State-owned explorer Oil and Natural Gas Corporation (ONGC) has posted a 31.8% year-on-year drop in net profit for the quarter ended September at Rs5,897 crore due to low crude realisation and increased subsidy burden.
Revenues, too, fell 13.26%, or by Rs3,309 crore, to stand at Rs19,885 crore for the quarter under review as against the year-ago period.
“Lower crude realisation, an increased subsidy sharing, higher share of government’s profit petroleum and increase in various levies led to the drop in revenues and profits in this quarter,” said a company official on an analyst call on Thursday.
AK Banerjee, director – finance, ONGC, told DNA that the biggest blow to the quarterly results came in the form of an increased subsidy burden for Q2, which rose over 115% as compared with the year-ago period.
For the current quarter, the company borne a subsidy burden of Rs12,330 crore as against Rs5,713 crore for the second quarter of the last fiscal.
While Banerjee did not comment on the amount of sharing among the upstream companies, analysts say ONGC’s share of the burden has shot up to 40% for the current quarter as against 33% in the last quarter.
“Its net crude realisation has been virtually capped at $46 per barrel, which is not sustainable on a long-term basis,” said Gagan Dixit, analyst with brokerage Quant.
During the conference call, ONGC officials also said the company has firmed up production plans for oil and gas for the current fiscal and the next at 26.965 million tonne (mt) and 29.104 mt, respectively. It plans to produce 25.734 billion cubic feet (bcf) and 26.446 bcf of gas for this and next fiscals, respectively.
However, plans for fiscal 2015 and the next two years under the 12th Five Year Plan has still not been firmed up as the company is expecting additional production in these years and hence revisiting the earlier targets, said officials.