ONGC is incurring losses every year on natural gas of Rs 6000 – 7000 crore

Business Finance Government

ONGC is known as one of the biggest natural gas and oil companies in India and is one of the oldest too. But as per the latest news, ONGC is able to see profits but from last some years losses per year is increasing consistently. According to the recent report by a senior employee of the ONGC, its profit is decreasing per year by Rs 6000 – 7000 crore. The reason behind this is being said that for ONGC the price of natural gas that is set by the government under the administered price mechanism (APM) is much less than the cost of production that ONGC occurs.

Recently, the prices of natural gas were lowered under APM from $2.39 per MMBtu to $1.79 per MMBtu. This change is done by the central government for a period of 6 months. And according to ONGC’s officials, the production that they do of natural gas of 60-65 MMSCMD is around 95% that is charged below the cost that they incur under the government’s APM.
“Rs, 6,000-7,000 crore is the loss from the gas business per se,” said Subash Kumar, director (finance) of ONGC.

According to ONGC’s Chairman and Managing Director, Shashi Shanker, one of the light that they are seeing in the near future to reduce the cost of operation and to reduce the price of natural gas for them is Japan/Korea.

Also, at a time when they are incurring losses in the natural gas sector, they are also trying to explore new sites for oil and natural gas both. This news has been shared recently that in Bikaner, Rajasthan ONGC is going to explore a site of around 2,118.83 sq km for oil and natural gas, and for this purpose, only a block is also provided to ONGC for a timer period of 3 years. And the license for exploring this site has also been issued to ONGC on the recommendation of the Union petroleum and natural gas ministry.

The investment that ONGC is going to do in this area to explore oil and natural gas is about Rs 74 crore that they will do in a phased manner and employment that is going to be generated is of 150 to 200 people directly, and indirectly it will be 500 to 700 people.