Media reports indicate that the recent hike in the price of natural gas by the government would boost the bottomline of oil and gas companies in the country.
For example, the $8.4 an mBtu price approved by the CCEA, would raise the net profit of ONGC by another Rs 8,500 crore, while it would add another Rs 1,050 crore to the bottom line of Oil India (OIL), reports indicate.
In 2013-14, ONGC has planned a capex of Rs 35,000 crore and Rs 164,000 crore during the 12th Five-Year Plan period.
The company is undertaking integrated development at deep-water assets like Krishna-Godavari (KG) offshore discoveries – G-1, G-2, G-4, Vashista, S-1 and G-4-6.
Production from GS-15 has started. G-4 is planned to be developed along with discoveries in the Northern Discovery Area of KG-DWN-98/2. The company has planned an integrated development of VA and S1 by 2015. It plans to develop its KG-DWN-98/2, KG offshore by 2016-17.
ONGC was said to be making a small profit even with the current pricing of $4.2 an mBtu and the latest revision would raise its profit further. The company feels that the price revision was necessary, because a lot of new blocks that are coming up are deep-water ones, which need more investment.
At $8.4 an mBtu, ONGC’s average production cost would rise to $4.25 an mBtu, including royalty and tax. This means the firm would get a higher margin that can be invested in exploration of blocks, the company said.
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