At present, ONGC bears close to 40% of the cost of oil subsidies --it paid a staggering Rs 2.72 lakh crore in subsidy over the 11 years to FY14 and Rs 56,384 crore in the last fiscal alone. This constrains the PSU in exploration ventures. The discounted (net) price at which it sold oil in last year was $40.97 a barrel, below the break-even rate of $44.
In FY14, the Maharatna firm sold every barrel of crude oil for $106.72. However, it has to bear a subsidy of $65.75/barrel to compensate state-owned oil marketing companies leading to a net realisation of just $40.97 a barrel. The biggest exploration company in India saw its stand-alone crude oil output falling from 24.67 million tonnes in FY10 to 22.25 million tonnes in FY14. Similarly, gas output has increased marginally from 23.11 billion cubic metres in FY10 to 23.28 billion cubic metres in FY14.