Oil and Natural Gas Corporation Ltd

NSE:ONGC

Earnings Call Transcript 2021-Q4

[Operator]

Good day, ladies and gentlemen. I'm with Harpreet Kapoor, the moderator of this call. Thank you for standing by, and welcome to fourth quarter FY '21 earnings conference call. [Operator Instructions] So I would like to now hand over the proceedings to Mr. Subhash Kumar, CMD ONGC. Thank you, and over to you, sir.

[Subhash Kumar, CEO, MD & Chairman]

Good morning. Thanks a lot. Good morning, ladies and gentlemen. I'm Subhash Kumar, Director Finance ONGC and also holding additional charge of CMD of ONGC. And on behalf of ONGC, I welcome you all in this ONGC earnings call for quarter 4 and FY '21. Thank you all for joining us on the call. I'm joined here by my colleagues on the Board, Mr. Anurag Sharma. My colleagues from finance and accounts, corporate planning and various other relevant departments, including Mr. Vivek Tongaonkar, CFO. In fact, I -- Vivek Tongaonkar has taken over as CFO of the company. He's joining the call shortly. Mr. Akhil Verma, Chief Corporate Planning, is with us. Mr. Anupam Agarwal, Chief Corporate Finance is also on the call. Mr. Rajeev Kumar, Chief Corporate Accounts and Financial Reporting Services; Mr. Rajarshi Gupta, Corporate Planning and Strategy; Mr. Vinod Harlan, CGM Finance; Mr. Sanjay Bharti from Corporate Accounts; Mr. Nirmal Kumar; and Chandra Shekhar from ONGC Videsh; and Mr. Prakash Joshi from Investor Relations. So all those who need to be there for this call are there in the room. Ladies and gentlemen, let me start the call on a rather somber note. FY 2021 has been a very, very difficult year for all of us. And when I say so, it is -- it has been difficult for ONGC, it has been difficult for the country, and it has been difficult for the humanity. During this period, as far as oil and gas operations in the country are concerned, the brave soldiers, energy soldiers have continued working tirelessly to maintain the energy flow. But in the process, we have lost our very dear colleagues and at least around 132 people have fallen victim to the corona during this period up to date. Also, this call is being held in backdrop of an accident which happened in Mumbai operations recently, where around 88 people became brave nature's victims and we lost them. At the beginning of the call, I pay on behalf of the organization and the management our tributes and respects to our departed colleagues and we also salute the grit and courage of those who continued working despite all the adversity.So with that, I come back to the financial results. ONGC has compiled its financial results for the fourth quarter and year ended 31st March 2021, which have been reviewed by the statutory auditors. The financial results have already been released on 24th of June 2021 through a press note and sent to stock exchanges. This has also been sent to analysts who are there on our mailing list, here is a brief synopsis of the results. The company has earned a net profit that is profit after tax of INR 6,734 crore during the fourth quarter of FY '21 as against restated loss of INR 3,214 crore on account of -- during the fourth quarter FY '20. That's an increase of close to INR 10,000 crores. Actually, we had to restate accounts of previous year because of a small issue relating to CCDs in one of our step-down subsidiary, that is ONPL, which actually resulted in restatement to the extent of around INR 19 crores. Similarly, the profit after tax for the year FY '21 has decreased by INR 2,218 crores. That's a reduction of close to 17% from profit after tax of INR 13,464 crore restated in FY '20 to INR 11,246 crore in FY '21. The increase in net profit during the last quarter of this fiscal versus the corresponding quarter of last fiscal is on account of higher sales revenue due to higher crude price, which have been partly offset due to the lower gas prices. Gas prices continue to be at a historic low prices. The decrease in net profit during FY '21 as compared to the corresponding profit for the previous year is on account of lower sales revenue, mainly due to lower crude price on an overall basis for the year and the gas price realization, which again have been one of the lowest in the recent past. The sales revenue for Q4 '21 is lower by INR 108 crores, a decrease of around 0.5% at INR 21,132 crores as against INR 21,241 crore in the corresponding quarter of previous fiscal. The sales revenue in current quarter has decreased mainly on account of lower sales revenue from natural gas by INR 1,717 crore and local -- lower sales revenue from value-added products by INR 228 crore. Increase in Government of India's share of petroleum -- profit petroleum by INR 361 crore, mainly at RJ-ON-90/1, by INR 324 crore, which is offset by higher sales revenue from crude oil by INR 2,198 crore. Similarly, if we come to the annual position, sales revenue in FY '21 has also decreased by INR 27,810 crore. That's a reduction of close to 30% from INR 95,701 crore in previous fiscal to INR 67,891 crore in current fiscal. The sales revenue in FY '21 has been lower mainly on account of decrease in sales revenue from crude oil by INR 17,170 crore, natural gas at INR 7,949 crore, and lower sales revenue from value-added products by INR 2,974 crore. So there is actually a negative variance in all the 3 segments -- 3 contributing streams. There is reduction in GOI share of petroleum by [ INR 230 crore ] from INR 1,776 crore in previous fiscal to INR 1,546 crore in this year. The decrease is mainly at CB/OS-2 by INR 215 crore. The billing price of VAT CST for crude during the fourth quarter