ONGC Q3 net dips 6% on subsidy burden

CORPORATE SCORECARD

Oil and Natural Gas Corp (ONGC) today reported a 6.4 per cent drop in net profit for the third quarter ended December 31, 2007, year-on-year as its subsidy payout to state-run oil marketing firms nearly trebled during the period.

"The company posted a net profit of Rs 4,367 crore despite selling crude oil at record 91.19 dollars a barrel price during the quarter," Chairman and Managing Director R S Sharma said.

"We paid Rs 6,080 crore towards subsidising petrol, diesel, domestic LPG and PDS kerosene in October-December as against Rs 2,204 crore a year ago," he said.

This is a jump of almost 175 per cent. After subsidy, ONGC's net realisation in dollar terms was $54.52 a barrel, the net realisation, after factoring in the 12.23 per cent rise in rupee, slipped to Rs 2,151 a barrel from Rs 2,288 a barrel in October-December 2006.

In October-December 2006, when ONGC secured $50.87 a barrel after giving a subsidy payout of $11.27 a barrel, the dollar was equivalent to Rs 44.97, which now is 39.47.

"Sales during the quarter were down 2.6 per cent to Rs 15,218 crore," he said. Sales during the first nine months of 2007-08 were almost unchanged at Rs 44,409 crore.

During April-December 2007, ONGC posted a 8.6 per cent rise in net profit to Rs 14,075 crore after paying a subsidy of Rs 13,528 crore. It realised $53.69 a barrel after paying out $26.68 per barrel towards subsidies.

However, after factoring in rupee appreciation, it earned Rs 2,170 per barrel as against Rs 2,147 per barrel a year ago.

Sharma said ONGC was being made to pay royalty on crude oil produced to states at gross realisation and, in effect, it should be calculated at price realised after subsidy payout. "The excess royalty payment in October-December was Rs 422 crore and Rs 508 crore in April-September."

Sharma said ONGC is investing about Rs 16,000 crore in exploration and production during the current financial year, up from Rs 13,000 crore in the previous year. "Next year, this would go up to Rs 18,000 crore."

He said ONGC made nine discoveries during October-December - four new prospects and five new pool discoveries in established fields.

Crude oil production was almost unchanged at 6.62 million tonnes in October-December and 19.5 million tonnes in April-December 2007.