1185.10 937.13

Other adjustments 60.73 17.05

Total Income 9549.21 8859.73

EXPENDITURE

Increase/(Decrease) in Stock (7.64) 10.57

Production, Transportation & Other Expenditure 4139.90 4072.90

Provision against debts, advances and other provisions/write-offs 469.60 282.72

Depletion 301.46 262.81

Depreciation 176.68 218.27

Interest & Debt Charges 13.92 3.65

Exchange Loss/(Gain) 1.40 (4.77)

Other Adjustments 144.83 112.62

Total Expenditure 5240.15 4958.77

Profit for the period / year 4309.06 3900.96

Prior Period items (4.14) 5.86

Profit Before Tax 4313.20 3895.10

Provision for Taxation:

Current Tax (Including Wealth Tax) 1297.32 1159.82

Tax for earlier years - 3.68

Deferred Tax 128.15 121.07

1425.47 1284.57

Profit After Tax 2887.73 2610.52

APPROPRIATIONS:

Interim Dividend @ 180% (Previous Year - 180%) 432.82 432.82

Tax on Interim Dividends 71.89 73.56

Final Dividend @ 195% (Previous Year - 160%) 468.88 384.73

Tax on Proposed Dividend 76.06 63.90

Transfer to General Reserve 1838.08 1655.52

TOTAL 2887.73 2610.52

a) The Shareholders' Funds as on 31.03.2011 were Rs. 15601.87 crores against loans of Rs. 1026.79 crore giving a Debt: Equity Ratio of 0.066:1 against 0.0027:1 in the previous year.

b) Earnings per Share (EPS) had increased to Rs. 120.09 in 2010-11 compared to Rs. 113.78 in 2009-10.

7.1 Dividend

Your Company paid an interim dividend @ 180% (previous year 180%), based on the provisional financial trend of the Company. The Board of Directors is now pleased to recommend a final dividend @ 195% on the paid up capital making the total dividend of 375% (Previous year 340%) for the year, subject to the approval of the shareholders at the ensuing Annual General Meeting. It is also proposed to transfer the balance of Rs. 1838.08 crore to the General Reserve.

8.0 CHANGES IN THE BOARD OF DIRECTORS

During the year, Shri. N. K. Bharali has been appointed as Director (Human Resource & Business Development) vide MOP&NG Letter No. C-31014/1/2008-CA dated 14.09.2010 and Shri. S. Rath has been appointed as Director (Operations) vide MOP&NG Letter No. C-31014/8/2010-CA dated 30.03.2011.

9.0 STATUTORY REQUIREMENTS

Section 274(1)(g) of the Companies Act, 1956 is not applicable to the Government Companies. However, none of the Directors of your Company is disqualified as per provisions of Section 274 (1) (g) of the Companies Act, 1956. Your Directors have made necessary disclosures as required under various provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement. Information as required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I forming part of this Report. None of the employees of your Company drew remuneration exceeding the limits laid down under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time.

10.0 STATUTORY AUDITORS

M/s Chatterjee & Co. and M/s SRB & Associates, appointed by the Comptroller & Auditor General of India (C&AG), are the Joint Statutory Auditors for the financial year 2010-11. The Auditors' remuneration for the year 2010-11 has been fixed at Rs. 9 lakhs each plus traveling and out-of-pocket-expenses, if any, in addition to the aforesaid amount for carrying out the statutory audit for the year 2010-11.

11.0 COST AUDIT

M/s Musib & Associates (M.No. 5546) are the Cost Auditors of the Company. The Cost Audit Report for the year 2009-10 has been filled on the due date i.e. 27th September, 2010. The due date for filling Cost Audit Report 2010-11 is 27th September, 2011. The Report is being finalized.

12.0 DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under the Section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts for the financial year ended 31st March, 2011, all applicable accounting standards had been followed, along with proper explanations relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently, except changes as stated in Para 2.2 of Schedule 27 to the Accounts per mandated convention, and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31.03.2011 and of the profit of the Company for the year ended on that date;

(iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors had prepared the accounts for the financial year ended 31st March, 2011 on a 'going concern' basis.

(v) proper systems are devised to ensure compliance of all laws applicable to the Company.

13.0 ACKNOWLEDGEMENTS

With the initiatives through the renewed Vision of enlarging the Company's contribution and with our combined zeal, commitment, experience and expertise, your Directors look forward to another year of fruitful operations combined with an overall improvement in efficiency during the year 2011-2012.Your Directors acknowledge the guidance and support of the Ministry of Petroleum & Natural Gas, all other Ministries and agencies in Central and State Governments. Your Directors express their gratitude and thanks to the Shareholders, Customers, Vendors, Service Providers and other business partners/associates for their continued co-operation and patronage. Your Directors wish to place on record their deep sense of appreciation for the devoted services of all Oil Indians for its success.

For and on behalf of the Board of Directors.

Sd/-

(N.M. Borah)

Chairman & Managing Director Dated: 27.07.2011


Mar 31, 2010

On behalf of the Board of Directors of the Company, I take great pleasure in presenting the 51st Annual Report on the working of the Company for the financial year ended 31st March, 2010 along with the Audited Statement of Accounts, Auditors Report and the Review of Accounts by the Comptroller and Auditor General of India.

Your Company has just completed its glorious eventful 50 years of its existence on 18th February, 2009 and is heading towards the century with renewed vision, commitment and dedication of all Oil Indians.

1.0 SIGNIFICANT HIGHLIGHTS

Initial Public Offering (IPO)

OIL IPO alongwith the disinvestment by Government of India has been a landmark and memorable event in OILs illustrious history. OIL came up with a public offer of 2,64,49,982 equity shares, for cash consideration @ Rs. 1050 per share (Face value of Rs. 10 per share at a premium of Rs. 1040 per share) through 100% Book Building Method. The issue opened on September 7, 2009 and closed on September 10, 2009. It received an overwhelming response from the investors.

The listing of OIL Shares on the National Stock Exchange and Bombay Stock Exchange was a defi ning moment for all Oil Indians. All activities were meticulously planned and executed with clinical precision. It was a collaborative effort of all the members of the IPO Team which resulted in accomplishment of the various tasks undertaken.

Navratna Status

Your Company, which was a Category-I, Miniratna PSE since 1997, has scaled another height by acquiring the prestigious Navratna status during the fi rst quarter of the current fi scal The grant of Navratna status is in recognition of the tireless efforts and contribution of all the Oil Indians towards helping the nation in attaining hydrocarbon self-suffi ciency and is expected to bring competitive advantages and support in its drive to eventually become a global giant.

Excellent MoU Rating

Your Company has been rated, "Excellent" in MOU for the year 2008-09 and is expected to be rated at the same level during 2009-10.

New Discoveries:

Your Company has made a total of six new hydrocarbon discoveries in Upper Assam basin during the year.

Heavy Oil Production in Rajasthan

Your Company has successfully produced heavy oil from two of the existing wells in Rajasthan with in-house expertise & efforts during the year, where some heavy oil reserves are locked up for want of appropriate technology.

Production and Sale

Your Company has set another record of achieving the highest ever production of crude oil and natural gas at 3.572 MMT and 2415 MMSCM respectively leading to the highest sales turnover of Rs.7905.55 crore during the year.

Profit after Tax (PAT)

The Company has set a new record of 20.76 % increase in PAT of Rs.2610.52 crore compared to the previous year.

Net Worth

Your Company continues to maintain the unique distinction amongst the operating giants in the N.E. Region with a steady growth in achieving a Net Worth of Rs.13,763.79 crore and earning a Profi t After Tax of Rs 2610.52 crore despite allowing subsidy sharing discounts to the tune of Rs 1548.82 crore to PSU Oil Marketing Companies in the price of Crude Oil and LPG as per the administrative order of the Ministry of Petroleum and Natural gas.

Acreage

Your Company holds domestic and international acreages as follows:-

Block Category Sq. Km. as on 31-03-2010

Nomination PEL 5367

JV non-operated 6041

NELP operated 10903

NELP non-operated 82175

Overseas operated 20570

Overseas non-operated 21086

PML operated 4809

Total 150951

Upto NELP VII we have participating interests in twenty-one blocks of which we are the operator in nine blocks.

In NELP VIII bidding round, your Company competed and bagged acreages for another nine blocks, PSCs for which have recently been signed with the Govt. of India. Of these nine blocks, we are the operator in three blocks of which one is offshore, one is onshore and we are joint operator in one deep water block and have a participating interest in the remaining six blocks.

In CBM IV bidding round, your Company competed and bagged acreage for one CBM block in North East India.

2.0 PERFORMANCE

Physical Highlights

The performance in respect of the key parameters of the Company for the year ended on 31.03.2010 in comparison with the previous year is furnished below:

Sl No. Item Unit 2008-09 2009-10 % increase / (decrease)

1 Crude oil production MKLS 3.930 4.072* 3.61

2 Crude oil sales MKLS 3.929 4.094* 4.22

3 Natural gas Production MMSCUM 2,269 2415* 6.43

4 Natural gas Sales MMSCUM 1,737 1,863* 7.21

5 LPG Production Tonnes 47610 44950 (5.58)

6 Drilling Metreage 115867 144862 25.00

* Highest ever for the company

Status of Reserves

(a) The status of proved, developed oil reserves and proved gas reserves of the Company as at 31.03.2010 is as follows:

Crude Oil

Area of Position Additions/ Production Position operation as on Revisions Quantity as on 01.04.2009 (2009-10) 31.03.2010 (MMKL) (MMKL) (MMKL) (MMKL)

Assam-Arakan 35.1738 4.2695 4.0283 35.4150

Rajasthan 0.0000 0.0000 0.0000 0.0000

JVC-India * 3.1122 (0.0763) 0.1099 2.9260

Total 38.2860 4.1932 4.1382 38.3410



Natural Gas

Area of Position Additions/ Sale Position operation as on Revisions Quantity as on 01.04.2009 (2009-10) 31.03.2010 (MMKL-OE) (MMKL- (MMKL-OE) (MMKL-OE) OE)

Assam-Arakan 36.9910 1.0080# 2.029 35.9700

Rajasthan 2.2000 0.0131 0.2053 2.0078

JVC-India * 0.0000 0.0000 0.0000 0.0000

Total 39.1910 1.0211 2.2343 37.9778

* To the extent of participating interest of the Company

# Reserves are based on the volume for which MoUs/Contracts have been signed with customers. Against the addition/ revision of 1.0080 MMKL-OE during 2009-10, the geological accretion of natural gas during the same year is 4.9456 MMKL-OE.

Financial Highlights

TABLE-I (Rs. in lakhs)

2010 2009

INCOME

Sales 774856 713972

Income from Transportation 15699 10173

Other Income 93713 93718

Other adjustments 1705 (4075)

Total Income 885973 813788

EXPENDITURE

Increase/(Decrease) In Stock 1057 1300

Production, Transportation & Other Expenditure 407290 396125

Provision against debts, advances and other provisions/write-offs 28272 37120

Depletion 26281 20877

Depreciation 21827 16808

Interest & Debt Charges 365 874

Exchange Loss/(Gain) (478) (615)

VRS Compensation written off - -

Other Adjustments 11262 2139

Total Expenditure 495878 474628

Profit for the period / year 390095 339160

Prior Period items 586 463

Profit Before Tax 389509 338697

Provision for Taxation:

- Current Tax (Including Wealth Tax) 115982 118484

- Tax for earlier years 368 -

- Deferred Tax 12107 3431

- Fringe Benefi t Tax - 614

128457 122529

Profit After Tax 261052 216168

APPROPRIATIONS:

Interim Dividend @ 180 % (Previous Year - 150 %) 43282 32101

Tax on Interim Dividends 7356 5455

Final Dividend @ 160 % (Previous Year - 155 %) 38472 33170

Tax on Proposed Dividend 6390 5637

Transfer to General Reserve 165552 139805

TOTAL 261052 216168

a) The Shareholders Funds as on 31.03.2010 was Rs. 13763.79 crore against long term loan amount of Rs. 37.50 crore giving a Debt: Equity Ratio of 0.0027:1 against 0.0061:1 in the previous year.

b) Earnings per Share (EPS) had increased to Rs. 113.78 in 2009-10 compared to Rs 101.01 in 2008-09.

Dividend

Your Company paid an interim dividend @ 180 % (previous year 150%), based on the provisional financial trend of the Company. The Board of Directors is now pleased to recommend a fi nal dividend @ 160% on the paid up capital making the total dividend of 340 % (Previous year 305 %) for the year, subject to the approval of the shareholders at the ensuing Annual General Meeting. It is also proposed to transfer the balance of Rs 1655.52 crore to the General Reserve.

3.0 DISCOVERY OF OIL AND GAS

The following oil and gas discoveries were made during the year.

South Tinali-2 (Loc. DGN)

The well South Tinali-2(Loc.DGN) located southeast of Shalmari fi eld in the South Tinali Structure was drilled to probe the prospect within Tipam Formation. The well has encountered a few hydrocarbon bearing sands within Tipam Formation. This discovery has opened up a new area for exploration within Dumduma ML area.

Disaijan-1 (Loc. BGB)

The well Disaijan-1 (Loc. BGB) located to the north-east of Baghjan area was drilled as a vertical well on a fault closure to Disaijan structure to probe the hydrocarbon prospects within Paleocene-Lower Eocene Formations. The well has encountered few prospective sands within Narpuh, Lakadong + Therria and Langpar Formation. The discovery of oil in this well has opened up a new area for exploration within Baghjan ML area.

NHK-583- West Jaipur ( Loc. NKV)

The well NHK-583(Loc.NKV) located towards north-west of Jaipur Structure of Nahorkotiya Extension ML was drilled to delineate the limit of extension of the lower Tipam Formation. The well has encountered few hydrocarbon bearing sands within the Tipam and Barail formation.

Umatara -1 (Loc. DGG)

The exploratory well Umatara-1 (Location-DGG) located towards east of Shalmari fi eld between Tinali and Jaipur structures in Dumduma Extension PEL was drilled to probe the prospect of Tipam Formation as well as Barail Formation.

Hapjan-55 (Loc HRU)

This exploratory location was proposed to probe hydrocarbon prospects of Tipam and Barail formations of HJN-21 Block, lying to the south of main Hapjan structure under Hugrijan ML. The well has encountered a number of hydrocarbon bearing sands within Tipam & Barail Formation.

Dhulijan (NHK-581) : Location HTF (NHK-581) lies in Dhulijan structure to the south- west of Hapjan structure. The Dhulijan structure is an independent anticlinal closure bounded by two faults one at the south and one at the west. The well has encountered few hydrocarbon bearing sands within Tipam Formation.

4.0 INDIGENOUS PROJECTS (Nominated areas)

RAJASTHAN BASIN

Jaisalmer PML area

Gas fi elds of Tanot, Dandewala & Bagi Tibba are lying within this PML. The gas produced in this area is being supplied to RRVUNL through GAIL (India) Limiteds pipeline for generation of electricity. New gas supply agreement has been entered with RRVUNL with enhanced price of gas for supply @ 0.90 MMSCMD against the average current withdrawal level of approximately 0.654 MMSCMD over three years.

Baghewala PML area

Heavy Oil fi eld of Baghewala is located in this PML area. We have a technological tie up with M/s Petroleos de Venezuela SA (PDVSA) of Venezuela for exploitation of this prospect. On completion of its Integrated Reservoir Study under phase-I, PDVSA indicated 53 MMT (Indicated Category) oil-in-place in upper carbonate and 78MMT(25 MMT-proved category) oil-in-place in lower Bilara + Jodhpur sand stone. In phase–II, the production efforts through steam injection had to be suspended due to teething problems encountered in surface facilities. Work over carried out by in-house effort in well (BGB-4) during August- October, 2009 produced 30 bbl / day of cold production. Subsequently, post work over Baghewalla-1(BGB-1) also fl owed during February, 2010 with the assistance of Sucker Rod Pumping. A pilot well is planned in the future on whose success the development plan will be implemented.

UPPER ASSAM BASIN

NORTH EAST FRONTIER PROJECT

Ningru ML: (Area: 540.668 SqKm)

The Mining Lease expired in November, 2003. MOP&NG accorded approval for re-grant of PML for another 20 years. However, Ministry of Environment and Forest directed State Government of Arunachal Pradesh(SGoAP) to obtain a fresh proposal from OIL in accordance with the provision of Forest Conservation Act, 1980 by paying Net Present Value (NPV) for diversion of the forest area covering the entire ML area for mining operation which is being contested by OIL. Since the matter is sub-judice, further drilling plans have been suspended.

Ningru ExtensionML: (Area: 75 Sq Km)

OIL applied for re-grant of Ningru Extension ML in June 2003. MoP& NG recommended re-grant of PML for another 20 years. Approval from SGoAP is still awaited. Since the matter is sub-judice, further activities have been suspended.

Namsai : (Area:370 sq km). The PEL validity was till April, 2010 and further extension has been applied for.

The well at North Kimchai-1 (NSA) was spudded-in during December, 2009. We have completed drilling to a depth of 5016 metres by end March, 2010. Presently we are arranging for production testing of the well.

Namchik: (Area:195 Sq Km). The PEL validity was till April, 2010:

The released well location at Namchik-1 (NCK) could not be drilled due to non availability of Forest Clearance, which is awaited from SGoAP.

Deomali (Area 113.50 sq km): The PEL is valid up to 03.04.2011. We are arranging to acquire fresh seismic data for generation of drilling prospects;

Brahmaputra River Bed

OIL had applied for grant of separate Brahmaputra River Bed (BRB) PEL for an area of 2754* Sq Km on 09.08.2007 OIL plans to carry out 1,700 GLKM of 2D seismic survey in parts of river Brahmaputra in Upper Assam as a part of its hydrocarbon exploration activities. A few NGOs and Public Organizations had expressed their concern for the survey apprehending ecological imbalance in river Brahmaputra, particularly threat to river dolphins present in the river. MOP&NG formed a Multidisciplinary Advisory Group (MDAG) consisting of experts on the subject to study the various aspects and also to guide Oil India Limited (OIL). MDAG along with the expertise from Canada (M/s Jasco) is planning to undertake Impact Assessment Studies in two phases, which has however been deferred pending grant of the PEL.

PELs under special dispensation

An extension of time was obtained to complete the work programs towards certain PELs granted on Nomination basis. The status of the same is furnished below:-

Name of PELs Area (Sq Km) Validity Status

Dumduma Extn.(F) 19 05.05.2010 Applied for ML conversion. Workover in progress at well North-Duarmara -1 ( Loc DFP)

Dumduma Extn.(NF) 133 31.07.2009 Applied for ML conversion

Tinsukia* 480 05.07.2010 Production testing is in progress at well Talap-3. 450.5 sq km of this area has been carved out and reapplied under the BRB PEL

Dirak 85 05.04.2011 Civil work is in progress at location EA Murkongselek (NF)* 449 05.10.2011 Arranging for Environmental Clearance for Loc.MSD. This PEL and an additional area of 154.52 sq km has been carved out and reapplied under the BRB PEL Jairampur 18 05.07.2010 Arranging for spudding the well Jairampur 2

Murkongselek (F)* 95 31.03.2007 76 sq km of this area has been carved out and reapplied under the BRB PEL. We are awaiting handover of Forest land in the remaining area

Borhat 111 31.03.2009 Applied for 2 years extension

Dibrugarh* 427 31.03.2009 355 sq km of this area has been carved out and reapplied under the BRB PEL We have applied for 2 years extension for the remaining area

Jairampur Extn 23.25 30.04.2007 Pursuing with MOP&NG for extension

Margherita 184 31.03.2009 Pursuing with MOP&NG for extension

Lakhimpur* 2100 20.12.2006 550 sq km of this area has been carved out and reapplied under the BRB PEL. This is being pursued with the MOP&NG for extension for the remaining area

Sadiya* 564 17.11.2006 This PEL and additional area of 95 sq km has been carved out and reapplied under the BRB PEL

Pasighat* 694.5 - 58.74 sq km of this area has been carved out and reapplied under the BRB PEL and the remaining area has been surrendered

NELP BLOCKS / PRE-NELP BLOCKS

The Company, up to the end of NELP VII bidding round, is holding Participating Interest (PI) in a total of 21 NELP & 2 Pre NELP blocks as detailed below:-

NELP BLOCKS WITH OILS OPERATORSHIP

Upper Assam Basin

AA-ONN-2002/3 (Karbi Anglong NELP-IV) AA-ONN-2003/3 (Sadiya NELP-V) AA-ONN-2004/1 (Amguri NELP-VI) AA-ONN-2004/2 (Dibrugarh NELP-VI)

In Karbi-Anglong 2D seismic survey resumed during December, 2009 subsequent to restoration of the normal working atmosphere in this insurgency prone area. The progress till March, 2010 end was about 82 GLKM. Similarly, in Sadiya 3D seismic survey resumed in December, 2009 and progress till March 2010 end was about 202 SQKM. In Amguri, the fi rst well Amguri-1 (Loc.AMG-1) was completed without any encouraging result and currently the civil work on the second location is in progress. 2 nos. drilling locations in Dibrugarh block namely, Loc-A (DRA) and Loc.-C (DRB) have been released. Civil work is in progress at the fi rst location DRA while the other location falls under the forest area for which clearance is awaited.

Assam-Arakan Basin

MZ-ONN-2004/1 (NELP-VI)

Despite diffi cult logistic and remote road connectivity, data acquisition through 2D survey is under progress. A total of 962 GLKM (403 GLKM in 2009-10) of data has been acquired so far. Interpretation of available 2D seismic data by M/s Fugro

Geosciences Limited is in fi nal stage. Gravity Magnetic and Geodetic surveys are in progress. Parallel actions are on for hiring of a suitable drilling rig and associated services for drilling and testing 5 nos. exploratory wells in Mizoram, towards which, against a global EOI, a bidders conference was held in Kolkata in February, 2010. Actions are in hand for hiring an international expert for project monitoring and expert support services.

Mahanadi Basin

MN-ONN-2000/1 (NELP-II)

In this Onshore block in Orissa, a well at location Sadhupur-1 was drilled during 2008-09 without success in Phase-II. The OC and MC have decided not to enter Phase-III and have relinquished the block.

Krishna Godavari Basin

KG-ONN-2004/1 (NELP-VI)

The 3D seismic survey commenced in March, 2010 and 38 Sqkm were acquired during 2009-2010. Scrutiny of offers received against EOI for hiring of drilling rig, associated services and consultancy services for well engineering and well site supervision have been completed. Pre-bid conference on civil related works was held on March, 2010.

Rajasthan Basin

We are presently operating in the following three blocks:-

RJ-ONN-2004/2, (NELP-VI) RJ-ONN-2004/3 (Rachan NELP-VI) RJ-ONN-2005/2) (Kalibhar NELP-VII)

Exploratory works in these blocks are at different stages as per the scheduled work program. Interpretation of 3D seismic data acquired in both NELP-VI blocks is in the fi nal stage of completion. In addition, preparation for drilling the fi rst well at location RBAE in the block RJ-ONN-2004/3 (NELP-VI) is in progress. Preparations for acquisition of 3D seismic data for the NELP-VII block are under progress.

During the year, the following three blocks have been surrendered due to low prospectivity after completion of committed MWP and post drilling evaluation.

RJ-ONN-2000/1 (Pinodah NELP-II) RJ-ONN-2001/1 ( Siyasar NELP-III) RJ-ONN-2002/1 (Rajasar NELP-IV)

NON-OPERATED NELP BLOCKS

OIL with other consortium partners has held participating interest in 12 NELP blocks. Out of these, four blocks are in onshore areas in Assam and West Bengal basins, remaining eight blocks are in offshore (including deepwater) in the Mahanadi, Krishna- Godavari and Cauvery and Andaman basins as shown below. In all these NELP blocks exploratory works are in progress and are at different stages of Minimum Work Programme:

Area Block Operator/(Operators OILs Participating Participating Interest) Interest(%)

AA-ONN-2001/3 ONGCL(85%) 15

AA-ONN-2002/4 ONGCL(90%) 10

Onshore AA-ONN-2005/1 ONGCL(60%) 30 WB-ONN-2005/4 ONGCL(75%) 25

KG-DWN-98/4 ONGCL(85%) 15

KG-DWN-2002/1 ONGCL(70%) 20

KG-DWN-2004/5 ONGCL(50%) 10

Offshore

KG-DWN-2004/6 ONGCL(60%) 10

CY-DWN-2001/1 ONGCL(45%) 20

MN-OSN-2000/2 ONGCL(40%) 20

MN-DWN-2002/1 ONGCL(70%) 20 Deepwater

AN-DWN-2005/1 ONGCL(90%) 10

Assam-Arakan Basin

Works in AA-ONN-2001/3 & AA-ONN-2002/4 were suspended due to problems arising out of an acreage demarcation dispute between two States in case of the former and due to Forest department instructions in case of the latter. In case of AA- ONN-2005/1 the PEL is awaited.

West Bengal Basin

In WB-ONN-2005/4 legacy geoscientifi c data of the block has been studied. Currently acquisition of 3D seismic data is in progress.

Mahanadi Basin

MN-OSN-2000/2: Declaration of Commerciality (DOC) was submitted on 22.12.2009. Review of DOC by DGH is in progress. MN-DWN-2002/1 : Arrangement for drilling of exploratory well MDW#9 (TD 6500 m;WD 2549 m) by Rig DDKG -1 is in progress.

Krishna-Godavari Basin

In KG-DWN-98/4. MWP in all phases has been completed. Three dry wells have been drilled to date. Review is in progress.

In KG-DWN-2002/1 Phase –I MWP has been partly completed as only one well (dry) out of four could be drilled due to rig moratorium.

In KG-DWN-2004/5 2D acquisition and processing is completed. Interpretation of 2D seismic data is in progress as per program.

In KG-DWN-2004/6 2D Seismic data acquisition and processing has been completed. Interpretation of 2D seismic data and 3D acquisition is in progress as per program.

Cauvery Basin

In CY-DWN-2001/1, MWP has been completed except drilling of the third well due to rig moratorium. Two wells drilled were dry.

Andaman basin

In AN-DWN-2005/1, arrangement of acquisition of 2D seismic and GM data in the block is in progress.

PRE-NELP BLOCKS

AAP-ON-94/1 (1998)

M/s Hindustan Oil Exploration Ltd (HOEC) is the operator and OIL has a participating interest of 16.129% with further carried interest of 30%. The block has Dirak Discovery (Area–14 Km2 & Pay– about 100 m). 3D API has been completed during fi scal 2010 and three additional prospects have been identifi ed. Appraisal wells are planned to be drilled. A 2000 HP drilling rig is being hired for the program.

GK-OSJ-3 (2001)

Reliance Industries Ltd (RIL) is the operator for this offshore block and OIL has a participating interest of 15%. Work has been suspended due to rig moratorium.

5.0 PRODUCTION SHARING CONTRACT (PSC)

Kharsang Oil Field In Arunachal Pradesh

The Company with a Participating Interest of 40%, entered into a PSC with the Government of India in consortium with M/s Geo Petrol International Inc, France (25%), M/s Jubilant Enpro Ltd., India (25%) and M/s Geo Enpro Petroleum Ltd, India (10%) on 16.06.1995. The fi eld produced 98583 tonnes during 2009-10 (previous year 66,099 tonnes) of Crude oil. 3D seismic API is nearing completion and exploratory drilling of one well to probe the deeper prospects in the Tipams is planned for fi scal 2011.

6.0 INORGANIC GROWTH

Venezuela:[ SA(PDVSA)-60%, OVL-11%, IOCL-3.5%, OIL-3.5%, Rapsol -11%, PETRONAS-11%]

Your Company has recently acquired 3.5 % of Participating Interest in a Mixed Company to be formed with CVP, a subsidiary of state oil company, PdVSA, Bolivarian Republic of Venezuela. The Mixed Company will be responsible for developing two blocks, Carabobo -1 North & Central, of Extra Heavy Oil in Orinico heavy oil belt. A consortium of ONGC Videsh Limited, Indian Oil Corporation Limited, Oil India Limited, Repsol and Petroliam Nasional Berhad (collectively, the "Consortium"), was selected by the Government of the Bolivarian Republic of Venezuela during February 2010 for awarding a 40% ownership interest, which will develop the Carabobo 1 Norte and Carabobo 1 Centro blocks located in the Orinoco Heavy Oil Belt, Venezuela. The Corporacion Venezolana del Petroleo ("CVP"), a subsidiary of Petroleos de Venezuela S.A. ("PDVSA"), Venezuelas state oil company, will hold the remaining 60% equity interest. The formal contract was executed on 12 May, 2010.

A wholly owned subsidiary of OIL has been created at Sweden named as OIL INDIA SWEDEN AB (OILSWED). OILSWED has 50% share in a joint venture created with IOCL at the Netherlands named INDOIL NETHERLANDS BV (INDOIL). INDOIL will hold 7% in the Mixed company at Venezuela (3.5% of OIL and 3.5 % of IOCL). The liabilities of INDOIL will equally be shared with IOCL.

OILSWED is also in the process of creating a wholly owned subsidiary at Cyprus for extending the loan facilities under the Carabobo Project to INDOIL.