of current fiscal was at $58 per barrel as against $49 per barrel in the same period in the last year. That's an increase. In fact, actually, prices have converged and are slightly higher corresponding to the Q4 of previous fiscal. The exchange rate of rupee-dollar versus dollar stood at INR 72.89 versus INR 72.36. So there was not a significant difference in exchange rate. Again, it has converged that. Thus the realization for crude in rupee terms stood at INR 4,431 per barrel in fourth quarter of this fiscal versus INR 3,546 per barrel in fourth quarter of previous fiscal, which amounted to increase of around 19%. So this actually is fairly reflective of movement on dollar-based prices as exchange rate is more or less the same. Similarly, gross billing for crude during the current fiscal was at [ $42.78 ] as against [ $58.61 ] in the same period last year. That's a decrease of USD 15.83 and in percentage terms is about 27%. The exchange rate of rupee versus dollar stood at INR 74.20 versus INR 70.88 in FY '20. Thus the realization for crude in rupee terms stood at INR 3,174 per barrel versus INR 4,154 in the -- for the previous fiscal, and that's a reduction of 24% or so. During Q4 of this fiscal, the statutory levies were INR 5,411 crore as compared to INR 4,807 crore in fourth quarter of previous fiscal that's increase in -- of INR 604 crore. The increase in royalty on crude of INR 523 crore and cess by INR 324 crore is mainly attributable to increase in average selling price of crude from INR 26,541 per MT in Q4 to INR 31,836 per MT in Q4 of this fiscal. And an increase in average selling price of value-added products from INR 32,163 to INR 35,469. Similarly, there has been decrease in royalty on natural gas by INR 183 on account of decrease in price of natural gas from INR 9,260 to INR 5,928. Similarly, statutory levies have also decreased by INR 6,148 crores from INR 22,571 crores to INR 16,423 crores. The decrease in royalty on account of crude oil INR 2,510 crore and cess by INR 2,769 crore is mainly attributable to decrease in average selling price of crude oil. Similarly, there has been decrease in royalty of natural gas by INR 863 on account of decrease in price of natural gas from INR 10,065 per thousand cubic meter in FY '20 to INR 6,544. The operating expenditure has decreased by INR 585 crore, 9.3% from INR 274 crore in fourth quarter of previous fiscal to INR 5,689 crore during the Q4 of this fiscal. The decrease in Q4 is mainly attributable to the decrease in consumption of materials, marginal INR 36 crores at the Dahej plant on account of decrease in prices of spot LNG, that was the reason for reduction of -- a reduction at Dahej level. Contractual payment, INR 269 crore, mainly at Western Offshore and [indiscernible] and Power and FE, CSR expenditure came down by INR 149, which actually is directly a reflection of our reduced profitability over the recent years and transport and oil expense INR 61 crore, mainly at Western offshore. This reduction in operating expenditure has been partly offset by increase in repairs and maintenance INR 55 crores, mainly at Western offshore and Neelam platform. For the year, there has been decrease by INR 2,632 crores in operating expenditure. That's a reduction of around 12% from INR 21,584 crore to INR 18,952 crore. The reduction in FY '21 is on account of decrease in consumption of materials INR 607 crore, mainly at Dahej plant by INR 501 crore on account of decrease in average LNG prices and decrease in purchase of spot LNG. Repair and maintenance was another factor contributing around INR 409 crore; water injection, INR 192 crore, mainly at Western Offshore; manpower expense by INR 213 crore due to major supervision separation in the last year and decrease in -- general decrease in the staff-related expenses. The finance cost has also decreased by INR 417 crore, and that is a reduction of 42.3% from INR 986 crore in Q4 of previous fiscal to INR 569 crore in Q4 of this fiscal. Similarly, the finance cost has decreased, on an annual basis also has come down by 33%, so roughly 1/3 or so from INR 3,310 crore to INR 2,215 crore in current fiscal. The decrease is mainly on account of decrease in short-term loans, commercial paper borrowings and unbinding of discount on decommissioning liabilities. So because of very proactive and innovative approach, which we adopted at the treasury level, the costs have been brought down by around 1/3. There is decrease of INR 1,064. That's around 35% of escalation costs, written off. And then which is actually -- the figure has come down from INR 3,038 in Q4 '20 to INR 1,974 in the same -- similar period of this fiscal. This decrease is mainly due to the decrease in unsuccessful well costs by INR 1,283 crore, which is partly offset by INR 176 crore due to increase in seismic data acquisition activity at Western Offshore Basin. However, during FY '21, there is a decrease in exploration cost written off survey and unsuccessful well cost by INR 2,298 crore. That's a reduction of 26.5% from INR 8,684 crore in previous year to INR 6,386 crore in this year, so -- which is largely actually attributable to unsuccessful well cost. DD&I cost for Q4 FY '21 stood at INR 4,398 crore as against almost similar figure of INR 4,999 crore in Q4, that's actually a INR 601 crore difference, which is -- reflects around 12%. The decrease is mainly due to a decrease in impairment loss by INR 1,035 crore. The decrease has been partially offset by increase in depreciation by INR 116 crore, mainly at Mumbai, due to increase in ROU assets, implementation of the IndAS 116 an increase in depletion