Rupee depreciation during the period ending September 30 proved to be a boon to state-owned Oil & Natural Gas Corp (ONGC) as it led to a 2.8 per cent increase in its net profit for the second quarter at Rs 6,063.86 crore over Rs 5,896.57 crore of the corresponding period.
India's biggest explorer posted an increase in its net profit as rupee depreciation boosted earnings and helped counter record subsidy payout.
Net profit in the July-September quarter rose to Rs 6,063.86 crore, or Rs 7.09 per share, compared to Rs 5,896.57 crore or Rs 6.89 a share in the same period a year ago, ONGC Chairman and Managing Director Sudhir Vasudeva told reporters.
However at the same time he informed that “both oil and gas production have been flat and our net realisation has been less due to subsidy payout. It is only rupee depreciation which saved the day”.The higher profit breaks a sequence of four consecutive quarters of lower net profit.
ONGC bills its oil and gas consumers in dollars and a depreciation in rupee adds to its revenues.The explorer paid Rs 13,796 crore to subsidise diesel, cooking gas (lPG) and kerosene in the second quarter as opposed to Rs 12,330 crore payout in the same period last fiscal.
Upstream oil producers like ONGC give discounts on crude oil they sell to refiners to cover for a part of the losses incurred on sale of diesel and cooking fuel rates lower than cost of production.
ONGC said its net profit would have been higher by Rs 7,621 crore if it had not paid the fuel subsidy.”Our net realisation after paying subsidy in Q2 was $44.84 per barrel as compared to $46.76 per barrel in Q2 of last year,” he said.
Our net realisation has been coming down and in H1 it was only $42.56 per barrel. We need net crude price of $60 per barrel to be able to fund Rs 35,000 crore plus of annual capex plans.