Wells are intended to initially produce "cold" and then with thermal recovery methods. The crude oil thus produced will be diluted, treated and transported through pipeline to the industrial complex at Soledad, in the south of the state of Anzoategui, where it will be processed in an upgrading plant to recover diluents and generate an upgraded crude oil. The upstream production facilities are expected to produce around 400,000 barrels per day of heavy oil of which approximately 200,000 barrels per day will be upgraded into light crude oil and mixed with the remaining 200,000 barrels as fi nal product. The license term will be for 25 years with the potential for a further 15 year extension. The project costs are estimated at US$ 15 - 20 Billion dollars.

Iran: Exploration Service Contract- Farsi Offshore[ OVL 40%,(operator), IOCL 40%,OIL 20%]

Gas Commerciality for Farzad-B area has been approved by National Iranian Oil Company (NIOC). OVL has submitted a draft Master Development Plan (MDP) to Iranian Offshore Oil Company (IOOC) and the second round of negotiation on the draft plan and Development Service Contract was held in December, 2009 at New Delhi. Another round of discussion/ negotiations is held up for acceptance of MDP by NIOC and additional proposed changes expected to be incorporated soon.

Sudan: Product Pipeline [OVL-90 %, (operator) & OIL -10 %]

Further to completion of the product pipeline, the consortium has received two instalments during the year from MEM, Sudan, totalling nine instalments so far out of eighteen instalments.

6.1 OPPORTUNITIES FOR INORGANIC GROWTH

As part of continuous efforts on inorganic growth , your Company has been continuously scouting /evaluating various up- stream opportunities and presently is actively pursuing producing properties in Australia, Russia, Kazakhstan and Italy .

7.0 EXPLORATION PROJECTS OVERSEAS

Libya: Area 86 , and Block 102/4 [OIL-50%(Operator) & IOCL- 50%]

OIL as operator of the consortium has completed the 2D and 3D seismic API of both the acreages. The fi rst well has since been completed . The well failed to encounter commercial hydrocarbons and was abandoned. The drilling of the second well in the area is in progress. Drilling phase of Block 102(4) will start after completion in Area 86.

Libya: Area 95/96 [Area 95 ,96( 4 blocks)] [Sonatrach-50% (Operator),OIL-25% & IOCL -25%]

Currently, 2D and 3D seismic survey acquisition are in progress.

Gabon: Block Shakti [OIL-45% (Operator), IOCL-45% & Marvis Petroleum-10%]

OIL as operator of the consortium has so far completed acquisition of 2D seismic data of about 1000 GLKM in the area. Interpretation of processed 2D seismic data is in fi nal stages. Arrangements are in hand for carrying out 3D seismic survey in the area.

Nigeria: Block OPL-205 [JV M/s Suntera Nigeria 205 Ltd.-70%(Operator ) & M/s Summit Petroleum(30%)]

OIL has 25% equity holding in M/s Suntera Nigeria 205 Ltd. along with Suntera Resources Ltd.(50%) and IOCL(25%).

M/s Suntera Nigeria 205 Ltd.holds 40% particticipating interest and further 30% economic interest in Block OPL-205 .

The JV has since drilled 1 well Otein -2 inside the acreage as part of the work commitment. The well failed to encounter hydrocarbons and was abandoned. Subsequently, based on the presence of existing gas/condensate discovery within the block, the lease area has been converted as OML 142 .However formal decree from Nigerian Government is still awaited.

Yemen: Block Nos. 82 & 83 [Medco Energi-38.25 % (Operator), Kuwait nergy-21.25%, OIL-12.75%, IOCL-12.75%, YOGC -15%]

The PSC agreement with Yemen government was executed in April, 2008 and has been approved by the Yemen Parliament in February 2009. Actions are on hand by the operator to commence the MWP commitments of the blocks.

Timor- Leste (East Timor): Area-K [Reliance Energy Limited-75% (Operator),OIL-12.5%, IOCL-12.5%]

The Farm-in-agreement was executed during June, 2008. As part of MWP, the operator has already completed the API of 1300 sq km 3D seismic data. Drilling of the commitment well is expected in the early part of third quarter of 2010.

Egypt: Block Nos. 3 & 4 (GRPC-50% & operator, OIL -25% and IOCL – 25%)

OIL in consortium with GSPC and HPC was successful in winning 2 blocks offered by GANOPE, Egypt. The draft agreement has been forwarded to GANOPE. The Consortium is waiting for signing of the PSC to commence the committed work programme.

8.0 OTHER PROJECTS

Coal Liquefaction Project

Final report towards the feasibility study by M/s. Headwaters CTL (HCTL), USA was submitted in July, 2009 and after deliberations,HCTL team made a presentation to OIL in December,2009. LOA was issued during April,2009 for preparation of Short DFR / PFS by EIL for setting-up a 10,000 bpd capacity commercial CTL plant. The Draft PFS, since submitted to OIL, is under examination. Syncrude, derived from Assam coal during Phase-II studies, has been sent to IOCL-R&D, laboratory at Faridabad for product evaluation and characterization study. This study is essential to upgrade the products to marketable specifi cation. The study is in progress at Faridabad.

9.0 - Crude oil production:

OIL has been maintaining an increasing trend in indigenous crude oil production in the recent past. A number of measures in its main producing fi elds in Assam and Arunachal Pradesh are underway to increase productivity. A few of them are listed below:- Dehydration Plant, Moran CTF: Construction work has been completed in all respects and commissioning is expected during 2010-2011.

OCS Bhogpara: The Contract for construction of the tanks deferred due to litigation resulting in delay; however, activities are expected to commence during 2010-2011.

Additional EPS at Barekuri and at Makum: All materials have been procured for respective EPSs. Currently, land acquisition and contract preparation is in progress for both and construction is expected to commence during 2010-2011.

Pipeline-8 inch x 42 Km (Crude Oil): Baghjan to Secondary Tank farm (TF), Duliajan. Material procurement and receiving is in progress. Simultaneously, the laying contract is under fi nalization and expected to commence execution during 2010-2011.

State-of-art OCS at Barekuri: Land acquisition has been completed and the area is being developed. Contract preparation is in progress. Construction is expected to commence during 2010-2011.

Storage capacity augmentation ITF at Tengakhat: Tender for construction contract was fl oated but single bidder quoted unreasonably higher than our internal estimates.Hence the tender was cancelled and is being re-fl oated. Construction job is expected to commence in 2010-2011.

- Natural Gas Production

OIL is presently producing on an average around 6.0 MMSCMD of natural gas from its Upper Assam & AP fi elds to meet its internal requirements and market commitment of approx 5.0 MMSCMD. OIL has committed to supply 1.0 MMSCMD natural gas to Numaligarh Refi nery by 2010 and 1.35 MMSCMD of Natural Gas (feedstock fuel) to Brahmaputra Cracker and Polymer Ltd. by April, 2012. A number of actions are underway for development of the gas production potential and infrastructure development for collection and distribution network involving considerable investments. It is planned to enhance production potential from the present level to nearly 10.0 MMSCMD in the north-east mainly from non-associated gas source by additional drilling and work over to meet the future requirement of natural gas and to compensate for calorifi c value to consumers in post-cracker scenario and the cushion gas required for operational fl exibility. In order to meet the demand the Company has initiated various time bound actions for development of Non-Associated Gas fi elds and distribution network infrastructure. A few of them are listed below:

Gas Infrastructure Development: Drilling of development gas wells, conversion of wells to gas wells through work over, de- bottlenecking pipeline network system and augmentation of compressor capacity for optimum utilization of available gas thereby reducing gas fl aring to a minimum.

Construction of Gas Gathering Station

Construction of a Central Gas Gathering Station (CGGS) at Madhuban ( well 50), Duliajan is in progress including a few Field Gas Gathering Stations (FGGS) for N.A. gas well production.

Development of gas network for supply of natural gas to BCPL.

Pipeline (Natural gas)-16 inch x 37 Km Baghjan to well 50, Duliajan. Material procurement and its receipt is in progress. Simultaneously, the contract is nearing fi nalization and is expected to commence execution in 2010-2011.

Pipeline (Natural gas)-16 inch x 20KM Chabua to Madhuban (well 50), Duliajan. Material procurement and its receipt is in progress. At the same time, contract is nearing fi nalization and is expected to commence execution in 2010-2011.

Pipeline - 6" dia x 60 Km: Gas pipeline from Kumchai to Dumduma to evacuate the fl ared gas at Kumchai is planned.

- Liquefaction of Natural Gas

Since the discoveries made in recent past are located in remote areas, though the crude oil production can be transported by browsers to the proximate processing facilities, the utilization of associated gas is not possible due to the non- availability of local consumers in those remote areas and evacuation through long distance pipeline is not a viable solution due to the small volumes. In order to utilize and monetise the associated gas and obviate fl aring and ensure abatement of harmful effects of greenhouse gas emissions, it is envisaged to establish a commercially viable and proven small scale Liquefi ed Natural Gas (LNG) plant as a pilot project at Mechaki-II including establishment of associated facilities like LNG Storage, LNG Transportation, Transportation of intermediate fraction produced during the liquefaction process along with re-gasifi cation plant. Based on the success of this small scale LNG plant, OIL may consider extending the technology to its other fi elds. Since there is no market of LNG in the area, the LNG will be re-gasifi ed and injected into the proximate gas grid. In this context bidders conference has been held with eleven parties and the tender will be floated shortly.The plant shall be commissioned within a period of 2 years from the date of issue of LoI.

- Exploitation of Shale gas

OIL has also initiated the process of examining the prospect for exploitation of shale gas opportunities in the North Eastern Region towards which actions are at hand for appointment of a consultant and collection of data from GSI.

10.0 VIGILANCE

Honesty, Integrity & Transparency are the foundation stones of a trust worthy society. To propagate this paradigm a number of vigilance awareness programmes and seminars were conducted across the organization in order to inculcate commitment to values and redefi ne the role and responsibilities of the line managers in vigilance activities. Also a booklet on the same was released.

11.0 QUALITY ASSURANCE AND CUSTOMER DELIGHTING

OILs improved quality control initiatives in the recent past, by construction of Intermediate Tank Farm with dehydration facility, have helped to considerably bring down the BS&W content in delivered crude to the refi neries to an acceptable level. A secondary tank farm with similar dehydration facilities is under construction stage and likely to be operational from 2012 when the current level of BS&W is expected to match with the international standards.

12.0 RESEARCH AND DEVELOPMENT

The Company gives great importance in continuous upgradation of technologies and expertise in various areas of activities through its own Research & Development Centre. The details of activities carried out are given in Form - B of this Report.

13.0 INDUSTRIAL RELATIONS

Harmonious and cordial relations were maintained with the employees recognized Union. The employees Union has extended full co-operation and actively participated with the Management in sorting out employees problems and grievances. There was no incidence of man days loss by unionized employees due to industrial relations problems.

14.0 IMPLEMENTATION OF OFFICIAL LANGUAGE

In pursuit of Offi cial Language Act/Rules of the Govt. of India efforts are continuing towards increased use of Offi cial Language Hindi in offi cial work. Hindi Workshops were conducted from time to time so as to enable offi cers and employees to work in Hindi conveniently and effi ciently. Employees were encouraged through incentive schemes to attend Hindi Training Classes, Assamese Classes and to communicate in Hindi. Hindi Prabodh, Praveen and Pragya, and Assamese training classes were arranged for executives/employees of OIL and other member organizations of TOLIC, Duliajan. The Companys in-house Journal, "OIL News" was published in Assamese/Hindi & English. The Hindi Magazine "OIL KIRAN" was published exclusively to cover all activities related to Implementation of Offi cial Language and to promote Hindi amongst the employees and the public.

15.0 AWARDS

Your Company was accorded recognition for its meritorious services to its stakeholders as follows:-

North East Excellence Award

Oil India Limited has been conferred with the "North East Excellence Award" for large enterprises by the Indian Chambers of Commerce at the North East Business Summit in Kolkata on 8th January, 2010.

Heavyweight Miniratna PSU award

Oil India Limited received the "Heavyweight Miniratna" PSU award at the 2nd Dalal Street Investment Journal PSU Award 2010 ceremony at New Delhi.

Rupkar Bota

Shalmari-Dighalia Juva Sangha, an active youth club under Tinghkhong Revenue Circle in Dibrugarh District in appreciation of and genuine gratitude to OIL for the CSR projects (with special focus on the ongoing Project Rupantar) presented a special award named "Rupkar Bota" to OIL.

Rashtriya Rajbhasha Patrika Shield

In recognition of the remarkable work regarding propagation of progressive use of offi cial language Hindi and its implementation by generating wide interest amongst Hindi readers, OILs in-house Hindi magazine, ‘OIL KIRAN was conferred a special honour and appreciation by awarding RASHTRIYA RAJBHASHA PATRIKA SHIELD SAMMAN 2009 by Rashtriya Hindi Academy, Rupambara.

16.0 RECOGNITIONS

Oil India Hospital (Duliajan) has been recognized as a study centre for the ‘Certifi cate Course in Healthcare Waste Management by Indira Gandhi National Open University (IGNOU). This is the only PSU-hospital in the North-East to get this recognition. Doctors, nurses, paramedics, health-managers and other professional workers of any discipline with minimum 10+2 academic qualifi cation can apply for this certifi cate course of six month duration. The programme will impart knowledge to the participants in biomedical waste management not only to prevent spread of diseases but also to preserve our environment and familiarize them on the current laws and practices.This will also increase job opportunities for the local people.

17.0 CORPORATE GOVERNANCE

As stipulated under Clause-49 of the listing agreement, the Management Discussion & Analysis Report and the Corporate Governance Report have been incorporated as separate sections forming part of the Annual Report.

The Company also complies with the corporate governance guidelines enunciated by the Department of Public Enterprises, Government of India, for Government Companies, which has been duly certifi ed by M/s R & D Associates, Practising Company Secretaries.

The Board has enunciated a code of conduct for the Directors and Senior Management of the organization, which has also been hosted on the website. The same has been circulated to all concerned, who have affi rmed compliance with the code of conduct.

18.0 CHANGES IN THE BOARD OF DIRECTORS

Shri Ashok Anand, Directors (HR&BD) superannuated from the services of the Company on 30th April, 2010. The Board wishes to place on record its sincere appreciation of his valuable contribution to the Company.

Shri S.K. Srivastava was appointed as Director (Operations) on the Board of OIL on 01.10.2009. In terms of orders of GOI, MOP&NG letter no. O-32011/1/2008-ONG-I(pt-II) dated February 24, 2010, he was appointed as Director General (DG), Directorate General of Hydrocarbon (DGH) on deputation basis. In terms of the above Orders, Shri S.K.Srivastava was relieved from the post of Director (Operations), Oil India Limited with effect from 25.02.2010 (A.O.H).

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri. A. K. Luke, Director, Prof. Sushil Khanna, Director and Shri. Arun Kumar Gupta, Director retire by rotation and being eligible, offer themselves for re-appointment.

Brief resume of the Directors seeking Re-appointment, together with the nature of their expertise in specifi c functional areas and names of the companies in which they hold the directorship, number of shares held and the membership/ chairmanship of committees of the Board, as stipulated under Clause 49 of the Listing Agreement are given in the notice convening the 51st Annual General Meeting of the Company and form part of the Annual Report.

19.0 STATUTORY REQUIREMENTS

Section 274(1)(g) of the Companies Act, 1956 is not applicable to the Government Companies. However, none of the Directors of your Company is disqualifi ed as per provisions of Section 274 (1) (g) of the Companies Act, 1956. Your Directors have made necessary disclosures as required under various provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement.

Information as required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I forming part of this Report. Details of the Employees who drew remuneration exceeding the limits laid down under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 (as amended from time to time) are attached as Annexure II.

20.0 STATUTORY AUDITORS

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s S R B & Associates, Chartered Accountants, Bhubneshwar and M/s Chatterjee & Co., Chartered Accountants, Kolkata were appointed as Joint Statutory Auditors for the financial year 2009-10.

The Auditors remuneration for the year 2009-10 has been fi xed at of Rs.8,00,000.00 (Rupees eight lakhs only) each plus travelling and out-of-pocket-expenses, if any, in addition to the aforesaid amount for carrying out the statutory audit for the year 2009-10

Comments of the C&AG forms part of this Report. There is no qualifi cation in the Auditors Report and there are no supplementary comments by C&AG under section 619(4) of the Companies Act, 1956. Notes to the Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments.

21.0 COST AUDITORS :

Pursuant to the direction of the Central Government for Audit of Cost Accounts, your Company appointed M/s Musib & Associates, Cost Accountants, for auditing the cost accounts of your Company for the year ending 31st March, 2011.

22.0 DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under the Section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confi rmed that:

(i) In the preparation of the annual accounts for the financial year ended 31st March, 2010, all applicable accounting standards had been followed, along with proper explanations relating to material departures;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31.03.2010 and of the profi t of the Company for the year ended on that date;

(iii) The Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors had prepared the accounts for the financial year ended 31st March, 2010 on a ‘going concern basis.

23.0 ACKNOWLEDGEMENT

With the initiatives through the renewed Vision of enlarging the Companys contribution and with our combined zeal, commitment, experience and expertise, your Directors look forward to another year of fruitful operations combined with an overall improvement in effi ciency during the year 2010-2011.

Your Directors acknowledge the guidance and support of the Ministry of Petroleum & Natural Gas, all other Ministries and agencies in Central and State Governments. Your Directors express their gratitude and thanks to the Shareholders, Customers, Suppliers and other business partners/associates for their continued co-operation and patronage.

Your Directors wish to place on record their deep sense of appreciation for the devoted services of all Oil Indians for its success.

For and on behalf of the Board of Directors

Sd/-

(N.M. Borah) Chairman & Managing Director


Mar 31, 2009

On behalf of the Board of Directors of the Company, I take great pleasure in presenting the 50th Annual Report on the working of the Company for the fi nancial year ended 31st March, 2009 along with the Audited Statement of Accounts, Auditors Report and the Comments on Accounts by the Comptroller and Auditor General of India.

A SCINTILLATING HALF A CENTURY

You will be pleased to know that your Company has completed a long and eventful 50 years of its existence on 18th February, 2009. It has come a long way from those early days when it started operating in the Naharkatiya fi eld.

Your Company is now the second largest national oil and gas Company in India as measured by total proved plus probable oil and natural gas reserves and production. It is now operating in India with 3 pre-NELP JV blocks (1 production and 2 exploratory) and 24 NELP blocks (Operatorship in 12 onshore blocks) besides having participating interest in 17 blocks in 7 countries overseas (Operator in 2 countries).

Your Company now produces about 10.41% of overall domestic crude oil and 6.91% of natural gas production which translates to over 25% of the total onshore production of oil and gas.

Your Company has large proved plus probable reserves of crude oil and natural gas in the Upper Assam basin.

Your Company has also diversifi ed into the midstream and downstream sector of the hydrocarbon industry. In the midstream sector your Company is holding a 10% stake in a 741 kilometre product pipeline in Sudan, constructed in 2005 on BOO basis in addition to owning (i) 100% in Trunk Crude Oil Pipeline between Duliajan and Barauni (ii) 100% in Product Pipeline between Numaligarh and Siliguri (iii) 23% stake in DNP Limited. In the downstream sector your Company is holding 26% stake in Numaligarh Refi nery Limited and 10% stake in the Brahmaputra Cracker & Polymer Limited.

PERFORMANCE NUGGETS

a) Highest ever profit of Rs. 2161.68 crores during 2008-09

b) Highest ever crude oil production. About 12 % more than the 2007-08 production.

c) Highest ever crude oil sale. About 12 % more than the 2007-08 sale.

d) Highest ever daily gas production rate of 6.43 MMSCMD in the North East.

e) Enhancement of daily production potential to 0.93 MMSCMD in Rajasthan (highest ever production potential).

f) Achieved highest ever horizontal displacement of 846m with S-bend trajectory (NHK #575).

g) Made 4 commercial hydrocarbon discoveries in Assam. Mechaki-2 discovery is the deepest on-land commercial hydrocarbon discovery in India (5556 m) so far and the well is already contributing to production of oil & gas.

h) Highest ever 3D seismic survey: 3495 SQKM, about 305 % higher than 2007-08 (Earlier highest: 1145 SQKM in 2007-08).

i) Completed acquisition and processing of fi rst ever 4D seismic survey in OIL over Dikom fi eld.

j) The GIS application centre is now fully operational for planning and execution of seismic survey operations.

k) Completed and commissioned 660 km long Numaligarh – Silliguri Product Pipeline.

l) Bagged 4 nos. blocks in NELP-VII round of bidding, 1block as operator and 3 blocks with PIs.

m) Acquisition (farming in) of overseas blocks in East Timor Leste (offshore block) and Egypt (two offshore blocks).

n) Four of our AC-SCR drilling rigs S-2, S-3, S-4 and S-7 were accredited with ISO 9001-2000 certifi cation.

o) Creation of a Technology Park in the vicinity of OILs discovery well NHK#1. The Park was inaugurated and declared as OIL Heritage Site by Honourable Chief Minister of Assam.

p) Five nos. of 600 HP new Workover rigs were procured and commissioned during the year. These have replaced fi ve old workover rigs.

q) Trained 732 numbers contract workers in the fi eld of S.H.E for the fi rst time in OIL.

r) As part of our continuous effort to comply with the requirements and guidelines of IE Rules, OISD and DGMS, the earthing systems were revamped in 5 substations and 7 industrial installations.

s) Carried out mechanical repair/overhauling jobs of over 40 heavy and critical fi eld equipment (drawworks, rig pumps, engines etc.) with in-house infrastructure. Similarly electrical repair jobs were carried out for a variety of about 750 electrical machines with in-house expertise.

t) Power availability from the captive Power Station at Duliajan was 99.96%.

u) The total station power consumption in the captive Duliajan Power Station was 1.04% of the total power generation, against industrial standard of 1-1.5%.

v) 2 nos of new ACPCRs for ACSCR Drilling rigs were commissioned.

w) Services in the form of equipment on rental, R&D & chemical laboratory services, well completion service etc. were rendered to other E&P operators and generated revenues of over Rs. 22 Crores.

x) Won the prestigious Greentech Environmental Excellence Gold Award – 2007 for its efforts in green movement and environmental protection in its oil fi elds.

y) Received national level award for best performance amongst upstream sector oil companies for the activities/ programs carried out by Oil India Limited during OGCF 2008.

z) OILs 190-bed hospital (Oil India Hospital) at its fi eld headquarter obtained Integrated Management System Certifi cation (ISO9001:2000, ISO 14001:2004 and ISO 18001:2007) during the year. Oil India Hospital is the fi rst public sector hospital in the north-east to be ISO accredited.

aa) Six Independent Directors inducted into OIL Board as part of Good Corporate Governance.

ab) Introduced "e-sampatti" for online submission of property returns.

ac) Introduced Revised Employees Suggestions Scheme.

ad) OILs Football Team is fi rst ever team from North-East to have qualifi ed for Federation Cup Football Tournament.

ae) Won prestigious PSPB and AIPSSB Golf Tournaments.

af) Shri Subhajit Saha, Table Tennis Player was awarded Arjuna Award and the Company awarded him with a cash prize of Rs. 3.00 lacs.

ag) OILs Women Table Tennis Team was the winner in PSPB.

1.0 PERFORMANCE

FINANCIAL HIGHLIGHTS

Rs / Crore 2008-09 2007-08

A. INCOME

a) Operating Income 7241.45 6081.95 b) Interest & dividend income 671.10 492.56 c) Gas subsidy 142.77 155.27 d) Misc income 123.31 29.16 e) Other adjustments including prior period items (40.75) 36.51 Total 8137.88 6795.45

B. EXPENSES

a) Operating Expenses 1006.96 763.63 b) (Increase)/decrease in stock 13.00 (22.06) c) Statutory duties 2216.10 2260.32 d) Interest & Exchange loss 2.59 38.29 e) Depreciation, Depletion write offs of assets/wells/debts and G&G cost/ 1454.21 956.18 Corporate Offi ce Expenditure f) Business Development Expenses 32.02 27.51 g) Other adjustments including prior period items 26.03 58.19 Total 4750.91 4082.06 C. profit before Tax 3386.97 2713.40

D. Less: Provision for Tax (including deferred tax liability) 1225.29 924.47

E. profit after Tax & available for distribution 2161.68 1788.93

- The Company earned higher profit after tax despite sharing a higher subsidy burden on crude oil and LPG and paying higher amount of statutory levies compared to previous year. The total subsidy share was Rs. 3023.28 Crore in 2008-09, compared to Rs. 2305.09 Crore in 2007-08, which works out to 31.16% increase.

- The Shareholders Fund as on 31.03.2009 was Rs. 9331.02 Crore against long term loan amount of Rs. 56.45 Crore giving a Debt Equity Rates of 1:173.04 against 1:113.33 in the previous year.

- Earning per Share (EPS) had increased to Rs. 101.01 in 2008-09 compared to Rs. 83.59 in 2007-08.

APPROPRIATION

Directors recommend the following appropriations:

Rs/ Crore

2008-09 2007-08

a) Interim Dividend @ 150 % (Previous Year - 125%) 321.01 267.51 b) Final Dividend @ 155 % (Previous Year - 150%) 331.70 321.01 c) Corporate Dividend Tax 110.93 100.01 d) Transfer to General Reserve 1398.04 1100.40 Total 2161.68 1788.93

DIVIDEND

The Company paid an interim dividend @ 150% (previous year 125%), based on the provisional financial trend of the Company. The Board of Directors are now pleased to recommend a fi nal dividend @ 155 % on the paid up capital making the total dividend of 305% (Previous year 275 %) for the fi nancial year, subject to the approval of the shareholders at the ensuing Annual General Meeting. It is also proposed to transfer the balance of Rs. 1398.04 Crore to the General Reserve.

PHYSICAL PERFORMANCE

a) The crude oil production (3.47 MMT) during the year was the highest ever by the Company so far. The increase of about 12% in oil production vis-à-vis the previous year (2007-08) is the most signifi cant physical achievement of the year. In terms of natural gas, the production potential was enhanced, but the actual gas production and sale was less than the previous year due to markets inability to uplift committed quantities of gas.

b) The recent discovery of commercial hydrocarbon in Mechaki west structure at a depth of 5550 m, in upper Assam basin is the deepest onshore commercial discovery of the nation. The discovery well Mechaki

2, drilled to a depth 5600 m+ has opened up a new vista for exploration in the Upper Assam basin. The well was drilled and completed with complete in-house efforts and is currently producing both crude oil and natural gas.

c) The Company was able to set new records of performance in respect of the following amidst adverse environmental condition in some of its major operational areas during the year.

- Highest ever crude oil production about 12% more than the 2007-08 production.

- Highest ever crude oil sale. About 12% more than the 2007-08 sale.

- Highest ever daily gas production rate of 6.43 MMSCM in the North East.

- Highest ever 3D seismic acquisition of 3495 SQKM (1,145 SQKM in 2007-08)

- Highest ever terminal rate of crude oil production 3.51 MTPA [3.43 MTPA in 2007-08].

- Highest ever CTU operation of 163 (previous highest 129 in 2007-08).

- Highest ever daily average gas processing of 79.52 MMSCF in LPG plant since its inception.

- Highest ever average daily production of condensate in last 12 years (73.07 Tonnes/day).

d) The Company is making continuous effort in various fronts for exploration activities and business expansion. A few activities of strategic importance pursued during the year are as under:

- There have been four new commercial hydrocarbon discoveries during the year, all in Upper Assam.

- As compared to 100 drilling locations available in April, 2008, 144 locations have been approved for drilling as on April, 2009, indicating a comfortable position of the Company in respect of forward drilling locations.

- Drilling of horizontal wells helped in augmenting production buildup in Makum area.

- Percentage of suspended water in delivered crude to Refi neries could be restricted to 0.42 % by weighted average with signifi cant improvement compared to previous year (0.46% in 2007-08).

- 721 GLKM of 2D Seismic survey was completed in Gabon. Another 279 GLKM of 2D survey is being completed in 2009-10.

- 3D acquisition of 700 SQKM in Libya was completed during the year. Two wells are planned to be drilled during 2009-10.

- The Company was rated, "Very Good" in MOU for the year 2007-08 and expected to be rated ‘Excellent", in 2008-09.

- Introduction of solar power system for Jorajan Magazine House for area lighting.

- Introduction of solar water heating system in residential bungalows.

