India's top oil and gas producer ONGC on Friday reported a tripling of net profit in the June quarter as it earned record prices before the government slapped a tax on windfall profits arising from a global rally in energy rates. Oil and Natural Gas Corporation's (ONGC) standalone net profit at Rs 15,205.85 crore, or Rs 12.09 per share, in April-June, compared to Rs 4,334.75 crore, or Rs 3.45 a share, in the same period a year back, according to a stock exchange filing by the company.
Sequentially, the profit was higher than the Rs 8,859.54 crore net profit of January-March. The earnings rose as the company got USD 108.54 per barrel price for crude oil it sold in the quarter as opposed to USD 65.59 a barrel rate realised in the same period last year. Gas price realisation more than doubled to USD 6.1 per million British thermal unit from USD 1.79.
International energy prices have been elevated since Russia invaded Ukraine in late February, raising concerns about global shortages given the nation's role as a key commodities supplier, especially to Europe. West Texas Intermediate crude, the US oil benchmark, spiked to a high of USD 130.50 per barrel in March, while International benchmark Brent crude came within striking distance of USD 140. It was each contract's highest level since 2008.
The basket of crude oil that India imports averaged about USD 110 per barrel in the April-June quarter. The rally prompted the government to slap a Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestically produced crude oil from July 1. The rate was reduced in subsequent reviews as global oil prices tumbled.
Oil prices have tumbled below USD 100 a barrel this month as recession fears grow, sparking fears that an economic slowdown will cut demand for petroleum products. Windfall profit tax on domestic crude oil is currently at USD 17,750 per tonne and this will trim earnings of ONGC as well as other domestic crude oil producers like Oil India Ltd and Vedanta Ltd in the current quarter that began in July. ONGC said turnover rose to Rs 42,320.72 crore in the first quarter of the current fiscal year that began on April 1 from Rs 23,021.64 crore in the same period of last year.
The earnings were also aided by a 2 per cent rise in crude oil production at 5.5 million tonnes and a 1.4 per cent rise in gas output at 5.38 billion cubic meters. Later in a statement, ONGC said it made two gas discoveries during the current fiscal. A gas find was made in a block in West Bengal and another in a block in Andhra Pradesh. For the full 2021-22 fiscal (April 2021 to March 2022), ONGC had posted a net profit of Rs 40,306 crore on a turnover of Rs 1.1 lakh crore. In that year, it had got an average price of USD 76.62 per barrel and a gas rate of USD 2.35 per mmBtu.