New Delhi: Oil and Natural Gas Corp (ONGC) is likely to again see total crude production decline this year and miss both its production and exploration targets.
Chairman RS Sharma. Sharma, who announced a 23% jump in quarterly profits due to higher crude prices, said the firm is likely to produce only around 24.75 million tonnes of crude this year, against a target of 25.76 million. Crude production had slipped from 27 million tonnes in FY08 to 25.4 million last year.
Sharma, who blamed lack of development work during the last three years for the slump, said he expects to bounce back to 27-28 million tonnes in two years as work has gathered pace in the last three quarters.
"For the last three years, we have been unable to award many of our development contracts due to scarcity of equipment and vendors. This year has seen a break from that routine and we expect to see the results in by 2012-13," he said.
As an example, he said the company has made 9 new discoveries during the last four months. "The decline in produce fields has been more than anticipated," he added.
The company is likely to exceed its target of drilling 225 development wells, but fall short of drilling its planned 148 exploration wells, officials said. As of the third quarter, it has drilled 202 development and 86 exploration wells.
The company posted lower than expected profits of Rs3054 crore during the third quarter. The figure was well short of the Rs4200 crore expected by analysts as it wrote off around Rs2,500 crore as the combined expenditure on drilling 37 unsuccessful exploration wells during the last two years. Its recent expedition off the Kerala waters cost it Rs662 crore, officials said.
It did not have to foot the bill for cooking gas subsidies, as many had feared, and contributed only around Rs3,500 crore as its share of fuel under recoveries by state-owned oil retailers.
Revenues rose 41.5% to Rs 15,373 crore, despite taking a Rs717 crore knock due to Rupee appreciation against the dollar. Average crude price during the third quarter was $76.66 against $58.87 during the same quarter last year. Net of subsidy discount to state firms, ONGC got around $57.7 per barrel, against $33.84 last year.
