PSU OMCs gain, oil E&P stocks drop on decline in crude oil price

Stocks of public sector oil marketing companies edged higher and oil exploration and production firms edged lower at 10:27 IST on BSE on decline in crude oil prices.

Public sector oil marketing companies (PSU OMCs) BPCL (up 1.97% at Rs 943.65), HPCL (up 1.21% at Rs 860.10) and Indian Oil Corporation (up 1.55% at Rs 422.90) edged higher. Oil exploration and production (E&P) stocks Cairn India (down 3.96% at Rs 149) and Oil India (down 1.67% at Rs 314.85) edged lower.

Meanwhile, the S&P BSE Sensex was up 130.47 points or 0.51% at 25,757.22.

Brent for June settlement was currently down $1.83 a barrel at $41.27 a barrel after talks over the weekend between the world's largest oil producing countries in Doha failed to produce a deal to freeze output aimed at boosting sagging crude prices. The contract had declined 74 cents or 1.68% to settle at $43.10 a barrel during the previous trading session.

Decline in crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already decontrolled pricing of petrol and diesel.

Meanwhile, PSU OMCs announced reduction in prices of both petrol and diesel with effect from the midnight of 15/16 April 2016. Indian Oil Corporation has cut the retail-selling price of petrol by 74 paise per litre in Delhi, with corresponding price revision in other states. After the latest price reduction, the price of petrol in Delhi stands at Rs 61.13 a litre. The price of diesel has been cut by Rs 1.30 per litre in Delhi, with corresponding price revision in other states. After the latest price reduction, the price of diesel in Delhi stands at Rs 48.01 a litre.

Lower crude oil prices would result in lower realization from crude sales for oil exploration firms.

Reliance Industries (RIL) fell 0.34% at Rs 1,061.80 after the company announced that the SEZ refinery of the company is planning to shut down one crude distillation unit for routine maintenance & inspection activities from 1 May 2016, for about 3 weeks. The other three crude distillation units including all secondary processing units are expected to operate at normal throughput at Jamnagar refinery complex, RIL said. The company said it does not anticipate any impact on its commercial commitments. The announcement was made before market hours today, 18 April 2016.

ONGC fell 2.37% at Rs 207.95. ONGC after market hours on Wednesday, 13 April 2016, announced that the company has signed an agreement with Reliance Industries (RIL) and BG Group to take over a part of the abandoned assets of the Mid & South Tapti field in Western Offshore of India. The joint venture members signed the Tapti Asset Transfer Agreement on 12 April 2016 with ONGC. ONGC intends to utilize the Tapti facilities (comprising of the processing platforms along with the connected export pipelines) for use in its adjacent Daman Development and C-26 Cluster Development Projects. In December 1994, Government of India awarded the Mid & South Tapti field in Western Offshore of India under the Production Sharing Contract (PSC) regime to a consortium comprising ONGC (with 40% stake), British Gas (with 30% stake) and Reliance Industries (with 30% stake).

ONGC has committed an investment of over Rs 8600 crore towards Daman Development Project and C-26 cluster Development Project to enhance production of natural gas and condensate from its Daman block in Arabian Sea. The production from these two projects is expected to start in Q2 September 2016, with estimated peak production rate of about 11 MMSCMD of gas and over 11,000 barrels of condensate per day, ONGC said.

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