New Delhi: State-owned Oil India Ltd, or OIL, expects net profit to rise almost 12% to Rs2,000 crore for the fiscal ended 31 March on record crude oil production.
India’s second largest explorer, expected to announce its earnings after a 30 May board meeting, produced 3.47 million tonnes of crude in the year, a 12% increase over fiscal 2008. It also produced 2 billion cu. m of gas during the period, 8% more than in fiscal 2008.
“We have had the maximum crude oil production in the history of OIL,” said a top OIL executive, who did not want to be named.
For the year, the company expects to post revenue of Rs7,000 crore, a 15% increase over the Rs6,081.95 crore posted in 2007-08. Its net profit would represent an increase of 11.79% from Rs1,788.93 crore in 2007-08.
OIL’s domestic interests are in Assam, Rajasthan and Arunachal Pradesh. It is also present overseas in Libya, Gabon, Nigeria, Yemen and Iran. The company is actively pursuing opportunities for acquiring hydrocarbon assets and exploring opportunities in Africa, West Asia, South-East Asia, South America, Russia and other countries.
“The prices of crude oil seem to have stabilized. Assuming that economic recovery takes place worldwide, prices in the future could increase further, boosting profitability of upstream companies such as OIL,” said a Delhi-based oil and gas sector analyst, who did not want to be named.
OIL is India’s first oil and gas exploration company, but has remained in the shadow of the bigger rival Oil and Natural Gas Corp. Ltd (ONGC).
The company is also ready to come out with its initial public offering after the formation of the new United Progressive Alliance government, the OIL executive said. The government will offload its 10% ownership in the company to issue 26.4 million shares.
The company is expected to contribute in offsetting the revenue loss of government-owned oil marketing companies such as Indian Oil Corp. Ltd, Hindustan Petroleum Corp. Ltd and Bharat Petroleum Corp. Ltd for selling petroleum products below cost.
The oil marketers are estimated to have ended the last fiscal with so-called under-recoveries of Rs1 trillion on account of selling petroleum products at prices set by the government.
“There have been some feelers from the government for sharing of under-recoveries. However, there should be a predictable parameter. We don’t want subsidy to go beyond a particular value,” added the executive.
The government has already issued so-called oil bonds worth Rs60,967 crore to offset these losses along with an upstream discount of Rs32,000 crore. The discount to be contributed by firms such as OIL, ONGC and GAIL (India) Ltd is expected to be around Rs1,000 crore.
Another batch of oil bonds worth Rs10,215 crore is also expected to be released by the next government.