by INR 322 crore. Similarly, there is also a decrease of INR 2,289 crore. That's around 12% in DD&I cost during this fiscal from INR 18,616 crore in previous fiscal to INR 16,327 crore. The decrease in this fiscal is mainly attributable to a decrease in depletion by INR 1,645 crore and impairment loss by INR 1,048 crore. The decrease in depletion is mainly at Vashishta by INR 727 crore due to decrease in production and impairment and Mumbai offshore field by INR 530 crore due to decrease in reserves. This has been partly offset by increase in depreciation by INR 404 crore from INR 3,497 crore in FY '20 to INR 3,901 crore in FY '21. The increase is mainly attributable to increase in depreciation at Mumbai offshore by [ INR 320 crores ] due to increase in depreciation of ROU assets.There is an exchange loss of INR 76 crores in Q4 of this fiscal as against exchange loss of INR 1,113 crore in Q4 of the previous fiscal. And similarly, there is an exchange gain of INR 779 crore as against exchange loss of INR 1,677 crore in FY '20. So at annual level, actually, there is a exchange gain. Corporate tax expense is at INR 2,194 crore in Q4 of FY '21 as compared to negative corporate tax of INR 794 crore as far as the expense is concerned. Similarly, at annual level, the provision of tax has been INR 5,157 crore against provision of -- against a figure of INR 6,924 crore for the previous fiscal. The effective tax rate for the year is 31.44% as compared to 33.96%. Now the company at a consolidated level has earned a net profit that's profit after tax of INR 10,946 crore during the fourth quarter as against loss of INR 7,027 crore. Actually, that's a reversal or increase of close to INR 17,672 crore, the increases can be mainly attributable to ONGC, our subsidiary, HPCL, OVL, MRPL. Similarly, the company at consolidated level has earned a net profit, profit after tax of INR 21,343 crore during the FY '21 as against INR 11,556 crore in building FY '20, an increase of INR 9,887 crore. This increase can be mainly attributable to our subsidiaries HPCL, OVL and MRPL. Well friends, that was the written script, but let me also go through what we went through the year. While the figure at the year end look pretty stable and the things look like coming back to the normal, there are 2 things I'll ask -- I'll bring your attention to: one is the way the year has gone through. The year has been truly a kind of a story of ups and downs. And what we have seen during the year has been truly unprecedented. If you really look at the way the prices have behaved, where they look like perfect instead on both the sides. Quarter 4 of the previous fiscal and the quarter 1 of this fiscal actually started at the -- if one were to compare Q1 of the previous fiscal versus Q1 of this, there's a huge, huge difference. And if I were to talk in pricing terms, the difference on a given day was as high as in oil prices, $65. So that's actually more than what we realized on an average basis for a barrel during the year. When we came to sometime like January time frame, actually, the things tended to converge. January 2021 prices were very similar to around January '20 prices. And then also the divergence continued. Oil prices have continued to rise compared to the sharp decline we had seen in the previous fiscal. If you look at exchange rate also, the story is pretty similar where rupee start -- was pretty strong in '19/'20. And then it actually depreciated considerably towards the end. And during this year fiscal, actually, it started at that level, and that weakness has been rested to a large extent. And by February or so, a month later when the oil price is actually convergence, the exchange rate has also converged. So while actually story looks pretty easy after one has gone through 1 year, it has been quite a difficult first quarter. As far as this fiscal was concerned, it's like -- it has been like something somebody trying to cross a river by just having the data on average thus cross the river and one realizes how risky it can be. The positive side of whole story has been that when we went through the worst in the first quarter, that also helped the company tighten the belt, upgrade its operating practices, come out with streams which actually results in a business model that sustains on a lasting basis. The benefiting from economies everywhere and sustaining operations even in difficult times for these. I actually, during this period, the -- I also congratulate those who continue to repose confidence in us during these difficult times. And it has been because of the support of all stakeholders that today the things look much brighter than how they do probably sometime during this time in the previous fiscal. That was pretty dismal outlook at that time. But we held we were of the firm belief that, that time also. If you recall, we believed that the things will get restored to normalcy. We never realized that it will happen so soon as January and February, as I discussed just now. I thought that they could take a little longer. But actually, it happened within 1 financial year. And it was actually at that time, when we were finalizing previous fiscal accounts. It was very difficult to convince somebody as to how rational we would be eager to predict that long-term oil price would be in the range of 55%. That was a struggle on April '20 when WTI touched minus 37 and even Brent went as low as 9. It was quite a struggle explaining all, but we probably can derive satisfaction that we called it right 1 year back. So thank you very much, and thanks, everybody, who has joined the call. Thank you.

