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Even as oil prices are edging down amid the ongoing global slowdown and commodity downturn, the Indian crude basket has hit a seven-year low at $36.65 a barrel. Bloomberg TV India caught up with ONGC’s Finance Director AK Srinivasan to get a sense of the oil price trajectory and its impact on producers.
The Indian crude basket is well below $37 a barrel. What is the impact on net realisation?
Any one dollar change in my total revenue, the impact is about ₹955 crore on the topline for a hopeful one year and the impact of that for (change in) dollar value is about ₹530 crore for the entire volume of production that the company does. Keeping these prices in realisation — and even there is a change in the exchange rate — the total impact which I get is about ₹588 crore for the entire volume and post-tax it is about ₹327 crore. The prices are at some $40/barrel now but on an average the prices for a year can remain at $48-50/barrel. Every dollar gives me an about ₹955-crore impact.
What is the impact as far as the subsidy sharing for oil marketing companies is concerned?
Basically, the government has taken a lot of proactive measures by deregulating the diesel price and then picking up the entire burden of LPG subsidy. The total subsidy burden has been picked up on SKO (kerosene), which, in the first half (April-September), was about ₹7,200 crore roughly. Against that the sharing of subsidy on the upstream company like ONGC was primarily ₹1,729 crore.
So, by looking at that number, we feel that if the global crude prices remain lower than $40/barrel, there should not be any impact of the subsidy further on the company.
What is your guidance for FY16 fiscal?
Last year we did about 25.99 million tonnes and this year we are going to be around 26 million tonnes and next year my production numbers are likely to be 27 million tonnes-plus and gas will be about 28 bcm. The current year’s gas numbers will be around 25 bcm including my joint venture share.
Give us a sense of the expectations for this quarter…
The average realisation during the first half was around $50-52/barrel levels and I am looking forward — the prices are still coming down. I realise that the average crude price during the next half should be in the range of $48-50/barrel.
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