ONGC profit soars 71% on higher crude prices

State-owned oil producer ONGC on Friday reported a 71% jump in net profit for the last quarter of 2009-10 that ended in March 31, 2010, to Rs 3,776 crore, mainly on account of higher crude oil price. This helped the company receive greater revenue from crude sales, even after giving higher discounts to downstream public sector fuel retailers, who sell fuel at government-fixed prices.

But net profit for the full fiscal moved up marginally by 4.4% to Rs 16,768 crore as crude production declined 2% to 26.5 million metric tonne (MMT) and the company stopped trading products from its subsidiary Mangalore Refinery and Petrochemicals Ltd, ONGC chairman and managing director RS Sharma told reporters here.

Besides, interest income on funds deployed has come down and ONGC has stopped charging interest on the loans to MRPL, leading to a decline in other income, company officials explained.

However, ONGC?s reserve accretion has significantly gone up and production of both crude oil and natural gas would go up in the near future, he said.

In the March quarter, sales income from trading of MRPL products was nil, while it was Rs 1,670 crore in the same period a year ago. In the whole fiscal too, income from trading was nil, while it contributed Rs 8,510 crore to the parent a year ago, Sharma said.

After giving subsidy, the company got $51.42 on crude oil per barrel in the fourth quarter, up from $43.4 the same quarter a year ago. In the full fiscal, the crude oil rate after discounts was $55.94 compared with $47.7 a year ago, he explained.

ONGC paid Rs 4,999 crore towards fuel subsidies in the March quarter compared to Rs 852 crore the same period a year ago. In the whole fiscal, subsidy to retailers stood at Rs 11,554, down from the previous year’s Rs 28,225 crore.

Sharma said the government?s decision to raise gas price to $4.20 per mmBtu from $1.79 would add Rs 5,500 crore in revenues and about Rs 3,500 crore to bottom line. ?With this price increase, we will be able to wipe out entire under recoveries (revenue loss) on gas business,? he said.