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Economy News

Discussion in 'World Economy' started by Indian_Idol, Jun 2, 2010.

  1. The Drdo Guy

    The Drdo Guy Captain SENIOR MEMBER

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  2. randomradio

    randomradio Mod Staff Member MODERATOR

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    You don't get it. Both ONGC and the govt has benefited. With low oil prices the govt has cut down on subsidy and taxed consumer oil purchases and excise. Companies have increased prices to end subsidy.

    Basically, both have made profits. It is clear as day. You are the one who can't see it.

    Also the discussion didn't start with that, the discussion started with you claiming ONGC is not making any money and your silly assumption that the public is not benefiting from low prices.

    Prices have come down by over 60%. Public has seen only 16% drop in prices. Govt has pocketed about 10-15%. The rest is ONGC's.
     
  3. randomradio

    randomradio Mod Staff Member MODERATOR

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    In 2014 the ONGC paid 56000Cr in subsidies. This year, it is substantially lesser even though demand is growing.

    Cost of fuel.
    [​IMG]

    Let me explain in a simpler way.

    Oil was $100/barrel. Indian public paid $50-55 while govt and oil companies paid the remaining.

    Today, oil is 45/barrel. India public is paying 50-55 while the companies are no longer paying the subsidy. Only govt is paying subsidies. That's about it.

    The rates are only for explanation, not real rates.

    Basically, ONGC has saved technically thousands of crores, the govt has taken the subsidy burden and only a very small percentage of the difference has come down to the public after extra taxes. The public savings is only around 10Rs/L while savings for ONGC is about 20-30% of their imports.

    Subsidy is only for high speed diesel, kerosene now. Apart from LPG, but that's gas. Petrol, low speed diesel etc are no longer subsidized.

    2014
    ONGC pays Rs 272,721 crore in fuel subsidy - The Times of India
    2015
    ONGC, OIL exempted from LPG subsidy payments this fiscal - Rediff.com Business

    Situation may persist in 2016.

    Oil ministry to cushion ONGC subsidy burden: Dharmendra Pradhan - Livemint
    Paliwal doesn't understand that removing the ONGC's subsidy burden has given them a lot of money. And with the current slump, ONGC is expanding like crazy. And from reports, the planned expansion is cheaper than what they had catered for.

    There is a new formula for subsidy. ONGC has to pay subsidy only if oil costs above 60.

    This reduction has directly helped ONGC in expanding.
    ONGC to execute 12 projects for Rs.13,000 crore by mid-2016 | Business Standard News
    Paliwal actually is stupid enough to believe low oil prices and removing ONGC's subsidy burden will bring no benefit to the company. Lol.

    ONGC made profits even during the subsidy era. Imagine what is the case now without subsidy.
     
  4. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    what you dont understand is

    1. currently there is subsidy only on Kerosene

    2. While Subsidy has been removed it has not increased realisations for companies becuase at the same time the realisable values in the market too has dropped
     
  5. randomradio

    randomradio Mod Staff Member MODERATOR

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    Realization has increased drastically.

    ONGC pays Rs 272,721 crore in fuel subsidy - The Times of India
    During subsidy era, production realization after paying all their taxes was $25. What a moron.

    Even here it says $32.78 is low. Lol.

    These are 2014 prices with 56000 Cr subsidy. Lol.

    ONGC's profitability has increased drastically this year.
    ONGC Q1 net profit rises 14% to Rs5,459 crore; misses estimates - Livemint
    State-owned oil explorer Oil and Natural Gas Corp. Ltd reported a 14.2% jump in its quarterly standalone net profit due to lower subsidy burden.

    Net profit for the three months ended 30 June was Rs.5,460 crore

    ONGC posted profit from operations of Rs.10,582.76 crore for the June quarter, up 19% from Rs.8,864.27 crore in the year-ago period.[/quote]

    Even net realization has drastically increased.
    Reserves are at 1.42L Cr. LOL.
    ONGC: Balance Sheet of ONGC, Profit & Loss, Cash Flow, Ratios, Quarterly, Half-Yearly, Yearly Financials - NDTVProfit.com
    ONGC is more profitable now than they have ever been and there are morons saying the opposite.
     
  6. randomradio

    randomradio Mod Staff Member MODERATOR

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    Weird. I paid for subsidized LPG only last week.
     
  7. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    Even net realization has drastically increased.


    Reserves are at 1.42L Cr. LOL.
    ONGC: Balance Sheet of ONGC, Profit & Loss, Cash Flow, Ratios, Quarterly, Half-Yearly, Yearly Financials - NDTVProfit.com


    ONGC is more profitable now than they have ever been and there are morons saying the opposite.[/QUOTE]


    in my last posts i had agrees to your posts - the above points

    provided the international market price of curde had remained at same level

    but your posts / viewpoints do not stand in view of falling international prices of crude


    today oil is at 40$ a barell

    who can ONGC realise more than 40$ a barell ?
     
  8. randomradio

    randomradio Mod Staff Member MODERATOR

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    The lower the costs go the lower is the profit made from indigenous production and higher the profit from imports.

    India produces less than 1M bpd while imports more than 3M bpd. So imports profit will be many times higher.

    Also the rates are pegged to average prices and not current prices. The average price this year is $59 and reducing. As the international prices decrease, the prices in the Indian market will decrease even more slowly. Consumer prices especially will deflate even more slowly. So ONGC will continue to make profits.