2.0 STATUS OF RESERVES

The status of oil and gas reserves of the Company as at 31.03.2009 is as under: Proved Developed Reserves

Area of operation Crude Oil Production Position as Additions / Quantity Position as at 01.04.08 Revisions (2008-09) at 31.03.09 MMKL MMKL MMKL MMKL

Assam 35.0350 3.3560 3.8593 34.5317 Arunachal Pradesh 0.9104 -0.2271 0.0413 0.6420 (Kumchai) Rajasthan 0.0000 0.0000 0.0000 0.0000 JVC-India 1.2888 0.0000 0.0300 1.2588 Total 37.2342 3.1289 3.9306 36.4325

Natural Gas



Area of operation Crude Oil Position as Additions/ Quantity Position as at 01.04.08 Revisions Sale at 31.03.09 (2008-09)

MMKL-OE MMKL-OE MMKL-OE MMKL-OE

Assam 23.5600 10.3660 1.573 32.3530 Arunachal Pradesh 0.0000 0.0000 0.0000 0.0000 (Kumchai) Rajasthan 2.4040 0.0000 0.2040 2.2000 JVC-India 0.0000 0.0000 0.0000 0.0000 Total 25.9640 10.3660 1.7770 34.5530

3.0 TECHNOLOGY INDUCTION, UP-GRADATION AND INNOVATION

The Company is continuously striving for enhancing technological capabilities for exploration success, enhanced production, operational improvement and effi cient performance. A Technology Management Team (TMT) was formed in January 2006 which continuously scouts for technologies suitable for oil fi eld operations resulting in production enhancement and cost reduction. The following are some of the technologies absorbed/ upgraded during the year.

- The existing geologic modelling software PETREL was upgraded to PETREL 2009 which now makes it possible to work on multiple regional 2D and 3D datasets under the same canvas.

- Acquired the Integrated Irap RMS solution which allows multiple disciplines to work together in parallel leading to acceleration of the fi eld development planning cycle.

- An E&P Field Development Centre equipped with state-of-the-art industry standard software, hardware and aesthetic working environment is now fully functional at Duliajan.

- Pilot study on curvature analysis, spectral decomposition and multi component 2D data acquisition in Geophysical front.

- Use of Solid control equipment like LMSS, Centrifuges etc of latest technology (OIL own 3 sets of LMSS and procurement process for another 6 sets are on) for better mud engineering.

- Use of Amine mud in drilling the curve sections of horizontal wells have resulted in trouble free drilling and Non Damaging Drilling Fluid (NDDF) used for the drain hole sections have provided fast activation of wells and better productivity.

- Use of microbial paraffi n remediation technique to minimize wax deposition in tubing.

- New state-of-the-art IP based Avaya make survivable media gateways (mini exchanges) installed at Digboi, Kharsang, Manabhum, South Bank, Tengakhat, Dikom and Kathalguri replacing cable network and nearly obsolete MART communication system.

- Two new open-hole logging units having state of art "Log-IQ System".

- 2nd generation micro-imaging XRMI tool capable of measuring high resistivity formations in a highly conductive borehole.

- 3rd generation crossed dipole WSS tool capable of measuring slowness, porosity and anisotropy of formations using shear and compressional waves.

- Introduction of multivariable transmitters, electronic level transmitters, digital smart transmitters and electronic digital valve controllers in place of mass fl ow meter, pneumatic level transmitters, analog transmitters and pneumatic valve positioners respectively in the LPG processing plan.

- A new smoke detection system was installed in LPG Recovery plant as a part of the up-gradation of the fi re protection system of the plant.

- Solids free and environment friendly Potassium Formate drilling fl uid system was introduced for drilling operations.

- Solids free and environment friendly Sodium Formate brine system was introduced as the regular fl uid workover operations.

- Video conferencing facility between Corporate Offi ce, NOIDA and Duliajan offi ce.

- Document Management System (DMS) for maintaining land records.

- Introduction of Blade servers which reduces space and power requirements.

- Implementation of enterprise-wide email solution using Microsoft Exchange.

- Implementation of SAP Travel Management module for arrangement of passage booking and settlement of claims for offi cial visits as well as LFA / LTC.

- The latest 2D and 3D drawing software AUTOCAD 2009 with 10 nos. of work stations were installed in the Design, Drawing and Survey section of Civil Engineering department.

- Total Station, a Theodolite with built in Electronic Distance Measuring and Microprocessor, was installed and commissioned which will save a lot of time and paper work in survey works.

- An integrated system of anaesthesia machine with multi parameter monitors for better and safer delivery of anaesthetics was put into operation in Oil India hospital.

- Energy effi cient rotary compressors were selected to replace the old reciprocating compressors while procuring new air-conditioners.

- Introduced maintenance free polycrete CTs and PTs for H.V. switchyards, totally eliminating the need for any maintenance.

- Highly accurate Numeric protection relays, which also require less maintenance, were introduced in the power distribution network replacing the older electro-mechanical relays in the H.V. substations.

- Multi-component seismic data acquisition along 2D profi les (2D-3C survey) introduced in the Upper Assam basin, two nos. of state-of-art high capacity 3D data acquisition systems were procured and commissioned, seismic data retrieval and archiving system is upgraded with new generation high density data storage media.

4.0 DISCOVERY OF OIL AND GAS

The following oil and gas discoveries were made during the year.

4.1 Nominated Areas

NHK-568 (Loc. HTA)

Central part of the West Madhuting structure, Assam On testing, the well produced gas.

Established In-Pace and EUR accretion of 1.84 MMStdKls (2P) and 0.98 MMStdKls (Best Estimates) O+OEG respectively in this area.

Makum-29 (Loc. HQN) West Makum Structure, Assam On testing, the well produced oil.

Established In-Pace and EUR accretion of 1.90 MMStdKls (2P) and 0.57 MMStdKls (Best Estimates) O+OEG respectively in this area.

NHK-572 (Loc. HTB) Madhuting Structure, Assam On testing, the well produced oil.

Established In-Pace and EUR accretion of 1.71 MMStdKls (2P) and 0.71 MMStdKls (Best Estimates) O+OEG respectively in this area. Mechaki-2 (Loc. TX)

Mechaki West Structure, Assam On testing, the well produced oil and gas.

Established In-Pace and EUR accretion of 4.95 MMStdKls (2P) and 1.87 MMStdKls (Best Estimates) O+OEG respectively in this area.

5.0 PROJECTS IN NOMINATED AREAS (IN-COUNTRY)

5.1 Rajasthan

Jaisalmer PML area

Gas fi elds of Tanot, Dandewala & Bagi Tibba are within this PML. The gas produced in this area is being supplied to M/s RRVUNL through GAIL (India) Limited for generation of electricity. New gas supply agreement has been entered with M/s RRVUNL with enhanced price of gas for supply @ 0.90 MMSCMD against the current withdrawal level of approximately 0.654 MMSCMD for three (3) year period. To meet with the enhanced gas demand, three development gas wells were drilled during 2008-09 in Dandewalla area.

Baghewala PML area

Heavy Oil fi eld of Baghewala is located in this PML area. Baghewala fi eld was being studied jointly in two phases by OIL and M/s Petroleos de Venezuela SA (PDVSA) of Venezuela under a technological tie up for last few years. On completion of its Integrated Reservoir Study under phase-I, M/s PDVSA Intevep (Venezuela), the collaborator; indicated 53 MMT (Indicated Category) oil-in-place in upper carbonate and 78MMT(25 MMT- proved category) oil-in-place in lower Bilara + Jodhpur sand stone. Based on this study, Company decided to carry out implementation of pilot project in Baghewala fi eld, which included drilling of two pilot wells, cyclic steam injection and production of heavy oil and bitumen for about one year under technical guidance of PDVSA Intevep. Drilling of the fi rst pilot test well was completed during 2005. Trial steam injection was carried out for a few days during July 2006 and also during December 2007. Steam injection was temporarily suspended since continuous injection could not be sustained mainly due to surface and sub-surface problem.

5.2 Ganga Valley Project (GVP)

OIL carried out an in-depth analysis of all available geoscientifi c data through in-house efforts, by engaging consultants from in-country and abroad. All these studies suggested that the area is of high risk and low return. The GVP area was relinquished. In future, OIL might however, pursue exploration activities in Ganga Valley areas through future bidding rounds, depending on merits of the block(s) with consortium partners.

5.3 North East Frontier Project (NEF)

The E&P activities under NEF project spread over in two PMLs are Ningru and Ningru Extension and four nomination PEL areas Jairampur, Namchik, Namsai and Deomali.

NINGRU

(Manabum)

OIL acquired around 554 GLKM of seismic data in the logistically diffi cult areas of Manabum in Arunachal Pradesh since 2003. During 2004-05, around 350 GLKM seismic data was simultaneously processed by M/s FSIL, UK and M/s TEEC, Germany and the same was interpreted by M/s FRL, UK. Based on interpretation, three drillable prospects were identifi ed. One exploratory drilling location (NMA) has been released. Meanwhile, civil survey for road & plinth preparation has been completed and your Company has applied for de-reservation of forest land involved. Actions for civil construction work would start once forest clearance is obtained. Exploratory drilling is expected during 2010-11.

JAIRAMPUR (THRUST BELT)

Jairampur

OIL acquired around 75 GLKM seismic data during 2004-05. In-house processing and interpretation of the data has been completed. Simultaneously, the data had been outsourced to M/s Paradigm, Mumbai for processing and interpretation to identify drillable prospects. Based on the integrated interpretation seismic and other geological data, one location .( Location-JRB) in the Jairampur area was released for exploratory drilling during the year. However, the original surface position of the Location JRB was on a hill top at a height of around 600 m from the foot of the hill. Considering the logistic diffi culties, the location was subsequently re-oriented to a new position having less elevation and a J-bend drilling is planned from the revised position to probe the hydrocarbon prospectivity of Jairampur area. Civil survey for road and plinth has been completed and your Company has applied for forest clearance. Action for civil construction would start once forest clearance is obtained.

Namsai

For location-NSA (Namsai area), Pre-drilling EIA study has been completed, Public Hearing was held and fi nally environment clearance was obtained on 02.12.2008. Civil preparations are completed. Your Company is planning to spud the well by 2nd quarter of 2009-10.

Namchik (Kharsang-Sonking)

2D seismic acquisition commenced after the monsoon break. Meanwhile, after carrying out processing and interpretation of old data, one prospective location was identifi ed and civil survey completed. Deforestation proposal was submitted to CCF, Itanagar.

Deomali

Your Company has planned to acquire 100 GLKM of 2D seismic data and based on the results of new seismic survey to drill one well under the minimum work programme.

BRAHMAPUTRA RIVER BED SURVEY

Your Company has a plan to carry out 1,700 GLKM of 2D seismic survey in parts of river Brahmaputra in Upper Assam as a part of its hydrocarbons exploration activities. A few NGOs and Public Organizations had expressed their concerns against the survey apprehending ecological imbalance in river Brahmaputra, particularly of threat to river dolphins present in the river. Presently a Multidisciplinary Advisory Group (MDAG) consisting of experts on the subject is studying the various aspects of the issue. The MDAG will also guide Oil India Limited (OIL) on this issue in future. OIL decided to keep the BRB survey plan in abeyance till clearance is received from MOEF to go ahead with the survey.

6.0 NELP BLOCKS

OIL acquired varied participating interests in a total of 24 blocks up to the end of NELP-VII bidding round. Out of these, 16 are onshore and the rest 8 are offshore blocks. OIL is the operator in 12 onshore blocks. Work is in progress in all these blocks as per the committed Minimum Work Programme (MWP).

6.1 NELP Blocks – with OILs Operatorship

Out of the 12 OIL operated blocks, four blocks are in the State of Assam (AA-ONN-2002/3, AA-ONN-2003/3, AA-ONN-2004/1, AA-ONN-2004/2), one block in Mizoram (MZ-ONN-2004/1), six blocks in Rajasthan (RJ- ONN-2000/1, RJ-ONN-2001/1, RJ-ONN-2002/1, RJ-ONN-2004/2, RJ-ONN-2004/3 and RJ-ONN-2005/2), and one is in Krishna Godavari basin in Andhra Pradesh and partly in Puduchery ( KG-ONN-2004/1).

In Assam, survey operation in Sadiya Block under NELP-V commenced in January 2008 and a total of 46 SQKM of data has been acquired so far. The Data acquisition in respect of the two NELP-VI blocks in Assam, was taken up on a fast track basis. 3D acquisition of total 157 SQKM has been completed in Dibrugarh block during the year. Meanwhile, on the basis of available data and interpretation result, drilling plan has been fi rmed up for Amguri & Dibrugarh block and drilling will be taken up during the 4th quarter of 2009-10. In respect of NELP-IV block in Karbi-Anglong, severe environmental problems have led to slow progress of work.

In Mizoram, despite diffi cult logistic and remote road connectivity, data acquisition through 2D survey is under progress and 550 GLKM of data has been acquired during the year.

In KG Basin, actions are on for acquisition of 549 LKM of Aeromagnetic survey data and 400 SQKM of 3D survey data in the KG-Block during 2009. However, reprocessing and interpretation of old 2D data for the block was completed during the year.

In Rajasthan, exploratory works in six NELP blocks, acquired up to the end of NELP-VII bidding round are at different stages of scheduled work program. So far, four exploratory wells have been drilled in two NELP blocks. Drilling at one location at Pinodah-1, under NELP-II block was completed during 2007-08. Evidences show presence of heavy bituminous oil in the upper carbonate formation in this location requiring special thermal/ chemical stimulation technique for fl ow of oil. Three wells, drilled in NELP-III block during 2006-07 have undergone post drilling evaluation in 2007-08 and JV partners decided to pursue further exploration entering into phase-II. Your Company has completed API of 155 SQKM of 3D survey in this block and one location has been released. Similarly, actions are on for carrying out survey in 1 block under NELP-IV and 2 blocks under NELP-VI. The PEL in respect of the remaining block under NELP-VII is awaited.

6.2 NELP Blocks - with OILs Participating Interest

OIL with other consortium partners has participating interest in 12 NELP blocks. Out of these, four (4) blocks are in onshore areas in Assam and West Bengal, eight (8) are in offshore (1 shallow water + 7 in Deep water) in Mahanadi, Krishna-Godavari, Cauvery and Andaman. In all these NELP blocks, exploratory works are in progress and are at different stages of completion.

Area Basin Blocks No. of Blocks

AA-ONN-2001/3

Assam-Arakan AA-ONN-2002/4 3 Onshore

AA-ONN-2005/1 West Bengal WB-ONN-2005/4 1 Mahanadi MN-OSN-2000/2 1

KG-DWN-98/4

KG-DWN-2002/1 Offshore Krishna-Godavari 4

KG-DWN-2004/5 KG-DWN-2004/6 Cauvery CY-DWN-2001/1 1 Deepwater Mahanadi MN-DWN-2002/1 1 Andaman AN-DWN-2005/1 1

Total 12

6.3 Pre-NELP Blocks

Blocks Under JVC

Exploration Blocks

Your Company is carrying out exploration activities in 2 pre-NELP JV blocks. M/s Reliance Industries Ltd (RIL) is the operator for the offshore block, GK-OSJ-3 in Gujrat-Kutch Offshore while M/s Hindustan Oil Exploration Ltd. (HOEC) is operator in the onshore block, AAP-ON-94/1 in Assam-Arakan Basin. OIL has a participating interest of 16.129% with Carried Interest of 30% in AAP-ON-94/1. In this block, discovery of commercial gas in the shallow Girujan reservoirs was established in the well Dirak-1. The appraisal programme has been submitted to DGH and approval obtained.

Production Block

Kharsang Oil Field In Arunachal Pradesh:

Company with a Participating Interest of 40%, entered into a PSC with Government of India in consortium with M/s Geo Petrol International Inc, France (25%), M/s Jubilant Enpro Ltd., India (25%) and M/s Geo Enpro Petroleum Ltd, India (10%) on 16.06.1995. The fi eld produced 66,099 Tonnes during 2008-09 (previous year 60,174 Tonnes) of crude oil, out of which your Companys share was 26,440 Tonnes (Previous year 24,285 Tonnes).

6.4 Projects Overseas

Overseas acquisition efforts of your Company continued throughout the year and the achievements as well as status of the ongoing overseas projects are summarized below:

6.4.1 Status of Ongoing Projects

Iran: Exploration Service Contract – Farsi Offshore [OVL-40% (Operator), IOCL -40 % & OIL -20 %]

Master Development Plan for gas production has been approved by National Iranian Oil Company (NIOC). OVL submitted a fi eld development plan to Iranian Offshore Oil Company (IOOC). Future course of action by the consortium partners is under various stages of discussion.

Libya: Area 86, and Block 102/4 [OIL-50% (Operator) & IOCL -50%]

OIL as operator of the consortium has completed the 2D & 3D seismic data API. It is proposed to spud-in the fi rst exploratory well by 3rd Quarter of 2009-10.

Libya: Area 95/96 [ Blocks 95/ 2, 96 / 1, 2 & 4] [Sonatrach – 50% (Operator), OIL- 25% & IOCL- 25%]

OIL in consortium with M/s SONATRACH, Algerian National Oil Company was successful in acquiring 4 Blocks under the Libyan EPSA Gas Bid Round IV held during 2007. The consortium was awarded this area (comprising of 4 blocks - 6934 sq km) located in the south western part of Libya amidst stiff international competition. The consortium is led by Sonatrach (50% -Operator) with OIL & IOCL 25% each. The PSC for the acreage was signed on 25th May, 2008. Acquisition of 2D & 3D seismic data is planned in 2nd quarter of 2009-10.

Gabon: Block Shakti [OIL - 45%, (Operator), IOCL - 45% & Marvis Petroleum 10%]

OIL as operator of the consortium has set up its offi ce at Libreville and started its work commitment. OIL completed 2D survey data acquisition of about 700 GLKM in the area. Processing and interpretation of the data is being undertaken. Based on 2D data interpretation, 3D seismic data is planned prior to taking up drilling activities.

Nigeria: Block OPL-205 [M/s Suntera Nigeria 205 Limited -70% & M/s Summit Petroleum (Operator) - 30%]

OIL and IOCL each are holding 25% equity stakes in Suntera Nigeria 205 Limited and effectively have 17.5% of PI in Block OPL- 205. The JV has since drilled 1 well, Otein - 2, inside the acreage as part of the work commitment. The well failed to encounter hydrocarbon and was abandoned. Contracts for carrying out 2D/3D seismic acquisition have since been awarded and work is expected to start shortly. Application for mining lease conversion has since been approved. The process for execution of necessary agreement has been initiated by the Operator.

Yemen: Block 82 & 83 [Medco Energi - 45% (Operator); Kuwait Energy-25%, OIL - 15% & IOCL - 15% ]

The consortium led by M/s Medco Energi, Indonesia signed the PSC agreement with Yemen Government on 13th of April, 2008 and the same was approved by Yemen Parliament in February 2009. Actions to meet work commitment under different phases of exploration are being started.

Timor Leste (East Timor): Area K [Reliance Energy Limited–75% (Operator), OIL- 12.5% and IOCL– 12.5%]

The Farm-in-agreement was executed on 02.06.2008. 3D seismic survey of 1,300 SQKM has been completed. Interpretation is in progress in Dubai.

Sudan: Product Pipeline [OVL-90% (Operator) & OIL -10%]

Further to completion of the product pipeline, the consortium has received 1 more instalment of payment during the year from MEM, Sudan, totalling 7 instalments so far.

6.4.2 Acquisition During 2008-09

During 2008-09, the Company was successful in acquisition of exploration acreage in Egypt as follows: Egypt: Blocks 3 & 4 [OIL - 25%, GSPC - 50% (Operator) & HPCL – 25%]

OIL in consortium with GSPC and HPCL was successful in winning 2 blocks, Block Nos. 3 and 4, in the last bid round offered by GANOPE, Egypt.

Apart from the above, the Company is scouting for various E & P opportunities in Algeria, Kazakhstan etc. as well as M&A portfolio of various small sized E & P companies across the Globe.

7.0 BUSINESS DEVELOPMENT

Business Development and Third Party Project

During the year, the Company generated revenue to the tune of Rs 0.61 Crore and US $ 23,340 by providing laboratory, rental or expert consultative services to a number of parties. The department is continuously scouting for E&P business both in-country and overseas. Flow of large number of enquiries and tenders from national and international companies for providing E&P services shows an optimistic scenario and scope for business expansion through this project wing. In order to expand its strategic areas of E&P Service Business activities and to establish as a leading E & P Service provider, new initiatives have been undertaken to explore the possibility of Joint Venture / Strategic Alliance arrangement with internationally reputed Company(ies) and the preliminary progress in this regard has been satisfactory. In consideration of the enormous potential in E & P Service Business sector both in India as well as abroad, a review on the subject of acquiring additional resources solely for the purpose of service business activities has been undertaken.

Coal Liquefaction Project:

The Company entered into a contract with M/s HCTL of USA for this project in 2007. So far Process Optimisation test, process guarantee run, preliminary coal gasifi cation assessment and product upgrading tests have been completed.

Telecom Project

Till date 3108 pair route kilo meter of dark fi bre of pipeline department has been commercialized by leasing the same to different telecom operators in the State of Assam and West Bengal. This has earned revenue of Rs. 1070.31 lacs.

Your Company has also leased out telecom bandwidth of 2 Mb capacity and is in the process of leasing out an additional 2 Mb bandwidth. The expected revenue from the leasing of bandwidth would be around Rs. 9.7 lakhs per annum. The Company has received number of enquires and expression of interest from different telecom service providers for availing bandwidth under the NLD agreement.

NRL-Silliguri Product Transportation Pipeline

The pipeline was successfully put into commercial operation with effect from June, 2009.

8.0 POLICY INITIATIVES FOR FUTURE

Exploring In-Country traditional basins

- In view of the mandatory relinquishment policy of government in respect of pre-NELP nominated PELs, the Company is prioritizing activities in such areas for conversion of PELs into PMLs wherever discovery and commercial producibility have been established.

- Systematic implementation of recommendations of various geo-scientifi c consultative studies of the recent past for exploration of stratigraphic traps, re-development & revitalization of matured declining fi elds, intensive reservoir revitalization initiatives etc.

- Efforts will be to cover seismically logistically diffi cult areas including Brahmaputra River Bed, rugged hilly terrain in river confl uence and various diffi cult hilly areas in the NE.

- Efforts will be enhanced to reduce the number of sick wells by bringing them back to production.

Acquiring Exploration Blocks through NELP

OIL has so far acquired 24 NELP blocks with operatorship in twelve (12) blocks with Participating Interest ranging from 10% to 90% with other consortium partners. Various exploration activities are underway in respect of all these blocks. The Company will look for prospective opportunities in future too.

Acquisition of Equity abroad

OILs E&P initiatives overseas at present extend to seven countries including Libya, Gabon, Iran, Nigeria, Yemen, Timor Leste and Egypt. Exploration along with acquisition of producing property overseas is considered a major thrust area. A number of such potential opportunities are currently being examined. In order to fi rm up a policy and to prepare a check list for screening potential overseas E & P opportunities, a study is nearing completion with the help of an internationally reputed consultancy fi rm.

Crude oil production:

OIL has been maintaining an increasing trend in indigenous crude oil production during the year 2008-09. The Company has initiated a number of measures in its main producing fi elds in Assam and Arunachal Pradesh to increase production, which are listed below:

- A number of geo-scientifi c studies like Integrated Basin modeling studies, Revitalization of old fi elds, Jorajan re-development, Thrust belt prospects, Stratigraphic trap prospects, Non-Associated Gas Field development, Pilot study for carrying out Seismic Reservoir characterization of Eocene Reservoirs, Post Drill Analysis of exploratory wells, Audit and certifi cation of oil and gas reserves etc. were carried out in the recent past with the help of internationally reputed consultants and their recommendations like infi ll drilling, workover and enhancement in water injection are being implemented.

- Various IOR/EOR measures like enhancing water injection, MEOR technique by using micro-organisms, optimization through artifi cial lift methods by use of Electric Submersible Pumps (ESP), Jet-pumps etc. for bringing into production shut in wells have been implemented/intensifi ed.

- Drilling of Horizontal and J-bend wells.

- Charter hiring of six drilling rigs to compensate the shortfall of four in-house rigs retired in the recent past and also to intensify drilling operation including that in NELP areas of the NE.

- In order to produce heavy oil and bitumen from the Baghewalla fi eld in Jaisalmer district of Rajasthan, OIL had entered into technical collaboration with M/s PDVSA of Venezuela and drilled the fi rst pilot well, the testing of which remained inconclusive. Actions are now in hand to set up alternative arrangements for experimental cold production of heavy oil.

Natural Gas Production

OIL is presently producing around 6.0 MMSCMD of natural gas from its Upper Assam & AP fi elds to meet its internal requirement and market commitment of 5.472 MMSCMD. OIL has committed to supply 1.0 MMSCMD natural gas to Numaligarh Refi nery by 2009-10 and 1.35 MMSCMD natural gas (feedstock+fuel) to Brahmaputra Cracker and Polymer Ltd. from 2011-2012.

a) OIL plans to enhance its production potential from the present level to 10.0 MMSCMD in the north-east mainly from non-associated gas source to meet the future requirement of natural gas, compensation for calorifi c value to consumers in post cracker scenario and cushion gas required for operational fl exibility. In order to meet the demand, your Company has initiated various time bound actions for development of Non-Associated Gas fi elds and distribution network infrastructure.

- Drilling of development gas wells (drilled 12 NAG well since 2002-03)

- Conversion of wells to gas wells through workover.

- Debottlenecking pipeline network system and augmentation of compressor capacity for optimum utilization of available gas thereby reducing technical fl aring to minimum.

- Construction of a Central Gas Gathering Station (CGGS) and Field Gas Gathering Stations (FGGS) for N.A. gas well production.

- Development of gas network infrastructure for supply of natural gas to BCPL.

- Construction of a 6" dia x 70 KM gas pipeline from Kumchai to Dumduma to evacuate the fl ared gas at Kumchai.

- Construction of gas pipelines from Baghjan and Chabua to CGGS for collection of N.A. gas.

b) Similarly, gas production requirement in Rajasthan has gone up to 0.90 MMSCMD against the current withdrawal level of approximately 0.654 MMSCMD after the recent gas sale agreement with RRVUNL. To meet this enhanced gas demand, 8 development wells were drilled during the last two years in Dandewalla fi eld.

Business Development Initiatives

a) A comprehensive road map was prepared for engaging in prospective business opportunities. A few projects are in the pipeline for providing E&P services to 3rd parties

- Purchasing of one no. 1000 HP mobile drilling rig and 1500 HP drilling rig

- Formation of joint ventures with reputed international companies

b) For monetizing stranded gas and reducing fl are, the Company has initiated actions for installation of mini- LNG plant.

c) A 198 Km gas pipeline from Duliajan to Numaligarh Refi nery is under construction by a JV Company DNP Limited where OIL has a stake of 23%. The pipeline is being laid in the OILs right-of-way (ROW) of crude oil trunk pipeline.

d) In continuation of its efforts to set up a commercial coal liquefaction plant and after completing the various process tests, OIL will now carry out a Pre-Feasibility Study for setting up of a medium size commercial coal-to-liquid plant which will be integrated with an existing refi nery and located near coal mine mouth. Contract has been awarded to the process licensors to provide the process inputs of a 10,000 bpd CTL plant which will be utilised in the study.

Health, Safety and Environment Initiatives

a) P&IDs, PFDs, Mine Plan, Surface Plan (containing the water bodies, well locations, public roads, buildings, railways, power transmission lines etc.), cable lay out, electrical circuit diagram etc. of most of the production installations shall be created as - built, digitised and software will be used to make it intelligent.

b) Reclamation of abandoned drill sites.

c) Compliance tracking and reporting mechanism from the beginning of any project in connection with implementation of environment regulatory conditions.

d) Commissioning of municipal solid waste disposal & treatment facility.

e) Use of impervious HDPE lining for all effl uent pits in drilling locations to prevent seepage of effl uent to surrounding environment.

f) Deployment of mobile effl uent treatment plants for drilling locations.

9.0 HUMAN RESOURCE DEVELOPMENT

HR initiatives during the year 2008-09:

Formulation of Policy for Reward / Recognition of Executives: A Task Force is working to formulate a policy on an effective system of recognition of performance and reward. The Task Force has combined inputs from questionnaire, random group discussions, benchmarking with 6 nos. of PSU and Private sectors and various other feedbacks. It is now in the fi nal stage of approval.

"e-Sampatti": An on-line property return system "e-Sampatti" has been introduced through the intranet portal OILWEB. This has made easy accessibility of submitted data by the user, as well as by the Personnel and Vigilance departments.

Revision of pay scale w.e.f. 1st January 2007: Revision of pay scale for executives has been approved by Govt. with effect from 1st January 2007, which is under implementation.

Suggestion Scheme: A new suggestion scheme was introduced in the organization from 22.12.2008. This is aimed at generation of ideas and suggestions from workpersons and offi cers for improved work safety processes, better quality of work life etc. leading to enhanced productivity for the organization.

Training:

A total of 3,276 persons inclusive of both executive and workpersons (which is about 39% of total strength) attended various training programs during the year. The segment wise break up compared to the last year is shown below.

2008-09 2007-08

In-house 2,361 2,960 In-country 681 680 Overseas 234 201 Total 3,276 3,841

OIL continues to sponsor two executives every year for the National Management Program PGDM course of one and a half years duration at MDI, Gurgaon. The fourth batch was nominated during the year.

OIL has extended its training facility to its JV partners and service providers and also to the district authority during the year. Under the industry academia interaction 215 students from 3 institutions were provided with valuable inputs regarding career building prospects in geo-science discipline.

