ONGC profit increases 22

Beating analysts8217; forecasts, Oil and Natural Gas Corporation Ltd ONGC, the largest Indian company in terms of profitability, has post...

Beating analysts8217; forecasts, Oil and Natural Gas Corporation Ltd ONGC, the largest Indian company in terms of profitability, has posted a rise of 22 per cent in quarterly net profit. This growth came at a time when the oil major lost output and suffered subsidy costs.

ONGC said July-September net profit rose to Rs 4,138 crore 920 million in Q2 of 2005-06 from Rs 3,383 crore a year ago. Total income rose 10.2 per cent to Rs 13,543 crore during the quarter from Rs 12,289 crore.

8220;The market was not expecting more than 10 per cent rise in profit due to the production loss and subsidy costs,8221; said an analyst with a local broking firm.

The state-run oil and gas producer had to offer crude at a discount of 17.27 per barrel to state refineries, sharing the losses they face as a result of a government cap on fuel prices. It is also struggling to kickstart dwindling output, and this year Chinese buyers have repeatedly beaten it to takeover deals.

ONGC said it paid out a subsidy of Rs 2,827 crore to downstream companies including Indian Oil Corp Ltd, Bharat Petroleum Corp and Hindustan Petroleum Corp.

Analysts had estimated the average price for ONGC8217;s crude, benchmarked with Nigerian Bonny Light, was about 44 per barrel in the quarter ended September.

ONGC has already said domestic output in the quarter fell to 470,000 barrels a day from 540,000 a year ago. A fire in July in its oldest field, Mumbai High, destroyed an entire crude processing platform and wiped out production of up to 123,000 barrels of oil per day for a few weeks.

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This month, its 20 per cent stake in the Sakhalin-I field off Siberia8217;s east coast started production, promising to contribute 50,000 barrels to daily output by early 2007. But ONGC needs more if it is to reach its 600,000 barrels a day target by 2009-10.

During the quarter it suffered a double blow to its growth ambitions, failing to win the auction of Canada-based PetroKazakhstan, sold for 4.2 billion, and the Ecuador assets of EnCana Corp, which went for 1.4 billion.

Both sets of assets were sold to Chinese firms, which are involved in an increasingly fierce battle with ONGC for reserves around the world. ONGC8217;s latest acquisition target is South Atlantic Petroleum, owner of some undeveloped deepwater offshore West African assets.

ONGC shares gained nearly 0.2 per cent to close at Rs 931.70 on the BSE on Wednesday.

With agencies

EXPLORING PROFITS

8226; 22 rise in Q2 net profit

8226; Income rises 10.2 in Q2

8226; Subsidise Rs 2,827 cr to oil PSUs

8226; Sells crude at 17.27 discount