State-run Oil and Natural Gas Corporation (ONGC) reported a pre-tax loss of Rs 10,529 crore in the fourth quarter of the financial year 2019-20 (Q4FY20) because of a drop in crude oil prices, the impact of the lockdown, and exchange losses.
This is ONGC’s first ever quarterly loss. It earned a profit before tax (PBT) of Rs 11,691 crore in the corresponding period of FY19. The company’s revenue from operations declined by 7 per cent to Rs 104,489 crore in the period under review, compared to Rs 112,539 crore the previous year. “This is one of the first times in recent years that we are posting a loss. The combined impact of reduced demand, Covid-19, reduced offtake and lower crude prices had an impact on our numbers to the tune of Rs 4,900 crore. Another major factor was foreign exchange losses. The rupee had depreciated heavily during the quarter, resulting in a loss of Rs 1,113 crore on exchange rate variation, as against a gain of over Rs 200 crore during the same time last year,” said Subhash Kumar, director of finance at ONGC.
During the quarter under review, the company’s net realisation on crude was seen $49.01 a barrel, as against $61.93 a barrel a year ago. Gas price for the quarter was also lower at $3.23 per million metric British thermal unit (mmBtu), compared to $3.36 a mmBtu in the year-ago period. “ONGC had recognised an exceptional item towards impairment loss of Rs 4,899 crore in Q4 to factor into estimated future crude oil and natural gas prices,” the company said. This adversely impacted its numbers.
For the whole of FY20, the company’s PBT fell by 65 per cent to Rs 19,068 crore as against Rs 54,846 crore in FY19. Revenue from operations saw a 6 per cent drop from Rs 453,683 crore in FY19 to Rs 425,001 crore in FY20. During the quarter under review, the company’s total crude oil production dropped by 1.4 per cent to 5.8 million tonnes (MT), compared to 5.9 MT in a year ago. Total gas production, too, declined 7.9 per cent to 6.04 billion cubic meter (bcm), compared to 6.56 bcm a year ago.
“Our cost of production on gas is around $3.7 per mBtu, while we are realising only $2.39 a unit from April 1. We expect some support from the government, that may boost gas production in long run,” Kumar added.