NEW DELHI: State-owned Oil and Natural Gas Corp (ONGC) on Tuesday reported its first-ever quarterly loss after it took an impairment on slumping prices and hoped the government will free gas prices to end the era of unremunerative rates.
India's top oil and gas producer reported a Rs 3,098 crore loss in the January-March quarter as compared to a profit of Rs 4,240 crore in the same period a year back.
Company Chairman and Managing Director Shashi Shanker said ONGC booked an impairment loss of Rs 4,899 crore in the fourth quarter of 2019-20 fiscal reflecting valuation of the firm''s assets after fall in crude oil prices.
But for the impairment, the company would have booked a profit.
An impairment loss is a recognised reduction in the carrying amount of an asset that is triggered by a decline in its fair value.
The same reason also led to the company seeing FY20 net profit halved to Rs 13,445 crore from Rs 26,765 crore a year earlier.
Revenue in the fourth quarter fell to Rs 21,456 crore from Rs 26,759 crore a year back.
"The impact of COVID-19 on ONGC has been to the extent of Rs 4,900 crore by way of reduced demand resulting in fall in prices," Shanker said.
Global oil prices had almost halved to USD 32.4 per barrel in March.
ONGC Director (Finance) Subhash Kumar said the company realised USD 49.01 per barrel for oil it produced in Q4, down from USD 61.93 a year back. Gas price also fell 4 per cent to USD 3.23 per million British thermal unit.
"Our weighted average cost of gas production is USD 3.75 per mmBtu and for newer projects in the deepsea, it is north of USD 5 per mmBtu. At current gas prices, we are losing money," he said.
ONGC, he said, has been pleading with the government for freeing natural gas prices to allow the fuel to find its natural value.
"We are hopeful government will do something," Kumar said, adding the company was comfortable with USD 50 per barrel oil price.
Freeing of natural gas price would not just help upstream producers but also the industry as it will help attract investment in exploration and production, raising India''s output. "More investment is likely. More gas is likely to be produced. And this will contribute to Atma Nirbhar Bharat," he said.
Crude oil production was marginally lower at 5.82 million tonnes in January-March as compared to 5.9 million tonnes in the previous year.
Natural gas output fell to 6.04 billion cubic meters from 6.56 bcm in January-March 2019 after demand fell due to the COVID-19 lockdown.
Shanker said the company''s overseas arm, ONGC Videsh Ltd too saw its net profit for FY20 fall to Rs 454 crore from Rs 1,682 crore after it also took an impairment loss of around Rs 3,000 crore.
OVL produced 9.755 million tonnes of crude oil FY20, down from 10.1 million tonnes a year back. Gas output, however, rose to 5.226 bcm from 4.736 bcm.
The company plans to set up a USD 1 billion venture fund to finance innovations.
It is targeting to raise domestic oil and gas production to 70 million tonnes of oil equivalent by 2040 from the current 50 MMTOE and that of overseas to 40 MMTOE from the current 15 MMTOE. The refining capacity is to be expanded to 100 million tonnes from the current 35 million tonnes.