ONGC’s Q4 net profit falls by a fifth to Rs 3,935 crore
ONGC expects to report better earnings in the current quarter than in January-March as the formula would “assure a realized price of $60 a barrel”, said Dinesh K Sarraf, chairman.
By ET Bureau |
NEW DELHI: State-run Oil and Natural Gas Corporation’s ( ONGC) fourth-quarter profit fell by a fifth in a year, hurt by lower crude and product prices and exploration write-off. India’s biggest oil and gas explorer posted a net profit of Rs 3,935 crore in the three months to March, down from Rs 4,889 crore a year earlier. Net sales rose 2% to Rs 21,303 crore.
Exploration write-off, levies and ‘other expenses’ rose to erode profit in the quarter when ONGC didn’t have to subsidise fuel retailers to enable them to sell LPG and kerosene at a governmentmandated cheap rate. The government has recently designed a formula under which ONGC will not have to pay any subsidy in the current quarter if crude oil prices stayed up to $60 a barrel.
ONGC expects to report better earnings in the current quarter than in January-March as the formula would “assure a realized price of $60 a barrel”, said Dinesh K Sarraf, chairman. Crude oil fell about 60% between June and January but has recovered nearly 40% since to about $63 a barrel. The dramatic fall in a year has squeezed profits and capital spending plans at most oil companies.
ONGC sells a ‘significant’ amount of oil and gas and value-added products at international rates and that has resulted in lower realisation in the fourth quarter, Sarraf said. Meanwhile, ONGC has also shelved plans to hire nine rigs on a nomination basis after ET reported the plans recently.
“After a lot of deliberation, we concluded that we should not go for hiring of rigs on a nomination basis,” Sarraf said. ONGC will now float tenders for this. ONGC has set itself a target of producing 26 million metric tonne (MMT) of oil, including 3.27 MMT from its joint ventures in 2015-16, compared with 25.94 MMT in the previous year. The annual target for gas is 25.10 BCM, as against 23.52 BCM in the previous year.
The company is faced with low-yielding ageing domestic fields and is making aggressive overseas investments to secure energy assets for a country that imports nearly 80% of its oil requirements.
Exploration write-off, levies and ‘other expenses’ rose to erode profit in the quarter when ONGC didn’t have to subsidise fuel retailers to enable them to sell LPG and kerosene at a governmentmandated cheap rate. The government has recently designed a formula under which ONGC will not have to pay any subsidy in the current quarter if crude oil prices stayed up to $60 a barrel.
ONGC expects to report better earnings in the current quarter than in January-March as the formula would “assure a realized price of $60 a barrel”, said Dinesh K Sarraf, chairman. Crude oil fell about 60% between June and January but has recovered nearly 40% since to about $63 a barrel. The dramatic fall in a year has squeezed profits and capital spending plans at most oil companies.
ONGC sells a ‘significant’ amount of oil and gas and value-added products at international rates and that has resulted in lower realisation in the fourth quarter, Sarraf said. Meanwhile, ONGC has also shelved plans to hire nine rigs on a nomination basis after ET reported the plans recently.
“After a lot of deliberation, we concluded that we should not go for hiring of rigs on a nomination basis,” Sarraf said. ONGC will now float tenders for this. ONGC has set itself a target of producing 26 million metric tonne (MMT) of oil, including 3.27 MMT from its joint ventures in 2015-16, compared with 25.94 MMT in the previous year. The annual target for gas is 25.10 BCM, as against 23.52 BCM in the previous year.
The company is faced with low-yielding ageing domestic fields and is making aggressive overseas investments to secure energy assets for a country that imports nearly 80% of its oil requirements.
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