ONGC stock: Natural gas price revision, higher volumes are positives

Rising crude oil prices are positive for ONGC. The company has already seen its net realisation for oil, at $74.2 a barrel, rise 46 per cent year-on-year in the June quarter

India’s largest gas producer ONGC will be a key beneficiary of the Centre’s decision to hike natural gas prices by 10 per cent from October 1. The price of natural gas has been fixed at $3.36 per million British thermal unit (mmbtu) and will improve revenues on the back of rising gas volumes. 

Given that ONGC is an oil exploration company, a rise in crude oil prices fetches it higher net realisations, while the rupee depreciation helps its subsidiary OVL (ONGC Videsh) earn higher revenues from overseas crude oil production. 

Though rising crude oil prices could translate to a higher risk of