Under the provisions of the Apprenticeship Act, 75 Trade apprentices and 34 Diploma apprentices were trained during the year. Apart from this 364 students from different institutions were given opportunity for summer training / Project work in their relevant branches of study.

Recruitment in Executive Category

27 nos. (Gen - 17, SC - 2, ST - 1, OBC - 7) of direct recruitments against posts and 41 nos. (Gen - 16, SC - 6, ST - 5, OBC - 14) of recruitment against executive trainees were completed during the year.

As on 31.03.2009, 51 (Gen - 24, SC - 6, ST - 5 and OBC - 16) Executive Trainees are undergoing training, who would be absorbed in permanent Executive cadre after successful completion of one year training.

22 executives are on deputation to various petroleum organizations in the country.

A total of 14 work persons were promoted to Executive cadre during the year

Recruitment in Workmen Category

In accordance with Government directives, Company has taken steps in recruiting candidates belonging to SC, ST and OBC categories. A total of 37 (SC-5, ST-9 and OBC-23) candidates were appointed during the year.

Employment of Women Employees

As on 31.03.2009 there are 324 women employees (73 in offi cer category and 251 are in non-offi cer category) out of the total manpower of 8387 (1260 in offi cer category and 7127 in non-offi cer category) constituting 3.86% (3.82 % previous year) of the total workforce.

10.0 QUALITY ASSURANCE

OILs improved quality control initiatives have helped to bring down the BS&W content in delivered crude to the refi neries from the level of 0.63 in 2006-07 to 0.42 during 2008-09. Efforts are still on to bring down the same to match international standards.

11.0 RESEARCH AND DEVELOPMENT

Your Company gives great importance to continuous up-gradation of technologies and expertise in different areas of activities through its own Research & Development Centre. The details of activities carried out are given in Form - B of this Report.

12.0 ENVIRONMENT AND POLLUTION CONTROL

All statutory requirements were complied with and Environmental Clearances from MOEF obtained wherever applicable. New initiatives like bioremediation of oily sludge in collaboration with TERI, phyto-remediation of oil contaminated soil and disposal of MSW in a scientifi c way have brought encouraging results in controlling pollution and maintaining better environment in OILs operational areas.

- Facilities such as effl uent treatment plant, waste disposal facilities, recycle and reuse of drilling effl uent, bio-diesel project, phasing out of ozone depleting substances, reduction in hazardous waste generation, introduction of eco-friendly chemicals, adoption of noise reduction methods in the installations etc. have signifi cantly helped in protecting the environment.

- Your Company with the help of Assam Agricultural University, Jorhat has completed a couple of projects related to the effects of oil fi eld activities on the environment and its preventive measures.

- All necessary measures for environmental protection and pollution control with radio active sources and explosives were taken and no untoward incident took place.

- A biomedical waste water treatment plant and an advanced digital incinerator installed in OIL hospital at Duliajan will pave the way for proper disposal of biomedical wastes and will go a long way in controlling environmental pollution.

- 26 Kms of effl uent line was laid at various drilling locations to keep the areas free from pollution.

- Small capacity diesel engine driven generating sets are procured with acoustic enclosure for arresting sound pollution.

- 1067 nos. of samplings have been planted in along the roads and in parks in Duliajan and Moran. Apart from this 1029 nos. of samplings were distributed to various school, colleges and NGOs.

- Creation of green belt at newly constructed OCSs.

- Construction of fi re brick wall around fl are pits to arrest heat radiation.

13.0 SAFETY

Your Company strongly believes that safety, health and environment management performances are integral parts of its business and accordingly considers the same as part of its corporate objectives. Your Company is focusing and emphasizing on behavioural safety besides implementing traditional safety methods with an aim to improve the overall safety performance. In compliance of the recommendations of the 10th Conference on Safety in Mines, the Company is focusing on contract work vis-à-vis HSE requirement.

During the year, as a part of the HSE management system, safety audits as well as review audits of its installations were carried out to check the level of safety and recommend for further improvement. In order to continue the HSE awareness amongst its workforce, on-site HSE awareness training of workers have been intensifi ed. In addition to personal safety, process safety is also given high priority right from the design stage itself. The entire PPE schedule of the Company has been reviewed including the requirement for contract workers.

14.0 OCCUPATIONAL HEALTH:

Occupational Health monitoring for work persons is done in a regular and systematic manner. Your Company is committed not only to meet the various statutory public regulatory requirements but is also going much beyond. Your Company has a 190-bed fully equipped modern hospital at Duliajan and also primary dispensaries at its operational areas in South Bank, Moran, Kumchai and at various pump stations. Apart from these, your Company provides regular Mobile Dispensary services to the adjoining villages in and around its main operational areas in the district of Tinsukia, Dibrugarh and Sivsagar in Assam besides similar services in Manabum and Kumchai areas in Arunachal Pradesh. Occupational Health monitoring for work persons is done in a regular and systematic manner. Your Company is committed not only to meet the various statutory and regulatory requirements but is also going much beyond and conducting health checkup to every employee in a block of 5 years.

15.0 CORPORATE SOCIAL RESPONSIBILITY

Your Companys social welfare and community development initiatives focus on the key areas of education, healthcare and the overall development of basic infrastructure for the benefits of the neighbouring localities in its operational areas.

Social Welfare Programme and Area Development Scheme: The scheme ‘Social Welfare Programme was instituted to cater to the growing need, demands and requirements of OILs operational areas. Today the programme is protecting the environment by uplifting Education, Health and socio-economic development. Some of the main activities taken up under this program during the last year are development of education, development of roads and bridges, development of sports, OIRDS, Rural development etc. A total amount of Rs 13.90 Crore has been spent during the year 2008-09 against the total sanctioned budget of Rs 16.25 Crore on this account.

The Area Development scheme was formulated to cater to the specifi c and developmental needs of the communities. Wth expansion of Companys operational areas, more villages have been covered under the welfare umbrella of OIL. The scheme covers the construction of roads, setting up of educational institutions and primary health centres in North Bank of Brahmaputra, South Bank of Brahmaputra and other spheres coming under the operational areas of the Company. A total amount of Rs 3.61 Crore has been spent during the year 2008-09 on this account.

Special Golden Jubilee year initiatives have been initiated to support around 250 Self Help Groups in its neighbouring areas.

Gender Budgeting: Your Company has constituted Gender Budgeting Cell comprising women employees from different departments to decide, formulate and execute plan in respect of the gender specifi c need of its female employees. The cell also plays an important role in designing strategies for overall development of female employees. A few of the ongoing schemes like imparting training to women on Handicraft, Weaving, Embroidery in its Handicraft Training and Production Center at Duliajan, Contribution to Women College and girls schools in its operational areas, sponsoring women members for National and International seminars / training courses, providing hostel accommodation to working women employees, encouraging rural women Self Help Groups, training on spinning & weaving of Eri and Muga Silk in advanced looms in the Growth Centre set-up at Duliajan etc. OIL Hospital, Duliajan conducts three years General Nursing Midwifery (GNM) training course to twenty students on yearly basis with stipend, free hostel accommodation, uniform, books and protective clothing etc.

Mobile Health Care Services: The Mobile Dispensary service of your Company is one of the most signifi cant community welfare projects of the Company. At present, OIL is conducting nearly 500 camps, screening and extending primary healthcare services to more than 75,000 patients in Dibrugarh & Tinsukia districts every year. OIL started a new project "SPARSHA" in association with St. Lukes Hospital to extend this service to the people in areas like Baghjan, Mechaki, Kakapothar etc.

16.0 DONATION

Company donated a sum of Rs 50 lakh and Rs. 25 lakh for the people of the State of Assam and Arunachal Pradesh respectively during the year through respective Chief Ministers Relief Funds.

17.0 SPORTS & CULTURE:

OIL hosted the 4th OIL Challenge Gold Cup Football Tournament, the PSPB Table Tennis Tournament and the XXIX Inter Unit PSPB Football Tournament during the year.

Your Company continues to encourage its employees to take part in various sports/games and cultural activities for development of their physical and mental abilities besides bringing laurels to the organization. During the year a number of sportspersons of the Company participated in various State/ National and International level tournaments in different sports/games as well as tournaments organized by PSPB and brought laurels to the Company.

Your Company won the prestigious Bordoloi Trophy Football Tournament this year which was held at Guwahati and the 4th OIL Challenge Gold Cup Football held at Duliajan. Your Company won the PSPB Table Tennis Tournament in the women category which was held at Guwahati and secured third position in the mens category. OIL was the winner of the PSPB Golf Tournament and runner-up in the XXIX Inter Unit PSPB Football Tournament held at Duliajan. OIL won the All India Public Sector Sports Promotion Board Table Tennis Tournament held at Chandigarh in the womens category and was runner-up in the mens category. OIL became champion in the XXIX PSPB Inter Unit Cricket (Mini) Tournament held at Dehradun. OIL for the fi rst time qualifi ed to participate in the Federation Cup Football Tournament.

18.0 INDUSTRIAL RELATIONS

Harmonious and cordial relations were maintained with the employees recognized Union. The employees Union has extended full co-operation and actively participated with the Management in sorting out employees problems and grievances. There was no incident of man-days loss by unionized employees due to industrial relations problems.

19.0 IMPLEMENTATION OF OFFICIAL LANGUAGE

In pursuance of Offi cial Language Act/Rules of the Govt. of India efforts are continuing towards increased use of Offi cial Language Hindi in Offi cial work. Hindi Workshops were conducted from time to time so as to enable offi cers and employees to work in Hindi conveniently and effi ciently. Quarterly Meetings of Offi cial Language Implementation Committee were held at the end of each quarter. The responsibility of the Chairmanship of Duliajan Town Offi cial Language Implementation Committee (TOLIC) was also borne by our Company. Employees were encouraged to attend Hindi Training Classes, Assamese Classes and to write more and more words in Hindi through Incentive Schemes formulated by the Company. Circulars, letters and other publication materials were made bilingual and trilingual as per requirements. Important documents, to be laid on the table of Parliament, were also brought out in bilingual form.

A total of 11 Nos. of Offi cers and employees were trained in Hindi in the year 2008-09. In House Journal of the Company was published in Trilingual i.e. Assamese, Hindi and English. An in-house Hindi Magazine "OIL KIRAN" was published bi-annually to motivate and encourage the offi cers & employees, their dependents, teachers and students of different educational institutions of Duliajan Township to contribute Hindi articles for the said Magazine. Hindi Month 2008 was observed in a befitting manner from 15.09.08 to 14.10.08 at Field Headquarter Duliajan. To propagate Offi cial Language Hindi, amongst employees and school going children, various competitions were held during Hindi Month Celebration and mementos/prizes were distributed to the prize winners.

20.0 CORPORATE GOVERNANCE

Corporate Governance is generally understood as the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations. It involves a set of relationship amongst the Companys Management, its Board of Directors, Shareholders and other Stakeholders.

The concept and principles of Corporate Governance introduced by the Securities & Exchange Board of India through Listing Agreement, though is mandatory only for listed companies, but the wide spread acceptance of the concept has made unlisted entities also to follow and practice the sprit of Corporate Governance.

Thus, even though, not listed, your Company has taken adequate steps to ensure compliance with the provisions of Corporate Governance as prescribed under the Listing Agreement.

A separate Report on Corporate Governance is enclosed as part of the Annual Report.

21.0 DIRECTORS

Shri. M. R. Pasrija demitted the offi ce of Chairman & Managing Director on 30.11.2008 on attaining superannuation. Your Directors placed on record their sincere appreciation for the valuable services rendered by Shri M. R. Pasrija during his tenure as CMD of the Company.

Shri N.M. Borah, Director (Operations) has been appointed as the Chairman & Managing Director of the Company w.e.f. 01.12.2008.

Dr. (Smt.) Archana S. Mathur, Government Nominee was appointed as an Additional Director of the Company w.e.f 09.02.2009. She holds offi ce up to the ensuing Annual General Meeting and in respect of whom, the Company has received a notice in writing from a member pursuant to the provisions of Section 257 of the Companies Act, 1956 proposing her name for appointment as a Director liable to retirement by rotation.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company Shri B.N. Talukdar, Director (Exploration & Development), Shri Ashok Anand, Director (Human Resource & Business Development) and Shri Vinod K. Misra, Director of the Company retire by rotation and being eligible, offer themselves for re-appointment.

Brief resume of the Directors seeking appointment/re-appointment, together with the nature of their expertise in specifi c functional areas and names of the companies in which they hold the directorship, number of shares held and the membership/chairmanship of Committees of Board as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges are given in the Notice convening the Annual General Meeting of the Company and forms part of the Annual Report.

22.0 STATUTORY DISCLOSURES

None of the Directors of your Company is disqualifi ed as per provisions of Section 274 (1) (g) of the Companies Act, 1956. Your Directors have made necessary disclosures as required under various provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement.

Information as required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I forming part of this Report.

Details of the Employees who drew remuneration exceeding the limits laid down under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 (as amended from time to time) are attached to this report as Annexure II.

23.0 AUDIT COMMITTEE

The Audit Committee constituted by the Board of Director of the Company comprises of three non-executive Directors, out of which two are independent. The Chairman of the Audit Committee is an Independent Director. The composition and terms of reference of the Audit Committee are in line with and is compliant to the provisions of Section 292A of the Companies Act, 1956.

24.0 STATUTORY AUDITORS

The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG) in terms of Section 619 (2) of the Companies Act, 1956.

M/s A.K.Sabat & Co., Chartered Accountants and M/s. Chatterjee & Co., Chartered Accountant were appointed as Joint Statutory Auditors for the fi nancial year 2008-09. There is no qualifi cation in the Report of the Statutory Auditors.

The Comments of C&AG forming part of the Annual Report are given elsewhere in the Report.

Notes on Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further explanations.

25.0 COST AUDITORS

Pursuant to the directions of the Central Government for Audit of Cost Accounts, your Company has re- appointed M/s. Musib & Associates as the Cost Auditor for the fi nancial year 2009-10.

26.0 DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confi rmed that:

a. In the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures

b. The Directors have selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year as on 31st March, 2009 and of the profits of the Company for the year ended 31st March, 2009.

c. Directors have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and preventing and detecting fraud and other irregularities

d. Directors have prepared the Annual Accounts on a going concern basis

27.0 ACKNOWLEDGEMENT

Your Directors acknowledge the involvement of the Government of India in the Ministry of Petroleum & Natural Gas and support of all other Ministries and other agencies in Central and State Governments.

Your Directors express their gratitude and thanks to the Shareholders, Customers, Suppliers and other business partners/associates for their continued co-operation and patronage.

Your Directors wish to place on record their sincere appreciation for the dedicated contribution by the OIL Indians in the remarkable performance and impressive results of the C


Mar 31, 2008

Dear Shareholders,

On behalf of the Board of Directors of the Company, I take great pleasure in presenting the 49th Annual Report on the working of the Company for the financial year ended 31st March, 2008 along with the Audited Statement of Accounts, Auditors’ Report and the Review of Accounts by the Comptroller and Auditor General of India.

50TH YEAR OF GLORIOUS EXISTENCE

You will be pleased to know that Oil India Limited is stepping to the 50th year of its existence in the hydrocarbon map of India and celebrating its Golden Jubilee with a year long programme from 18th of February, 2008. The festivities were centrally inaugurated by the Hon’ble Union Minister of State for Petroleum and Natural Gas Shri Dinshaw Patel, Hon’ble Union Minister of Panchayati Raj and Development of North Eastern Region Shri Mani Shanker Aiyer and attended by other dignitaries from the States of Assam and Arunachal Pradesh. The Hon’ble Chief Minister of Assam Shri Tarun Gogoi declared Nahorkatiya discovery well no.1 as a heritage site on 18th February, 2008.

(a) It is my privilege to record a few outstanding achievements of the Company during the past five decades to recapitulate the colorful and exciting happenings of the past which I am sure would inspire all the future generations to lead the Company towards the vision of fastest growth and contribute towards country’s hydrocarbon self sufficiency.

Your Company is now the second largest oil and gas company in India as measured by total proved plus probable oil and natural gas reserves and production.

Your Company has large proved plus probable reserves of crude oil and natural gas in the Upper Assam basin.

Your Company has adopted the international approved and used system for estimation of hydrocarbon reserves.

Your Company has an exciting track record of making and exploiting small to medium size discoveries

Your Company has developed expertise in reservoir management skills for ageing and depleting fields.

Your Company is managing efficient cost structure to perform as an integrated exploration and production company

Your Company has a track record of high success ratio of nearly 65% of exploratory wells drilled.

Your Company possesses both 2D and 3D seismic API capabilities with excellent support services ranging from satellite navigation systems and remote blasting units to processing / interpretation systems.

Your Company owns and operates, as a common carrier for OIL, ONGC and Canoro, a 1157 KM cross-country crude oil pipeline.

Your Company has mechanically completed 660 km Product Pipeline from Numaligarh to Siliguri in August, 2008 and it is under commissioning in the month of August-September, 2008.

Your Company is holding 26% stake in Numaligarh Refinery Limited, 10% stake in the Brahmaputra Cracker & Polymer Ltd and 23% stake in DNP Limited.

Your Company is also holding 10% stake in a 741 kilometer pipeline construction project in Sudan, completed in 2005.

Your Company has been accorded “Schedule –A” and “Mini Ratna Category-I” status by the Government of India during this period.

Your Company has varied participating interests in 1 PSC, 3 JVC & 21 NELP blocks with operatorship in 12.

Your Company has also expanded its exploration activities in 11 blocks overseas in 6 countries

(b) It is due to the persistent effort and determination of many valiant Oil Indians, the flow of crude oil is still on in the North East India and OIL is at present contributing to boost the Indian economy, approximately by: 9.14 % of overall domestic crude oil production (equivalent to 27.43 % of onshore production)

7.13 % of overall natural gas production (equivalent to 24.42% of onshore production)

SIGNIFICANT HIGHLIGHTS

(a) Your Company has made nine small to medium size discoveries during 2007-08

(b) You will be pleased to know that during the year your Company has been conferred “SAP ACE Award-2007”, for Customer Excellence in the best Oil & Gas Sector Implementation Category, for implementation of ERP in the organization. The award is in recognition of the best-run business that is setting global benchmarks in excellence as is conveyed by President & CEO, M/s SAP Indian Subcontinent.

(c) OIL also bagged the Best Overall Performance Award amongst Upstream Oil Sector Companies’ during Oil and Gas Conservation Fortnight -2007 from the Ministry of Petroleum & Natural Gas, Government of India during the inaugural function of OGCF-2008 at New Delhi.

(d) The overall position of oil and gas reserves stands at 37.2277 MMKL and 25.4590 MMKL-OE respectively after the recent audit of reserves by M/s. GCA, Singapore,. M/s GCA, Singapore has audited crude oil reserves in Proved, Proved+Probable and Proved+Probable+Possible categories to be 99.5%, 96.2% and 98.9% respectively of in-house estimation which are in excellent match.

(e ) Your Company, in consortium with M/s SONATRACH, Algerian National Oil Company was successful in the Libyan EPSA Gas Bid Round IV held during 2007. The consortium was awarded the Area 95/96 (comprising of 4 blocks – 6629.18 sq km) located in the south western part of Libya amidst stiff international competition. The consortium is led by SONATRACH (50 %) with OIL & IOCL 25 % each.

(f) Your Company has been accredited with two International standard certification during the year viz.., International Safety Rating System (ISRS) certification to Intermediate Tank Farm (ITF) Tengakhat, Assam and the other accredited Clean Development Mechanism (CDM) validation for Green House Gas Emission Reduction through recovery and utilization of Flare Gas in respect of proposed Kumchai to Dumduma Gas Pipeline.

(g) The Government of India approved the Initial Public Offer (IPO) of the Company vide its letter no.G-34014/2/ 2000-Fin.III dated. 11th September, 2007. In terms of the said approval, 10% of the Post Issue Capital would be offered to the public for subscription and additional 1% to employees of OIL on reservation basis at the issue price of Retail Investors. Further, 10% of OIL’s pre-issue capital will be divested in favour of Indian Oil Corporation Limited, Hindustan Petroleum Corporation and Bharat Petroleum Corporation Limited in the ratio of 2:1:1.

1.0 PERFORMANCE FINANCIAL Rs/ Crore 2007-08 2006-07

A. INCOME

a) Operating Income 6081.95 5389.20

b) Interest & Dividend income 492.56 337.00

c) Gas subsidy 155.27 149.79

d) Misc Income 29.16 44.50

e) Other adjustments including prior period items 36.51 87.29

Total 6795.45 6007.78

B. EXPENSES

a) Operating Expenses 763.63 578.94

b) Increase/Decrease in stock (22.06) 2.21

c) Statutory Duties 2260.32 2066.07

d) Interest & Exchange Loss 38.29 15.08

e) Depreciation, Depletion write offs of assets/wells/debts and G&G cost/Corporate Office Expenditure 980.54 840.56

f) Business Development Expenses 3.15 10.55

g) Other adjustments including prior period items 58.19 13.95

Total 4082.06 3527.36

C. Profit before Tax 2713.40 2482.63

D. Less: Provision for Tax (including deferred tax liability) 924.47 842.64

E. Profit after Tax & available for distribution 1788.93 1639.99

The Company has earned higher profit after tax despite sharing a higher subsidy burdens on crude oil and LPG and paying higher amount of statutory levis compared to previous year. The total subsidy share was Rs. 2305.09 Crore in 2007-08, compared to Rs. 1993.75 Crore in 2006-07, which works out to 15.62 % increase.

The Shareholders Fund as on 31.03.2008 was Rs. 7932.97 Crore against long term loan amount of Rs. 70.00 Crore giving a Debt. Equity Rates of 1:113.33 against 1:65.23 in the previous year.

Earning per Share (EPS) had increased to Rs. 83.59 in 2007-08 compared to Rs. 76.63 in 2006-07.

APPROPRIATION

Directors recommend the following appropriations

Rs/ Crore 2007-08 2006-07

a) Interim Dividend @ 125 % (Previous Year 185%) 267.51 395.91

b) Final Dividend @ 150 % (Previous Year 75%) 321.00 160.50

c) Corporate dividend tax 100.01 82.80

d) Transfer to General Reserve 1100.41 1000.78

Total 1788.93 1639.99

DIVIDEND

The Company paid an interim dividend @ 125 % (previous year 185%), based on the provisional financial trend of the Company. The Board of Directors is now pleased to recommend a final dividend @ 150 % on the paid up capital making the total dividend of 275% (Previous year 260 %) for the year, subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. It is also proposed to transfer the balance of Rs 1100.41 Crore to the General Reserve.

PHYSICAL

(a) The performance of the Company for the year ended on 31.03.2008 in comparison with the previous year is furnished below:

SI no. Item Unit 2007-08 2006-07

1 Crude oil production MMT 3.101 3.107

2 Natural gas Production MMSCUM 2340.46 2264.57

3 Natural gas Sale MMSCUM 1828.85 1767.50

4 LPG Production Tonnes 48,165 43,750

(b) The Company could achieve the above and also was able to set new records of performance in respect of the following amidst adverse environmental conditions in some of its major operational areas during the initial nine months of the year.

Highest ever 3D acquisition of 1145 SQKM ( 923.39 in 2006-07)

Highest ever natural gas production of 2340.46 MMSCM ( 2264.57 in 2006-07 )

Highest ever natural gas sale of 1828.85 MMSCM (1767.50 in 2006-07 )

Highest ever-daily crude oil production of 13051 KLPD (Previous highest 12,602 KLPD).

Highest terminal rate of Crude Oil Production of 3.43 MMTPA [Previous highest 3.42 MMTPA],

Highest ever-daily water injection rate of 12,319 KLPD ( Previous highest 12,247 KLPD)

Highest ever cumulative water injection of 3554260 KIs ( upto 3253184 kls in 2006-07)

Highest ever work over operation of 126 nos. and CTU operation of 129 nos. (127 nos. in 2006-07)

(c) The Company is making continuous efforts in various other fronts for business expansion and exploration activities. A few activities of strategic importance pursued during the year are as under:

There have been nine small & medium size new discoveries during the year, 8 in Upper Assam & 1 in Rajasthan. In addition, strike of gas in one of the JVC in Assam and commercial discovery of gas at Farsi offshore block, Iran was established during the year.

Overall drilling metreage achieved during the year is 137850 m and is in increasing trend compared to previous year. Drilling achievement in Assam alone is 125678 m and is 18% higher than the last year.

A total of four J-Bend and four horizontal wells completed during the year with encouraging results.

Fastest execution of MWP against NELP-VI Blocks viz. 144.13 SQKM acquisition of 3D completed in Amguri Block in Assam during 2007-08 while 3D in Dibrugarh Block completed in June, 2008. In Mizoram Block, 2D acquisition commenced during the year and continuing as per schedule.

Percentage of BS & W in delivered crude to Refineries could be restricted to 0.457% by weighted average with significant improvement compared to previous year (0.643% in 2006-07).

Gas flaring in total has been brought down by 9.8% compared to previous year and likely to come down further on commissioning of Kumchai-Dumduma Gas pipeline which will be constructed by Assam Gas Company Limited.

LPG Plant completed its 25 years of operation with excellent track record of running at 99% plant load capacity.

Agreement between OIL & Brahmputra Cracker and Polymer Limited signed during the year for supply of gas for feedstock and fuel for Gas Cracker Project at Lepetkata, Dibrugarh, Assam.

One crude oil pipeline and one gas pipeline were constructed from Barekuri EPS in Tinsukia District to Makum for uninterrupted transportation of crude oil to CTF and to minimize gas flare.

Field Gathering Station (FGS) at Nagajan in the district of Tinsukia, Assam commissioned in August, 2007.

All action set during the year for commencement of drilling in Arunachal Pradesh and in Orissa, Mahanadi onshore NELP-II block tentatively by September, 2008

33912 LKM of Aero-Magnetic survey carried out in Gabon. Commencement of 1000 GLKM of 2D survey is expected shortly.

2D acquisition in Libya completed during the year and drilling is expected to commence by December2008

The Company has been rated, "Very Good" in MOU for the year 2006-07 and expected to be rated "Excellent", in 2007-08.

2.0 STATUS OF RESERVES

The Status of Oil and Gas Reserves of the Company as at 31.03.2008 is as under:

Area of Crude Oil operation

Position Additions/ Production Position as at Revisions Quantity as at 01.04.2007 31.03.2008

MMKL MMKL MMKL MMKL

Proved Developed reserves

Assam 34.2354 4.2454 3.4459 35.0350

Arunachal 1.0012 (0.0434) 0.0473 0.9104 Pradesh (Kumchai)

Rajasthan 0.0000 0.0000 0.0000 0.0000

JVC-India 1.0012 0.3082 0.0270 1.2824

Total 36.2378 4.5102 3.5202 37.2277

Natural gas

Position Additions/ Production Position as at Revisions Quantity as at 01.04.2007 31.03.2008

MMKL-OE MMKL-OE MMKL-OE MMKL-OE

32.9550 (7.799) 2.1020 23.560

0.0000 0.0000 0.0000 0.0000

1.8586 0.0000 0.2390 2.4040

0.0000 0.0000 0.0000 0.0000

34.8136 (7.7980) 2.3410 25.4590

3.0 TECHNOLOGY INDUCTION, UP-GRADATION AND INNOVATION

The Company is continuously striving for enhancing its technological capabilities for operational improvement and efficient performance. A Technology Management Team (TMT) was formed in January 2006 and is scouting for suitable technologies and extends innovative guidance from time to time towards production enhancement and cost reduction in the operations of the Company. Activities in this front during the year are listed below:

An advanced drilling software package has been procured and commissioned during the year which is expected to facilitate well planning, anti collision check, casing and drill string design, torque drag analysis, cementing program, well cost etc.

The Company acquired the latest version of Rockworks and Logplot Software which are utilized to maintain and generate lithology data, stratigraphy, fracture and downhole data alongwith their 2D and 3D model. Besides a number of other utilities, the software can also perform log designer data editor sharing of borehole log data with other bore hole log compiling.

The Company also acquired the Midland Valley 2D&3D & hydrocarbon move software package and installed at OILs TEAM centre at Duliajan to facilitate in-house interpretation of complex thrust fold belt areas and structural validation.

Reservoir Characterisation study for Barekuri area using 3D Seismic, pilot study on thrust belt imaging using 2D seismic and also introduction of MC survey (Pilot Project) were carried out by the exploration Group at OILs TEAM-Centre.

A pilot study on Thrust Belt Imaging using 2D seismic was carried out by in-house exploration group.

Pilot study of curvature analysis is planned to carry out by M/s Geo-Texture, USA which is expected to aid in deciphering different aspects of reservoir geometry and its heterogeneity in our areas.

Acquired large volume of 3D data and carried out integrated review of geology for regional understanding, evaluation of geological prospectivity and prospect generation.

Produced formation water at Kathaloni oilfield posed a major hindrance in safe disposal due to presence of Sulphate Reducing Bacteria (SRB). In a significant innovative drive with the help TERI a new bactericide was developed and regular treatment of the formation water with the bactericides helped in solving the problem of disposal.

New explosion proof starting system for rig engines installed in two outfits replacing the conventional electric starters.

