Oil & Natural Gas Corp., India’s biggest energy explorer, posted its highest quarterly profit in more than two years after rising demand boosted energy prices. Net income rose 6 percent to 53.9 billion rupees ($1.2 billion) in the three months ended Sept. 30 from 50.9 billion rupees a year earlier, according to a statement sent to the Bombay Stock Exchange today. The mean profit estimate of 17 analysts in a Bloomberg survey was 56.2 billion rupees. India’s government allowed ONGC to more than double gas prices in June, loosening controls as it prepares to sell a stake in the state-owned producer. Crude oil prices in New York gained 12 percent to an average $76.20 a barrel in the quarter, boosted by demand from India and China, Asia’s two fastest growing economies. “They sold oil at higher prices and got the full benefit from the gas price increase,” Vinay Nair, a Mumbai-based analyst with brokerage Khandwala Securities Ltd. said before the earnings were announced. “As long as they sell oil at about $60, they will comfortably be able to meet all their expenditure plans.” New Delhi-based ONGC sold crude at $62.75 a barrel in the quarter after giving discounts to state refiners as partial compensation for selling fuels below cost. That’s an 11 percent increase from sales at $56.41 a year earlier. ONGC shares have gained 11 percent this year compared with a 14 percent increase in the benchmark Sensitive Index of the Bombay Stock Exchange. The shares rose 0.4 percent to 1,303.85 rupees in Mumbai trading before the earnings were announced. Oil for December delivery rose 19 cents to $82.13 a barrel in electronic trading on the New York Mercantile Exchange at 11:58 London time. Subsidy Bill The explorer’s subsidy burden may ease after the government freed gasoline prices from state control on June 26 to limit revenue losses of state-run refiners. Prices of diesel, kerosene and cooking gas were also raised that day. Discounts given to state refiners rose 15 percent to 30.2 billion rupees in the quarter from a year earlier, Finance Director D.K. Sarraf said Oct. 26. The subsidy bill was 55.2 billion rupees in the three months ended June 30. The government allowed ONGC to more than double gas prices to 6,818 rupees per thousand cubic meters from 3,200 rupees from June 1. It may raise about $3 billion from the sale of a 5 percent stake in ONGC, planned by March. The company plans to get the equivalent of 60 million tons of oil from overseas fields by 2025, or more than double its output in India. Chairman R.S. Sharma is looking at oil opportunities in Brazil, Venezuela and Syria after India lost out to China in at least $12.5 billion of contracts in the year ended June. To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net. To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

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