[Operator]

[Operator Instructions] First question today we have from Mr. S. Ramesh from Nirmal Bang.

[S. Ramesh, Chairman]

Yes. So first of all, thanks a lot for the detailed numbers, and we are sorry to hear that you have to go through the challenges, we wish the ONGC team well. So my thoughts are as follows. One is there is a note, which talks about a dispute on the GST and VAT levied by the government. So what is the basic issue at stake? Is it a question of interpretation or a one-sided maybe by the government? And when do you see getting out the contingent liability, which our still large. And the second question is on the receipts from OMPL, which you have shown in the cash flow. If you can let us know where it's accounted, that would be great?

[Subhash Kumar, CEO, MD & Chairman]

Can you repeat the first part of the question?

[S. Ramesh, Chairman]

Yes. The first is on the notes regarding the claim for GST and VAT which you have provided under protest. It adds to close to about INR 7,000 crores out of the claim of around INR 11,500 crores in disputed. So I just want to understand what exactly is the provocation for the government to levy that? And how do you see it getting resolved in terms of any potential risk of having to provide for any additional cash outlook? Hello?

[Subhash Kumar, CEO, MD & Chairman]

Actually, not clear your question on first part, actually, you are saying there is general issue on GST. So that is quite a general issue, which is not necessarily for particular government prospect. That is because GST doing the central tax is an issue every year. So the Government of India or the tax authorities assert is that there should be GST on royalty, which we are contesting because we believe that royalty itself is a tax. And as far as you are telling -- as far as the sale of ONPL shares is concerned, I believe that is what you were referring to. It is already there in cash flow at sale of league investment in subsidiaries.

[S. Ramesh, Chairman]

So the question is, is it being routed through the network in terms of the income? Or are you including it in other income?

[Subhash Kumar, CEO, MD & Chairman]

No, no. Actually, see, these are -- we, in fact, incurred a little bit of loss on it. We share -- our spend was disposed of INR 9.76, so there was a loss of 24 paisa or so. So that's the kind of loss we incurred.

[S. Ramesh, Chairman]

So the next question is, in terms of the gas pricing, what is your current understanding in terms of when we can get some clarity on a, the prices for the high competitor gas because those prices are now lagging the global prices and potential economic pricing required for your CG? And secondly, on the APM gas price revision. Any thoughts on that?

[Subhash Kumar, CEO, MD & Chairman]

So as far as gas prices are concerned, we think that work is behind us, from kind of INR 180 kind of prices and INR 343 for the difficult gas. Probably, on both the fronts, we should be seeing an increase of minimum 50% in the next quarter. In fact, it is likely to be more than that. But since the period reference is still there, a couple of days, still need to be counted for the price calculation for future. We believe that 50% to 60% is likely increase, but that's only transitory. Whatever happened during the recent quarters actually will possibly result in much higher prices in 6 months further down the line, that's in -- starting from March '22 or so. So INR 180 kind of price is like -- this is only an estimate. There is -- can't be held for this because it could be rounded by 1 or 2 percentage points, but around 60% and INR 343 also, I expect similar movement.

[S. Ramesh, Chairman]

Yes. That is helpful. Just 1 last thought. In terms of for sustainable development and reducing emissions, last year, you had mentioned in the annual report, you have a separate vertical. So what is your eminent Board now thinking in terms of your future road map? Or if you can share some thoughts in a limited time, that would be grateful?

[Subhash Kumar, CEO, MD & Chairman]

So on this front, actually [Audio Gap] on all the ESG front, actually, we are working very hard. We have cut down our energy emission intensity by close to 12% from -- on an annual basis from 2015, '16 and emissions, which used to be of the order of 1, 2, 3, 4 tonnes per CO2 for per tonne of O plus OEG has been reduced considerably. And that is one. And on the ESG front, also, we are actually strengthening our framework. One is that we are having the regular greenhouse GHG inventory. We have, as we shared, part of it, we implemented number of CDM projects. Renewable energy projects are being taken up, where they are economically feasible. In paper, we have -- in office, we have eliminated paper totally. We are looking at water conservation in a big way. From a social perspective, we remain one of the pioneers in the area of CSR. CSR activities are aligned with the needs of community. And annual spend, as you would have seen is of order of around INR 400 crores to INR 500 crores. On governance front, we are first signatory to integrity pack and we actually have very good governance mechanism in terms of visual mechanism dedicated vigilance and also our subscription and adherence to various intonation norms. So -- and actually, at the group level, also the same spirit and philosophy is being carried forward. So we continue to be a very responsible corporate and promoting with an intention to increase our rating in terms of ESG build up.

[S. Ramesh, Chairman]

[Audio Gap] happening and kind us to give us this particular explanation.

[Operator]

Next, we have Nafeesa Gupta from Bank of America.

[Nafeesa Gupta, Research Analyst]

Sir, my question is first on the production estimate. Could you give us the color on what production for oil and gas looks like according to your estimates in the next 1, 2 years? And also, where are we on the KG basin right now in terms of the gas production?

