The country’s largest explorer ONGC Ltd needs net crude oil price realisation of at least $55 a barrel to fund capital expenditure plans of the company, the Chairman, Mr Sudhir Vasudeva, told newspersons.

The Chairman added that selling oil at discount in India is impacting its plan to buy assets overseas.

"If net crude price realisation drops below $55 a barrel, the company will have to take funds from its cash reserves and may also have to borrow funds in the future. At present, there are no plans to borrow funds," Mr Vasudeva said.

ONGC has lined up a capital expenditure of Rs 33,065 crore for 2012-13.

The company offers compensation to public sector fuel retailers for selling products below market cost. The three oil marketing companies, IOC, BPCL and HPCL, reported Rs 47,800 crore losses for selling fuel below market cost during April - June. Out of this, Rs 15,000 crore is expected to be released by upstream companies such as ONGC, OIL India and GAIL.

The Oil Ministry has sought Rs 32,800 crore from the Finance Ministry. Mr Vasudeva said they are yet to be informed about compensation to be given in the first quarter. ONGC produced every barrel of crude oil at $44 in 2011-12, which is expected to go up to $ 47 a barrel in 2012-13.

(This article was published on July 25, 2012)
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