Top India Oil Producer Beats Profit Estimate on Price Surge
(Bloomberg) -- Oil and Natural Gas Corp.’s first-quarter profit exceeded estimates as higher crude oil and natural gas prices, along with a weaker rupee, offset lower production.
The New Delhi-based explorer’s net income more than doubled in the quarter ended June to 170.34 billion rupees ($1.8 billion), according to a stock exchange filing. That compares with 152.67 billion rupees average of estimates compiled by Bloomberg. Revenue jumped 45% from a year earlier to 464.60 billion rupees.
The state-run oil and gas producer’s earnings mirror bumper profits posted by global energy supermajors as they reaped gains from the biggest supply disruption in history caused by the US-Iran war. Benchmark Brent crude prices in the June quarter averaged almost 50% higher year-on-year as the US-Iran war choked most of the Gulf flows.
Stronger earnings are crucial for ONGC as it needs to ramp up spending on high-risk exploration to help reverse India’s declining domestic oil and gas production. The company is central to the government’s efforts to curb India’s growing reliance on imports, which meet almost 90% of oil demand and about half of gas consumption. Acute shortages of cooking fuel during the Middle East war had further exposed that vulnerability.
The firm, which accounts for two-thirds of India’s oil and over half of gas output, has been struggling to stem the decline in production from its ageing fields, while new assets have been slow to contribute. ONGC’s standalone oil and gas production declined 3.4% on year to 9.4 million tons of oil and equivalent gas.
ONGC is investing more than 400 billion rupees ($4.2 billion) in projects across its Western Offshore assets to reverse the production decline, it said in a statement. The company has also hired BP Plc as a technical services partner to boost output from these fields.
“We expect their benefits to progressively materialize from FY 2027-28 onwards, leading to enhanced production, improved recovery, and sustained value creation in the years ahead,” ONGC said.
The company’s earnings on every barrel of crude oil sold in April-June was 50.4% higher than a year earlier. Earnings from gas produced from old legacy fields were up 5.4% but that from new deepwater acreage rose 61.5% on year.
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