[Subhash Kumar, CEO, MD & Chairman]

Okay. Actually, let me tell you, COVID has thought us 1 thing, because also to talk about supremacy of immediacy. So what one can talk about is what is there on an immediate basis. And then top one of 6 months, actually, that starts looking like a 20, though human being by very nature plans for long, and that continues to be the case with us. So first of all, we look very closely in terms of our existing operations. So instead of giving a clear-cut projection for 5 years or so, we have started looking in terms of where we will be on existing projects, what do we aspire to do in next set of projects. Not specifically looking at the individual projects. Actually, we have started taking a very holistic view on an overall basis from existing reserves and YTF reserves where we intend to be. Now whether that comes from A project or B project, that is something which we'll continue constantly working on and calibrate. So in terms of oil, we anticipate that we have ended actually 2021 with around 22.5 million metric tonnes in oil and 22.82 BCM of gas. So this takes it to with JV 45.35 MMT. We expect next year, '21, '22 numbers to be of the order of around 48.7. And we will be pretty about the same level with a little bit here and there, touching 49 by '22 and '23. And '22/'23 -- '23/'24, we anticipate to be around 52. That is the existing project. From new projects, actually, we anticipate increase. And as far as the contribution from individual projects is concerned, KG-98/2, we have today production level of the -- budgeted production level of 1.2 MM BCM of gas and which was to go to 3 BCM or so and roughly 4 BCM by '23/'24, so that is something we still continue to aim at. But let me be very frank. As far as the international supply chain is concerned, that is disrupted far more than the disruptions, which have taken the Indian level. While it has been relatively an easier task to catch up on the project where on onshore projects or on the projects where large part of supplies has been sourced from India. In case of offshore projects, especially KG-98/2 which is quite complex with the supply likely to come from more than 1 country. It has been a difficult call. We are reassessing, and we probably are in the process where we could be able to give time lines only when we have looked at the situation in entirety. And probably, you would have heard the same in last quarter also. So just by way of explanation, I think we are just past the second day. And 1 cannot with certainty predict how COVID will behave going forward. So while we believe that the worst is past us, and it gives us an opportunity to plan and look at, but realty remains that one has to keep finger cross and see that things may not be achieved in the time line. So I'm a little wary of predicting beyond the numbers I have shared right now. I can -- I think I can only share that you would have seen in the press that there have been certain national level targets announced by Ministry, which is 40 million metric tonnes by '23/'24 or '24/'25 of oil and 50 Bcm of gas. And there is an anticipation that contribution of ONGC to this should be of anywhere between 65% to 70%. We internally are recalibrating all our approach not looking at specific fields, whatever can be done at the individual feed level, whatever can be done at a group of feed level such that we meet these objectives. We probably believe that as far as lower end of the expectations is concerned, 65% or so, that by '23/'24 or '24/'25, we should be in a position to come very close to that. So today, I will -- this is from giving projects wise view because that's very difficult in a time like this to be.

[Nafeesa Gupta, Research Analyst]

Sure, sir. I understand. And sir, the second question is a little bit of a broader question, but since the oil prices are rising, just wanted to take your color on what do you think of subsidies coming back? Do you think that is a possibility that strategy to events might come back given oil prices are on rising again.

[Subhash Kumar, CEO, MD & Chairman]

So big no, [indiscernible] okay?

[Nafeesa Gupta, Research Analyst]

All right. Okay.

[Subhash Kumar, CEO, MD & Chairman]

If somebody on the other side has money to subsidize please do, please [indiscernible].

[Operator]

[ Laxmilal Vidyadhar from ICICI Securities ].

[Unknown Analyst]

My first question is on the KG. Could you give us some guidance of oil, KG oil [indiscernible]?

[Subhash Kumar, CEO, MD & Chairman]

So you want on KG-98/2, is it?

[Unknown Analyst]

Correct. Correct. The oil production, when is it expected to start? You did for the gas...

[Subhash Kumar, CEO, MD & Chairman]

I mean see, see, see, I actually -- I'm slightly wary of giving any timeline strength for the reasons explained at length and ascribing number to any specific project for the reason that nobody can predict today, while we are fast worse as far as second wave is concerned, I don't think we are entirely out of the trouble as of to-date. So from that perspective, unlikely, our planning basis was that '22/'23, oil would be close to 1.80 MMT, which will go up to 2.2 in '23/'24. That's the number, which we continue to maintain till such time we revise it is some better information.

[Unknown Analyst]

But as -- even if everything is smooth from now, is there a delay in Or things will have to go wrong from year on for there to be a delay?

[Subhash Kumar, CEO, MD & Chairman]

So if the situation stays the way it is as of date, then 1.80 and 2.2 is definitely a target.

[Unknown Analyst]

And just to on the gas also, the gas numbers which you gave, if there is no further worsening at least improve, then even on gas, the numbers which you say achievable. So you're saying that outside only if things you have a third wave or something of that front?

[Subhash Kumar, CEO, MD & Chairman]

Yes.

[Unknown Analyst]

Now coming to -- last year in FY March '20, did you have a reserves downgrade because of the oil prices? You are corresponding upgrade in reserves this year along with because you had an impairment of account? So the number disclosed in one of your October presentation is substantially lower reserve for FY '20 is much lower than it was in the preceding year FY '19?

[Subhash Kumar, CEO, MD & Chairman]

No. Actually, I think previous year blip was both to shifting to PRMS. It has nothing much to do with it. And as far as...

[Unknown Analyst]

Sir, you changed to PRMS in '19. So FY '19 and FY '20 are both on the same PRMS basis. So if you look at your FY '19 number in our FY '19 presentation,and FY '20 number in Meet the Press presentation in October '20, there's a substantial difference.

