ONGC Q2 profit dips 10% on crude price decline, subsidy sharing

ONGC registered a net profit of Rs 5,445 cr, compared to Rs 6,064 cr in the same quarter last year

Oil and Natural Gas Corporation Ltd (ONGC), India’s state-run petroleum explorer, has reported a 10.2 per cent dip in net profit for the quarter ended September on the back of a historic slump in crude oil prices that impacted sales apart from sharing of under-recoveries of downstream firms and lower sales.

The company registered a net profit of Rs 5,445 crore during the quarter as compared to Rs 6,064 crore in the corresponding quarter last year. Global crude oil price benchmark Brent has slumped to less than $80 a barrel, a four year low on forecasts of depressed demand amid oversupply.

ONGC’s total income during the second quarter dipped 8.7 per cent to Rs 20,448 crore as compared to Rs 22,415 crore in the same period last financial year.  Gross revenue was impacted by Rs 13,641 crore while profit was impacted by Rs 7,645 crore in the quarter due to subsidy sharing.

“The company has share under-recoveries of OMCs for the quarter and half year ended September by allowing discount in the prices of crude oil, PDS Kerosene and domestic LPG based on the rates of discount communicated by the Ministry of Petroleum and Natural Gas,” ONGC said in a filing on the BSE.

The oil and gas explorer’s revenues from offshore operations dipped 6.8 per cent to Rs 14,955 crore between April and September 2014 while the revenue from onshore fields decreased 14 per cent to Rs 5,556 crore in the same period.

India’s three OMCs suffered under-recoveries of Rs 24,500 crore in the second quarter owing to subsidised sales of diesel, LPG and kerosene. ONGC had to bear around Rs 13,640 crore ofthese losses even as its upstream peers Oil India (OIL) and GAIL (India)absorbed Rs 2,230 crore and Rs 500 crore each. ONGC’s share price at the BSE on Friday closed at Rs 393.35, up 2.05 per cent as compared to previous close.