Will meet year's target of 27.54 mmt: ONGC

Below is an edited transcript of the interview on CNBC-TV18.

Q: The minister of state for oil and gas announced that the government would not be able to hike diesel prices due to high the inflation and added that that there would have to be alternate solutions. Given the current state of under-recoveries you are currently grappling with, the OMC situation is clearly not sustainable. Are you expecting the upstream burden to go up from the level of 31% recorded in Q1?

A: The first-quarter subsidies are always tentative and the picture becomes clearer only in the Q2 or Q3 and only then will the hike in the prices of petroleum products or under-recoveries be decided. The rate of foreign exchange the rupee vis-à-vis the dollar- is becoming important as it impacts under-recoveries and subsidy burden under-recoveries.

At this stage, it is not prudent to raise concerns regarding the payment of Rs 12,346 which ONGC had to pay. We are sending out a word of caution that we must get remunerative prices- in this quarter we got a net realised price of USD 46.62 a barrel which is not good in the long term.

We have been telling the government that USD 55 - USD 60 is the minimum which we need to be paid. However, we will have to see how the situation pans out across the year.

Q: Do you expect a hike in diesel prices or a cut in the overall under-recoveries? What are you internally factoring-in terms of estimates and what you will have to bear for this year?

A: We don't really provide for such eventualities. But our projections certainly factor-in post-discount prices. I think we have considered a price-level of over-USD 55 in our calculations for profitability.

So this is what we expect to get. ONGC's plan outlay is totally dependent on our internal generation of resources. If we can't generate enough resources, we don't get remunerative prices.

Our outlay for the year is Rs 33,065 crore - if we don't get a price that is adequate, I don't think we will be able to generate sufficient resources, and in that case we will have to dip into our surplus and reserves.

Q: What, according to you, is the practical manner to approach the problem?

A: The formulas have been offered. ONGC has always stated that the government is well within its right to get this because subsidies are being taken from nominated fields where we are not required to pay profit petroleum.

We always demanded for a transparent mechanism. In the past, we have advocated that there could be price slab up to USD 60 - USD 70 and beyond that we are willing to share.