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ONGC’s standalone profit in the June 2018 quarter grew a robust 58 per cent year-on-year to ₹6,144 crore. This was primarily due to two factors — better price realisations and higher gas output. These positives more than offset decline in oil production.
Crude oil
The global rally in crude oil over the past year had a positive rub-off effect on ONGC. The company’s crude oil price realisation in dollar terms shot nearly 48 per cent year-on-year — from $46-48 a barrel a year-ago to $68-71 a barrel in the June 2018 quarter. Adding to the benefit was the sharp 5 per cent depreciation of the rupee during the quarter — from 65 to 68.5 a dollar; this translated into a 54 per cent year-on-year increase in the price realisation in terms of rupee. This dwarfed the 3.5 per cent dip in crude oil output in the quarter. ONGC’s gas business also delivered strongly — gaining from increase in both price and output. The formula-linked half-yearly pricing for domestic gas saw ONGC realise $3.06 per mmbtu of gas in the June 2018 quarter, up 23 per cent from $2.48 per mmbtu the year-ago period. And unlike the decline in oil output, the company’s gas output during the quarter was up more than 3 per cent year-on-year. The output of value added products was also up 12 per cent.
The benefit from higher oil and gas prices, and a weak rupee could continue for the company for two or three quarters more. But this base effect is likely to wear off after that. Output increase will then be the key.
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