Oil India's daily prodn at a new high

Oil India (OIL), the state-owned Navratna oil and gas production company, has achieved a record production level of 10,000 tonnes a day. The company, which produces most of its oil from its Assam oilfields, has been producing 10,000 tonnes daily since mid-August.

The company witnessed a dip of 9.52 per cent at 0.798 million tonnes (mt) in crude oil production during the June quarter of this financial year, compared to 0.882 mt in corresponding quarter last year. Its daily average output for the quarter was 8,770 tonnes, compared to 9,910 tonnes in the January-March quarter. The company operates 30 oil and gas blocks, primarily in Assam and Andhra Pradesh.

The main reason for scaling down production during the June quarter was due to a shutdown by its top customer, Numaligarh Refinery (NRL), which accounts for over 55 per cent of its crude oil sales.

NRL was first shut down for 60 days from March 16 to upgrade units to produce higher quality Euro-III/IV compliant diesel. The shutdown, however, got extended and NRL came back to full stream only on June 27, causing OIL a production loss of 130,000 tonnes in the first quarter.

OIL had set a target of producing 0.928 million tonnes crude oil during the first quarter (April-June), but failed to achieve it due to the NRL shutdown.

There were apprehensions that with this dip in the first quarter, the company would be unable to meet its annual production target of 3.7 million tonnes. However, it is confident of achieving this target. It had produced 3.61 million tones of crude oil in 2009-10.

“This is an all-time high production for OIL, achieved as a result of various improved oil recovery and enhanced oil recovery measures apart from some minor discoveries. We are confident of recovering the loss in production and meeting the output target,” said T K Ananth Kumar, director (finance) at OIL.

The company had invested Rs 280 crore in such recovery improvement measures in 2009-10.

The company saw a 21 per cent decline in revenues at Rs 1,523 crore during the first quarter due to lower crude oil price realisation and lower output. However, revenue for this quarter is expected to be better on higher crude oil output and increased APM (administered price mechanism) gas price. APM was increased by 113 per cent to $3.82 per million British thermal units in June. “The increase output is expected to add over 10 per cent to the company’s top line,” he said.

OIL’s shares closed 2.74 per cent higher at Rs 1,476.05 on the Bombay Stock Exchange.