ONGC net profit dips 43.3 percent in third quarter (Lead)

January 28th, 2009 - 11:36 pm ICT by IANS  

New Delhi, Jan 28 (IANS) State-run Oil and Natural Gas Corp (ONGC) Wednesday reported a 43 percent dip in net profit in the quarter ended Dec 31, but expressed hope that the fourth quarter performance will be better as there would not be any further subsidy burden.The company’s net profit for the third quarter fell to Rs.24.75 billion (Rs.2,475 crore/$506 million) from Rs.43.7 billion a year ago.

“We have been given repeated assurances orally that there will be no subsidy burden on ONGC in the fourth quarter,” ONGC chairman R.S. Sharma told reporters.

ONGC’s subsidy burden - the discount it gives to state refiners - for the first nine months this fiscal amounted to Rs.2.73 billion (Rs.273.3 crore), a rise of 102.3 percent compared to Rs.1.35 billion a year ago. In fact, it is more than that total subsidy burden of last year, which was Rs.2.2 billion.

“We have been given oral assurances that whatever subsidy that we have given will reflect ONGC’s share for the entire fiscal,” Sharma said.

He added that refiners have been under pressure in the third quarter due to low crude prices. “But, with crude prices having bottomed out, there will be no inventory losses (for refiners).”

ONGC’s sales revenue saw a decline of 17 percent to Rs.125.2 billion from Rs.152.2 billion in the year-ago period.

Crude oil production dipped to 6.49 million tonnes in the quarter from 6.62 million tonnes a year ago.

The ONGC board of directors in its meeting Wednesday approved a significant investment of Rs.680 million for redevelopment of Mumbai High north.

Sharma said ONGC would be comfortable with a price range of around $60 per barrel. “It is difficult to say when stability will come. The paper trading is almost 50 percent more than the actual trading,” he said.

When crude oil was above $100 a barrel, ONGC was forced to offer discounts of up to $70 a barrel to help the state refiners sell transport fuels, kerosene and cooking gas at subsidised rates, slashing its own earnings.

Sharma said the petroleum ministry has approved its annual plan for 2009-10, which forecasts the firm will make a profit of Rs.175 billion on total income of Rs.647.31 billion and assuming a net realisation of $50 a barrel.

In order to increase the production profile as estimated in the 11th plan, the ONGC chairman said it would start three to four major field redevelopment schemes before the next monsoon.

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