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The Wall Street Journal: ONGC’s Profit Falls 13%, Hurt By Fuel Discounts

A WALL STREET JOURNAL NEWS ROUNDUP
June 26, 2007

India’s state-run Oil & Natural Gas Corp.’s fiscal fourth-quarter net profit fell 13% on charges and higher mandatory discounts to refiners.

ONGC said it will invest more than $26 billion in the next five years to boost oil and gas production at home and overseas and that it was in talks with Chevron Corp., Total SA and Royal Dutch Shell PLC to enter into equity-sharing pacts for oil blocks. ONGC proposes to swap equity in its blocks, both onshore and offshore, for blocks overseas.

For the quarter ended March 31, the company reported net profit of 26.82 billion rupees ($661.1 million), compared with 30.86 billion rupees a year earlier.

The latest quarter included 11 billion rupees in expenses for employee retirement and medical benefits. ONGC, which produces nearly 80% of India’s crude oil, is required by the government to sell oil and gas from its domestic output to state-run refiners at heavy discounts to keep retail fuel prices low. The company said its subsidy rose 42% to 170.24 billion rupees for the fiscal year.

ONGC said it will spend $16 billion on capital expenditures in India. The funds will used to increase crude-oil production, Chairman R.S. Sharma said. ONGC’s overseas-investment arm plans to spend 420 billion rupees to buy more overseas oil and gas assets and expand their production capacity.

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