Bio-degradable Sodium Format has been made a stock item to replace highly corrosive Calcium Chloride brine in work over operations.

Introduced Multivariable transmitter to measure differential pressure, temperature and fluid flow in Water Injection Stations as an alternative to old chart flow recorders.

Old gas detectors (10 nos) in the LPG plant have been replaced by latest infra-red type detectors.

Initiated a collaborative project with NT, Guwahati for design and development of Pressure Swing Absorption(PSA) process for separation of water vapour and C5+ components of natural gas used for OILs gas lift purpose

The grounding system of the new AC-PCRs of S-1and S-3 rigs has been designed in-house for detection and prevention of ground faults in motors and feeder loads.

OIL Hospital at Duliajan adopted (i) the latest life saving technology by use of surfactant by endotracheal route in very low birth weight babies (ii) introduced ventilator in Neonatal ICU and (iii) introduced modern Microsurgery in ENT& Ophthalmology during the year.

4.0 DISCOVERY OF OIL AND GAS

The following oil and gas discoveries were established during the year.

4.1 NOMINATED AREAS South Chandmari-2 (DFQ)

South Chandmari Structure, Tinsukia District, Assam

Established two prospective sands in Tipam formations.

On testing Tipam sand at 2420 m proved presence of Heavy High Pour Point oil.

Sapkaint-1 (DGD)

Sapkaint Structure of Tinali area, Dibrugarh District, Assam

Established presence of oil at 3350 m lower Tipam sand in Sapkaint structure

Established Estimated Ultimate Reserve (EUR) of approximately 0.3371 MM std. kls. O + OEG in this area

Moran 112(MEW)

Khatkhati Structure at Barail fourth sand top level, Sivasagar District, Assam

Established presence of Gas at 3357 m Barail sand

Established EUR of approximately 0.0983 MMstdkls O+OEG in this area

Hapjan-48(HRP)

Eastern part of North Hapjan Structure, Tinsukia District, Assam

Established presence of oil at 4000 m Lakaddong+Therria sand

Established EUR of approximately 0.2878 MMstdkls O+OEG in this area

Makum-25(HRZ)

Makum-North Hapjan Structure, Tinsukia District, Assam

On testing 2626 m Barail Fourth + Fifth sand well produced oil.

Established EUR of approximately 1.4085 MMstdkls O+OEG in this area.

Kathaloni-42 (HSB)

S-W Kathaloni Structure, Dibrugarh District, Assam

The well encountered hydrocarbon bearing sand ranges within Lakadong +Therria formation

On testing 3599 m Lakadong +Therria sand well produced oil.

Established EUR of approximately 0.4548 MMstdkls O+OEG in this area.

Makum-28(HRT)

Makum-North Hapjan Structure, Tinsukia District, Assam

Log evidences indicate presence of hydrocarbon bearing sand ranges within Barail formation

Established EUR of approximately 1.9832 MMstdkls O+OEG in this area.

Baghjan-7 (BGE)

South West Baghjan Structure, Tinsukia District, Assam.

Log evidences indicate presence of hydrocarbon bearing sand ranges within Lakadong+Therria and Langpar formation

Established EUR of approximately 0.4763 MMstdkls O+OEG in this area.

Dandewalla-17 (RJBB)

Khuiala formation, Rajasthan

On testing at 900 meter sand the well produced gas in Khuiala formation.

4.2 JOINT VENTURE

AAP-ON-94/1, ASSAM [Pre NELP JV Block, date of execution 30.06.1998]

PI: OIL (16.129% & 30% CI), IOCL (43.548 %) and HOEC (40.323% & Operator)

Test result of the second well at Dirak, Tinsukia District, under Phase –III MWP in this block, established presence of Gas & Condensate with an estimated potential of approx.6 MMSCFD.

4.3 OVERSEAS

FARSI OFFSHORE BLOCK, IRAN [Date of execution: 25.12.2002]

PI: OIL (20%), IOCL (40%) and OVL [40% & Operator)

The fourth well tested gas @ 19 MMSCFD from the carbonate reservoirs of Lower Triassic/ Upper Permian formation.

5.0 PROJECTS IN NOMINATED AREAS (IN-COUNTRY)

5.1 RAJASTHAN

Jaisalmer PML area

Gas fields of Tanot, Dandewalla & Bagi Tibba are lying within this PML. The gas produced in this area has been supplied to Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL) through GAIL (India) Limited for generation of electricity. New gas supply agreement has been entered with RRVUNL with enhanced price of gas for supply @ 0.90 MMSCMD against the current withdrawal level of approximately 0.654 MMSCMD for three (3) year period. To meet with the enhanced gas demand, five development wells were drilled during 2007-08 in Dandewalla area. The well Dandewalla-17, encountered hydrocarbon (mainly gas) at Khuiala formation.

Baghewala PML area

Heavy Oil field of Baghewala is located in this PML area. Baghewala field being studied jointly in two phases by OIL and M/s Petroleos de Venezuela SA (PDVSA) of Venezuela under a technological tie up for last few years. On completion of its Integrated Reservoir Study under phase-I, M/s PDVSA Intevep (Venezuela), the collaborator; indicated 53 MMT (Indicated Category) oil-in-place in upper carbonate and 78MMT(25 MMT-proved category) oil-in-place in lower Bilara + Jodhpur sand stone. Based on this study, The Company decided to carry out implementation of pilot project in Baghewala field, which includes drilling of two pilot wells, cyclic steam injection and production of heavy oil and bitumen for about one year under technical guidance of PDVSA Intevep. In phase–II, drilling of the first pilot test well completed during 2005. Trial steam injection carried out for a few days during July, 2006 and also during December, 2007. Steam injection temporarily suspended due to teething problem encountered in surface facilities. Meanwhile, a diagnostics work over of the said well has been tentatively finalized, on the basis of which future course of action is expected to be finalized.

5.2 GANGA VALLEY PROJECT

Ganga Valley lease area spreads over two PELs viz., Kasipur (6570Sq Km) and Kasipur extension (280 Sq Km). Over the years of various geological & geoscientific studies the poor prospectivity of the Kasipur Extension area was established and therefore it was decided to surrender the entire 280 Sq Km area w.e.f 01.01.2008 It was planned to drill one exploratory well in the identified structure in the Kashipur PEL during 2007-08. Pre-drill prospect assessment in respect of the identified locations carried out with the help of expert M/s RPS Energy, UK. Based on the study report an opinion from another international expert M/s Geoglobal Resources Ltd, Canada has been sought. The report from the expert has been received during April, 2008. OIL’s in-house geoscientific team is re-evaluating the recommendations of M/S Geoglobal for a final decision. Meanwhile, pre drill EIA study completed.

5.3 NORTH EAST FRONTIER PROJECT

The activities under the above project spread over two mining lease and four exploration lease areas owned under nomination basis in Arunachal Pradesh as shown below.

State PML PEL

Arunachal Pradesh 615.668 Sq km 1414.25 Sq. kms

Ningru, Ningru Jairampur, Jairampur Extn., Namchik Extension (Kharsang-Shongking areas), Namchai,Deomali & Pasighat

Transition Zone - 2013 sq. kms Brahmaputra (Assam & AP) River Bed

NINGRU

(Manabum)

OIL acquired around 554 GLKM of seismic data in the logistically difficult areas of Manabum in Arunachal Pradesh since 2003. During 2004-05, around 350 GLKM seismic data was simultaneously processed by M/S. FSIL, UK and M/S. TEEC, Germany and the same was interpreted by M/S. FRL, UK. Based on interpretation, three drillable prospects were identified. One exploratory drilling location (NMA) has been released. Meanwhile, civil survey for road & plinth completed & applied for de-reservation of forest land involved. Actions for civil construction work are in progress. Exploratory drilling is expected during 2009-10.

JAIRAMPUR (THRUST BELT)

Jairampur

OIL acquired around 75 GLKM seismic data during 2004-05. In-house processing and interpretation of the data has been completed. Simultaneously, the data had been outsourced to M/s Paradigm, Mumbai for processing and interpretation to identify drillable prospects. Based on the integrated interpretation of seismic and other geological data, one location e.g. Location JRB in the Jairampur area was released for exploratory drilling during the year. However, the original surface position of the Location JRB was on a hill top at a height of around 600m from the foot of the hill. Considering the logistic difficulties, the location position was subsequently re-oriented to a new position having less elevation and a J-band drilling is planned from the revised position to probe the hydrocarbon prospectivity of Jairampur area. Preparatory civil work for drilling the location including pre-drilling EIA study, Forest clearance and award of various contractual works are in progress. In addition, Jairampur is in thrust-fold belt area and geologically known to be complex and therefore it was considered prudent to reduce the overall geological risk by undertaking field geological mapping for structural validation and few other geological studies e.g. fault seal & trap geometry analysis, pore pressure analysis etc.

Namsai

Location NSA (Namsai area) civil preparations are in progress and the Company is planning to spud-in the location by October, 2008. Meanwhile pre Drilling EIA has been completed and Public Hearing for Environmental Clearance was completed in July’2008

NAMCHIK (Kharsang-Sonking)

Mobilization of man and materials completed on 28.04.2008. However, production shooting could not be started due to onset of monsoon. Data acquisition will commence after the monsoon break. Meanwhile, processing and interpretation of existing data is on for generation of drillable prospect.

DEOMALI

Most of the equipment and materials have been mobilized. However certain equipments viz, shot hole drilling rigs are required to be replaced. Data acquisition expected to commence after monsoon break. Meantime, forest clearance as well as extension of PEL is awaited.

BRAHMAPUTRA RIVER BED SURVEY

OIL has planned to carry out 1,700 GLKM of 2D seismic survey in parts of river Brahmaputra in Upper Assam as a part of its hydrocarbons exploration activities. A few NGOs and Public Organizations had expressed their concern for the survey apprehending ecological imbalance in river Brahmaputra, particularly threat to river dolphins present in the river. Ministry of Environment & Forests (MoE&F), Govt. of India advised Wildlife Institute of India (WII), Dehradun to examine the matter and submit their report. Based on the report and as advised by the Expert Apprisal Committee of MoE&F, Govt. of India, a Multidisciplinary Advisory Group (MDAG) consisting of experts on the subject has been constituted to study the various aspects and also to guide Oil India Limited (OIL) on this issue. The proposed BRB seismic survey has been kept in abeyance pending receipt of report from MDAG and subsequent environmental clearance from Ministry of Environment & Forests, Govt. of India.

6.0 STATUS OF EXPLORATION BLOCKS

OIL acquired varied participating interest in a total of 21 blocks up to the end of VI-th NELP bidding round. Out of these 14 are onshore and rest 7 are offshore blocks. OIL is operator in 12 onshore blocks. The work is in progress in all these blocks as per the committed Minimum Work Program (MWP).

6.1 NELP-OIL OPERATED BLOCKS

Out of the 12 OIL’s operated blocks four blocks are in the state of Assam ( AA-ONN-2002/3, AA-ONN-2003/3, AA-ONN-2004/1, AA-ONN-2004/2 ) one block in Mizoram (MZ-ONN-2004/1), five blocks in Rajasthan ( RJ- ONN-2000/1, RJ-ONN-2001/1, RJ-ONN-2002/1, RJ-ONN-2004/2 and RJ-ONN-2004/3), one block in Orissa (MN-ONN-2000/1) and one is in Krishna Godavari basin mainly in Andhra Pradesh ( KG-ONN-2004/1) and partly in Puducherry.

In Assam, survey operation in Sadiya Block under NELP-V commenced since January 2008 and a total of 33.84 SQKM of data acquired so far. The data acquisition in respect of the two NELP-VI blocks in Assam, were taken up on fast track basis during the year. While a total of 144 SQKM of 3D data has been acquired against Amguri block in 2007-08, the 3D acquisition of total 207 SQKM has been completed in Dibrugarh block so far. Meanwhile, on the basis of available data and interpretation result, drilling plan is firmed up in Amguri & Dibrugarh Block during the 4th quarter of 2008-09. In respect of NELP-IV block in Karbi-Anglong severe environmental problem led to slow progress of work. In absence of response from suitable parties, ONGC the major partner is now exploring the alternate possibilities for 2D survey in this block. In Mizoram, despite difficult logistic and remote road connectivity, data acquisition through 2D survey is under progress now. In Mahanadi Onshore Block in Orissa, drilling preparatory works are in advance stage at location Sadhupur-1. Drilling is scheduled to commence by September, 2008. Similarly, fast track actions are on through global enquiry for acquisition of 50 GLKM of High Resolution 2D surveys in the KG-Block during 2008. In Rajasthan, exploratory works against five NELP blocks are at different stages of scheduled work program. A total of 5 (five) NELP blocks have been acquired in Rajasthan upto the end of NELP-VI bidding round. So far, 4 (four) exploratory wells have been drilled in 2(two) NELP blocks. Drilling of one location at Pinodah-1, under NELP-II block completed during 2007-08. Evidences shows presence of heavy bituminous oil in the upper carbonate formation in this location requiring special thermal / chemical stimulation technique for flow of oil. The three wells drilled in NELP-III block during 2006-07 has undergone post drilling evaluation in 2007-08 and JV partners decided to pursue further exploration entering into phase-II. Acquisition of 155 SQKM of 3D has already been initiated in this block. Similarly, based on the interpretation results of the first phase work programme, a further acquisition, Processing and interpretation of 600 GLKM of 2D has been planned for the NELP-IV (RJ-ONN-2002/1) block. The PEL in respect of the remaining two blocks under NELP-VI have been received from Government of Rajasthan during January, 2008. Meanwhile, tendering process for 3D acquisition of 700 SQKM in each of these blocks has been initiated and expected to be mobilized soon.

6.2 NELP-NON-OIL OPERATED BLOCKS

OIL has participating interest in respect of 9 NELP blocks with other consortium partners. Out of these, two (2) blocks are in onshore areas in Assam, one (1) in shallow water in the Mahanadi offshore and the remaining six (6) spread over a vast tract of deepwater offshore acreages within the country viz., Mahanadi (1), Cauvery (1) and Krishna Godavari(4) as shown below:

Basin

Onshore Assam-Arakan

Offshore Mahanadi shallow water

Mahanadi deep water

Cauvery

Krishna-Godavari



Blocks Total Nos

AA-ONN-2001/3 AA-ONN-2002/4 2

MN-OSN-2000/2 1

MN-DWN-2002/1 1

CY-DWN-2001/1 1

KG-DWN-98/04, KG-DWN-2002/1 KG-DWN-2004/5 , KG-DWN-2004/6 4

Total 9

In all the above NELP blocks exploratory works are in progress and are at different stages of Minimum Work Programme.

6.3 JOINT VENTURE BLOCKS (PRE-NELP)

EXPLORATION BLOCK

The Company is carrying out exploration activities in 3 pre–NELP JV blocks. Out of these, M/s Reliance Industries Ltd (RIL) is the operator for the two offshore blocks, one in Saurastra offshore (SR-OS-94/1) and the other in Gujrat-Kutch Offshore (GK-OSJ-3). The remaining onshore block in Assam-Arakan Basin (AAP-ON-94/1) was executed during 1998 where M/s Hindustan Oil Exploration Ltd (HOEC) is operator and OIL has a participating interest of 16.129% with carried interest of 30%. The third Phase of its exploratory work was completed during 2007-08. M/s HOEC has drilled the second well at Dirak, Tinsukia District in Assam and discovered hydrocarbon, mainly gas with condensate. The initial test assessment confirms produceable potential of estimated 6 MMSCFD from this well. Post discovery action plan is expected to be finalized during 2008-09. Meanwhile, the Operating Committee during its meeting on 12.06.2008 held at HOEC’s office at Chennai deliberated and decided to retain a portion of 305 sq. km PEL out of the total 435 sq. km for drilling of 4(four) appraisal wells spanning over next 3 year period.

PRODUCTION BLOCK

Kharsang Oil Field In Arunachal Pradesh : Company with a Participating Interest of 40%, entered into a PSC with Government of India in consortium with M/s Geo Petrol International Inc, France (25%), M/s Jubilant Enpro Ltd., India (25%) and M/s Geo Enpro Petroleum Ltd, India (10%) on 16.06.1995. The field produced overall 60,174 Tonnes during 2007-08 (previous year 62,598Tonnes) of Crude oil, out of which Company’s share was 24,285 Tonnes (Previous year 25,039 Tonnes).

6.4 PROJECTS OVERSEAS

Overseas acquisition efforts of the Company continued throughout the year and the achievements as well as status of the ongoing overseas projects are summarized below:

6.4.1 STATUS OF ONGOING PROJECTS

The status of various ongoing overseas projects during this year is as follows:

Exploration Service Contract–Farsi Offshore, Iran, [OVL-40%, (Op), IOCL -40% & OIL -20%]

As part of the ongoing work commitment, the 4th (last) well was drilled and successfully completed by the consortium towards the south western part of the block. The well tested gas @ 19 MMscf/day from the carbonate reservoirs of Lower Triassic/ Upper Permian formation. Commercial feasibility study for both oil and gas discoveries had been carried out by international E&P consultant M/s Fugro Robertson, U.K. The study for gas discovery has since been completed and report submitted to NIOC, Iran for their acceptance.The study for oil discovery is being carried out by the same consultant and is expected to be submitted shortly.

Area 86, Libya [OIL-50% (Op) & IOCL -50%]

OIL as operator of the consortium has completed the acquisition of 1787 LKM of 2D seismic data over the block as part of the work commitment. Processing of the data has been completed at Tripoli and interpretation is under progress at U.K. Presently, 500 SQKM of 3D survey is under progress. It is proposed to Spud-in exploratory well by December, 2008.

Block 102(4), Libya [OIL-50% (Op) & IOCL -50%]

OIL as operator of the consortium has completed the acquisition of 1287 LKM of 2D seismic data over the block as part of work commitment. Processing of the data has since been completed at Tripoli and interpretation is under progress at U.K.

Block Shakti, Gabon [OIL-45% (Op), IOCL -45% & Marvis Petroleum 10%]

OIL as operator of the consortium has set up its office at Libreville and started its work commitment. Aeromagnetic survey covering around 36,400 (33,912+2500) LKM acquisitions, processing and interpretation has been completed. Presently mobilization is in progress for acquisition of 1000 GLKM- 2D seismic survey data. It is tentatively scheduled to spud a well by November, 2009.

Block OPL-205, Nigeria [M/s Suntera Nigeria OPL 205 Limited -70% & M/s Summit Petroleum 30%, OIL 17.5% PI]

The JV has since drilled 1 well Otien#2 inside the acreage as part of the work commitment. The well failed to encounter hydrocarbon and was abandoned. Actions for 2D/3D Seismic aquisition are being taken.

Block 82 & 83, Yemen [M/s. Medco Energi - 45% (Op), Kuwait Energy - 25%; OIL - 15% & IOCL 15% ]

The consortium led by M/s Medco Energi, Indonesia signed the PSC agreement with Yemen government to start the work commitment under different phases of exploration. Ratification of PSC by the Yemen Parliament is awaited.

Product Pipeline, Sudan [OVL - 90 % (Op) & OIL - 10%]

Further to completion of the product pipeline, the consortium has received 2 more installments during the year from MEM, Sudan, totaling 5 installments so far.

6.4.2 NEW ACQUISITIONS

The Company was successful in acquisition of new exploration acreage as follows.

Area 95/96 [ Blocks 95/2, 96/1,2 & 4], Libya [Sonatrach - 50% (Op), OIL - 25%, IOCL - 25%]

OIL in consortium with M/s SONATRACH, Algerian National Oil Company was successful in the Libyan EPSA Gas Bid Round IV held during 2007. The consortium was awarded this area located in the south western part of Libya amidst stiff international competition. The consortium is led by SONATRACH who is also the operator of the area. The PSC for the acreage has been signed 0n 25th May, 2008.

Block K, Timor Leste (East Timor) : [ Reliance Energy Ltd, - 75%, OIL - 12.5%, IOCL - 12.5%]

OIL executed a Farm -in-Agreement for 12.5% P.I. with Reliance Energy Limited recently. Approval of assignment by the Goverment of Timor Leste is awaited.

Besides above, the Company is scouting for various E&P opportunities in Egypt, Algeria, Kazakhstan etc as well as M&A portfolio of various small sized E&P companies across the globe.

7.0 BUSINESS DEVELOPMENT

Business Development and Third Party Project

During the year the department generated revenue to the tune of Rs 0.61 Crore and US $ 23,340 by providing laboratory, rental or expert consultative services to a number of parties. The department is continuously scouting for E&P business both in-country and overseas. Flow of large number of enquiries and tenders from national and international companies for providing E&P services shows an optimistic scenario and scope for business expansion through this project wing requiring additional resources. In order to expand its strategic areas of E&P Service Business activities and to establish as a leading E&P Service provider, new initiatives have been undertaken to explore the possibility of Joint Venture / Strategic Alliance arrangement with internationally reputed company(ies) and the preliminary progress in this regard has been satisfactory. In consideration of the enormous potential in E&P Service Business sector both in India as well as abroad, a review on the subject of acquiring additional resources solely for the purpose of service business activities has been undertaken.

Coal Liquefaction Project:

OIL is exploring the possibility of setting up a small size commercial plant of 2500 BPD capacity using N.E. Coal. Discussion is in progress to induct suitable parties like Engineers India Limited (EIL), Coal India Limited etc. The plant capacity shall have facilities for up-scaling to full scale commercial plant, similar to the strategy followed by country like China. While the time line for commissioning the small size plant is expected to be in place by 2011, the parallel action will continue to upgrade the same to 44,000 BPD capacity by the end of 2015 as per the latest plan.

NRL-Siliguri Product Transportation Pipeline

The pipeline has been mechanically completed and is under commissioning in the month of August- September, 2008.

Dry Leasing of Dark Fibre (OFC)

OIL entered into a lease agreement with Bharat Sanchar Nigam Limited (BSNL) for lease of dark fibers from Nagaon to Siliguri during the year. The same is operational since June 2007. OIL also leased out OFC to Airtel & Railtel during this period.

River Crossing Work for IOCs Guwahati - Siliguri Product Pipeline

OIL is executing IOCs Horizontal Direct Driling (HDD) work for four nos. of river crossing of their Guwahati - Siliguri Product Pipeline.

8.0 POLICY INITIATIVE FOR FUTURE

Exploration Strategy

In-Country traditional basins

In view of the mandatory relinquishment policy of government in respect of pre-NELP nominated PELs, company is prioritizing activities in such areas for conversion of PELs to PMLs wherever discovery and commercial produceability is established.

Systematic implementation of recommendations of various geo-scientific consultative studies of the recent past for exploration of stratigraphic traps, re-development & revitalization of matured declining fields, intensive reservoir revitalization initiatives etc.

Efforts will be to cover seismically logistically difficult areas including Brahmaputra River Bed, rugged hilly terrain in river confluence and various difficult hilly areas in the NE.

Effort will be enhanced to reduce the number of sick wells by bringing them back to production.

Acquiring Exploration Blocks through NELP

The Company has so far acquired Participating Interest ranging from 10% to 90% with other consortium partners in respect of 21 NELP blocks and in another 100% interest in one of the block in Rajasthan with operatorship in twelve (12) blocks. Various exploration activities are underway in respect of all these blocks. The Company will look for prospective opportunities in future through

Acquisition of Equity abroad

OILs E&P initiatives overseas at present extends to 6 countries including Libya, Gabon, Iran, Nigeria, Yemen and Timor and expected to result in contribution in near future. Exploration within and outside the country along with acquisition of producing property is considered to be a major thrust area.

Crude oil production:

The Company has been maintaining an increasing trend in indigenous crude oil production during the year 2007-08. The Company has initiated a number of measures in its main producing fields in Assam and Arunachal Pradesh to increase productivity in these producing fields, which are listed below:

A number of geo-scientific studies like, integrated basin modeling studies, revitalization of old fields, Jorajan re- development, thrust belt prospects, stratigraphic trap prospects, non associated gas field development, pilot study for carrying out seismic reservoir characterization of eocene reservoirs, post drill analysis of exploratory wells, audit and certification of oil and gas reserves etc. were carried out in the recent past with the help of nternationally reputed consultants and their recommendations like infill drilling, workover, enhancement in water injection are being implemented.

Various IOR/EOR measures which have been implemented / intensified like enhancing water injection, MEOR technique by using micro-organisms, optimization through artificial lift methods by use of Electric Submersible pumps(ESP), Jet-pumps etc., for bringing into production shut in wells.

Drilling of Horizontal and J-bend wells

Charter hiring of six drilling rigs to make up the shortfall of four in-house rigs retired in the recent past and also to intensify drilling operation including NELP areas of the NE.

In order to produce the heavy oil and bitumen from the Baghewala field in Jaisalmer district of Rajasthan, the Company entered into technical collaboration with M/s PDVSA of Venezuela and drilled the first pilot well. Actions are now in hand to set up full scale production facilities at the earliest on the basis of outcome of the pilot project.

Natural Gas productions

Presently the Company is producing around 6.0 MMSCMD of natural gas from Upper Assam & AP fields to meet its internal utilization and market commitment of 5.472 MMSCMD. The Company has further committed to supply 1.0 MMSCMD gas to Numaligarh Refinery by 2009-10 and 1.35 MMSCMD gas (feedstock + fuel) to Brahmaputra Cracker and Polymer Ltd. from 2011-2012. To meet the requirement of future gas commitment, compensation for calorific value to consumers in post cracker scenario and cushion gas required for operational flexibility, the production potential has to be enhanced in NE to 10.0 MMSCMD in future and therefore, increase in gas production has to come from Non-Associated Gas source only. In order to meet the demand of natural gas the Company has initiated various time bound actions like development of Non-Associated Gas (NAG) fields, drilling of development gas wells (drilled 11 NAG well since 2002-03), debottlenecking and re-routing of pipeline network system for optimum utilization of available gas thereby reduce technical flaring to minimum, construction of central and field gas gathering stations etc. In addition fast track work over of sick gas wells have been taken up to restore locked up potential at an early date.

Similarly, gas production in Rajasthan is likely to be @ 0.90 MMSCMD against the current withdrawal level of approximately 0.654 MMSCMD as per the recent agreement with the sole consumer. To meet with the enhanced gas demand, five development wells have been drilled during 2007-08 in Dandewalla area.

9.0 HUMAN RESOURCE DEVELOPMENT

Initiatives during the year:

Annual Manpower Planning (Executives) : Subsequent to approval obtained from Corporate Office all actions pertaining to manpower planning were completed i.e. release of advertisements, conducting of campus nterviews in all the Universities in North East, ISM, Dhanbad, MIT Pune, IIT Roorkee, NT Guwahati, NT Kharagpur, BHU, Osmania Univertsity, ICAI Kolkota and ICAI Delhi for recruitment in specialized fields such as Petroleum

Engineering, Geophysics, Finance etc. We were able to recruit 120 personnel during this year and internal notification were also issued to promote few personnel from Group C to Group B and as a result 29 work- persons were promoted to Executive cadre through internal recruitment process during the period

HR initiatives for the year 2008-09 :

Formulation of Policy for Reward / Recognition of Executives: As part of the review process, a questionnaire has been designed to carry out pilot survey to understand the perceptions and expectations from different sections of people. As a part of the survey personal interviews with top management will be conducted. The review will be further augmented by feedback from random group discussions. Obtain Benchmarking information of Practices in other organizations. After comparative analysis of survey responses with Benchmarking details, a presentation of draft survey findings on formulation of Policy on reward/Recognition will be made.

Review of job Profiles (Role Clarity): As an organization development initiative, a review of all job profiles of level 1 and 2 Executive Positions commenced, covering all disciplines/departments for role clarity & clear accountability wherever gaps were perceived. The task has since made considerable progress.

Talent review exercise ‘Project Competitive’ is initiated to ensure continuity of leadership into the future. Hay Group, a global management consulting firm, was engaged for this project. In the first phase of the talent review exercise 26 Senior Executives participated in the programme, which was subsequently extended to their 12 Superiors for a holistic approach. The Leadership Competency Framework and Talent Matrix was created, adopting the process of online diagnostic questionnaire with 360- degree feedback to assess/understand organizational climate, leadership style impacting overall performance, before finalizing the individual and group development programme. The process is continuing

Training: Training to the following number of persons, both executives and workmen were imparted during the year.

2007-08 2006-07

In-house-Statutory 980 1065

- Regular 1980 1934

In-country 680 717

Overseas 201 151

Employment of weaker section

Workmen Category

In accordance with Government directives, the Company has taken steps in recruiting candidates belonging to SC, ST and OBC categories and ex-servicemen. A total of 23(SC-7 and ST-16) candidates have been appointed during the year.

In addition to special recruitment drive, 104 skilled posts (Jr. Engineer Production-39, Asstt. Operator-53, Four (4) sportsman, five (5) tradesman in Grade – I, one (1) each in Nurse – I, (Grade – VII) Paramedical Technician – I (Lab) (Grade – VII) and Asstt. Paramedical Technician – I (Path) (Grade – V) were filled up during the year.

Executive Category

In executive category, there has been recruitment against 20 posts filled up from the weaker section of the society.

