Sector Performance - Oil & Gas

Oil and gas: Hit by higher subsidy burden

• The provisional numbers for FY2006 reported by Oil and Natural Gas Corporation show that the company is likely to post a 25% year-on-year drop in its profits for Q4FY2006. This is despite the fact that the crude prices have gone up substantially over Q4FY2006. The drop is mainly on account of a higher subsidy burden (the subsidy burden for the full year will be provided in the last quarter).

• RIL is expected to report a flat bottom line, as its refining margins for Q4FY2006 are likely to decline by $1 a barrel. However, sequentially the growth is likely to be around 23.6%, as the company had undertaken a
  50-day planned shut-down in Q3FY2006.