State-run ONGC reported a net profit of Rs 1,286 crore in Q3 FY16, down 64% from Rs 3,571 crore in Q3FY15 even though the state-run firm has been relieved from footing a chunk of oil subsidy bill.
The fall in net profit is primarily due to making provisions of R3,994 crore towards impairments, which impacted the net profit by R2612 crore. Without this, the third quarter net profit would have been R3,898 crore, ONGC chairman DK Sarraf said.
In the third quarter of FY15, ONGC’s gross selling price of crude was reported at $75.95/barrel, while net realisation was drastically down to $35.52/barrel, after forking out R9,458 crore towards subsidising state-run oil marketing companies for selling fuel below market price. In the third quarter of FY16, ONGC to net realisation stands at $44.34/barrel of crude price.
As reported by FE on Thursday, ONGC has produced marginally less oil and gas during the third quarter of FY16 against the same months previous year. The consolidated production (ONGC plus joint venture fields) of crude oil during Q3FY16 stands 1.3% lower at about 6.528 million tonnes against 6.612 million tonnes in the corresponding quarter previous year. This is primarily because of lower production from onshore fields. During October-December 2015, natural gas output dropped 4% to 5.771 billion cubic metres against 6.011 bcm in the three months last year.
Gas price to fall 15%: ONGC
The price of natural gas drilled from fields at home would further reduce by nearly 15% to about $3-$3.2/million British thermal units (mBtu), as the commodity price has been on a downward trend globally, said Dinesh K Sarraf on Thursday.
“Times are bad for exploration and production companies. Crude prices are down and gas price (domestic) as determined by government-approved formula would also come down from April 1,” Sarraf said, though restraining from divulging the minimum price required by ONGC to make its projects viable.
ONGC has taken up the matter on reduction in gas prices and its impact on its existing as well as new projects with the nodal petroleum ministry.
The price of domestic natural gas is currently decided based on a formula approved by the Modi government in October 2014, which is linked to select global indices. From October 1, the rates fell to $3.82 per million British thermal units (mBtu) till March 31, 2016 on gross calorific value (GCV), against $4.66/mBtu in the previous six months.
When asked if ONGC is contemplating to cut down on expenditure in a low price scenario, Sarraf said, “We are a national oil company and we have to see that exploration and production goes on in the country. This is the time when we can create more assets,” ONGC chairman said.