[Subhash Kumar, CEO, MD & Chairman]

So let me look at the specific numbers. So -- but as far as the price impact is concerned, actually, it is more reflected by way of the provision for, what you say...

[Unknown Analyst]

Sir, what I'm asking is it because oil prices had gone down, did you also take a reserve cut?

[Subhash Kumar, CEO, MD & Chairman]

Not of a substantial amount. There might be one or the other case, which might have got impacted, but not at a global level.

[Unknown Analyst]

Okay. So then lastly on OPaL, if you could give us some color on -- in the press release, the profit or loss payment is not mentioned or I think only the utilization number is mentioned for OPaL. So if you could give us some color on the EBITDA on OPaL in FY '21? And what is the profit loss? What -- how are these -- are things better in Q4? What's the outlook for FY '22? Will you be profitable?

[Subhash Kumar, CEO, MD & Chairman]

Okay. So happy to share that for the first time in history for the company, actually, Q4 2021 was PAT positive to the extent of INR 274 crores. So that has been the situation, though, on an annual basis, we had a loss of INR 797 crore, but Q4 per se was plus INR 274 crores. And even INR 797 crores needs to be looked in -- in comparison to around loss of INR 2,089 crores as far as loss for the entire year of 2020 was concerned, previous fiscal was concerned. So on an annual basis, it reduced by around -- reduced to around 40%. But Q4 was positive. That's the first quarter. And I think if I were to give a slight color on it, OPaL is being very well these days. And I hope the first quarter -- I mean, which is almost ending, this has been a very steady and good quarter for the company. And in addition, we are also looking at whatever structural arrangement needs to be made at the company level to see that it's operational and bottom line efficiency improves.

[Unknown Analyst]

So FY '22 looks like it is going to be profitable?

[Subhash Kumar, CEO, MD & Chairman]

I don't want to -- or the basis of not, I mean, I don't know what will change going beyond a particular point. But yes, as far as I can say this, certainly, our budgeted numbers are flat for the year on the whole.

[Unknown Analyst]

What was the Q4 utilization? And if you could give us some color on your feedstock? So how much -- because there seems to be some element of spot LNG sourcing, which probably work you at some stage in the year and which may not work for you that much now.

[Subhash Kumar, CEO, MD & Chairman]

So [ Vidyadhar ] actually, we are talking of ONGC accounts while all details that may not have immediately, those details can be shared. I will request the self to give you. But as far as sourcing is concerned, so one is they sold C2, C3, C4 and naphtha, so quite a bit of it they sourced from our own plants. We have a steady arrangement and formula through which C2 is sourced. There is a pricing which actually, under the existing set of circumstances is quite liberal from that perspective. C3, 34 are -- pricing is based on international benchmarks. Majority of naphtha they use from our own Hazira and Uran which actually continues to be advantageously because it's a long term arrangement.[Audio Gap]ONPL will be merged into MRPL within the shortest possible time. This actually helps the stated integrated planning across 2 complexes and also brings in certain amount of tax efficiency, that's one. On OPaL part also the same story, we have moved pretty much beyond the stage where there is uncertainty on operational front or the financial front that project both from operational and financial aspects have started doing very well, notching up capacity of 90% on an annual basis in difficult period like last year is an excellent testimony of where they are likely to end up. And they have -- the fourth quarter is already positive. So that is one part. I think we have shared some potential steps which we would be taking in terms of restructuring. And so the part of that, probably we have shared in the past, we intend to see that because then there is a lot of taxing efficiency involved because of the unit wing in SEZ. Further, we would like to infuse equity. There are certain approvals required, which we have pursued. And since it is likely to be a profit-making company very soon, so we will actually -- we will integrate into the group. Now that we will be able to rate and structurally boundaries or not depends on how the things pan off on going forward in terms of previous approvals and time frame. But that is no longer an issue that we would be required to continue increasing anything down. I anticipate and that's what their approved budgets are set. They will be not only a cash positive, there will be actually the bottom line impact versus also the effect that will be positive this year. So I actually forgot your first part. There were 2 actually...

[Unknown Analyst]

Sure. CapEx side...

[Subhash Kumar, CEO, MD & Chairman]

Yes, yes. In terms of CapEx, actually, see, 2021, we started with anticipation the INR 32,500 crore and then when things were pretty bad, we revised it to INR 26,000 crore, but ended up doing something close to INR 28,000 crore. This year's budget, we have started with INR 29,000 crore. We have also prepared a variant. And we believe -- I mean, it's all a question of what I talked about earlier detention again the things pan out from here. If things continue the way we face in the last fiscal that because it's not possible to ramp up the activity in all sectors in a day. So unless the things change materially on positive side, CapEx could remain in the same order as of last year, but probably will give us a handle to increase it in subsequent years. So as of today, I would rather say that it will be -- our projected level is INR 29,500 crore or so. And so we would be around that.

[Unknown Analyst]

Sure, sir. So sir, just to clarify. The -- after the MRPL OMPL has done, is there a next step of a potential MRPL HPCL because both are subsidiaries of the group?

[Subhash Kumar, CEO, MD & Chairman]

So actually, see, you have certain long-term direction and you calibrate your approach as you move along.

