The Telegraph
Since 1st March, 1999
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Oil equity swap talks on the boil

New Delhi, June 25: The Oil and Natural Gas Corporation is discussing equity swaps in oil blocks with global giants Chevron, Total and Royal Dutch Shell.

The PSU today reported an 8 per cent jump in net profit for the last fiscal.

“ONGC is talking to Chevron, Total and Shell for equity swap with their blocks,” the company’s exploration director, D.K. Pande, told reporters after the announcement of the PSU’s results here today.

Pande said the PSU had 190 blocks and was offering stakes in four or five of them.

“We offer them stakes provided they compensate by reciprocating,” Pande said. “We will tie up with companies that can add value to our properties.”

Recently, the cabinet allowed ONGC-Videsh, the foreign arm of the PSU, to pick up a 33 per cent stake in an Egyptian deepwater gas block from Royal Dutch Shell for $380 million.

ONGC had earlier entered into an agreement with Brazilian oil major Petrobras on equity swap in blocks.

The PSU offered Petrobras a stake in its deepwater oil and gas block in the Krishna-Godavari basin, which has gas reserves of 5-15 trillion cubic feet. In return, Petrobras offered a stake in its Brazilian oil blocks.

ONGC posted a net profit of Rs 15,643 crore for 2006-07, despite paying subsidies of Rs 17,024 crore. In 2005-06, the net profit was Rs 14,431 crore.

The turnover in 2006-07 increased by 18 per cent to Rs 56,904 crore, and the PSU declared a dividend of 310 per cent — Rs 13 per share — to its shareholders.

This is over and above the 180 per cent, or Rs 18 per share, interim dividend in December 2006.

R.S. Sharma, chairman and managing director of ONGC, said the gross realisation from crude sales was $66 per barrel. Since the PSU gave away $22 per barrel as subsidy to state-run refiners, the net realisation was $44 per barrel.

The company is required by the government to sell oil and gas from its domestic output to the refiners at heavy discounts to keep retail fuel prices low.

ONGC’s net profit for the quarter ended March fell by 13 per cent because of the subsidies. The net profit fell to Rs 2,681.64 crore from Rs 3,085.89 crore a year ago. Revenues for the quarter rose to Rs 14,575.92 crore from Rs 12,528.23 crore a year ago.

For the Eleventh Five Year Plan, which is from 2007-2012, ONGC will invest Rs 121,318 crore compared with Rs 75,380 crore in the Tenth Plan. During this period, ONGC-Videsh will invest Rs 45,334 crore compared with Rs 25,052 crore in the Tenth Plan.

Group company Mangalore Refinery and Petrochemicals Limited will pump in Rs 8,316 crore compared with Rs 765 crore in the previous plan period.

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