Rupee depreciation and high crude oil prices help ONGC more than double its net profit for the fourth quarter of 2011-12. ONGC has reported Rs 5,644 crore net profit for the quarter, up from Rs 2,791 crore a year ago. ONGC earns in dollar for both crude oil and natural gas it produces.
Speaking to newspersons after the Board meeting, the ONGC Chairman and Managing Director, Mr Sudhir Vasudeva, said, “ONGC paid Rs 14,170 crore for subsidising diesel, domestic LPG and kerosene against Rs 12,136 crore during the fourth quarter of last fiscal.”
“The steep subsidy outgo pulled the profit of the company down by Rs 8,208 crore,” he said. However, rupee depreciation came to the rescue of the public sector exploration major. It reported a gain of $6 a barrel against the same quarter last fiscal — from Rs 45.26 to a dollar in 2010-11 for fourth quarter to Rs 50.29 to a dollar in 2011-12 fiscal.
“Every rupee depreciation against the dollar increases our top line by about Rs 1,600 crore,” said the ONGC Director (Finance), Mr A.K. Banerjee.
During the quarter ONGC got $44.32 on sale of every barrel of crude oil. This was after subsidy discount of $77.3 a barrel to the public sector oil marketing companies.
Besides, the company's cost of production after the recent increase in oil cess to Rs 4,500 a tonne is $44 a barrel.
Mr Vasudeva said for the company to succeed there is a need to have a clear subsidy mechanism in place, end regulatory overlaps, remunerative price for oil and gas, and favourable policy environment.
ONGC Videsh Ltd
Production in 2011-12 from assets of ONGC Videsh Ltd (OVL), the overseas investment arm of ONGC, was 7.4 per cent lower mainly due to problems in Sudan and Syria assets.
Post secession of South Sudan from Sudan with effect from July 9, 2011, Blocks 1,2 and 4 straddle between the two countries and Block 5A is now entirely in South Sudan.
OVL's operations in South Sudan are temporarily under shutdown from January 23 this year, said Mr D.K. Sarraf, Managing Director, OVL. This was because of lack of agreement between the Governments of South Sudan and Sudan for use of processing, transportation and port facilities in Sudan for crude oil produced in South Sudan.