[Unknown Analyst]

Understood sir. Fair enough. And sir, lastly, to clarify, is there a possibility of OPaL becoming a subsidiary, a fully-owned subsidiary of ONGC? Is it possible?

[Subhash Kumar, CEO, MD & Chairman]

I mean a possibility can't be ruled out. But it won't be fully owned. You know that we have [indiscernible]. We have GSPC with some presence but the possibilities can't be ruled out. And just to give you a figure, OPaL, incidentally, in last quarter of previous fiscal, while capacity utilization was 100%, which was one of the drivers where we could that's a part of INR 270 crore.

[Operator]

Next Sabri Hazarika from Emkay Global.

[Sabri Hazarika, Senior Research Analyst]

First of all, congratulations on becoming the Chairman and Managing Director for ONGC. So I have got a few questions. The first one, it gets to the KG-98/2. So as we know that there was interest going on regarding 2 MMSCMD of gas. And there has been some reports that by December, another 5 MMSCMD of bidding would come from KG-98/2. There were further reports that there are some litigation by GMR group regarding this 200 SCMD tender due to which there was a stay order. So can you give us guidance on this closed case and also the near-term ramp up from 2 to 7 MMSCMD for 98/2?

[Subhash Kumar, CEO, MD & Chairman]

Sir, 2 things. You first congratulated me transfer as that, but I may only tell that I was there at the right place at the right time because it's temporary assignment, additional assignment, but still, I take it as a complement, and thank you very much. Secondly, you talked about the growth in production and certain facts about the court case. So I think you are rightly about it. There is some issue going on, and the next hearing is in early July. We believe that part of discussion should be over in July. In terms of volumes, actually, as I alluded to earlier, actually, I would rather be little careful about committing any volumes at this stage from a specific projects where direction and numbers than similar. But specifics, I would be very, very open.

[Sabri Hazarika, Senior Research Analyst]

But for Round 1 and Round 2 of 2 MMSCMD and 5 MMSCMD it is a reasonable development, right? I mean there is not much risk in that...

[Subhash Kumar, CEO, MD & Chairman]

Who is the immediate is so that is pretty certain. And I have to look back, actually, they get the facts.

[Sabri Hazarika, Senior Research Analyst]

Okay, sir. And second question relates to your governance sector. So I'm not sure about but I think you had just 1 independent director and there were certain delays in committee meeting and all. So we are saying that it is in the case PSU with other also, sir? Any specific reason behind lower controller numbers of independent directors because as per new guidelines, I think 1/3 of the Board should be independent directors.

[Subhash Kumar, CEO, MD & Chairman]

No. Half the Board should be independent directors because we have executive, post of Chairman is executive and the company with has to have 50, 50 kind of breakup. And in addition, actually, we are 2 government directors. So actually, we have a Board strength of 18: so 6 directors, 1 Chairman, plus 2 government directors and then equivalent number of independent directors need to be there. That's 1 question. You were also well informed that similar position about vacancies is very similar at other PSUs. Now further, actually, the clearance for the names happens through a process, the results of which are awaited. That's the case with us. That's the case with all PSUs.

[Sabri Hazarika, Senior Research Analyst]

Sir, it is in the hands of government to decide that? I mean you'll not be able to do anything about it, right?

[Subhash Kumar, CEO, MD & Chairman]

Yes, yes, obviously. I mean, names are cleared through a process. I mean it's strictly -- I think it is has commenced. I'm not pretty sure, but I think it's a process through which these directors are cleared. So that is how it helps us.

[Operator]

Next we have Manikantha from Axis Capital.

[Manikantha Garre, Assistant Vice President of Energy]

Sir, just wanted just wanted to check on a recent article where it was mentioned that ONGC is offering partnership in basins like Mumbai offshore and Kaveri for exploration to ExxonMobil. And as well as I would like to also partner with ExxonMobil to improve the production at complex sales. So can you please provide some color here? Because I understand that we have some MoU with ExxonMobil. Any progress? What the kind of progress that we are doing here? And how is that going to help? That's the first question, sir.

[Subhash Kumar, CEO, MD & Chairman]

Okay. So I think we continue to pursue the possibility of fasting alliances with whomsoever pushover has expertise in specific areas. And with an intent to pursue the same objective, we have been discussing with various companies. It would be difficult for me to specifically confirm or contradict developments on the alliances with the specific companies. But as a matter of principle, impact that we have taken up the -- not only an individual entity, but we are actually looking at where the alliance with which entity could be relevant. So we have broadened -- made our policy a little more productive. We are looking at where and which companies have succeeded done exceedingly well in which kind of basis. And with the that knowledge, we are getting back to different parties, not necessarily one we are getting back. We intend to improve our relationship and alliances with them. In fact, what we also intend to do is that I can be pretty clear about. See, the size and scale of our existing fields might not be of interest to the majors or large players in the international arena. So we believe that it is category 2 and category 3 basis, which will be of interest. And that's how we are looking at who fix best in those locations, and that is how we have partners and having a discussion.

[Manikantha Garre, Assistant Vice President of Energy]

Okay, sir. So, so far, have we made any partnerships from the tie 2 entities? Have we actually...

