But For Upstream Cos, Low Oil Prices & Stagnant Output May Bring Down Profits & Sales
OIL marketing firms and standalone refiners are tipped to do well in the March 2009 quarter, which saw oil prices stabilising around $50 per barrel after plunging to below $35-levels in December. However, the quarter may turn out to be a disappointing one for upstream companies such as government-run ONGC, which may see low oil prices and stagnating output affecting their sales and profit numbers.
Oil marketing companies will post the biggest gains over the year-ago period, as their marketing operations were profitable for a major part of the quarter. Low crude prices prevailed in the quarter will see standalone and private sector refiners posting good numbers. The benchmark WTI crude oil prices averaged at $42 per barrel for the quarter, which was 57% lower compared with the prices prevailed in the year-ago period.
Fuel marketing firms such as Indian Oil, BPCL and HPCL will see a jump in profitability in the March quarter, as their refining operations will remain profitable unlike the two previous quarters when inventory losses played spoilsport. Also, they were selling auto fuels at positive margins during most part of the quarter, thanks to the crash in crude oil prices.
India’s largest producer of crude oil and natural gas, Oil & Natural Gas Corporation (ONGC), will have a disappointing quarter. Stagnating oil production from many of its ageing fields will also affect ONGC, which is likely to report a 7% decline in domestic production in the quarter. However, these negative factors will get partially offset by a major depreciation in rupee value, which at Rs 49.8 against the dollar was nearly 25% weaker since the year-ago period.
Oil refiners such as MRPL, Chennai Petroleum, Reliance Industries and Essar Oil are likely to see pressure on margins in dollar terms. However, unlike the preceding quarter, they won’t have inventory losses this quarter. They too will benefit from the rupee depreciation as the same dollar per barrel gross refining margin would translate in more rupee profits. However, India’s largest company Reliance Industries is set to report a fall in sales as well as profits for the quarter due to the maintenance shutdown at its refinery in January-February period.
In natural gas segment, the results for the March quarter are likely to be mixed. The supply of natural gas in the country remained more or less stagnant during the quarter. Gail is likely to maintain its growth momentum, thanks to additional gas from Panna, Mukta, Tapti (PMT) fields.
A rise in naphtha prices will see a number of gas consumers, who had shifted to naphtha in the December 2008 quarter, shift back to natural gas in the March quarter. As a result, smaller players such as Gujarat State Petronet (GSPL) and Gujarat Gas will see an improvement in gas volumes.
OIL marketing firms and standalone refiners are tipped to do well in the March 2009 quarter, which saw oil prices stabilising around $50 per barrel after plunging to below $35-levels in December. However, the quarter may turn out to be a disappointing one for upstream companies such as government-run ONGC, which may see low oil prices and stagnating output affecting their sales and profit numbers.
Oil marketing companies will post the biggest gains over the year-ago period, as their marketing operations were profitable for a major part of the quarter. Low crude prices prevailed in the quarter will see standalone and private sector refiners posting good numbers. The benchmark WTI crude oil prices averaged at $42 per barrel for the quarter, which was 57% lower compared with the prices prevailed in the year-ago period.
Fuel marketing firms such as Indian Oil, BPCL and HPCL will see a jump in profitability in the March quarter, as their refining operations will remain profitable unlike the two previous quarters when inventory losses played spoilsport. Also, they were selling auto fuels at positive margins during most part of the quarter, thanks to the crash in crude oil prices.
India’s largest producer of crude oil and natural gas, Oil & Natural Gas Corporation (ONGC), will have a disappointing quarter. Stagnating oil production from many of its ageing fields will also affect ONGC, which is likely to report a 7% decline in domestic production in the quarter. However, these negative factors will get partially offset by a major depreciation in rupee value, which at Rs 49.8 against the dollar was nearly 25% weaker since the year-ago period.
Oil refiners such as MRPL, Chennai Petroleum, Reliance Industries and Essar Oil are likely to see pressure on margins in dollar terms. However, unlike the preceding quarter, they won’t have inventory losses this quarter. They too will benefit from the rupee depreciation as the same dollar per barrel gross refining margin would translate in more rupee profits. However, India’s largest company Reliance Industries is set to report a fall in sales as well as profits for the quarter due to the maintenance shutdown at its refinery in January-February period.
In natural gas segment, the results for the March quarter are likely to be mixed. The supply of natural gas in the country remained more or less stagnant during the quarter. Gail is likely to maintain its growth momentum, thanks to additional gas from Panna, Mukta, Tapti (PMT) fields.
A rise in naphtha prices will see a number of gas consumers, who had shifted to naphtha in the December 2008 quarter, shift back to natural gas in the March quarter. As a result, smaller players such as Gujarat State Petronet (GSPL) and Gujarat Gas will see an improvement in gas volumes.
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