Joint Ventures & Syndicate Leadership& Syndicate Leadership

8th Oil & Gas HR Round Table

27th August 2009

BPCL’s JVs :� Refineries : Numaligarh Refinery Ltd

Bharat Oman Refineries Ltd

� Pipelines : Petronet CCK Ltd

Petronet India Ltd

� Gas : Petronet LNG Ltd

Central UP Gas Ltd

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Maharashtra Natural Gas Ltd

Sabarmati Gas Ltd

Indraprastha Gas Ltd

� Airports : Bharat Stars Services Pvt Ltd

� Bunker fuel :Matrix Bharat Marine Services

� Biofuels : Bharat Renewable Energy Ltd

Ways for a Company to grow

�A company can grow and/or increase in scale, scope or capacity, through:

� Organic Growth (growth from within)

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� Organic Growth (growth from within)

� Strategic Alliance

� Joint Venture

� Merger/Acquisition

Strategic Alliances and Joint Ventures

�Strategic alliances and/or joint ventures

� Help increase a company’s scale, scope, and

capabilities,

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� Less risky than a merger/acquisition

� Enable industry consolidations

� Enable global partnerships of complementary skills

What is a Joint Venture?

�An “association” of two or more parties who:

� Contractually agree to contribute to a specific venture

� Usually limited to a specific task for a specific period of

time.

�A joint venture is a separate entity (incorporated or unincorporated) generally governed under partnership

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unincorporated) generally governed under partnership

�The JV parties can be individuals, partnerships or corporations that continue to operate independently from the other except for activities related to the Joint Venture.

Problems Inherent in a JV

�Each party is responsible for the actions of the JV and one another

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�The best JV agreement cannot insulate the JV and parties from all risks

Reasons for Conflict in Joint Ventures

�Lack of trust between partners

�Incompatible or hidden partner objectives

�Incompatible Personalities

�Divergent evolution of partner objectives

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�Cross-cultural clashes

�Clashing partner organizational cultures

�Lack of knowledge reciprocity between partners

Trustworthness exists when one partner will not exploit the

exchange vulnerabilities of another partner

Barney (1996)

Trust emerges because of the

TYPE DEFINITION ENFORCEMENT

Trust and the Joint Venture Relationship

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Weak Form Trust

Semi-Strong Form Trust

Strong Form Trust

Trust through governance

Trust emerges because of the

limited opportunities for

exploitation Penalties

Internal Incentives

Reputation

Contingent Claims Contracts

Equity JVs

Moral Commitment

Socialisation

Corporate Culture

None

Trust through values, norms

and standards of behaviour

Role of the Leadership

�Understanding partner objectives

�Working approaches towards alignment of objectives

�Effective Conflict resolution

�Transparent Governance and accountability mechanisms

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mechanisms

�Examining role of parent company’s corporate identity in the JV

�Identifying, developing and assigning staff with required skill bases to the JV

�Designing career paths/compensation packages for staff deputed to JVs

Syndicate Leadership :

�By definition : Syndicate Leadership means “Borrowing talent from different sources”

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�Identification of right talent for the right job

Key Competencies

1. Empathy

2. Entrepreneurial drive

3. Stake holder influencing

4. Net working

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5. Passion for action

6. Adaptive thinking

7. Team leadership

And finally…

“Some people see things the way they are and ask, “Why?”.

I see things that never were, and ask, “Why not?”

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- George Bernard Shaw

Willingness to consider perspectives & approaches other than one’s own = critical to JV success

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