    As for production, the best price for ONGC today is $50+, since production rate is $38. Even at $40, production is viable. If price goes below $40, then ONGC will have to stop indigenous production and import more which brings more benefit in terms of cheaper price. But the profit from cheap imports will be so high that the net realization will cover cost of production.

    Any oil price above $50 is very much in favour of indigenous production for ONGC.
    Extremely cheap oil price is also in favour of imports for ONGC.

    So whatever be the climate, ONGC can always make a huge profit. As long as oil is below the threshold of $60, ONGC has no subsidy burden, which goes into thousands of crores. The profits are equally massive.

    If ONGC paid above $100 and still paid subsidies of 56000Cr and still made profits, the current climate is the best for ONGC. It's bad for Modi who wants to reduce import dependency, but that's just his luck. But cheap oil is very good for India, especially ONGC which makes the most profit.

    Overall, cheaper oil means less revenue for ONGC for obvious reasons, but profit margin is higher and their reserves will be massive, as already posted. The ONGC reserves in 2013 was just 5,000Cr compared to 1.42L Cr today. The massive reserves is the reason why they can expand into foreign markets like mad.

    Provisions, subsidy to drain ONGC cash reserves in 2013-14 - Financial Express
    The piddly amount of 34KCr the govt made through taxes is nothing compared to the savings the ONGC has managed over the past one year.

    That's why ONGC is expanding overseas as I had originally said many weeks ago.
    PSU oil companies like ONGC, Oil India, to invest Rs 76k crore on project expansion in FY16 - timesofindia-economictimes
    And on top of all the money have they planned to invest, actual expenditure will fall due to falling global prices, which means more savings for further expansions the next year.
     
  9. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    simple question'

    when ONGC sells crude at 40$ a barell in the market

    how can it realise more than 40$
    the govt has increased taxes ( indirect taxes like excise and cst more than 5 times ( almost doubling the taxes0 in last year means govt is taking in the difference between lower international price & higher domewstic price )
     
  10. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    when the price of our final product falls in the international can you explain how will your expenditure fall

    will they reduce salaries of employees to reduce expenditure ?
    will they reduce perks & benefits of employees to reuce expenditure ?

    will they reduce inventory (of non crude category) to reduce expenditure ?
     
  11. randomradio

    randomradio Mod Staff Member MODERATOR

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    All figures prove your nonsense wrong. I've given enough data. Cash reserves have increased from 5000Cr to 1.42L Cr in a 2 year period. You figure where that came from.
     
  12. randomradio

    randomradio Mod Staff Member MODERATOR

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    Reuters Summit: ONGC targets $10-$12 billion foreign oil and gas investments| Reuters

    The foreign investment arm of India's top oil explorer ONGC is targeting $10-$12 billion of oil and gas asset purchases over the next three years, including more corporate acquisitions, its managing director said.

    ONGC Videsh Ltd (OVL) hopes to capitalise on cheaper assets after a slump in oil prices and Prime Minister Narendra Modi's diplomatic efforts to boost the global presence of Indian firms.

    "Earlier it was an asset-based (strategy) but now we are giving good consideration to M&A," Narendra K Verma, managing director of OVL, told the Reuters Global Commodities Summit.

    "Our mandate is huge and we can acquire a larger portfolio through the corporate acquisition route," added Verma, who has overseen $7 billion in deals over four years.

    OVL, which produces about 175,000-180,000 barrels per day (bpd) from its overseas assets, wants to double output by 2018 and increase it six-fold by 2030.

    The firm has stakes in 33 oil and gas projects from Venezuela to South Sudan but its first corporate investment in 2008, buying Russia's Imperial Energy for $2.6 billion, did not turn out as planned with output slumping to 8,000 bpd from an estimated 60,000 bpd.

    Still, Verma said the firm was not put off and was "working on some opportunities where we could see a broader portfolio being available to us."

    HOTSPOTS

    OVL last month concluded a deal to buy a 15 percent stake in Rosneft's Vankor field to secure access to about 66,000 bpd of oil production at the Siberian field.

    But Verma said Africa and Latin America were likely to be the hotspots for new investment with some companies financially stressed due to high capital expenditure and low oil prices.

    OVL is also better placed than some of its global peers to invest due to the financial strength of its parent, state-run Oil and Natural Gas Corp (ONGC).

    The firm was in talks with overseas partners to reformulate exploration and development expenditure as current revenue at oil firms had halved due to weaker oil prices, he said.

    OVL also hoped to wrap up talks in two months to refinance $1.7 billion in loans at LIBOR plus 120 basis points maturing in 2021, versus the current LIBOR plus 195 basis points running to 2020, he said.

    ONGC and its Indian partners have submitted a $5-billion revised plan to Iran seeking development rights of Farzad B gas field, Verma said.

    The revised contract offered more flexibility and included a mix of production sharing and service contracts, he said, adding investment could double if infrastructure is built to supply gas to New Delhi.
     
  13. randomradio

    randomradio Mod Staff Member MODERATOR

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    Not bad. OVL wants direct control of 2M bpd from overseas assets by 2030.
     
  14. randomradio

    randomradio Mod Staff Member MODERATOR

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  15. Averageamerican

    Averageamerican Colonel ELITE MEMBER

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    Theres not going to be much investment in Oil production at mince 25 a barrel.
     

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