OREANDA-NEWS. June 1, 2011. State-owned Oil India Ltd (OIL) today reported 30.5 per cent jump in net profit for the fourth quarter ended March 31 even after more than doubling of its fuel subsidy burden.

OIL, the nation's second biggest state explorer, reported a net profit of Rs 562.61 crore in the January-March quarter, compared to Rs 430.99 crore in the year-ago period, company Chairman and Managing Director N M Borah told reporters here.

"Our fuel subsidy outgo doubling in FY 2010-11 to Rs 3,293.08 crore," he said. Upstream oil firms like OIL, Oil and Natural Gas Corp (ONGC) and GAIL India give discounts on crude oil they sell to refiners to make up for part of the losses they incur on selling diesel, domestic LPG and kerosene at government-controlled rates.

Borah said its profit would have been higher by Rs 900.69 crore in the fourth quarter and by Rs 1,848.18 crore in the full fiscal if it were not to share the fuel subsidy. The share of subsidies for exploration companies was increased to 38.8 per cent of the total revenue retailers lost on fuel sales in the 2010-11 fiscal from 33.33 per cent previously.

OIL earned USD 104.01 for every barrel of crude oil it produced but had to give USD 51.12 per barrel discount to refiners, leaving it with USD 52.89 per barrel in January- March quarter, less than USD 53.32 a barrel net realisation in Q4 of 2009-10.

Revenues increased to Rs 2,018.93 crore from Rs 1,832.14 crore in the fourth quarter of the 2009-10 fiscal. During the 2010-11 fiscal, OIL's net profit was up 10 per cent to Rs 2,887.73 crore.

Crude oil production was up marginally to 3.627 million tons in 2010-11 fiscal from 3.611 million tons as the company lost 130,000 tons of output due to prolonged shutdown of Numaligarh Refinery, its main customer in the North East.

Gas output was 2.61 per cent at 2.35 billion cubic meters, he said. Borah said during current year, OIL was expected to produce 3.9 million tons of oil and gas production which is stagnant at 7 million standard cubic meters per day would rise to 9-10 mmscmd in 1-2 years after more customers are tied-up.

OIL has capped natural gas output in the North East as it does not have many buyers of the fuel. "Crude oil and natural gas production had suffered during the first quarter of the year due to Numaligarh Refinery shutdown," he said adding OIL had to restrict output in absence of offtake by its main customer. The increase in subsidy burden saw the profits of ONGC and GAIL fall in the fourth quarter.