State-run Oil and Natural Gas Corporation (ONGC) reported 25 per cent Y-o-Y growth in its consolidated net profit at ₹8,581 crore in the April-June quarter of the current financial year aided by high crude oil and gas prices.

However, on a sequential basis, the net profit of the oil exploration and production (E&P) major declined by 29 per cent from ₹12,061 crore in Q4 FY22.

The country’s top explorer’s consolidated total income rose 69 per cent Y-o-Y to ₹1,84,149 crore in Q1 FY23. On a quarter-on-quarter (Q-o-Q) basis, total income grew 16 per cent.

ONGC’s total expenses in Q1 FY23 rose by 73 per cent Y-o-Y to ₹1,72,2900 crore. On a sequential basis, expenses were up 23 per cent from Q4 FY22.

On a standalone basis, ONGC reported its highest ever quarterly net profit of ₹15, 206 crore in Q1 FY23.

Operational performance

The CPSUs net crude oil realisation in US dollar terms rose by 66 per cent Y-o-Y to $108.54 per barrel, while in rupee terms, it rose by 73 per cent Y-o-Y to ₹8,384 per barrel. Gas price for Q1 FY23 stood at $6.10 per million British thermal units (mBtu) from $1.79 per mBtu in Q1 FY22, ONGC said in a statement.

The company’s crude oil production rose by almost 2 per cent Y-o-Y to 5.49 million tonnes (MT).Gas output grew 1.4 per cent Y-o-Y to 5.38 billion cubic meters (BCM) during the same period.

“ONGC has declared 2 discoveries in on-land during FY 2022-23 in its operated acreages. Out of these, one is a new prospect (Kankpul-1 in NELP-VII JV block WB-ONN-2005/4) in West Bengal and the other is a new pool (Mandapetta-60 in KG Onland) in Andhra Pradesh,” the company said.

Russia-Ukraine conflict impact

In its results filing on the stock exchanges, ONGC said it has considered the possible effects that may result from the special operations carried out by Russia in Ukraine and various sanctions that have been imposed on Russia by several countries. These economic sanctions have a cascading effect on the economies globally.

ONGC has 3 assets in Russia—Sakhalin-1 (Joint arrangement 20 per cent Stake), Vankorneft (Associate 26 per cent Stake) and Imperial Energy (wholly-owned subsidiary).

“Sakhalin-1 project is operated by ENL, a subsidiary of Exxon Mobil. With the current geo-political situation, further to the announcement by Exxon Mobil (Operator-ENL) to discontinue operations in the Sakhalin-1 project, the consortium is heading towards a transition of operatorship which is in progress,” ONGC said.

The temporary unavailability of International Group of Protection & Indemnity (IG P&I) insurance for crude oil tankers hired by the project for delivery of its crude oil to international buyers has created a logistics constraint for evacuation of its production from May 22 thereby resulting in reduced output from the project. Further the Operator has declared force majeure of production in view of the crude oil evacuation constraints and the production is restricted below capacity and which is expected to gradually recommence from October 2022, it added.

“JSC Vankorneft being an equity-accounted entity is entitled to dividend which was due till September 2021 has been received and the dividend for the subsequent period October to December 2021 is expected to be received. Production from the field continues as per the Business Plan 2022,” ONGC informed the stock exchanges.

In the case of Imperial Energy, the operations are continuing according to the business plan, except for the price of crude oil sales being affected due to the prevailing discount, it added.

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