Subsidies fail to dampen growth

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: The $13 billion state owned Oil and Natural Gas Corporation Ltd (ONGC) is the country’s biggest oil and gas exploration company and has, in the recent past, announced 10 oil and gas discoveries.

Despite sharing a huge subsidy burden of its sister oil marketing PSUs (IOC including IBP, BPCL and HPCL), ONGC managed to register the highest-ever turnover of Rs 49,440 crore during 2005-06 (up 4% from Rs 47,245 Crore in the previous fiscal). As much as 66% of the turnover came from sale of crude oil, 14% from sale of natural gas and 13% from sale of value-added-products (VAPs). ONGC posted the highest-ever Net Profit of Rs 14,431 Crore during 2005-06 (up 11% from Rs 12,983 Crore in FY05), notwithstanding the highest-ever subsidy pay-out of Rs 11,956 Crore (up 244% from Rs 4,104 Crore in FY05). Impact of subsidy on Net Profit was Rs 7,210 Crore.

The 10 new oil and gas finds announced by ONGC include 5 Finds in Deepwaters, (KG-DWN-98/2-D-1, KG-DWN-98/2-A-1, KG-DWN-98/2-U-1, KG-DWN-98/2-W-1 and KG-DWN-98/2-E-1), three in Shallow Offshore (RV-1 in Mumbai offshore, B-9-1 in Saurashtra offshore and GS-15-E in Krishna-Godavari offshore and two Onland—(Turputallu-1 in Krishna-Godavari and Mekeypore-3 in Assam Shelf).

Earnings-Per-Share (EPS) of ONGC for the nine month of FY-06 has increased to Rs 60.60 per share as compared to Rs 53.04 per share (on enhanced capital) for the corresponding period the year before. The company also announced bonus shares in the ratio 1:2 after which the company’s Paid-up Equity Share Capital (face value Rs 10), went up to Rs 2138.87 crore.

ONGC—through its wholly-owned subsidiary ONGC Videsh Ltd. (OVL)—has strengthened its global footprint. It recently made its maiden entry in South America by picking up a 15% stake in BC-10 Deepwater Block in Brazil, with a production potential of 90,000 barrels of oil per day (bopd).

OVL also inked Production-Sharing-Contract with Cuba’s national oil company Cuba Petroleos (Cupet) for 2 Deepwater exploration Blocks in Gulf of Mexico. Earlier, OVL acquired 30% interest in 6 Deepwater exploration Blocks and 30 in Cuba Deepwaters, which were assigned by the Cuba Government.