The Hindu Business Line : ONGC net rises 44% in Q1 as crude offsets subsidy burden

New Delhi, July 28 A substantial increase in subsidy burden notwithstanding, ONGC has managed to register a 44 per cent increase in net profit at Rs 6,636 crore during the first quarter of financial year 2009 (Rs 4,611 crore).

Turnover rose 47 per cent to Rs 20,123 crore (Rs 13,728 crore). This increase was mainly due to high price realisation on crude oil and cost management, Mr R.S. Sharma, Chairman and Managing Director of ONGC, said.

The subsidy burden has increased to Rs 9,811 crore (Rs 3,649 crore) in the quarter under review. “This is the highest ever so far,” Mr Sharma said. ONGC has to shoulder the subsidy burden to partially offset the under-recoveries suffered by the public sector oil marketing companies due to selling petroleum products below the cost price. He said that “we would rather prefer a windfall profit tax than ad-hoc subsidy sharing mechanism to maintain company’s robust performance in the quarters to come.”

However, the high crude oil prices have helped the company register a better performance. The gross realisation on crude oil was $125.84 a barrel ($71.90 a barrel). The net realisation was $69.14 a barrel ($50.34).

The crude oil production improved marginally for ONGC (excluding the joint venture). Crude oil production stood at 6.41 million tonnes during the quarter (excluding its joint ventures’ share of 0.43 mt) against 6.38 mt (excluding JVs’ share of 0.5 mt).

The natural gas production was 5.63 billion cu m (excluding JVs’ share of 0.76 BCM) as against 5.50 BCM (excluding JVs’ share of 0.60 BCM). Production of value-added products increased from to 7,53,000 tonnes (7,29,000 tonnes).

Uranium venture

The ONGC board has approved entering into a MoU with Uranium Corporation of India Ltd. (UCIL), for exploration and exploitation of uranium. This collaboration with UCIL is to leverage ONGC’s expertise in exploration of hydrocarbons, to commercially exploit this vital and strategic mineral, Mr Sharma said. Currently, ONGC is studying the prospects through ONGC Energy Centre (OEC) by studying the logs of existing wells.

During the quarter the company made 11 oil and gas discoveries. ONGC shares on Monday closed up at Rs 1,012.50 (Rs 983) at BSE.