On back of higher oil prices, State-owned Oil and Natural Gas Corp (ONGC) on Wednesday posted its net profit of Rs 5,915.12 crore, a jump of 37 per cent in three-months to March 31, 2018. The net profit in the fourth quarter of 2017-18, the highest profit in last 17 quarters, was higher than Rs 4,340.18 crore net in the same period of the previous fiscal, according to the company.

New Delhi: State-owned Oil and Natural Gas Corp. Ltd (ONGC) has replaced a government nominee director on board of Hindustan Petroleum Corp Ltd (HPCL) with its nominee as it consolidates control over the company it recently acquired.

ONGC, which had in January completed the acquisition of the government’s 51.11% stake in HPCL for Rs36,915 crore, has appointed its director (finance) Subhash Kumar on the company board, people familiar with the matter said.

The government is likely to levy a ‘windfall tax’, in the form of a cess, on companies like Oil and Natural Gas Corporation (ONGC) and Oil India (OIL) to bring down the rising petrol and diesel prices. The move may add additional pressure to oil producers that were already paying a higher cess after the switchover of fixed amount to 20 per cent ad valorem rates in 2016.

Oil and Natural Gas Corporation (ONGC) dipped 5% to Rs 166, extending its previous day’s nearly 5% fall on BSE, after the media report suggested that the government may ask the company to share the burden to reduce fuel price.

In past two trading session, the market capitalisation of state-owned oil exploration & production company declined by Rs 223-billion to Rs 2,148-billion, the BSE data shows. The stock hit eight month low, trading at its lowest level since September 26, 2017.

As petrol and diesel prices continue to breach record highs in quick succession, to touch a new peak on Thursday, the government is reportedly looking at ONGC to share the burden. Notably, petrol prices on Thursday, were hiked by 26 paise to Rs 85.29 per litre in Mumbai, while in Delhi, petrol was retailing at at Rs 77.47 per litre on Thursday. Notably, this is the 11th straight hike in a row.

As oil prices rise, Moody’s Investors Service said state-owned oil producers ONGC and Oil India Ltd face increasing risk of the government once again requiring them to share the fuel subsidy burden. Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) had for more than 13 years paid as much as 40 per cent of the under-recoveries arising from fuel retailers selling petrol, diesel, cooking gas (LPG) and kerosene at a government-mandated price, which was way below the cost.

Defying a global trend, India’s flagship national oil company ONGC did not cut its capital spending on exploration and development after oil prices collapsed between 2014-16, Moody’s Investors Service said today. In a report, Moody’s said while ONGC did not reduce capital spending on oil and gas exploration and production, it halted the pace of its international expansion as a response to the oil price slumping from USD 140 per barrel to under USD 40.

Vedanta Cairn, operator of the prolific Barmer field in Rajasthan, bid aggressively, while eight other companies, including state-run ONGC, Oil India, Indian Oil and GAIL (India) also put in their bids for the 55 hydrocarbon blocks offered under the Open Acreage Licensing Policy (OALP), a critical part of the March 2016-launched Hydrocarbon Exploration Licensing Policy (HELP).

The ongoing Open Acreage Licensing Policy round of oil and gas auctions is likely to be a battle between public sector undertakings and the Anil Agarwal-led Cairn India in many of the lucrative blocks.

According to sources close to the development, state-run Oil and Natural Gas Corporation (ONGC) and Oil India may even jointly bid for some blocks for which private parties have submitted expressions of interest (EoIs).

The Oil and Natural Gas Corporation (ONGC) stock has significantly lagged the benchmark S&P BSE Sensex over the past year, even as prices of crude oil, its mainstay, have rallied (see chart). There has been some catching up in the past week, led by improving prospects in the business. If the trend sustains, which seems likely, ONGC’s investors could see good returns.

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