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• Oil and Natural Gas Corporation has reported a net profit of Rs 6,741 crore for the quarter ended December 31, 2011, down 4.8 per cent from Rs 7,083 crore in the same period last year.Sales revenue was also down 2.4 per cent to Rs 18,199 crore (Rs 18,648 crore). Crude production fell marginally in the quarter to 6.74 million tonnes (7.03 mt).In a statement, ONGC said its net profit for this period was impacted to the tune of Rs 7,172 crore as a result of discounts offered to its three public sector refining counterparts — IOC, HPCL and BPCL. This is part of the subsidy-sharing formula where this quarter saw ONGC's outgo jump three-fold to Rs 12,536 crore, compared to Rs 4,222 crore in the third quarter of 2010-11.
• According to this calculation, ONGC and its upstream allies (Oil India and GAIL) make good a third of the refiners' losses on sale of diesel, cooking gas and kerosene, which are heavily subsidised to the end-user. Between April and December this fiscal, ONGC has already forked out Rs 30,296 crore as its share of the compensation formula, against Rs 12,757 crore in 2010-11.It is also increasingly evident that the one-third support mechanism is largely ad hoc considering that the upstream sector coughed up nearly 39 per cent in Q4 of the preceding fiscal.This could well apply to the current January-March quarter which means another hit on the ONGC bottomline.

GOVT RUNNING OUT OF OPTIONS

• It is clearly apparent that the Government is running out of options in framing a cohesive pricing policy for the hydrocarbons sector.“Getting more out of the upstream sector is the only way to keep the refining companies afloat except that this is not a permanent solution especially when crude prices are ruling so high,” an oil sector official said.In the process, ONGC's Rs 12,000-crore FPO (follow-on public offer) is not likely to find any takers unless there is a clear formula in place for the subsidy-sharing mechanism.

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