Cairn India’s profit after tax has been impacted due to crude oil theft from its pipeline in Gujarat and on higher depletion, depreciation and amortisation (DD&A), according to Motilal Oswal Securities.
“Reported profit after tax was Rs 2,460 crore versus our estimate of Rs 2,990 crore. Apart from lower production, profit was impacted due to higher DD&A and exploration write-off charges of Rs 540 crore versus our estimate of Rs 350 crore,” Motilal Oswal said in its report.
It said production from the Rajasthan block dipped in the fourth quarter of this financial year due to theft from the oil crude pipeline averaging at 118,000 barrels per day against 125,000 barrels per day in the third quarter (gross basis) of 2010-11. Cairn India registered a 10-fold jump in its net profit for the fourth quarter of 2010-11 at Rs 2,460 crore against Rs 245 crore in the corresponding previous quarter.
The company said it had to keep production level low for five days to tide over theft problem. Cairn India has a 670-km crude carrier pipeline from the Mangala field to Bhogat near Jamnagar. About 154 km of the pipeline is in Rajasthan and the rest in Gujarat.
Cairn India has since strengthened security at its pipeline, the company said.
Industry experts said the most vulnerable pipelines are those of Indian Oil Corporation and Oil and Natural Gas Corporation. Every year, crude oil worth Rs 1,000 crore is pilfered.
Various oil companies have pipelines located in the areas of rural Ahmedabad, Anand, Kheda, Mehsana, Vadodara and Bharuch.
