ONGC net down 5 per cent at Rs6,741 crore in October-December 2011

State-run explorer Oil & Natural Gas Corp (ONGC) reported a 5-per cent drop in its net profit for fiscal third quarter ended 31 December 2011, as a sharp rise in provisioning for subsidy payments offset gains from higher crude prices and one-time gains from Cairn India's transfer of ownership in Rajasthan oilfields.

ONGC reported a net profit of Rs6,741 crore in October-December 2011-12, against a net profit of Rs7,083 crore in the comparable quarter of the previous financial year, the company said in a filing with the Bombay Stock Exchange (BSE).

The company had to provide Rs12,536 crore towards subsidy share payments to oil marketing companies for selling petroleum products at government regulated prices.

ONGC's sales for the quarter were also down nearly 3 per cent year-on-year at Rs18,123 crore.

ONGC had to bear the full burden (100 per cent) of royalty payments to Rajasthan on its 30-per cent stake while Cairn had no such obligations. Cairn's sale of its Rajasthan oil block to London-listed Vedanta Resources helped ONGC ease this royalty payment burden.

Now that Cairn has sold its 70-per cent interest to Vedanta, ONGC's royalty obligation on crude oil produced from the prolific Rajasthan block is now cost recoverable. ONGC also received Rs3,1412 crore towards royalty already paid.