Despite the country’s efforts to hike its hydrocarbon output, state-run producers are struggling to earn their spurs.
Despite the country’s efforts to hike its hydrocarbon output, state-run producers are struggling to earn their spurs. While ONGC, the largest player in the segment is learnt to have missed the crude oil production target from onshore fields for FY16 by around 5% and gas output target by nearly 12%, Oil India Ltd (OIL), a much smaller player, has seen its crude output falling for fourth straight year. OIL’s crude oil production in FY 16 was 3.245 million tonnes (mt), 6% lower than in FY15.
In fact, in FY16, OIL saw the decline in production from its older fields at a steep 20%. This, according to sources, was unexpected as the estimated drop in output was around 15%. Industry watchers are of the view that poor reservoir management coupled with the failure to start production from new fields is leading to the continuous fall in OIL’s output.
Moreover, Oil India does not have a full time chairman and managing director. At the same time, the new development wells drilled to boost output did not yield positive results.
At a time when Prime Minister Narendra Modi has called for efforts to reduce India’s oil imports by at least 10% in the next five years, OIL’s output has fallen by about 16% since FY12. The last increase in output was reported by the company in FY12 when it produced 3.847 mt of oil, 7.3% higher than in the previous year.
Oil India is expected to report 21.5% drop in revenues at Rs 2,131 crore in the fourth quarter of FY16 against the corresponding quarter in the previous year. Its net profit is seen to have dropped 35% year-on-year to R359 crore in FY16.
“Oil India’s net realisation is expected to fall by 20% quarter-on-quarter to $33.7/barrel on account of drop in crude oil prices. We expect crude oil production from its own field to decline sequentially to 0.78 million tonnes due to social disturbances in Assam during the quarter,” Dhaval Joshi, research analyst at Emkay Global Financial Services wrote on a April 6 report.
Currently, U P Singh, who is additional secretary (exploration) at the petroleum ministry also serves as OIL head.
The post could not be filled after Sunil Kumar Srivastava retired as chairman and managing director on June 30, 2015.
The Oil India stock has lost nearly 31% of its value in the last one year and underperformed the market. The benchmark Sensex has fallen close to 13% in the period.