Public sector oil exploration companies have been exempted from sharing the subsidy on domestic LPG for the 2015-16 fiscal year. The beneficiaries of such a move will be ONGC, Oil India and also GAIL (India) Ltd as the entire subsidy burden for domestic LPG will be borne by the Central Government.
“This will leave a lot more money in the hands of the upstream companies to invest in exploration and production. This puts a huge pressure on them to step up the exploration and production activities,” said Petroleum and Natural Gas Secretary, Saurabh Chandra.
He added that ONGC and Oil India would invest $6 billion in exploration and production in the year ending March 2016, as they look to arrest declining oil and gas production
ONGC’s Chairman and Managing Director D K Sarraf welcomed the move saying the company will get better realisation but said it hasn’t yet got an official communication on the same.
“We are very aggressive on our investments and will continue to be so,” said Sarraf.
Oil India shares were down 2.15 per cent at Rs 489.70, ONGC was up 0.93 per cent at Rs 324.80 and GAIL (India) was trading down 1.27 per cent or Rs 4.90 at Rs 380.25 on the NSE at 2.15 pm.
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