MUMBAI (NewsRise) -- India's state-owned Oil & Natural Gas Corp. reported a more than 58% jump in first-quarter net profit, aided by surging oil prices and higher gas production.
ONGC's profit for the quarter ended in June stood at 61.44 billion rupees ($894 million), compared with 38.85 billion rupees a year earlier. The profit, however, missed analysts' estimate of 66.43 billion rupees in a Reuters poll.
Gross sales rose about 43% to 272.12 billion rupees, while total expenses rose 30%.
State-run energy companies such as ONGC have been trying to step up investments in oil exploration to meet India's rising fuel needs. According to the International Energy Agency, the country is set to be the fastest-growing crude-consumer in the world by 2040. India currently imports more than three-fourth of its crude oil requirements.
ONGC's total crude output in the quarter declined 3.5%, while gas production increased 3.2%.
The surge in price of Brent crude, the global benchmark, led to a 48% jump in net realization for ONGC to $71.48 per barrel, the company said in a statement.
The surge in oil prices raises the specter of Indian government asking state-owned companies to share the country's fuel subsidy burden because of its widening fiscal deficit. Brokerage Edelweiss has capped ONGC's net realization at $60 a barrel, assuming anything beyond that will be absorbed by the government in the form of subsidy sharing.
ONGC used to share the subsidy burden with the government until 2015. According to a Bloomberg report, crude price this fiscal year is likely to stay 30% more expensive than last year. The government has allotted 249 billion rupees in subsidies for this fiscal year, compared with 244 billion rupees last year.
Earlier this year, ONGC agreed to buy a more than 51% stake in Hindustan Petroleum for 369.15 billion rupees. After the completion of the deal, ONGC is set to merge HPCL with Mangalore Refinery and Petrochemicals, a standalone refining company.
ONGC shares lost 0.4% in Mumbai trading, while the benchmark S&P BSE Sensex closed 1% lower.
--Dhanya Ann Thoppil