In addition, there are 81 (Gen – 45, SC – 05, ST – 07 and OBC - 24) Executive Trainees undergoing training who would be absorbed in permanent Executive cadre after successful completion of one year training.

A total of 12 work persons have been promoted to Executive cadre during the year

Employment Of Women Employees

As on 31.03.2008 there are 322 women employees (69 in officer category and 253 are in non-officer category) out of the total manpower of 8431 (1182 in officer category and 7249 in non-officer category) constituting 3.819% (3.76 % previous year) of the total workforce.

10.0 QUALITY ASSURANCE

OIL’s improved quality control initiatives have helped to bring down the BS&W content in delivered crude to the refineries from the level of 0.634% in 2006-07 to 0.457% during 2007-08. Efforts are still on to bring down the same to the minimum extent possible to match with the international standard.

11.0 RESEARCH AND DEVELOPMENT

The Company gives great importance in continuous upgradation of technologies and expertise in various areas of activities through its own Research & Development Centre. The details of activities carried out are given in ‘FORM – B’ of this Report.

12.0 ENVIRONMENTAL PROTECTION

Through regular monitoring and proper co-ordination, Company could successfully abate the pollution problems arising out of various operational activities during the year. The major thrust for abatement of pollution is continuing toward setting up of effluent pits at strategic locations, recycling of drilling effluent, setting of noise barrier walls, procurement of diesel engines with acoustic enclosures, identification of possible areas of reducing CFC, inputs furnished for formation water disposal problem in fields, Bio-Remediation, phytoremediation of oily sludge in old pits, Bio-diesel project, NAG and new power House. Specific complaints on damage to paddy cultivation, tea crop, sericulture etc., were resolved with the help of Assam Agricultural University, Jorhat. OIL is at present accredited with ISO certification to a number of installations conforming environment standard besides accredited Clean Development Mechanism (CDM) validation for green house gas emission reduction through recovery and utilization of flare gas for its proposed project Kumchai to Dumduma gas pipeline

13.0 SAFETY

During the year a number of Internal (55) as well as External Safety Audits (5) of various installations were carried out by Oil Industry Safety Directorate and Mines Safety Directorate experts. Besides, pre-spudding safety audit of drilling locations / pre-commissioning safety audits, review audits were carried out with the objective of improving the HSE standards of the various installations of the Company. All statutory reports were submitted in time besides holding statutory meetings at regular intervals with Mines Managers Co-ordination meeting with DDMS, safety council meeting at field level, Departmental safety meetings, quarterly meetings with MSO/DSOs etc with follow up actions to resolve the issues tabled thereof. Company’s Accident Frequency Rate shows a decreasing trend compared to previous year. (Viz., 1.28 in 2007-08 compared to 2.74 during 2006-07). A mock drill of on site disaster management plan organized at OCS1 and well 454 to institute awareness and preparedness for systematic quick response in such circumstances. During the year review of the Disaster Management Plan has been updated.

14.0 OCCUPATIONAL HEALTH:

Occupational Health monitoring for work persons is done in a regular and systematic manner. OIL is committed not only to meet the various statutory public regulatory requirements but is also going much beyond. OIL has a 190-bedded fully equipped modern hospital at Duliajan. OIL also runs primary dispensaries at its operational areas in South Bank, Moran, and Kumchai and at various pump stations. Apart from these, OIL provides regular Mobile Dispensary services to the adjoining villages in and around its main operational areas in the district of Tinsukia, Dibrugarh and Sivsagar in Assam besides similar services in Manabum and Kumchai areas in Arunachal Pradesh. Occupational Health monitoring for work persons is done in a regular and systematic manner. OIL is committed not only to meet the various statutory public regulatory requirements but is also going much beyond and conduct health checkup of every employee in a block of 5 years.

15.0 CORPORATE SOCIAL RESPONSIBILITY

OIL’s social welfare and community development initiatives focus on the key areas of education, healthcare and the overall development of basic infrastructure for the benefit of the neighboring localities in its operational areas.

Social Welfare Programme and Area Development Scheme: Company continues to invest considerable financial support annually through two of its ongoing schemes viz. “Social Welfare Scheme “ and “Area Development Scheme”, which covers a wide gamut of activities like construction of roads, setting up of educational institutions, sports, investing in agro-based projects like Project Rupantar, Oil India Rural

Development Society (OIRDS), primary health centers and other infrastructural support in the North East region and other operational areas. The above schemes cover about 1,200 villages out of over 1,400 villages under its extended operational areas. A total amount of Rs 17.95 Crore has been spent during the year 2007-08. Special Golden Jubilee year initiative have been initiated to support around 250 Self Help Groups in its neighboring areas.

Road Development with State Government: OIL continues to develop number of state owned road network every year for its operational convenience and for benefit of the communities. Besides, OIL participates with state government for development of some of the major PWD roads on 100% cost deposit basis. A sum of Rs 4.53 crore against operational road development and Rs 13.83 crore against deposit work have been approved during the year 2007-08 and works are in different stages of progress.

Rajeev Gandhi Institute of Petroleum Technology (RGIPT): Ministry of P&NG is considering OIL’s proposal to set up RGIPT Centre at Guwahati.

Gender Budgeting: OIL has constituted Gender Budgeting Cell comprising of women employees from different departments to decide, formulate and execute plan in respect of the gender specific need of its female employees. The cell also plays an important role in designing strategies for overall development of female employees. A few of the ongoing schemes like imparting training to women on Handicraft, Weaving, Embroidery in its Handicraft Training and Production Center at Duliajan, Contribution to Women College and girl’s schools in its operational areas, sponsoring women members for National and International seminars / training courses, providing hostel facilities to working women employees, encouraging rural women Self Help Groups, training on spinning & weaving of Eri and Muga Silk in advanced looms in the Growth Centre set-up at Duliajan. Additionally, OIL Hospital, Duliajan conducts three years General Nursing Midwifery (GNM) training course to twenty students on yearly basis with stipend, free hostel accommodation, uniform, books and protective clothing etc.,

Mobile Health Care Services: Mobile Dispensary services of OIL have always been one of the most significant community welfare project and regularly conducting about 500 camps annually with in-house Doctors, paramedics and infrastructure covering remote areas in the Districts of Dibrugarh and Tinsukia in Assam.

Visitors Care: OIL continues to acquire land every year mostly on outright purchase basis for operational purpose from its vast operational areas in the three district of Dibrugarh, Tinsukia and Sivasagar in Assam. A large number of pattadar and occupier not only part their land and surface properties with OIL but also part with the emotions attached with such ancestral properties. A large number of such land affected persons visit OIL’s field office for completion of the partition formalities and financial settlement. A system of offering hospitality with light snacks & beverages to such land affected persons visiting OIL’s office during the intermittent period has improved day to day public dealings significantly in such localities. Company is now constructing a suitable visitors shed for convenience of people visiting OIL’s office complex at Duliajan for convenience.

16.0 DONATION

The Company donated a sum of Rs. 40 lakhs and Rs. 25 lakhs for the people of the state of Assam and Arunachal Pradesh during the year through respective Chief Minister’s Flood Relief Fund.

17.0 SPORTS & CULTURE:

The Company continues to encourage the employees of the organization to take part in various sports/games and cultural activities for development of their physical and mental abilities besides bringing laurels to the organization and the Nation. A new revised “Sports Policy,” has been introduced during 2006-07 with number of incentives to encourage talent in this regard. During the year, number of sportspersons of the Company participated in various State/ National and international level tournaments in different sports/games as well as tournaments organized by PSPB and brought laurels to the Company. OIL hosted 3rd OIL Challenge Gold Cup Football Tournament during January-February’2008 where a number of national team of repute participated. The Vasco Sports Club of Goa won the tournament and OIL came out as runners-up. OIL team participated PSPB inter-unit athletic meet during February’2008 at Guwahati and adjudged as the runners-up . OIL Employees Sports Meet, 2007-08 was held during January’2008 where employees of different department were encouraged to participate. OIL sportspersons performed excellently, either in individual or team sports especially in Football, Basketball, Volley ball, Table Tennis and Bridge during the year.

18.0 INDUSTRIAL RELATIONS

During the year, Company continued to maintain harmonious industrial relations and there were no maydays loss due to industrial relations problem. Active participation of employees representatives in change management and organisation transformation initiatives arising out of strategic initiatives has been encouraging. Transparency in management dealings with collectives through regular and periodic interactions has been found to be very effective in maintaining cordial employee relations, which has been excellent throughout the year 2007-2008.

19.0 IMPLEMENTATION OF OFFICIAL LANGUAGE

In pursuance of Official Language Act/Rules of the Government of India efforts are continuing towards increased use of Hindi in official work, Hindi Workshops were conducted time to time to popularize Hindi amongst employees. Meetings of Official Language Implementation Committee are being held periodically. Employees are encouraged to attend Hindi Classes, Assamese Classes, and Hindi typing Classes and to write more and more words in Hindi. Employees were given lump sum cash awards on passing various Hindi exams as per Incentive Policy of OIL. Companys House Journals, "OIL News" and "Employee Communication Programme" carried Hindi write-ups in their issues. Circulars, Letters, MoU document and other publication materials have been made bilingual and trilingual as per the requirement. OIL Shreemanta Shankardeva Fellowship for comparative studies of Hindi and Assamese literature was given to a research fellow of Guwahati University in January 2004. Research Fellowship of Rs. 7000/- per month for three years and contingency of grant of Rs. 9000/- per annum are given under this fellowship. OIL is the only Petro-Organization to take this initiative for academic brilliance and national unity.

20.0 CORPORATE GOVERNANCE

OIL promotes the best global practices in the area of corporate governance and follows fair representation and full disclosure in all dealings and communications thereby protecting the rights and interests of all its employees, stakeholders and the society. OIL believes disclosure of efficient and up to date communication to all internal and external constituents through publication of the bi-monthly, trilingual OIL NEWS on regular basis and also launched Home page of Personnel Department in OIL-Web for disclosure of HR related information. Company also publishes financial and other business related information on its website www.oil-india.com and also in Intranet Portal OIL WEB. OIL signed a Memorandum of Understanding with Transparency International India on 29th November, 2007 to ensure that all activities and transactions between OIL and its suppliers and contractors are handled in a fair, transparent and corruption free manner. Company expects the following benefits out of the aforesaid MoU pact.

Improvement in ethics between Buyer and the Bidders.

Greater transparency in the procurement process and thereby enhancing public trust in procurement process.

Improvement in credibility of the organization in regard to procurement process.

Reduction in external interference in matters of tenders for procurement of goods /works / services.

Reduction in number of representation / complaints.

Reduction in number of arbitration / legal cases in regard to procurement.

Though the Company is an unlisted Company, a report as stipulated under Clause 49 of the Listing Agreement has been provided as a good Corporate Governance Practice.

21.0 CHANGES IN THE BOARD OF DIRECTORS

The following changes took place in the constitution of the Board of Directors of the Company since the last report:

APPOINTMENT

Shri B.N.Talukdar assumed office as Director (Exploration & Development) of the Company with effect from 1st December, 2007 and Shri Ashok Anand assumed office as Director (Human Resource & Development) of the Company with effect from 1st February, 2008.

Six Part-time Non-Official Directors viz. Shri Vinod K.Misra, Mr Alexander K.Luke, Prof. Sushil Khanna, Shri Arun Kumar Gupta, Shri Pawan Kumar Sharma and Shri Ghanshyambhai Hiralal Amin were appointed by the President of India vide MOP&NGs letter no C-34011/19/2005-CA dated. 22nd July, 2008 on the Board of the Company.

They were appointed as Additional Directors with effect from 30th July, 2008.

Shri D.N. Narasimha Raju was appointed as Government Nominee Director with effect from 1st August 2008.

CESSATION

Shri S.K.Patra and Shri J.K.Talukdar ceased to be Directors of the Company on attaining superannuation on 30th November, 2007 and 31st January, 2008 respectively.

Shri A.K.Jain and Smt. Aditi S.Ray, Government Nominee Directors ceased to be Directors of the Company w.e.f 1st August, 2008 and 14th July, 2008 respectively.

22.0 STATUTORY REQUIREMENTS

None of the Directors of your Company is disqualified as per the provisions of Section 274(1)(g) of the Companies Act, 1956. The information required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 (as amended) relating to Conservation of Energy, Technology Absorption, Expenditure on Research &am


Mar 31, 2007

On behalf of the Board of Directors of the Company, I take great pleasure in presenting the 48th Annual Report on the working of the Company for the financial year ended 31st March, 2007 along with the Audited Statement of Accounts, Auditors’ Report and the Review of Accounts by the Comptroller and Auditor General of India.

SIGNIFICANT HIGHLIGHTS

(a) You will be pleased to know that during the year your Company has been conferred “Performance Excellence Award, 2005-06” by the Indian Institution of Industrial Engineering (IIIE) and “Best PSU Award for the year 2005-06” under Public Enterprise Survey by the Department of Public Enterprises.

(b) We are also pleased to inform that during the year under review we have made considerable addition to Oil and Gas reserves as under :

Area of Operation Crude Oil Natural Gas Additions/Revisions Additions/ Revisions (MMKL) (MMKL-OE)

Proved Developed Reserves Assam 6.1726 7.8826 Arunachal Pradesh (Kumchai) 0.3969 0.0000 Rajasthan 0.0000 0.0046 JVC-India 0.1396 0.0000 Total 6.7091 7.8872

(c) The Company also bagged 8 blocks {6 nos. as operator and 2 as non-operator} under NELP-VI Round of bidding, the highest ever blocks awarded to OIL in a single round of bidding.

(d) The Company has been rated “Excellent” against MoU: 2005-06 with a composite score of 1.47 on the basis of audited data. It is also expected to retain the same level of Excellence for the year 2006-07 on the basis of preliminary in-house evaluation.

(e) Three installations namely two Fire Service Stations, one at Duliajan & other at Moran and the R & D Laboratory at OIL’s Field Head Quarter, Duliajan, Assam was accredited with ISO certification during the year. The ISO/IEC 17025: 2005 awarded to OIL’s R&D laboratory is the first amongst the laboratories of E&P companies to get this accreditation.

(f) Contribution to Indian Economy: OIL contributes approximately:

* 9.14 % of overall domestic crude oil production.

* 2.38 % of India’s overall crude oil consumption

* 3.12 % of India’s total import value of POL (Crude oil + Petroleum Product)

* 0.21 % of India’s GDP

1.0 PERFORMANCE

PHYSICAL

The performance of the Company for the year ended on 31.03.2007 in comparison with the previous year is furnished below:

Sl. No. Item Unit 2005-06 2006-07

1. Crude oil production MMT 3.2327 3.1067 2. Natural gas production MMSCUM 2269.54 2264.57 3. Natural gas sale MMSCUM 1743.95 1767.504 4. LPG production Tonnes 48,320 43,750

The Company could achieve the above despite adverse environmental problems in some of its major operational areas and the Company is making continuous efforts for improvement of oil production through the following measures :

* Augmenting drilling for increased number of exploratory and development wells.

* Prioritization of workover effort for quick revival of sick wells for on-stream production.

* Implementation of recommendations of various reservoir management studies for optimization of field production.

* Prioritization of high potential drilling locations for early completion.

* Enhancement of water injection through conversion of three additional water injection wells.

* Enhanced workover effort.

* Optimization of new and old wells.

* Intensification of Horizontal drilling.

* Additional facilities for crude handling and infrastructure for production.

* New wells to be brought on stream without any downtime.

* Induction of ESP (Electric Submersible Pump) for artificial lift assistance.

* Application of Gravel Packs for sand ingression in selected wells.

* Indirect heaters relocated, installed & commissioned in strategic locations.

* Frequent flow line heating jobs through Mobile Steam Generator to stop flow line gelling.

FINANCIAL

Rs/Crore 2006-07 2005-06

A. INCOME a) Operating Income 5389.20 5550.19 b) Interest & dividend income 337.00 216.81 c) Gas subsidy 149.79 121.10 d) Misc income & Stock adjustment 44.50 37.39 e) Other adjustments including prior period items 87.29 111.07 Total 6007.78 6036.56 B. EXPENSES a) Operating Expenses 578.94 629.41 b) Statutory duties 2066.07 1743.71 c) Interest & exchange loss 15.08 15.21 d) Depreciation, Depletion, write offs of assets/wells/debts and G&G cost/Corporate Office Expenditure 840.56 768.02 e) Business Development Expenses 10.55 7.27 f) VRS Compensation 0.00 29.96 g) Other adjustments including prior period items 13.95 168.58 Total 3525.15 3362.16 C. Profit before Tax 2482.63 2674.40 D. Less: Provision for Ta x (including deferred tax liability) 842.64 984.47 E. Profit after Tax & available for distribution 1639.99 1689.93

* Despite substantial increase in subsidy burden on crude oil and LPG to the tune of Rs.1016.26 crore and increase in statutory duties on crude oil and royalty, cess and sales tax on natural gas to the tune of Rs.322.43 crore, the Company earned profit after tax of Rs.1639.99 crore which is marginally lower than that of the last year.

* The Shareholders’ Fund as on 31.03.2007 was Rs. 6849.07 crore against long term loans of Rs.105 Crore giving a Debt to Equity Ratio of 1: 65.23 against 1: 32.66 in the previous year.

* Total subsidy share was Rs.1993.75 Crore during 2006-07 in comparison to Rs. 977.49 Crore in the previous year.

APPROPRIATION

Directors recommend the following appropriations:

Rs/Crore

2006-07 2005-06

a) Interim Dividend @ 185% (Previous Year 185%) 395.91 395.91 b) Final Dividend @ 75% (Previous Year 80%) 160.50 171.20 c) Corporate Dividend Tax 82.80 79.54 d) Transfer to General Reserve 1000.78 1043.28 Total 1639.99 1689.93

DIVIDEND

The Company paid an Interim Dividend @ 110 % and a Special Interim Dividend @ 75% during 2006-07, based on the provisional financial trend of the Company. The Board of Directors is now pleased to recommend a final dividend @ 75 % on the paid up capital making the total dividend of 260 % (Previous year 265 %) for the year, subject to the approval of the shareholders at the ensuing Annual General Meeting. It is also proposed to transfer the balance of Rs.1000.78 Crore to the General Reserve.

2.0 STATUS OF RESERVES

The status of Oil and Gas Reserves of the Company as on 31.03.2007 are as under :

Area of Crude Oil Operation Position Additions/ Production as at Revisions Quantity 01.04.2006 (MMKL) (MMKL) (MMKL)

Proved Developed Reserves Assam 31.5240 6.1726 3.4612 Arunachal Pradesh (Kumchai) 0.6571 0.3969 0.0528 Rajasthan 0.0000 0.0000 0.0000 JVC-India 0.9144 0.1396 0.0528 Total 33.0955 6.7091 3.5668

Position Position as at as at 31.03.2007 01.04.2006 (MMKL) (MMKL-OE)

34.2354 27.1120 1.0012 0.0000 0.0000 2.0790 1.0012 0.0000 36.2378 29.1910

Natural Gas

Additions/ Production Position Revisions Quantity as at 31.03.2007 (MMKL-OE) (MMKL-OE) (MMKL-OE)

7.8826 2.0396 32.9550 0.0000 0.0000 0.0000 0.0046 0.2250 1.8586 0.0000 0.0000 0.0000 7.8872 2.2646 34.8136

3.0 TECHNOLOGY INDUCTION, UP-GRADATION AND INNOVATION

* Capability of the Integrated Enterprise Application (SAP-ERP) has been expanded across the organization through e-networking to cover business and information related to personnel, administration and organizational management, financial accounting, costing, budgeting, JV-accounting, production revenue accounting, project management, materials management, E-procurement, sales accounting etc.

* Successfully established radio connectivity of the Mud Logging Units (MLU) deployed in scattered drilling locations in field with the campus network for facilitating real time monitoring of vital data while drilling and for extending guidance from the campus with this. It is envisaged that monitoring of drilling well will be improved considerably and quickly and important decisions can be made with greater accuracy.

* In order to augment the capability of preparing integrated survey database through cartographic digital format, new software named Geoscientific Interpretation System (GIS) has been commissioned during the year. Another software named AFI & EMERGE for fluid inversion (add and AVO) and reservoir property prediction using seismic attributes and well log data has been inducted during the year.

* Installed four (4) Mass Flow Meters at Tengakhat ITF for accurate measurement of volume of crude oil flow and water content in crude and action for procurement has been initiated for additional eight (8) such meters for installation in other areas.

* Burner Management System & Remote Ignition System for safe and efficient operation of heaters in OCSs have been introduced.

* The J-Bend drilling technology has been adopted for the first time in OIL during the year. Three Horizontal wells drilled during the year resulted in significant increase of crude oil production rate. Introduction of Aphron Invasion Control System in two sub-hydrostatic wells during work over operations led to encouraging results in control of loss of fluid into formations. Based on the satisfactory results of the field trial of Sodium Format Brine in three workover wells, it has now been proposed to switch over to sodium format system over a period of next 2 to 3 years from the existing calcium chloride system which is associated with the problem of corrosion.

* Pre-cast, pre-stressed RCC slabs have been successfully used in place of costly, perishable, scared timber skids in seven drilling locations. The result has been found to be effective especially during rainy season and the skids are reusable, long lasting and expected to be economic in the long run. As an alternative to the traditional use of huge volume of costly timber skids, rubber mats have been utilized for the first time in almost all drilling locations as a cheap and environmental friendly measure for maintenance and hard standing of drilling plinth area with satisfactory result.

* Voice communication system has been established through SCADA Radio Communication System in NEEPCO and LPG off take point.

* A collaborative geo-scientific study project has been completed with the help of Rice University, USA for Velocity-Depth Modelling on thrust-belt areas of the North-East. This project has led to new hydrocarbon leads and International exposure to oil geo-scientists.

* The Company inducted sophisticated Micro Tunnelling Technology (first time in Indian Petroleum Industry) for difficult river crossings in the Numaligarh-Siliguri Product Pipeline project.

The Company is continuously striving for enhancement of technological capabilities to bring about an improved and efficient performance in its infrastructure and field operations. A Technology Management Team (TMT) was formed in January 2006 which is scouting and evaluating suitable technologies for production enhancement and cost reduction. Certain technologies have been short listed and examined for possibility of pilot implementation. Successful induction of the technologies in the identified areas as mentioned below is expected to provide an enhanced technological capability besides economy in production cost :

* Real time well monitoring for production optimization through remote monitoring of well head pressure & real time BHP monitoring in some gas lift wells.

* Down hole oil-water separator.

* Smart drilling through remote monitoring and use of Mud Volume Totaliser.

* 2D-3C / 4D Seismic Survey.

* Technology for effective surveillance of crude transportation trunk pipeline and flow pipeline in fields.

* Casing while drilling.

3.0 DISCOVERY OF OIL / GAS FIELDS

The following oil and gas discoveries were made during the year in Assam:

3.1 BAGHJAN (Tinsukia district in Upper Assam)

Baghjan structure was discovered during 2002-03. Baghjan -1 was the first well drilled in the structure for Paleocene-lower Eocene prospects. On testing the well produced mainly gas. During the year the following wells have been drilled in the said structure and established presence of hydrocarbon:

Baghjan-3 (TO) was drilled in the Baghjan-1 fault block to delineate the downdip extension of hydrocarbon reservoirs encountered in Baghjan-1. On testing, well gave inflow of gas with condensate from the Paleocene- lower Eocene reservoir.

Baghjan-4 (TQ) was drilled in a separate fault block to delineate the extent of hydrocarbon reservoirs encountered in Baghjan-1 and 2 blocks towards the eastern part of Baghjan structure. On testing, this well produced oil and established the presence of oil reserves in another block after the success of Baghjan-2(TP).

Baghjan -5 (TN) was drilled in Baghjan-1 block towards west of well Baghjan-1. The well has encountered few hydrocarbon bearing sand ranges within Paleocene-lower Eocene formation and established significant presence of gas, on testing, within Lang par formation.

3.2 BAREKURI (Tinsukia district in Upper Assam)

Barekuri (North Chandmari) structure was discovered in the year 2003.

The well Barekuri-6 (DFU) was drilled during the year after extensive review and interpretation of the additional 2D & 3D data acquired during the interim period in the said area. This exploratory location is in the western flank of the adjacent fault block of well Barekuri-1 block which is the down dip extension of Barekuri structure. The well encountered significant pay of hydrocarbon within the Paleocene-lower Eocene formations. On testing the well produced commercial oil.

3.3 SANTI AREA (Tinsukia district in Upper Assam)

This well NHK-556 was drilled as an exploratory well for Paleocene-lower Eocene prospect in Santi structure which is located in the South-East of Naharkatiya structure. The well has encountered few hydrocarbon bearing sand ranges in Kopili and Lakadong+Therria formation and established presence of oil within the Lakadong+Therria formation.

4.0 PROJECTS (IN-COUNTRY)

4.1 RAJASTHAN:

JAISALMER PML AREA

Gas fields of Tanot, Dandewala & Bagi Tibba are lying within this PML. The gas produced at an enhanced rate of approx. 0.7 MMSCMD from this area during the year has been supplied to RRUVNL through GAIL (India) Limited for generation of electricity. New gas supply agreement has been entered with RRUVNL with enhanced price of gas for supply @ 0.90 MMSCMD for next three (3) years period.

BAGHEWALA PML AREA

Heavy Oil field of Baghewala is located in this PML area. Baghewala field being studied jointly in two phases by OIL and M/s Petroleos de Venezuela SA (PDVSA) of Venezuela under a technological tie up for thermal recovery by Cyclic Steam Stimulation.

* On completion of its Integrated Reservoir Study under phase-I, M/s PDVSA Intevep (Venezuela), the collaborator indicated the presence of a total of 78 MMT of contingent resource category, out of which 53 MMT (Indicated Category) of Bitumen in the upper carbonate reservoirs and 25 MMT proved category oil- in-place in the lower Bilara + Jodhpur sand stone. Based on this study, Company decided to carry out implementation of pilot project in Baghewala field, which includes drilling of two pilot wells, cyclic steam injection and production of heavy oil and bitumen for about one year under technical guidance of PDVSA Intevep.

* In phase–II, drilling of the first pilot test well completed during 2005. Trial steam injection carried out for a few days during July’ 2006. Steam injection temporarily suspended to attend the teething problem encountered in surface facilities. M/s Engineers India Limited was engaged to provide necessary rectification in surface facilities. After rectification, steam injection will be resumed to produce the bitumen from the upper carbonate reservoirs of Baghewala field.

4.2 GANGA VALLEY PROJECT

It has been planned to drill two exploratory wells in the identified structures in Kashipur PELs. Pre-drill prospect assessment in respect of the identified prospects particularly in the logistically difficult Himalayan foothill region which was carried out with the help of expert M/s PRS Energy, UK. Based on the final evaluation report, a third opinion from another consultant M/s Geoglobal Resources, Canada has been sought.

4.3 NORTH EAST FRONTIER PROJECT

MANABUM

OIL acquired around 554 GLKM of seismic data in the logistically difficult areas of Manabum in Arunachal Pradesh during 2003-2006. Based on the interpretation of the data acquired so far, three drillable prospects were identified. One exploratory drilling location (NMA) has been released and preparatory surface work is in progress. Exploratory drilling is expected during 2009-2010.

PASIGHAT

OIL acquired around 357 GLKM seismic data during the period 2004-06. Based on the interpretation, a few leads/prospects identified. To confirm these leads, additional in-fill 2D seismic of 350 GLKM is planned. The validity of PEL expired on 31.03.2007. OIL applied for another two years extension of PEL. Further exploration activity is dependent on extension of PEL by the Government.

JAIRAMPUR (THRUST BELT)

OIL acquired around 75 GLKM seismic data during 2004-05. Based on the in-house interpretation and a second party opinion, one location (JRA) for exploratory drilling has been released and civil work already commenced. Actual drilling is expected by March, 2009.

RIVER BED OF BRAHMAPUTRA (BRB)

The proposed BRB survey work is kept in abeyance, in view of pending Environmental Clearance from Pollution Control Board, Assam. The matter is pending before the Hon’ble Guwahati High Court. Meanwhile, Ministry of Environment and Forests (MOE&F) has advised Wildlife Institute of India (WII) to examine the matter and submit their comments. MOE&F has also suggested constituting a committee with representatives from WII, OIL & other Dolphin Experts to look into the issues and suggest measures to be taken by OIL.

4.4 STATUS OF EXPLORATION BLOCKS

NELP

OIL has participated in all the past six NELP bidding rounds concluded so far and acquired total 22 blocks. Out of these 14 are onshore and rest 8 are offshore blocks. OIL is operator in respect of 12 onshore blocks. The work is in progress in all these blocks as per the committed Minimum Work Program (MWP).

OIL bagged 8 (eight) Blocks {6 nos. as operator and 2 nos. as non-operator} under NELP-VI Round of bidding, the highest ever blocks awarded to OIL in a single round of bidding.

