The Hindu Business Line : Higher output, lower subsidy burden boost ONGC profit

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New Delhi Jan. 30 Boost in oil output, increased earnings from each barrel and reduced subsidy burden propelled ONGC to a 20 per cent increase in net profit for the third quarter of the current fiscal (October-December 2006). The company reported a net profit of Rs 4,668 crore compared with Rs 3,888 crore for the same quarter previous year.

ONGC earned $50.87 for each barrel of oil produced in the three-month period, compared with $42.57 a year earlier. The turnover of the company increased during the third quarter by 25 per cent to Rs 15,631 crore despite a subsidy payout of Rs 2,204 crore to the oil marketing companies — Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation.

The subsidy burden during the third quarter was lower than what the company forked out during the corresponding quarter last year (Rs 2,843 crore). However, for the nine months period (April-December 2006) the subsidy burden amounted to Rs 12,356 crore compared to Rs 8,550 crore in the same period last year. For April-December 2006, the net profit stood at Rs 12,961 crore up 14 per cent from the same period previous year. The company's sales revenue for the nine-months went up by 23 per cent to Rs 44,454 crore.

Announcing the results Mr R.S. Sharma, Chairman and Managing Director, ONGC, said that due to increased techno-managerial interventions both oil and gas productions and financials were moving up. "Our bottomline would not be affected very much in the fourth quarter by subsidy-sharing as oil prices have fallen," he said adding "I am very positive on the outlook for the company because we have made efforts to increase our performance efficiency."

Bonus shares

The company has also issued bonus shares. With the issue of these shares, the paid-up capital of ONGC has increased to Rs 2,138.87 crore from Rs 1,425.9 crore. ONGC issued bonus shares in the ratio 1:2. This is the second bonus issue by ONGC, the first one being in financial year 1995-96 in the ratio 3.08:1.

Investments

The board also approved investment proposals to the tune of Rs 6,152 crore for projects in Western onshore, which contributes around 71 per cent of the total oil and oil equivalent gas of ONGC. It gave its nod for the construction of a new process complex at Mumbai High North near old Bombay High North (BHN) platform at the cost of Rs 2,853 crore.

A major accident in July 2005 completely destroyed the BHN process platform, thereby, disrupting oil production from the entire fields (North and part of South). The new process complex envisages facilities for handling around 2,55,000 barrels per day of liquid including 48,000 barrels per day of oil and 6.8 mmscmd of gas. The project is scheduled to be completed in 40 months.

Development of B-22 marginal fields cluster including BS-12, BS-13 and B-149 located West of the giant Bassein gas field in the Western offshore at the cost of Rs 2,323 crore also received the board approval. These are primarily sour gas fields, however, B-22 is also oil bearing. The project is scheduled to be completed in 44 months.

Approval for new Uran-Trombay gas pipeline was also given at the board meet. Under this project, a new gas pipeline will be laid as a replacement of the existing line at the cost of Rs 236 crore.

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