FALLING CRUDE PRICES: ONGC Q3 PROFIT HALVES TO `3,571 CR

NEW DELHI: On the back of falling global crude oil prices to over fiveyear lows, state-owned Oil and Natural Gas Corp’s (ONGC’s) net profit declined almost by half to `3,571 crore in the third quarter ending December, against `7,126 crore in the year-ago period.

This is ONGC’s second successive quarterly drop in the profit, following decline in crude oil prices that impacted the state explorer’s sales.

ONGC said its profit was impacted by `5,386 crore as a result of the discounts offered to downstream firms to part offset their under-recoveries.

Crude oil prices have dived to less than $60 a barrel in December from a peak above $115 on June 19 last year as increasing US shale oil output helped create a glut amid sluggish global demand growth.

ONGC’s total income dipped by 9.2% to `18,924 crore in the quarter under review against `20,852 crore the year ago. ONGC shelled out `9,458 crore in fuel subsidy during the quarter when its average crude oil price realisation fell to $76 per barrel, against $108.19 in October-December 2013.

Fuel retailers such as IOC, BPCL and HPCL sell domestic LPG and kerosene through PDS at government-controlled rates, which are way below the cost. The loss they thus incur are made good by way of subsidy from the budget and assistance from upstream firms like ONGC.

“The company has shared the under-recoveries of OMCs (oil marketing companies) for the nine months and quarter ended December by allowing discount on the price of crude oil, kerosene and domestic LPG,” ONGC said in a statement to the Bombay Stock Exchange.