All on Gas: ONGC to add $3B in earnings, Reliance $1.5B from gas price hike
New Delhi/Ahmedabad: April04: Riding on the world gas and crude prices, state-owned Oil and Natural Gas Corporation (ONGC) will pocket a $3 billion (about Rs 23,000 crore) bounty in its annual earnings by more than doubling of the price of natural gas it produces. Corporate giant, Reliance Industries may get $1.5 billion (Rs 11,500 crore) more in revenue, quotes a report by Morgan Stanley. The government from April 1 increased the gas price paid to producers of oil and regulated fields from $2.9 per million British thermal units to $6.10, a record high. For difficult fields, such as ..”A three-pronged deficit in oil markets (inventory, capex and spare capacity) combined with rising domestic gas production after nearly a decade of declines sets the stage for a super-cycle in profitability”. Gas accounts for 58 per cent of domestic gas production for ONGC and every $1 per mm Btu change in gas price affects ONGC’s earnings by 5-8 per cent.
“We foresee $3 billion earnings increase in FY23 (April 2022 to March 2023) and, more importantly, improving ROCE to above 20 per cent after more than a decade,” it said. Gas prices for difficult fields (deepwater, ultra-deepwater and high-pressure high-temperature areas) have risen by $3.8 per mmBtu to $9.9 and will be applicable to ONGC’s production from KG-DWN-98/2, which is expected to contribute about 14 per cent of domestic gas production by FY24.