ONGC net up 11%, strikes Brazil deal

The state-run company said its October-December net profit rose to Rs 3,888 crore ($881 million) in the quarter to December, up from Rs 3,493 crore in the same period a year ago.

Nine analysts polled by Reuters had forecast a 10 per cent increase in net profit to Rs 3,827 crore. ONGC shares closed 2.5 per cent down at Rs 1,236.1 in a slightly weak Mumbai market. ‘‘Oil and gas production is moving up after the tragic loss of the BHN platform in July 2005, further increases are expected in the next three months,’’ company Chairman Subir Raha said in a statement.

The company’s crude production in the December quarter fell 10 per cent to 6.37 million tonnes compared with a year earlier mainly due to a fire at the Bombay High North platform in its oldest field, Mumbai High, in July. As a flagship state-run group, ONGC follows federal government’s orders to sell its crude at a discount to state-owned refiners, helping to insulate India’s economy by capping retail fuel prices. The subsidy burden for the quarter stood at Rs 2,843 crore.

A spokesman said ONGC had discounted $16.5 per barrel on its crude to state-run refiners Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd to help them reduce their losses.

‘‘The results are in line with our expectations… ONGC may have gained from the recent hike in price of natural gas,’’ an analyst with an international brokerage said.

ONGC’s Brazilian deal is its second biggest after a $2.7 billion investment for a 20 per cent stake in Russia’s Sakhalin-I project, operated by ExxonMobil, five years ago. ONGC is now awaiting formal approval from the Brazilian government and has started talks with other partners active in the field, known as block BC-10—namely Royal Dutch Shell and Brazilian state company Petrobras—seeking their nod for the acquisition.

ExxonMobil holds interests in two offshore blocks in Brazil’s prolific Campos Basin. An oil discovery has been made in block BC-10 with possible reserves of 400 million barrels. Block operator Shell aimed to declare it commercially viable this year.