ONGC profit falls 92% to Rs 496 crore in Q1

The company is grappling with under-recoveries stemming from low crude prices.

ONGC reported a profit of Rs 496 crore on a standalone basis for the quarter ended June 30, 91.7% less than the profit made in the same period a year ago.

The state-run oil and gas producing company attributed the loss to lower crude price realisation in the wake of the coronavirus crisis on global oil and gas industry. The company is also facing under-recoveries from its gas business, after the government slashed the price of domestic gas to $2.39 per million British thermal units (mmBtu), whereas the firm’s average output cost is around $3.7/mmBtu.

The company, which produces about 65% of domestic crude oil, supplied 5.7 million tonne of crude oil in the quarter from its ageing oilfields, recording an annual drop of 3.5%. Its natural gas output fell 13.6% 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% to $28.7 per barrel during the June quarter compared with the year-ago period. Gross revenue was down 51% y-o-y to Rs 13,011 crore in the quarter.

The company is grappling with under-recoveries stemming from low crude prices.

Analysts have pointed that lower oil and gas prices, and disruption in demand for refined products, can weaken the company’s cash flow and leverage till FY22-end.

ONGC is understood to have requested the government to consider exempting it from payment of cess, royalties, and profit petroleum until crude prices are less than $45/barrel. The company has declared six discoveries in FY21 so far in its operated nomination acreages.