Public sector oil giant Oil and Natural Gas Corporation (ONGC) has been sliding in the global ranking among its peers over the past three years, as it creaks under the burden of the government’s subsidy payouts to oil marketing companies.
The public sector major has written to the government that its “lower ranking during the current year (as also the two previous years) has been mainly due to higher subsidy payouts, which have adversely affected ONGC’s revenues and profits.”
From the number one rank among exploration and production (E&P) companies in 2010, ONGC fell to number two in 2011 and is ranked third in 2012. China’s CNOOC topped in 2011, and ConocoPhilips of the US topped this year (CNOOC is at second rank).
As an integrated global energy major, ONGC ranked 22-leading the pack among 12 Indian companies that ranked in the top 250 global energy firms in the Platts Survey 2012.
ONGC chairman and managing director Sudhir Vasudeva said he has already flagged the issue at the highest level in the government including the Prime Minister’s Office and the cabinet secretariate.
ONGC made a subsidy payout of Rs 12,330 crore in the second quarter — more than double that of the Rs 5,713 crore it paid in the same period last year. This has hit its profit after tax by Rs 7,103 crore in the second quarter when its profits saw a 32% drop.
Vasudeva said that if ONGC continued to pay higher subsidy, its cash reserve, which stood at Rs 12,000 crore, would drop to Rs 4,500 crore this fiscal-end.
Upstream oil companies like ONGC have to offer discounts on crude oil sales to fuel-marketing companies to help oil PSU refiners cut losses on sales.