ONGC has posted its first-ever quarterly loss after taking a one-time impairment for "future crude and gas prices". ONGC recorded an impairment loss of around 49 billion rupees ($650 million) in the January-March quarter of the 2019-2020 fiscal year ending 31 March.
The impairments led to losses of around Rs31 biliion in the latest quarter compared with a profit of Rs42.4 billion a year earlier. It posted a Rs134.4 billion profit for 2019-2020, 50 percent down on Rs267.6 billion a year earlier.
After crude prices fell to $20/ billion, ONGC suffered in April, making it difficult for it to even cover operating costs. The company starts losing money at less than $40/bl because of government taxes. Crude output dropped by 1.4 percent in the latest quarter from a year earlier to 469,000 b/d and gas production fell by 8 percent to 6 billion m³.
ONGC expects crude to stay in a $45-$55/bl range, with it evaluating projects on a $45-50/bl basis. India has no price controls on crude but applies various taxes and royalties, while domestic gas prices are fixed by Delhi twice a year. The company has asked the government to reduce the burden of royalties and taxes.
