The Oil and Natural Gas corporation stated a total profit of Rs 496 crore on a standalone basis for the quarter ended June 30, which is 91.7 per cent lower than the profit made in the same period a year ago. The state-run oil and gas producing organisation attributed the loss to lower crude price realisation in the reporting of the coronavirus pandemic crisis on global oil and gas industry. The company is also undergoing various recoveries from its gas business after the government reduced the price of domestic gas to $2.39 per metric million British thermal units (mmBtu), where the company’s average output cost is around $3.7 per mmBtu.
The company which is manufacturing around 65 per cent of domestic crude oil, provided 5.7 million tonnes of crude oil in the quarter from its ageing oilfields, which is recording an annual decline of 3.5 per cent. The firm is coping with under-recoveries restricting from low crude prices.
The company’s natural gas production dropped 13.6 per cent year-on-year (y-o-y) to 5.5 billion cubic metres. ONGC’s realisation from crude oil from its nominated fields fell 56.7 per cent to $28.7 per barrel during the June quarter when compared with the year-ago time. Gross revenue was low 51 per cent y-o-y to Rs 13,011 crore in the quarter. Many analysts have pointed out that lower oil and gas prices and damage in demand for refined products, can decline the company’s cash flow and leverage until the end of FY22.
ONGC is understood to have asked the government to ponder over exempting it from the payment of royalties, cess and profit petroleum till crude prices are reduced than $45 per barrel. The company has acknowledged six discoveries in FY21 so far in its operated nomination properties. ONGC told in a statement that the income and profit for Quarter 1 have been affected by declined crude oil price realization in the wake of coronavirus pandemic fall out on global oil and gas industry as a direct significance of adverse price movements in global crude prices.
ONGC stated that it made three finds in the current fiscal so far. These include natural gas discoveries in KG blocks and Tripura. Similarly, an oil and gas discovery was also made in the KG-DWN-98/2 block that locates next to Reliance Industries’ flagging KG-D6 block in the Bay of Bengal. This discovery in KG-DWN-98/2 has enhanced prospectively, it said. ONGC is investing more than US Dollar 5 billion in bringing to production the first set of oil and gas finds in the block.
