India?s largest upstream hydrocarbon player ONGC is diversifying into downstream business like refining and petrochemicals as also into power generation to become a fully integrated energy company.
ONGC produced 52.45 million tonnes of oil and oil equivalent (mtoe) in the past financial year. The company is expected to benefit from rising international crude oil prices. However, it is required to share public sector oil marketing companies (OMCs) under-recoveries from the below cost sale of petrol and diesel, which poses a downside risk to the company?s profitability.
According to chairman RS Sharma, ?Sustaining supplies remains the first priority for the industry; not only from the present assets, but even from all the plays which attracted attention in high-price regime like, deepwater, ultra-deepwater and oil sands.?
?Commitment, investment and technology will play a major role in tapping this large pool of located and yet-to-be-discovered resources or from new and alternate sources of energy. Industry will have to eschew volatility which requires paradigm shift in policy framework; not only from producers and consumers but even at the commodity exchanges,? Sharma added. In the financial year 2008-09, ONGC?s in-place hydrocarbon volume was estimated at 284.81 mtoe while its ultimate reserves stood at 68.90 mtoe. The company?s total reserves were 1,593.53 mtoe as April 1, 2009.
The company reported a 23.4% rise in its net profit for the third quarter of the current financial year because of favourable factors like higher price realisation from its crude sale and a lower subsidy burden. But ONGC might have to fork out a higher amount a higher amount in the last quarter to cover the shortfall of the third quarter. The company?s net profit in the latest quarter is Rs 3,054 crore compared with Rs 2,475 crore in the corresponding period of the previous fiscal. The company reported a turnover of Rs 15,337 crore compared with Rs 10,865 crore for the same period last year.
The average price for crude oil sold by the company during October-December 2009 stood at Rs $76.66 a barrel as against $58.87 a barrel in the corresponding period of the previous fiscal. The company paid price discount of $18.97 a barrel, compared with $ 25.03 a barrel in the same quarter of the previous year. The company paid out Rs 3,497 crore in price discount on crude sale to the public sector oil marketing companies toward sharing their under-recoveries on sale of petrol and diesel for the third quarter.
ONGC made seven new discoveries during the latest quarter and two more in January 2010. ONGC Videsh (OVL), ONGC?s subsidiary for acquiring oil and gas assets abroad, has participating interests in 39 blocks spread across 15 countries.
Of these, 23 are under exploration, 6 under development and the rest are in production. OVL, in association with Hinduja Group and Petronet LNG, recently entered into two broad enabling agreements with Iranian authorities on for participation in development of gas fields and liquification facilities in Iran, in return for assured minimum 6 million tonne LNG per annum (mmtpa) on long term basis.
Managalore Refinery and Petrochemicals Ltd (MRPL), ONGC?s subsidiary for refining business, achieved 130% throughput in the past fiscal. ONGC is setting a petrochemical complex in Dahej, Gujarat under the joint venture route.
