Key facts
- ONGC's quarterly profit more than doubled, reaching 170.34 billion rupees ($1.8 billion).
- Revenue increased by 45% year-over-year to 464.60 billion rupees.
- Higher crude and natural gas prices, along with a weaker rupee, boosted earnings.
- Production output decreased by 3.4% to 9.4 million metric tons of oil equivalent.
- ONGC plans to construct a 13-million-barrel storage facility in Mangaluru.
India's Oil and Natural Gas Corporation (ONGC) reported a more than doubling of its quarterly profit for the period ending June, driven by surging crude and natural gas prices, as well as a weaker rupee. The company's net income reached 170.34 billion rupees ($1.8 billion), surpassing the average analyst estimate of 152.67 billion rupees. Revenue saw a significant 45% increase year-over-year, totaling 464.60 billion rupees.
ONGC's earnings per barrel of crude oil sold rose by 50.4% compared to the previous year. Earnings from gas produced at legacy fields increased by 5.4%, while newer deepwater acreage saw a substantial 61.5% jump in earnings. These price windfalls were crucial as ONGC's overall oil and gas output declined by 3.4% to 9.4 million metric tons of oil equivalent, attributed to aging fields and slow progress on new projects.
As a key supplier to India, providing about two-thirds of the nation's oil and over half of its gas, ONGC plays a vital role in reducing import dependence. India currently imports nearly 90% of its oil and about half its gas. The disruption of supplies due to the Middle East war highlighted this vulnerability, leading India to increase its reliance on Russian crude, which reached a record 2.8 million barrels per day in July, accounting for 55.5% of total imports.
To bolster energy security, ONGC is set to invest in a new 13-million-barrel storage facility at Mangaluru, with half of the capacity designated for strategic reserves. India's existing strategic reserves currently cover only about eight days of demand. The company's falling production underscores the need for increased exploration, while the current price surge provides the necessary capital to fund these efforts.