Discounts to state refiners hits ONGC`s profit
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Last Updated: Thursday, July 23, 2009, 22:30
New Delhi: PSU major Oil and Natural Gas Corp (ONGC) today reported a 27 per cent drop in its net profit for the first quarter of the current fiscal as it realised lower crude oil price and gave discounts to state refiners.

Net profit in April-June quarter dropped 26.9 per cent to Rs 4,848 crore from Rs 6,636 crore a year ago, company Chairman and Managing Director R S Sharma said.

ONGC realised USD 60.58 dollars per barrel on the crude oil it sold to refiners in Q1, against USD 125.83 a barrel last year.

After giving discounts to Indian Oil, Bharat Petroleum and Hindustan Petroleum to help them sell domestic LPG and kerosene below cost, the company's net realisation was USD 58.25 per barrel in April-June quarter this fiscal as opposed to USD 69.13 a barrel a year ago.

Sharma said ONGC gave Rs 429 crore of subsidy discounts to state refiners in Q1 compared to Rs 9,811 crore in Q1 of 2008-09 fiscal.

Turnover dropped 25.8 per cent to Rs 14,922 crore from Rs 20,123 crore in previous fiscal.

Profit was lower on reduced crude oil production in Q1 - ONGC's crude output declined 4.5 per cent to 6.12 million tonnes in April-June against 6.41 million tonnes last year.

The company's prime Mumbai High unit produced 4.7 per cent less crude oil at 4.25 million tonnes.

ONGC's natural gas production, however, rose marginally by 2 per cent to 5.75 billion cubic meters (bcm) from 5.63 bcm.

Gas sales at 4.51 bcm was almost unchanged from Q1 of previous fiscal.

Sharma said the board of ONGC has approved setting up of polypropylene unit by MRPL - its refinery subsidiary - at a total project cost of Rs 1,803.78 crore to be executed in 39 months. The capacity of the plant is 450,000 tonnes per annum of polymer grade propylene product.

"Q1 of last fiscal was exceptionally abnormal when crude oil was on the climb. Gross billing last year was USD 125.83 a barrel while this year it is just USD 60.58 per barrel," Sharma said.

ONGC Director (Finance) D K Sarraf said the net realisation in rupee term was Rs 2,835 per barrel in Q1 as opposed to Rs 2,885 a barrel in the previous year.

The rupee-dollar rate in current year was Rs 48.67 to a dollar against Rs 41.73 to a dollar a year ago.

Sharma said globally old and aging oil fields are declining at the rate of 7-8 per cent and ONGC's prime Mumbai High field is also facing the same problem.

During April-June quarter, nine new discoveries were made. "These include five new prospects and four new pools," he said.

"We are investing Rs 60,000 crore in improved and enhanced oil recovery schemes," he, said adding three projects will start production next month.

The C-series field will produce 3 million standard cubic meters per day of gas, while Vasai field would produce 1mmscmd and 12,000 barrels per day. The third is the R-series field, Sarraf said adding all the three fields lie in western offshore.

"The production will begin on August 9," he said. Sarraf said as on April 1, 2009, balance recoverable reserves were 1,139 million tonnes of oil and oil equivalent gas. Of this, 570 million tonnes are crude oil and balance are gas reserves.

Bureau Report

First Published: Thursday, July 23, 2009, 22:30

Tag: ONGC Q1
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