A. OIL OPERATED BLOCKS

Out of the 12 OIL’s operated blocks, five blocks are in the North Eastern (NE) states of Assam and Mizoram (AA-ONN-2002/3, AA-ONN-2003/3, AA-ONN-2004/1, AA-ONN-2004/2 and MZ-ONN-2004/1), five blocks are in Rajasthan (RJ-ONN-2000/1, RJ-ONN-2002/1, RJ-ONN-2004/2 and RJ-ONN-2004/3), one block is in Mahanadi basin (MN-ONN-2000/1) and one block is in the Krishna-Godavari basin (KG-ONN-2004/1).

The work is progressing in all these blocks as per schedule and is being closely monitored.

B. NON OIL OPERATED BLOCKS

OIL has participating interest in respect of 10 remaining NELP blocks with other consortium partners. Out of these, two blocks (AA-ONN-2001/3, AA-ONN-2002/4) are in onshore areas in Assam, one block (MN-OSN- 2000/2) in shallow water in the Mahanadi offshore, Orissa and the remaining seven blocks are spread over a vast tract of deepwater acreages within the country. One block (MN-DWN-2002/1) in the deep water of Mahanadi offshore, one block (MB-DWN-2000/2) in Mumbai deep water, one block (CY-DWN-2001/1) in Cauvery deep water and four blocks (KG-DWN-98/4, KG-DWN-2002/1, KG-DWN-2004/5, KG-DWN-2004/6) in Krishna–Godavari deep water. Out of the two onshore blocks in Assam, one location has been so far released in Koraghat Block (AA-ONN-2001/3, NELP-III) in Golaghat District and land acquisition has been initiated. Data acquisition in the other block (AA-ONN-2002/4, NELP-IV) near Assam-Nagaland border is in progress. In the shallow water block in Mahanadi offshore (MN-OSN-2000/2, NELP-II), drilling has been completed in two wells. Similarly, out of the remaining deep water blocks, drilling of two wells has been completed in Krishna Godavari basin (KG-DWN-98/ 4, NELP-I), one in Mumbai deepwater (MB-DWN-2000/2, NELP-II). The PSC of the block has come to an end w.e.f. 15th August, 2005. Activities in respect of the remaining blocks are in progress as per the committed minimum work programme.

C. JOINT VENTURE BLOCKS (PRE-NELP)

EXPLORATION BLOCKS

The Company is also carrying out exploration activities in 3 pre–NELP JV blocks i.e. one Saurastra offshore (SR-OS-94/1), one in Gujrat-Kutch Offshore (GK-OSJ-3) with RIL as the operator and the remaining one is in onshore block (CR-ON-90/1) where M/s Premier Oil is the operator in Assam-Arakan Basin. Drilling of the first exploratory well, Masimpur-3 is in progress.

PRODUCTION BLOCK

The Company with a Participating Interest of 40%, entered into a PSC for Kharsang Oilfield (Arunachal Pradesh) with Government of India in consortium with M/s Geo Petrol International Inc, France (25%), M/s Jubilant Enpro Ltd., India (25%) and M/s Geo Enpro Petroleum Ltd, India (10%) on 16.06.1995. The field produced 62,598 Tonnes during 2006-07 (previous year 57,919 Tonnes) of Crude Oil during the year and Company’s share was 25,039 Tonnes (Previous year 23,167 Tonnes).

4.5 PROJECTS (OVERSEAS)

Exploration Service Contract: Farsi Offshore Block, Iran [OVL-40%PI (operator), IOCL-40% PI & OIL-20% PI]

The consortium has completed drilling of four (4) wells as per the commitment and discovered presence of oil in 2 wells and gas in 1 well. Assessment of the commerciality of the discoveries are in progress by international consultants.

Product Pipeline, Sudan: [OVL–90% PI & OIL-10% PI]

The construction of the product pipeline has been completed and the same was handed over to the Ministry of Energy and Mines (MEM), Sudan. This pipeline has already started generating revenue. Three installments towards repayment from the MEM have been received.

Block 86, Libya: [OIL-50% PI (operator) & IOCL-50% PI]

The block is in first phase of exploration. Acquisition of 2D seismic has started from 28/12/2006 and the same is in progress.

Block-102(4), Libya: [OIL-50% PI (operator) & IOCL-50 % PI]

Acquisition of 2D seismic has started from 28/12/2006 and the same is in progress. Cumulative achievement for both blocks till date is about 1700 LKM.

Block - Shakthi, Gabon: [OIL–45% PI (operator), IOCL–45% PI & Marvis Pte.-10% PI]

First phase of exploration in the block is in progress. Aeromagnetic survey has been completed (36,400 LKM). Tendering process of 2D seismic Acquisition, Aeromagnetic Survey Processing and Interpretation is in progress.

Block OPL 205, Nigeria: [OIL-17.5% PI, IOCL-17.5% PI & Suntera Resources 35% PI in JV M/s Suntera Nigeria OPL 205 (70% interest of Block)]

The Company has acquired 25% equity (from M/s Suntera Energy) in a Nigerian Company (Suntera Nigeria 205 Ltd.), which in turn has acquired interest in a prospective onshore Block OPL-205. OIL’s partner for overseas ventures, Indian Oil Corporation Limited (IOCL) also has acquired 25% equity in Suntera Nigeria 205 Ltd. Drilling of the first well is expected to commence by October/November, 2007.

Block 82 & 83, Yemen: [MEDCOENERGI-45% PI (operator.), Kuwait Energy-25% PI, OIL-15% PI & IOCL- 15% PI]

The consortium was awarded Onland Blocks 82 & 83 in the 3rd International Bidding Round. Production Sharing Agreement (PSA) has been initialed on 20th May, 2007. Government approval for signing of PSA is awaited.

Besides looking for acquisition of producing/discovered E&P blocks, the Company is also actively pursuing acquisition of companies having a good portfolio of exploration acreages and producing assets.

M/s Bangladesh Gas Fields Company Limited, Bangladesh.

* In December ’2005, OIL entered into a contract with M/s Bangladesh Gas Fields Company Limited, to provide wire line operator services in two of their work over wells in Titas Gas Field, Bangladesh. Accordingly, the two jobs (well 15 & 16) were successfully completed in December’2005 and May ‘2006, respectively. The scope of the contract was subsequently extended for three more wells on 06.12.2006 and the first job under the extended scope of service at well no. Narsingdi-2 was successfully completed on 16.02.2007.

* OIL entered into another contract with M/s Bangladesh Gas Fields Company Limited in December’2006, to provide expert wire line service in one (1) drilling well and four (4) work over wells. The service is yet to start and the contract will remain effective up to 31.03.2009.

M/s Sylhet Gas Field Limited, Bangladesh.

* Contract was signed in December ’2005 with M/s Sylhet Gas Field Limited, a subsidiary of Petro-Bangla for providing wire line operator services for their work over operation in Kailashtilla Gas Field in well no. 3 & 4. The jobs in these wells were successfully completed during July and December ’2006, respectively.

4.6 OTHER BUSINESSES

* Patenting Of i-Cap Technology: The Company has entered into a Joint Venture Partnership Agreement with M/s ICSA (India) Ltd., Hyderabad towards development of i-CAP technology (used in pipeline surveillance) and transfer of the patent in the joint name of the Company and ICSA on a 50:50 cost sharing basis including initial cost of Research & Development incurred by them.

* Indian Oil Tanking Ltd (IOTL)–Oil Consortium: The Company entered into a Consortium Agreement with IOTL for jointly bidding for and securing a contract for laying a part of the Numaligarh–Siliguri product pipeline for the Company on 50:50 sharing basis. The consortium has been awarded with the contract for laying 115 km of pipeline at a total contract value of Rs 50.01 Crore.

* OIL’s Business Development Cell participated in the International Competitive bidding to provide charter hire service of one drilling rig package with crew for drilling of three (3) wells to OIL-ONGC JV Project under NELP-III at Rajasthan. OIL was successful in the bidding round and rendered the desired services and drilled three wells during 2006-07.

* OIL extended services to M/s Canoro Resources Ltd and M/s Geo Enpro Petroleum Ltd. by providing various equipment on rental, laboratory testing of well bore crude oil, gas & water samples and BHP with PVT analysis jobs during the year 2006-07.

5.0 STRATEGY AND THRUST IN E&P IN THE NORTH-EAST

All producing oilfields till date of the Company are located in the North-east in the States of Assam and Arunachal Pradesh. From a geo-scientific perspective, there is still significant hydrocarbon potential to be tapped. The Company continues an aggressive Exploration, Development and Production Strategy in the region with the following major elements:

(i) Step up seismic survey including more and more of 3-D seismic coverage.

(ii) Plan/Execute seismic survey in Brahmputra River Bed and other logistically difficult areas.

(iii) Augment exploratory, delineation and development drilling. Improve quality of drilling and related operations targeting international benchmarks.

(iv) Engage internationally reputed consultancy firms for independent assessment of hydrocarbon prospectivity andranking of drilling locations, as an essential scientific input and complementary study to in-house efforts.

(v) Step up IOR/EOR to enhance recovery factors and enhance production.

(vi) Impart suitable training and induct appropriate technology.

(vii) Continuously strive for new oil in old fields by probing deeper horizons for optimum use of its infrastructural facilities.

6.0 POLICY INITIATIVE FOR FUTURE

In view of the changed scenario in the hydrocarbon sector and to meet the future challenges, OIL has formulated long term Strategic and Corporate Plan with the following business focus:

* Strategic focus on E&P service business and Pipeline business in the North East and rest of the Country and selective focus in rest of the World.

* Selective focus in Refining and other downstream business in the North East and rest of India.

The plan aims at more than doubling its present level of crude oil production in the next five years, through two distinct sets of initiatives. The first relates to physical activities in the following three major focus areas:

* Maintaining and improving production from the existing acreages in the North East through intensive exploration and development initiatives.

* Enlarging the Company’s production base in the rest of the Country through aggressive activities in the NELP blocks available with the Company, acquisition of new blocks under future NELP rounds and acquisition of producing properties available in the market.

* Acquiring prospective exploration and producing acreages abroad.

The second set of initiatives relates to transformation of OIL to a learning organization with inherent flexibility to adapt to changes. This is being achieved by focusing on enhancing employees’ capabilities and competencies to realize a shared vision through the process of continuous learning in teams. The philosophy of mutually accountable team activities aims at quantum improvement in performance and achievements.

The plan also calls for a diversified business portfolio for the Company through selective presence in the oil and gas value chain covering amongst others refining, gas monetization through cracker/power generation and extension of existing business of pipeline services and E&P services as a service provider. The plan is being implemented through six distinct modules:

* Business and Organization Restructuring and creation of a New Performance Management System

* Change Management and creation of a new HR Policy to meet the requirements of the new and emerging competitive business environment

* Implementation of Enterprise Resource Planning (ERP)

* Performance Improvement and Cost Reduction

* Manpower Redeployment

* Corporate Governance Framework

7.0 HUMAN RESOURCE DEVELOPMENT

Initiatives during the year

* Revised HR Policy comprising of recruitment, job rotation, promotion, training and development for the executives of the Company has been put in place during the year. The revised policy is expected to serve as a critical HRD strategy for acquisition, management and development of quality HR required for meeting the Company’s long term strategies.

* In order to ensure a continuous career development and utilization of the human resource a job rotation plan has been implemented in the operating executive level to develop people for both future functional and multi-functional roles. The succession plan implemented for the managerial and leadership roles have been extended to cover executives in Salary Grade F (level-2) of the Company for positions likely to fall vacant up to 2010.

* In order to overcome the critical issue of separation of HR from the core functional areas in the recent years, Company, in principle, adopted recruitment of 25% extra manpower over and above the Board sanction for Geosciences group to stabilize the vacuum created in such specific areas.

* Training to the following number of persons, both executives and workmen were imparted during the year:

In-house : 1065 In-country : 717 Overseas : 151

In addition to above, Apprenticeship training was provided to 114 persons. Summer training has been provided to 165 students from Technical/Management Institutes.

Employment Of Weaker Section

Workmen Category

* In accordance with Government directives, Company has taken steps in recruiting candidates belonging to SC, ST and OBC categories and ex-servicemen. Accordingly, 40 backlog vacancies (SC-13 and ST-27) were notified during the year and 36(SC-12 and ST-24) candidates have been appointed during the year.

* In addition to special recruitment drive, 105 skilled posts (Jr. Engineer Production-45, and Asstt. Operator-60) were notified during the year for direct recruitment. Notification for another five paramedical posts has also been issued during the year. The appointment process is underway.

Executive Category

* In executive category there has been recruitment against 17 posts filled up from the weaker section of the society. (SC- 07, ST- 05, OBC- 05)

* In addition, there are 64 (Gen – 36, SC – 08, ST – 07, OBC – 13) Executive Trainees undergoing training who would be absorbed in permanent Executive cadre after successful completion of one year training.

* A total of 11 work persons have been promoted to Executive cadre during the year

Women Empowerment

As on 31.03.2007 there are 319 women employees (67 in officer category and 252 in non-officer category) out of the total manpower of 8476 (1172 in officer category and 7304 in non-officer category) constituting 3.76 % of the total workforce.

Future Initiatives

To meet the challenges of the fast changing competitive market of the HR, especially the demand for experienced knowledge workers worldwide, Company has initiated long term strategy. The Company has engaged Hay Group Consultants, a premier global company to map the competency requirement and suggest future actions to develop leadership competencies of key executives at managerial and leadership level. In order to check the attrition of in-house talents, Company is planning a suitable strategy not only to retain scarce talent but also to attract others for making a long term career in the Company. Scientific method of screening during recruitment of talent is another area being explored to introduce psychometric tests, group discussion etc. to strengthen the existing system and to ensure induction of quality people at all levels.

8.0 QUALITY ASSURANCE

OIL’s improved quality control initiatives have helped to bring down the BS&W content in delivered crude to the refineries. Efforts are on to bring down the BS&W content to minimum extent possible to match with the international standards.

9.0 RESEARCH AND DEVELOPMENT

The Company gives great importance in continuous up-gradation of technologies and expertise in various areas of activities through its own Research & Development Centre. The details of activities carried out are given in FORM–B of this Report.

10.0 SAFETY, HEALTH AND ENVIRONMENT

The Company could successfully abate the pollution problems arising out of various operational activities during the year through regular monitoring and proper co-ordination. The major thrust for abatement of pollution during the year was in setting up of Effluent Pits at strategic locations, Recycling of drilling effluent, setting of noise barrier walls, procurement of diesel engines with acoustic enclosures, identification of possible areas of reducing CFC, Bio-Remediation of oily sludge in old pits, actions for obtaining ISO certifications in more installations, setting of incinerator in OIL Hospital, field study on “Effect of gas flaring on paddy cultivation”, organized various awareness programs, plantation of trees, sought expert opinion from Assam Agricultural University, Jorhat to resolve public complaints on damage to paddy cultivation, tea crop, sericulture etc.

During the year a number of Internal as well as External Safety Audits of various installations were carried out jointly with Oil Industry Safety Directorate and Mines Safety Directorate experts. Besides, pre-spudding safety audit of drilling locations / pre-commissioning safety audits, review audits were carried out with the objective of improving the HSE standards of the various installations of the Company. The Company has also initiated HAZOP (Hazard & Operability) Study, preparation of Operating and Maintenance manual and digitization of P&ID, PFD & all other records of 40 production installations. The job is expected to commence shortly and is likely to be completed within 18 months time.

A major thrust has been given for awareness drive amongst Executives, Employees and Contractors’ workers on HSE matters. More than 800 people of the said categories have been trained in the last Six months by on-site training. This effort will be a continuous process. Regular bi-monthly co-ordination meeting with Union officials, MSO / DSO and DDMS, Digboi has helped to improve the Safety awareness amongst all. Quality control of PPE items in close liaison with Union has helped to provide appropriate good quality materials in time. HSSE (Health, Safety, Security and Environment) Policy manual has been finalized and adopted by the Company during the year under review. On-site and Off-site disaster management mock drills were carried out.

Occupational Health monitoring for work persons is done in a regular and systematic manner. OIL is committed not only to meet the various statutory public regulatory requirements but is also going much beyond. The examination is carried out in a block of 5 years. The compliance is excellent and is close to 100%.

11.0 CORPORATE SOCIAL RESPONSIBILITY

A. SOCIAL WELFARE PROGRAMME AND AREA DEVELOPMENT SCHEME

The Company continues to extend considerable financial support annually through two of its ongoing schemes viz. “Social Welfare Scheme” and “Area Development Scheme”, which covers a wide gamut of activities like constructions of roads, setting up of educational institutions, investing in agro-based projects like Project Rupantar and Oil India Rural Development Society (OIRDS) and primary health centers and other infrastructural support in the North-East region and other operational areas. OIL has also contributed to upliftment of economically and socially deprived sections through its special component plan and tribal sub-plan. Mobile dispensaries and free medical camps are some of the other services by OIL. A total amount of Rs 13.74 Crore has been spent during the year 2006-07 against the sanctioned budget of Rs 14.00 Crore on this account.

The Company lays significant emphasis on development of women through its various ongoing schemes as under:

* Imparting training to women on handicraft, weaving, embroidery and tailoring on monthly stipendiary basis in its Handicraft Training and Production Center at Duliajan.

* OIL has made significant contribution to Women Colleges and Girl Schools in its operational areas.

* OIL sponsors women members for attending National and International seminars / training courses.

* OIL provides single occupancy type ladies hostel to working women employees of OIL.

* Under Project Rupantar, a joint initiative of OIL and the State Institute of Rural Development (SIRD) for providing avenues for sustainable self-employment to the rural masses, rural women (members of Self Help Groups) are given training on spinning & weaving of Eri and Muga Silk in advanced looms in the Growth Centre set-up at Duliajan. A batch of 30 women undergoes this free of cost two-month residential training. After the training, the trained members of the SHGs are helped in getting credit linkage form banks to set-up their own units.

* OIL Hospital, Duliajan conducts three years General Nursing Midwifery (GNM) training course to twenty students yearly with stipend, free hostel accommodation, uniform, books and protective clothing.

* Special emphasis is given on women’s health, nutrition, hygiene and child care besides proper immunization.

B. DONATION FOR THE CAUSE OF THE NATION

The Company donated a sum of Rs.40 lakh to the Chief Minister’s Relief Fund, Assam for providing relief and rehabilitation of the poor, needy, downtrodden and affected people of the State of Assam and Rs.25 lakh to the Chief Minister’s Relief Fund, Arunachal Pradesh for providing relief to the victims of natural calamities, landslides, flash floods and other disasters in the State of Arunachal Pradesh.

12.0 SPORTS & CULTURE

The Company continues to encourage the employees of the organization to take part in various sports/games and cultural activities for development of their physical and mental abilities besides bringing laurels to the organization and the Nation. A new revised Sports Policy has been introduced during the year with number of incentives to encourage in this regard. During the year, number of sportspersons of the Company participated in various State/ National and International Level Tournaments in different sports/games as well as tournaments organized by PSPB and brought laurels to the Company. OIL sportspersons participated in 33rd National Games held at Guwahati during the year and won number of medals in different events. OIL’s Table Tennis team delivered brilliant performance in the 68th Senior National & Inter State TT Championship held at Ajmer, Rajasthan by winning a number of single and double events. OIL’s football team won the prestigious “All India Kalinga Cup Football Tournament”, held at Cuttack, Orissa during the year. OIL sportspersons performed excellently, either in single or group in PSPB- events, especially in Basketball, Cricket, Football, Tennis, Golf, Billiard and Chess during the year. OIL’s badminton team won Gold medal in SAF games held at Colombo, Sri Lanka in November’2006. Besides, one of the football players of OIL has brought laurel by representing Indian Football Team in SAF games.

13.O IMPLEMENTATION OF OFFICIAL LANGUAGE

In pursuance of Official Language Act/Rules of the Government of India efforts are continuing towards increased use of Hindi in Official work. Hindi Workshops were conducted from time to time to popularize Hindi amongst employees. Meetings of Official Language Implementation Committee are being held periodically. Employees are encouraged to attend Hindi Classes and Hindi typing Classes and to write more and more words in Hindi through Incentive Schemes formulated by the Company. Circulars, Letters and other publication materials have been made bilingual and trilingual as per the requirement. Various initiatives were taken up during the year for promotion of the Official Langauge.

14.0 INDUSTRIAL RELATIONS

During the year, the Company continued to maintain harmonious industrial relations and there were no man days lost due to industrial relation problems. Active participation of employees’ representatives in change management initiatives arising out of the strategic corporate plan has been encouraging. Transparency in management dealings with collectives through regular and periodic interactions has been found to be very effective in maintaining cordial employee relations, which has been excellent throughout the year 2006-2007.

15.0 CHANGES IN THE BOARD OF DIRECTORS

The following changes took place in the constitution of the Board of Directors of the Company since the last report:

APPOINTMENT

Shri A.K.Jain, Joint Secretary (E), Ministry of Petroleum and Natural Gas was appointed as Part-time Government Director on the Board of the Company w.e.f. 30th November, 2006.

Shri T.K.Ananth Kumar assumed office as Director (Finance) of the Company w.e.f 18th January, 2007. Previously, he was Director (Finance) of Numaligarh Refinery Limited, a subsidiary of BPCL.

16.0 STATUTORY REQUIREMENTS

None of the Directors of your Company is disqualified as per the provisions of Section 274(1)(g) of the Companies Act, 1956. The information required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 (as amended) relating to Conservation of Energy, Technology Absorption, Expenditure on Research & Development, Foreign Exchange Earnings and Outgo etc. have been provided in the Annexure I attached to this Report.

Details of the Employees who drew remuneration exceeding the limits laid down under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 (as amended from time to time) are attached to this report as Annexure II.

17.0 AUDIT COMMITTEE

The Audit Committee constituted under Section 292A of Companies Act, 1956 consists of two Government Nominee Directors and one Whole-time Director as members of the Committee. The Committee acts in accordance with the terms of reference specified by the Board as per the provisions of the Companies Act, 1956.

The following Directors are the members of the Committee: (i). Smt. Aditi S Ray (ii). Shri A.K.Jain (iii). Shri J.K.Talukdar

18.0 STATUTORY AUDITORS

M/s PK Mitra & Co., Chartered Accountants, Kolkata and M/s A.K. Sabat & Co., Chartered Accountants, Bhubaneswar were appointed as Joint Statutory Auditors for the financial year 2006-07 by the Comptroller and Auditor General of India in terms of Section 619(2) of the Companies Act, 1956 and will hold office until further orders.

19.0 DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the requirements under Section 217(2AA) of the Companies Act, 1956 your Directors confirm that:

(i) in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures

(ii) the Directors have selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year as on 31st March, 2007 and of the Profits of the Company for the year ended 31st March, 2007.

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and preventing and detecting fraud and other irregularities

(iv) the Directors have prepared the Annual Accounts on a going concern basis

20.0 ACKNOWLEDGEMENT

On behalf of all the Directors, I would like to express my sincere gratitude to the Government of India, Government of various overseas countries, the concerned State Governments, Government Departments and other Agencies for their continued support, guidance and cooperation. The Directors would like to thank the Company’s customers, vendors, investors, business associates and bankers for their support to the Company and also place on record their deep sense of appreciation for the committed and sincere efforts of every member of the Oil India family at all levels.

21.0 CONCLUSION

Propelled by the vision of enlarging the Company’s contribution and powered by internal vitality, your Directors look forward to another year of fruitful operations combined with an overall improvement in efficiency during the year 2007-2008.

For and on behalf of the Board of Directors

Sd/- (M.R.PASRIJA) Chairman and Managing Director

Place : New Delhi Date : 20.07.2007


Mar 31, 2003

1.0 Your Directors have the pleasure in presenting the 44th Annual Report on the working of the Company together with audited statement of accounts for the financial year ended 31st March, 2003.

2.0 THE YEAR IN RETROSPECT

2.1 ACHIEVEMENTS

The year 2002-2003 has been a successful year with your Company meeting most of the targets as set in the Memorandum of Understanding 2002-2003. The significant achievements during the year are as under:

a) Seismic Performance target was achieved except for shortfall in 3D survey due to non-receipt of defence clearance for Cauvery Offshore. The total achievement was 1950 GLKM of 2D Data and 350 SQKM of 3D Data. This was the highest ever survey by your Company with 9 seismic parties in operation in the 4th quarter.

b) Drilling achievement surpassed target by 10% inspite of severe downhole problems in few wells. Drilling achievement of 1,30,035 Mtrs was the highest ever achieved.

c) Accretion to in-place and recoverable reserves surpassed the target with in-place accretion of 21.86 MMT and Recoverable Reserves accretion of 9.79 MMT against the target of 20.7 MMT and 9 MMT respectively.

d) LPG production is 9% more than the target with achievement, of 54,320 tonnes against target of 50,000 tonnes. The achievement is also 7% more than the last years achievement.

e) Although Gas production and Sale were lower than the targets due to delay in completion of revamping work of BVFCL, Namrup but were around 8% and 11% higher respectively than the previous year.

f) Although there was a shortfall in achievement of crude oil production target there has been a remarkable improvement in the Crude Oil quality during the year. Various measures taken resulted in reducing BS&W content to current level of below 1% as compared to around 4% in April, 2002.

g) Your company has duly completed the formulation of its Strategic and Corporate Plan. Action has already been initiated for implementation of the same.

h) Projectisation of Manabum Exploration as a part of its strategy for exploration in Frontier areas has been taken;

i) An Exploration Service Contract with National Iranian Oil Company, in consortium with ONGC Videsh Limited and Indian Oil Corporation Ltd. with OILS participating interest of 20% in FARSI Offshore Block in the Persian Gulf of Islamic Republic of Iran has been executed during the year.

j) Your Company acquired OVLs 100% stake in Sakhalin India Inc. (Sll), a company incorporated in Texas, USA which holds 10% participating interest in North Hellhole Bayou Prospect in offshore Vermillion" Parish, Louisiana, USA.

k) Your Company provided E&P consultancy to Morris Petroleum in Nigeria for assessment and submission of bids for development of marginal fields.

I) Profit Before Tax at Rs. 134057 lakhs represents an increase by 66.90% over the previous year.

m) Profit After Tax at Rs. 91673 lakhs represents an increase by 74.54% over the previous year.

n) The Earning Per Share (EPS) for year was Rs. 42.84 against Rs. 24.54 in the previous year.

o) The Return on Net Worth was 26.52% against 15.26% in the previous year.

p) The Shareholders Funds as on 31.3.2003 was Rs. 345690 lakhs against long term loans of Rs. 30771 lakhs giving a Debt Equity Ratio of 1:11.23 against 1:14.25 in the previous year.

Based on the performance during the year 2002-2003, your Company is expected to be rated as "EXCELLENT" with respect to targets set in Moll 2002-2003 with a composite score of 1.22 which would be the best ever achieved by your Company.

2.2 FINANCIAL RESULTS

(Rs./Lakhs)

Financial 2001-2002 2002-2003

Profit before interest, depreciation, depletion, write offs & taxation 107503 158516

Depreciation, depletion & write offs (45010) (36104)

Profit before interest & tax 62493 122412

Net interest (+) 4945 7989

Profit before tax, adjustment related to previous year & unusual items 67438 130401

Adjustment related to previous years & unusual items 12884 3656

Profit before tax 80322 134057

Corporate tax (27800) (37200)

Deferred Tax - (5184)

Profit after tax & surplus available for distribution 52522 91673

APPROPRIATION

a) Interim dividend @40% (Previous year - Nil) - 8560

b) Final dividend @90% (Previous year @75%) 16050 19260

c) Corporate Dividend Tax - 2468

d) Transfer to General Reserve 36472 61385

52522 91673

2.3 DIVIDEND

Your Company paid an interim dividend @40% during the year and your directors are now pleased to recommend a final dividend @90% on the paid up capital making the total dividend of 130% (previous year 75%) for the year, subject to the approval of the shareholders at the ensuing Annual General Meeting. It is also proposed to transfer the balance of Rs. 61385 lakhs to the General Reserve.

3.0 DISCOVERY OF OIL/GAS FIELDS

During the year under review, the following significant oil and gas discoveries were made in Assam :

3.1 Matimekhana North

First well drilled in Matimekhana North structure, located adjacent to Chabua High discovered low API, High viscous oil within Lakadong + Therria formation.

3.2 North Dikom

First well drilled in North Dikom structure, located adjacent to khagorijan discovered high pour point oil within Lakadong + Therria formation.

3.3 Matmekhana

First well drilled in Matimekhana (Chabua Extension) structure discovered oil within the Langpar formation of upper palaeocene.

3.4 East Deohal

First well drilled in East Deohal structure, located North of Nahorkatiya main field, discovered oil within the Lakadong + Therria formation.

3.5 Mechaki

First super deep well drilled in the Mechaki structure, located in far north eastern corner of Tinsukia district, encountered good quality oil within the Narpuh and Lakadong + Therria formation. Productivity of the reservoir is being assessed.

3.6 Baghjan

First well drilled in the Baghajan structure located in the fringe of Dibru reserve forest, discovered gas within the Langpar and Lakadong + Therria formation.

