Calcutta, Dec. 7: Indian Oil Corporation (IOC) is set to report a considerable decline in its profit for the current financial year compared with last year’s net profit in view of widespread fluctuations in international crude prices.
IOC chairman M. S. Ramachandran, while refusing to comment on the company’s profit prospect this year, said the situation in the last financial year was extraordinary.
“This year the situation is different and international crude prices are putting a lot of pressure,” he said.
According to an IOC executive, the refining margin has come under pressure from the beginning of the current financial year.
“We have taken a lot of initiatives to reduce our cost and increase savings to neutralise the price fluctuations of crude. But whatever we have done internally is not enough,” he said.
The company has suffered a decline of Rs 387 crore in its net profit for the first six months. The company reported a net profit of Rs 2,751 crore in the first half of the current fiscal against Rs 3,138 crore in the same period last year.
To streamline resourcing crude from abroad, the company has not only signed long-term contracts especially for sour crude (crude with major sulphur content), it is also keen on participating in upstream activities abroad with ONGC Videsh Ltd.
The company has already teamed up with ONGC Videsh and British Petroleum for oil equity in a proven field in Kuwait. It will also take up exploration activities in Iran along with ONGC Videsh.
Ramachandran said the company has been keen on taking an active part in ONGC Videsh and the government has also discussed the issue.
Since the government feels that there should be only one company from the public sector to compete for any oil and gas-related project abroad, it is not possible for IOC to take part in any competitive bidding for upstream projects abroad.
“Hence, we will be taking part in a project in collaboration with OVL,” he said.