[Subhash Kumar, CEO, MD & Chairman]

Not -- no, no. That has not reached a stage and we say that it has succeeded. Discussions yet, yes. But specific reliances, no.

[Manikantha Garre, Assistant Vice President of Energy]

Sure, sir. Sir, my second question is with respect to the CBM project that you are doing, if you can give some color there? Like what is the kind of target that you're looking at from the PBM projects and what kind of CapEx that you have to incur here? I mean can we hope for some meaningful production from these projects? And then last question is, are you also going to do compressed biogas projects? Those are the other 2 questions from my side.

[Subhash Kumar, CEO, MD & Chairman]

Okay. So I think as far as the details that I'll request Joshi to share with you. Compressors is not on the table as I said. We are doing already through our subsidiary and the group entities. So they are better placed to pursue those. I mean whether it is type on to the 1G, 2G, or compressed biogas. So we are already exposed to our refinery subsidiaries. So we are not directly taking up stake on that. Can we be little quick? Actually, we have a meeting starting at 12 and we have to be in another 12 minutes or so.

[Operator]

So can we take 1 last question?

[Subhash Kumar, CEO, MD & Chairman]

Yes, yes.

[Operator]

So next, we have [ Sumit Vohra from Maxim capital ].

[Unknown Analyst]

Yes. Firstly, sir, very sorry to hear about the loss at ONGC. Now for secondly, many congratulations on taking over as Chairman. I'm sure ONGC and all stakeholders will be very happy, and you will create huge value for all of us. Sir, firstly, I would like to understand, if I understood correctly, you said that the production of oil and gas will be up about 8% to 10% in this fiscal. Is that -- is my understanding correct on that, sir? Secondly, sir, when do you think that gas price revision of 50% to 60% would happen. So when is the next cycle, which is basically due in terms of time line? Sir, just one point I wanted your attention. There has been some reports saying that the oil blocks would be auctioned from ONGC and Oil India. So sir, if you can please throw some light on that, is that -- what's the value that we can realize from this option of blocks?

[Subhash Kumar, CEO, MD & Chairman]

Okay. So a couple of -- you asked many questions in that. Actually, one of them was about the oil block. So I think that's something that we have done in the past, we continue to pursue, and we are doing. In fact, you would have seen that we had tried to come out with the production announcement contract model. We also bid out some smaller field, 64 fields in the past for these bids were invited. We are open for such alliances on 2 considerations: one is where the -- probably the size -- depending on the size, it may make economic sense for the smaller players who handle it; or there could be certain cases where because of the technology and expertise region, if we have alliances, those could be better -- it could be better to face the So those 2 considerations continue to guide. In fact, we are open to look at any strategic partnership in this area, which helps generate value for all the stakeholders. So we are not close to the idea. So this will continue to be the guiding force on going-forward basis also. Certain fields out of those 64 the agreements have not been signed, and there have not been interest in the previous round. We may come out with the new one. Production enhancement model, we may tweak it and come back again. There could be similar opportunities where we think that there are some specific proposals on the induction of technology, et cetera. And we believe that there is a better way to go forward. We'll continue accepting that. And probably that will be the process of high-grading our assets and moving to area where we alone can take those assets and rather than leave those to be developed later. So that was one of the questions. Your question on production. Actually, I didn't talk of the kind of numbers you have said. Actually, 2021, our OEG was 45.35. And -- but in oil terms, actually 22.5%, and our anticipation for '21/'22 is of very similar order, 22.566. Just shared 1% -- 0.1% actually have. So oil, we are pretty at the same level. It is only a little bit in gas, but gas actually is a story. Both oil and gas actually are production during the year was hit. So we were within 3, 4 percentage points as far as oil was concerned, and gas was of the plus 5%, around 7 or 8 percentage points. And part of it had also to do with the offtake. So to the extent there are constraints due to optics, and then there are newer projects contributing additional gas. So we would be reverting to the previous level. And as such, the total OEG level, there will be movement from 45 to 48 or so. Gas, we do think that in the current fiscal, if projects go ahead as planned, there could a -- we could revert back to the level of -- because in '19/'20, if you remember, we did 24.89. So pretty much 25 or so BCM is what we target. But specific numbers are a good guidance. Plus/minus as percentage will depend on the way the things pandemic out from here. I think these were the 2 questions. But was there anything else also?

[Unknown Analyst]

No, sir. Yes. And the last question was, sir, on the gas pricing. So when is the next pricing for revision?

[Subhash Kumar, CEO, MD & Chairman]

1st of October is when pricing revision comes unless the policy self changes before that.

[Unknown Analyst]

There is absolutely no subsidy, which is going to come.

[Subhash Kumar, CEO, MD & Chairman]

Yes, yes. We are -- on that front, we are looking for volunteers. Each one of you, please have a nice day stages. Thank you, and thanks for staying connected, we appreciate your participation. Thank you.

[Operator]

Thank you so much, sir. Thank you, participant. That does conclude our fourth quarter FY '21 earnings conference call. At its you all please disconnect your lines. Thank you, and have a pleasant day ahead.

[Subhash Kumar, CEO, MD & Chairman]

And thanks a lot, ma'am, for organizing it over. Thank you very much.

[Operator]

Thank you so much.