4.0 GEOSCIENTIFIC STUDIES, TECHNOLOGY UPGRADATION & EXCELLENCE

4.1 Geo-scientific Studies

Your Company carried out a number of Geoscientific Studies with the help of internationally reputed consultants and most of these were either completed or is at an advanced stage of completion. Some of these studies will help in identifying and locating petroleum system and its entrapment and thereby formulate the exploration strategy in the Upper Assam matured basin including the frontier areas. Other studies will facilitate to locate areas of by-pass oil/gas, plan for IOR/EOR, development of non-associated gas fields, identify reservoirs for horizontal drilling, formulate drilling policy for deep seated Eocene etc. and accordingly strengthen development activities for enhanced oil production.

4.2 Technology Upgradation & Excellence

Upgradation of laboratory Analytical Methodology : With the withdrawal of the Administered Price Mechanism (APM) and introduction of the Market Determined Pricing Mechanism (MDPM), the determination of Base Sediment and Water (BS&W) content and other parameters of the crude oil supplied to the refineries has achieved greater importance. In order to streamline laboratory-testing procedures as per ASTM standards, your company has procured several new equipment like the Karl Fischer Titrator, Automatic Distillation Apparatus, Sediment Content Analyser, Salt Content Analyser, Brookefield Viscometer etc. Procurement of a Simulated Distillation Apparatus is also envisaged to facilitate studies in the distillation characteristics and find yields of different cuts, which will be useful in determining the crude oil price.

Infra Red Mass Spectrometer : A highly sophisticated Infra Red Mass Spectrometer has been procured for advanced geo chemical studies.

Hydraulic Jet Pumps : Two sets of Jet Pumps were procured for producing a group of wells that need artificial lift. Such pumps work on the principal of nozzle and venturi. The first set of Jet Pump was installed at Bogapani and the second set is under installation at Kathaloni area.

Electrical Submersible Pump : Electrical Submersible Pumps are basically electric motor driven downhole centrifugal pumps, which are used for producing deeper wells that require high volume artificial lift. Your company has initiated action for procurement of 3(three) sets of such systems, which will help in producing wells located in remote areas.

Electrostatic Emulsion treater : Electrostatic Emulsion treater use high voltage electric field for separation of emulsified water from oil droplets and are more efficient than conventional Emulsion treaters which works on the principal of thermo-chemical treatment. Under the new pricing regime (MDPM), the stipulated BS&W content in crude Oil delivered to the refineries is to be kept at internationally accepted level in order to avoid any discount in price. Therefore, in order to maintain such quality, one number of Electrostatic Emulsion treater has already been procured and installed at Dikom OCS. Action is also initiated to install such Electrostatic Emulsion treater at the Central Tank Farm at Tengakhat by 2004.

Water Injection : A comprehensive study has been carried out for enhancement of Water Injection as IOR/EOR measures in our oil reservoirs of Naharkatia, Moran, Jorajan, Zaloni, Madhuting - Tipling and Shalmari oilfields. It has been established that the requirement of water injection volume will be around 14000 KLPD to sustain crude oil production in our depleting oil fields. Actions have been initiated to make the proposed water injection enhancement programme a success through extension of existing surface infrastructural facilities apart from taking measures for increasing the number of water injection wells.

Horizontal/Drain-hole Drilling including selection of wells : Your Company had engaged Internationally reputed consultant, M/s Schlumberger Asia Services Ltd. for the consultancy studies for assessing the feasibility of drilling horizontal wells in operational areas of OIL who have given their report. Study is also being carried out at IRS, Ahmedabad. Your Company has planned to drill few horizontal wells during 2003-2004.

Induction of Excel-2000 Open-Hole Wireline Logging Unit : The Excel-2000 logging system with its DITS and MUXB2 capabilities (DITS is the Digital instrumentation Telemetry System for down hole multicable operations and MUXB2 is for Monoconductor Cable Operations) have the benefit of improved reliability, improved measurements and more options for simultaneous operation of combinations of services.

Reservoir Monitoring Tool (RMT) : Halliburtons Reservoir monitor tool (RMT) Elite which is a slim-hole pulsed neutron logging system for monitoring and managing the production of hydrocarbon reserves was inducted in operations of your Company during the year. This logging tool allows accurate determination of oil and gas saturation, identification of by-passed reserves; formation fluid contact and water flow behind casing etc. It will help to optimize, manage and produce reservoirs more efficiently.

Induction of new generation 3D technology : A new generation 24-bit delta-sigma technology based SN-388 line telemetry seismic data recording system was successfully deployed in the field during the year for acquisition of 3D seismic survey data. The new system is equipped with state- of-the-art capability viz. high dynamic range, high speed data acquisition with distributory spread management, flexibility in field layout even in difficult terrain conditions with provision for limited wireless connectivity across obstacles and ability to record large number of channels simultaneously at 2 ms sampling rate. The system is also equipped with state-of-the-art data storage and display devices, online quality control software suite and software packages for survey design, simulation and project management, etc. The induction of this system has significantly augmented in house seismic survey capabilities of your Company.

5.0 PHYSICAL PERFORMANCE

5.1 The physical performance of the Company for the year ending 31.03.2003 in comparison with the previous year is furnished in Table-1 below :

TABLE-1

SI. Item Unit 2002-2003 2001-2002 No. Target Achievement Target Achievement

1. Crude oil production MMT 3.40 2.950 3.45 3.183

2. Natural gas production MMSCUM 1,820 1743.311 1,780 1,618.505

3. Natural gas sale MMSCUM 1,290 1237.300 1,215 1,113.194

4. LPG production Tonnes 50,000 54,320 50,500 50,950

5. Seismic survey

Assam & Arunachal Pradesh

- 2D Departmental GLKM 500 571.73 500 617.20

-3D -do- SSQKM 150 170.18 150 17.32

-2D Contract GLKM 500 738.86 1,000 148.80

-3D -do- SQKM 200 179.32 200 -

Ganga Valley Project

- 2D Contract GLKM 375 447.55 400 70.85

Saurashtra Exploration Project

-3D Contract SQKM - - - 332

Mahanadi Onshore

-2D Contract GLKM - 191.45 - -

6. Drilling 000 MTRS

ASSAM & AP

-Exploratory 55.00 42.201 60.20 39.556

-Development 60.20 87.834 62.30 57.470

Rajasthan

- Exploratory 3.00 - - -

GRAND TOTAL: 118.20 130.035 122.50 97.026

5.1.1 There were setbacks in crude oil production, primarily due to - (i) Initial crude oil production rate as on 01.04.2002 was only 3.00 MTPA against planned 3.36 MTPA. (ii) There was higher than expected decline rate in a few new field because of increase in water oil ratio, (iii) Less than planned production from a few wells in Kathaloni, Dikom, Madarkhat, North Hapjan, Shalmari etc. (iv) Continued blockade in Khagorijan area. Similarly low achievement in natural gas production is due to - (i) Regulated Non-Associated Gas (NAG) production based on market requirement (ii) Low upliftment by gas consumers viz. M/s BVFCL, Namrup and NEEPCO.

5.2 ACCRETION TO RESERVES

The estimated accretion to geological reserves (oil + oil equivalent of gas) and gross ultimate recovery due to exploratory and development drilling, workover and geological studies carried out during the period 01.04.2002 to 31.03.2003 are shown in Table-2 below :

TABLE-2

Total Additional Geological/Recoverable Reserves

SI. Area of operation 1.4.2002 to 31.03.2003 1.4.2001 to 31.03.2002 No. Oil Oil + OEG Oil Oil + OEG

1. Assam & A.P

Incremental Geological Reserves (MMT) 11.70 21.86 9.11 15.64

Incremental Gross Ultimate Recovery (MMT) 3.64 9.79 4.22 8.59

2. Rajasthan

Incremental Geological Reserves (MMT) - - - -

Incremental Gross Ultimate Recovery (MMT) - - - -

NOTES : The above figures do not include Kharsang Field which is under JVC.

5.3 RECOVERABLE RESERVES OF OIL AND NATURAL GAS

The estimated recoverable reserves of oil and natural gas as on 01.04.2002 and 01.04.2003 are given in the

Table-3 below:

TABLE-3

SI. Area of Operation Crude oil (MMT) No. Position as on 1.4.2002 11.4.2003 Increase

1.0 Assam & AP

Gross Ultimate 189.77 193.41 3.64 Recovery (GUR)

Cumulative Production 117.36 120.21 2.85 Balance Recoverable

Reserves 72.41 73.20 0.79

2.0 Rajasthan

Gross Ultimate Recovery (GUR) 2.19 2.19 -

Cumulative Production - - -

Balance Recoverable Reserves 2.19 2.19 -

Sl. Natural Gas (MMSCUM) Position as on 1.4.2002 1.4.2003 Increase (Decrease)

1.0 146466 152620 6154

52208 53808 1600

96200 100754 4554

2.0 3162 3162 -

353 423 70

2809 2739 (70) NOTES : The above figures do not include Kharsang field which is under JVC.

6.0 PROJECTS

6.1 RAJASTHAN :

M/s. ECL of UK submitted the final report of the Basin Modeling studies of Rajasthan Project in September 2002. Based on the study, locations are being identified for future drilling.

Defence Clearance for Work over operation in Mining Lease area in Tanot and Dandewala and for laying of 7.4 km pipeline received during February, 2003. Actions are now in hand for hiring of the rig for workover operations.

The agreement for Pilot study for the exploitation of Heavy Oil in Baghewala field was signed with M/s PDVSA, Intevep, Venezuella on 29.11.2002. Work is in progress.

6.2 SAURASHTRA EXPLORATION PROJECT :

Based on KDMIPE report, NGRI report, in house study and views of consultants, 332 SQKM of 3D Seismic data was acquired and interpreted. Presently your Company alongwith ONGCL decided for a joint approach for study of the Mesozoics in Saurashtra & Kutch offshore area below the trap.

6.3 GANGA VALLEY PROJECT :

Further acquisition of seismic data (625GLKM during 2003-04) and geoscientific studies have been planned. During 2002-03 as against the target of 375 GLKM, there was an achievement of 447.55 GLKM.

For the first time, mechanized shot-hole drilling rigs were deployed in the Himalayan foothills for survey work.

6.4 BRAHMAPUTRA VALLEY EXPLORATION PROJECT :

Commercial discovery of hydrocarbon has not been made so far under the above project. Your company has taken a strategic decision to temporarily discontinue the project till further decisions are firmed up based on ongoing in-house study.

6.5 JOINT VENTURES:

(A) Status/Achievements of PSC/JVCs executed or initiated for execution during the year 2002-2003 are as under.

(a) RJ-ONN-2001/1 in Onshore Rajasthan

Your Company with a Participating Interest (PI) of 70%, in consortium with Oil and Natural Gas Corporation Limited (ONGCL) has entered into a PSC with Government of India on 4.02.03 under NELP-III. OIL is the operator for the block. Actions for granting of PEL by the concerned State Government are in progress.

(b) AA-ONN-2001/3 in Onshore Assam

Your Company (15% PI) in consortium with ONGCL(85% PI - Operator) has been awarded this offshore block under NELP-III, the PSC for which has been signed on 4th February, 2003. Action for granting of PEL by the concerned State Government is in progress.

(c) CY-DWN-2001/1 in Deep Water Offshore Cauvery Basin, Gulf of Mannar

Your Company (20% PI) has entered into a PSC with Government of India on 4th February, 2003 in consortium with ONGCL (80% Pi-Operator). PEL against this prospect for a period of 8 years has been granted by the Central Government with effect from 12th March, 2003.

(B) Status/Achievements of PSC/JVCs executed or initiated for execution in the past are as under:

(a) CY-OSN-97/2 in Offshore Cauvery Basin, Tamil Nadu

Your Company with PI 100% had signed a PSC with Government of India on 12.04.2000. However, your Company has not been able to start the job due to non-receipt of security clearance.

(b) KG-DWN-98/4 in Deep Water Offshore Krishna-Godavari Basin

This block was earlier awarded to M/s ONGCL. PSC for the same was signed on 12th April, 2000. Subsequently, on the initiative of your Company, 15% participating interest has been assigned to it with effect from 31st May, 2002. The Minimum Work Programme of first phase of exploration has been completed and based on the work done so far three prospects and one lead have been identified. Accordingly, it has been decided to relinquish 2485 Sq. Km from the total contract area of 9940 Sq. Km. and to enter into 2nd phase of exploration.

(c) RJ-ONN-2000/1 in Onshore Rajasthan

Your Company with 100% and as Operator had signed a PSC with Government of India on 17th July, 2001. Since the area is near to International Border, seismic data acquisition work as planned was initially held up for security clearance from Ministry of Defence. However, the required clearance has been obtained recently and accordingly actions are in hand to acquire the seismic data.

(d) MN-ONN-2000/1 in Onshore Mahanadi Basin

Your Company (40% PI) and as Operator in consortium with ONGCL (20% PI), IOCL (20% PI), GAIL (20% PI) had signed a PSC with Government of India on 17th July, 2001. In line with the Minimum Work Programme Commitment, after completion of pre seismic EIA, contract has been awarded for API of 460 LKM 2D seismic data. Acquisition of data is in progress.

(e) MN-OSN-2000/2 in Offshore Mahanadi Basin

Your Company (20% PI) in consortium with ONGCL (40% Pi-Operator), GAIL (20% PI) and IOCL(20% PI) has signed a PSC with Government of India on 17th July, 2001. After initial acquisition and interpretation of seismic data, a joint review of work programme was done by all the parties on 12.03.03. Based on the review, 400 sq.km. of pre drill 3D seismic survey has been recommended as additional work in the second phase of exploration to decide on drilling of the identified prospects.

(f) MB-DWN-2000/2 in Deep Water Offshore Mumbai Basin

Your Company, with a PI 10%, in consortium with M/s ONGCL (PI -50% and Operator), IOCL(15% PI), GAIL (15% PI) and Gujarat State Petroleum Corporation Limited (10% PI) signed PSC for this block with Govt. of India on 17th July 2001. In line with the Minimum Work Programme Commitment, 2D as well as 3D seismic survey and Gravity-Magnetic survey of the block have been completed and interpretation of the survey data is nearing completion to decide future course of action.

(g) SR-OS/94/1 in Offshore Saurashtra

Your Company, with carried interest of 30% at the time of discovery, had signed PSC in consortium of Reliance Industries Ltd. (100% PI-Operator) on 12th April, 2000 with the Government of India. The first phase of exploration expired on 11th October, 2002 after extension by six months. Reprocessing of old seismic data, acquisition and processing of fresh seismic data and interpretation of the data in line with the Committed Work Programme have been completed and accordingly 25% of the contract area has

been relinquished to enter into the second phase of exploration which will be valid upto 11th October, 2004.

(h) GK-OSJ-3 in Offshore Saurashtra

Your Company (15% PI) in consortium with ONGCL (25% PI) and Reliance Industries Limited (60% Pi-Operator) had signed a PSC with the Government of India on 6th September, 2001. Reprocessing of 2065 LKM of old seismic data has been completed and detailed interpretation for further acquisition of seismic data and planning for drilling of a well are in progress.

(i) AAP-ON-94/1 in Onshore Assam

Your Company (10% PI) in consortium with Hindustan Oil Exploration Limited (HOEL) (80% Pl- Operator) and General Fibre Dealers Private Limited (GFDL) (10% PI) had signed a PSC on 30th June, 1998. The PEL was issued on 29th November, 2000 and accordingly PSC became effective from that date. Recently on 14th January, 2003 Government of India approved relinquishment of GFDLs participating interest and assignment of interest to Premier Oil North East B.V. (PONEI) and Indian Oil Corporation Limited (IOCL) together with transfer of Operatorship to PONEI from HOEC. The present sharing of participating interest is OIL 10%, HOEC 25%, PONEI 38% and IOCL 27% respectively. The first phase of exploration which was due to expire on 28th November, 2002 has been proposed for extension by one year. Reprocessing of old seismic data and review of geological structure and geochemical studies have been completed. At present new seismic data acquisition is in progress.

(j) RJ-ON-90/5 in Onshore Rajasthan

Your Company with a carried interest of 30% at the time of discovery in consortium with ESSAR Oil (75% Pi-Operator), Polish Oil and Gas Company Limited, Poland (25% PI) had signed a PSC with Government of India on 20th September, 1996. 2D seismic data acquisition, processing and interpretation and drilling of a well as committed in the first and second phase of exploration have been completed. As per requirement of the work programme of 3rd phase one well has to be drilled in the retained portion of 3967 sq. km before 29.09.03.

(k) Kharsang Oilfield in Arunachal Pradesh

Your Company (40% PI) had entered into a PSC with Government of India in consortium with Geopetrol International, France (25% PI), Jubiliant Enpro India (25% PI) and Geoenpro Petroleum Ltd. India (10% PI) on 16th June, 1995. The field produced 46744.836 MT of crude oil during the year of which your Companys share was 18697.934 MT.

(C) Overseas

(a) Exploration & Production

(i) Farsi Block in Offshore of Islamic Republic of Iran : Your Company (PI 20%) has entered into an Exploration Service Contract with National Iranian Oil Company on 25th December, 2002, in consortium with ONGC Videsh Limited (PI 40%) and IOCL (PI 40%). ONGC Videsh Limited is the Operator of the Block in which the work has started and is in progress.

(ii) Acquisition of Exploration Areas and Producing Properties

Your Company has signed a Memorandum of understanding with ONGC Videsh Limited on 12th July, 2002 for either participating in or jointly bidding towards acquisition of exploration areas and producing properties overseas. In this regard, discussion is already going on for some of the exploration areas as well as producing properties, the outcome of which would be known in subsequent years.

(iii) Acquisition of 100% Equity Shares of Sakhalin India Inc., Texas, USA

Your Company has acquired 100% Equity Shares of Sakhalin India Inc., a Company incorporated in the State of Texas, USA, from M/s. ONGC Videsh Limited on 10th March, 2003. With this acquisition M/s. Sakhalin India Inc. has become a wholly owned subsidiary of your Company. M/s. Sakhalin India Inc. is having a participating interest of 10% in the North Hellhole Bayou Prospect in the Vermilion Parish in offshore Louisiana, USA. The exploration work in the prospect is in progress. M/s. McAlester Fuel Company, USA is the Operator of the Block.

(D) Others

Consultancy Services in E&P

Your Company provided E&P Consultancy service for the first time since its inception. E&P Consultancy Service was extended to M/s. Morris Petroleum, a Company incorporated in Nigeria, towards evaluation as well as submission of bids for development of marginal fields offered by the Government of Nigeria through their National Oil Company M/s. Nigerian National Petroleum Company.

7.0 RESEARCH & DEVELOPMENT :

Your Company gives great importance in continuous upgradation of technologies and expertise in various areas of activities through its own Research & Development Centre. The details of activities carried out are given in form B of this Report.

8.0 ACTIVITIES AND ACHIEVEMENTS OF VIGILANCE DEPT. :

Vigilance activities in the organisation were broadly divided into two categories as under :

1. Preventive Measures

2. Punitive Measures

8.1 PREVENTIVE MEASURES :

During the year 53 nos of regular inspections and 36 nos of surprise inspection/checks and 2 nos. system studies were carried out and actions have been pursued for system studies in corruption prone areas and necessary corrective actions initiated. Vigilance Department organised the Vigilance Awareness Week in October/November, 2002 to make the employees of the Company aware about their role and responsibilities in preventing corruption. During the year 315 Nos. of property returns have been scrutinized and further investigations were taken up depending on the merits of the individual cases.

8.2 PUNITIVE MEASURES :

On the punitive side 20 nos. of fresh cases were registered during the year based on written complaints, inspections and audit reports. Some of the cases were disposed off as per their merits and rest are under investigation. During the year 13 nos. of cases were completed and reports submitted to the management for necessary actions.

9.0 ENVIRONMENTAL PROTECTION :

During the year under review, through effective monitoring and proper co-ordination, substantial abatement of pollution from various operations was achieved due to the stress laid in the following areas.

- Recycling of drilling effluent pit water was continued. In critical wells effluents were disposed off by pumping or by bowsers.

- Deployment of low pressure booster compressor/jet compressors (ejectors) in phases to reduce flaring of natural gas.

- The practice of disposal of produced formation water in shallow disposal wells continued.

- Adequate measures were taken to lift any spilled crude oil from nullahs and fields.

- Central effluent pits are arranged at strategic locations and also compartmentalization of effluent pits has been arranged to abate possible pollution hazards arising out of drilling operations.

- To prevent effluents from going out of production installations, action has been taken to install recirculating pumps in all future Oil Collecting Stations (OCSs), Early Production Set-ups (EPSs) and Quick Production Set-ups(QPSs).

- To prevent pollutants from going out of Central Tank Farm (CTF), formation water collection reservoir is being constructed at CTF, Duliajan.

10.0 SAFETY

Safety is always given the foremost consideration in the operations of your Company. Against MoU target of 2.00 for accident frequency rate, companys achievement was 1.82 which was in excellent category. Actions were initiated to carry out Risk Analysis Study in Shalmari OCS, Shalmari GCS, Jorhat CTF and Moran CTF.

A number of safety audits, both internal as well as external, were also carried out in various installations to improve upon the safety standards.

For the first time an "Off-site Disaster Management Plan Mock Drill" was conducted by your company on 16.12.2002 in which all the Mutual Aid Industries, District Authority, Army, N.G.O. and Civil Defence participated.

Monitoring of occupational health of the workpersons exposed to occupational health hazards has been carried out in a regular and systematic manner. Work environment monitoring from occupational health point of view was also done and corrective actions were taken to eliminate possible health hazards at various installations.

Annexure I and II attached to the Report, are deemed to form part of the Directors Report.

Annexure I deals with the requirement of the Companys (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 relating to Conservation of Energy, Technology Absorption, Expenditure on Research & Development, Technology Introduction and Absorption, Foreign Exchange Earnings and Outgo etc.

During the year 2002-03, there was no employee, who drew remuneration of Rs. 24 lakhs or more per annum or Rs. 2 lakhs per month. Hence, information as required under Sec. 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975 (as amended from time to time) is NIL.

22.0 AUDIT COMMITTEE :

As reported in the previous year, the Board of Directors of the Company has constituted an Audit Committee pursuant to Section 292A of the Companies Act, 1956 comprising of the following Directors

1. Shri Sunjoy Joshi (part-time Government Director), Chairman.

2. Shri N.K. Singh, (part-time Government Director), Member.

3. Shri M.R. Pasrija, Director (Finance), Member.

The Audit Committee met 4 times during the year 2002-03 and reviewed the financial report of the Company for the year 2002-03 in its meeting held on 21st June, 2003 before approval of the same by the Board of Directors.

23.0 STATUTORY AUDITORS :

M/s. Ray & Ray, Chartered Accountants, Kolkata and M/s. B.M. Chatrath & Co., Chartered Accountants, Kolkata were appointed as Joint Statutory Auditors for the financial year 2002-2003 by the Comptroller & Auditor General of India under the provisions of Section 619(2) of the Companies Act, 1956 and will hold office till the conclusion of the ensuing Annual General Meeting.

The Comptroller & Auditor General of India will be approached for the appointment of Statutory Auditors for the financial year 2003-2004.

24.0 DIRECTORS RESPONSIBILITY STATEMENT :

In accordance with the requirements under Section 217 (2AA) to the Companies Act, 1956 as inserted by the Companies (Amendment) Act, 2000, your Directors confirm that:

i) In the preparation of Annual Accounts, the applicable accounting standards have been followed;

ii) Directors have selected such Accounting Policies and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2003 and of the Profit of the Company for that year;

iii) Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) Directors have prepared the Annual Accounts on a going concern basis.

25.0 STATUTORY AUDITORS REPORT

Referring to the Statutery Auditors Report in thick type at paragraph 2 and 3 of their Report and para 1, 9 and 10 of the Annexure to the Auditors Report, the Directors wish to state that the same were mere observations and not qualifications or adverse remarks and accordingly need no explanations.

26.0 FUTURE OUTLOOK

In the backdrop of very significant achievement made during 2002-2003 in terms of profitability and in recording highest ever achievement in various physical performance parameters and the actions planned for taking up in near future, your Company is all set to meet the challenges of the future in order to attain a competitive edge under the new liberalized policies of the Government. In order to achieve sustained growth in long-term value addition, while maintaining satisfactory profitability, your Companys strategy is continued growth of reserves. Towards this your Company has taken all the necessary steps to further accelerate and intensify its E&P activities.

On dismantling of Administered Price Mechanism (APM), your company is exposed to volatility in the prices of crude oil in the international market. Though the Company realized good prices during the year under review, the status may not remain the same keeping in view the current trend in the prices.

In order to remain competitive, maintain growth and remain an economically viable world class entity, your Company had engaged internationally renowned consultant M/s. Price Waterhouse Coopers, now a part of M/s. IBM-BCS for preparation of strategic and corporate plans for the Company who have submitted their report and the same was approved in principle by the Board. M/s. IBM-BCS have also been engaged for the implementation of the same in consultation with the Company.

OIL has taken various initiatives towards the strategic focus areas identified. Various measures like enhancement of water injection, projectisation of Jorajan, revitalization of old depleting fields, intensification of 3D survey etc. are taken towards improvement and sustenance of production.

With most of the areas in the North-East having been already explored, OIL is now venturing into logistically difficult and geologically more complex frontier areas such as rain-soaked jungles in the Belt of Schuppen, exploration of suitable stratigraphic traps, Manabhum etc. In addition, your Company is also participating in blocks including deep water areas offered under the New Exploration Licensing Policy (NELP).

Your Company has executed Memorandum of Understanding (MOU) with ONGC Videsh Ltd. (OVL) for participating in prospective exploration blocks and producing properties in the overseas areas. In this context, exploration service contract for an exploration block (FARSI Offshore Block) in the Persian Gulf of Islamic Republic of Iran was awarded to the consortium comprising of ONGC Videsh Ltd., Indian Oil Corporation and Oil India Limited with OILS participating interest of 20% during the year. The Company is in

the process of acquiring stake in the prospective exploration block in Syria from ONGC Videsh Limited. The Company is also exploring the possibility of acquiring other prospective exploration block and producing properties in the overseas areas.

Your Company is also expanding the value chain by expanding its activities by joining hands with other consortium partners in the forthcoming pipeline projects in the country and providing E&P services both in India and overseas market.

In the downstream sector, your Company has already made a modest entry by taking 10% stake in Numaligarh Refinery Ltd. (NRL) and is also contemplating to enhance its stake further in the sector.

Your Company recognises the need of constant upgradation of technology and absorption of state-of-the art technology and hence, increased emphasis is being given on technology upgradation in all facets of its operations to keep pace with the technological developments in the rest of the World.

The Coal-Oil Co-processing pilot plant, which has already been commissioned, is at present being utilised in carrying out extensive research to study the economics of building a commercial plant to convert Assam Coal to value added liquid fuels. The ongoing study is expected to open up new vista for the Nation for developing Indias advanced technology for alternative source of energy in near future:

In recognition and appreciation of the Governments initiative of restructuring and reforming of hydrocarbon Sector as mentioned above, your Company has initiated necessary steps for growth of the organization and with this dynamism, the Company is poised to face all the challenges of the future.

27.0 ACTIONS FOR DEREGULATORY MARKET SCENARIO:

Your Company has already initiated actions to prepare itself to face the challenges of deregulated market scenario and has initiated the following steps :

(A) Increase production of crude oil and natural gas by intensifying drilling in its operational areas in Assam to meet the crude oil demand of the refineries in N.E. Region.

1.0 Reengineering operations for improving cost-effectiveness through more effective manpower deployment, adopting state-of-the-art technology, revamping ageing equipment etc.

2.0 Downsize through redeployment of manpower, multiskilling & Voluntary Retirement Schemes (VRS).

3.0 Minimise build-up of further in-house resources and meet additional requirement through outsourcing.

4.0 Reform systems & procedures to debottleneck procedural delays.

5.0 Restructure the Company organizationally and financially.

(B) Diversify into low risk investment:

Your Company is also contemplating to -

1.0 Spread business risk by expanding value chain by :

- equity participation in Numaligarh Refinery Ltd. (NRL) (10% already acquired)

- building, operating & maintaining product pipeline.

- Possibilities of direct marketing of LPG.

2.0 Compete for providing Oil Field and Pipeline Services including consultancy to others.

(C) Quality Assurance :

1.0 Create additional infrastructure for improving product quality to compete with international standards. Your Company has already initiated actions to maintain BS & W in the crude oil produced at the internationally acceptable level.

2.0 Create awareness for quality assurance of all products and services within the organization.

28.0 CONCLUSION

With the planned expansion in activities and constant thrust towards improving performance, your Company is looking forward to another year of fruitful operations combined with an overall improvement in efficiency during the year 2003-2004.

29.0 ACKNOWLEDGEMENT

The Board of Directors highly appreciate the competence, commitment and dedicated efforts of the employees at all levels who have ensured your Company to achieve substantive improvement in performance and results. Your directors are confident that all the members of OIL family would continue their commitment to the pursuit of excellence and consistent growth.

Your Directors also acknowledge with sincere appreciation for the unstinted assistance and guidance received from the Ministry of Petroleum & Natural Gas, other Central Government agencies, various State Governments, and look forward to their continued support.

For and on behalf of the BOARD OF DIRECTORS

Sd/- ( R.K. DUTTA ) Chairman & Managing Director

New Delhi. Dated 16th July, 2003.

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