Amid falling crude prices, State-owned Oil and Natural Gas Corp. (ONGC) has declared a 100% interim dividend.
The company also said it had sufficient funds to continue operations.
“The ONGC board approved the payment of an interim dividend of ₹5 per share (i.e. 100% of face value of ₹5 per share) to the shareholders,” said the ONGC in a statement.
The board had emphasised on the need to take a closer look at the emerging scenario and advised the company to adopt a balanced approach towards capital spending, according to the statement.
During the last few days, due to a sudden and sharp decline in crude oil prices, the share prices of oil sector entities have witnessed a lot of volatility, particularly, the share prices of upstream companies have been hit hard.
In addition, due to failure of talks of OPEC+ to arrive at an agreement on production cut, oil prices had declined drastically.
Key oil producers have since adopted a strategy of “fight to finish” and have, besides announcing an increase in production, have also offered huge discounts to Asian markets, making capturing of markets as key priority at this juncture.
All these major developments bring in some uncertainty for oil and gas sector and specifically, for oil and gas producing companies.
Outbreak of COVID-19Corona virus and its declaration as a pandemic by the U.N. has exacerbated the demand side and it is apprehended that, for the first time over the last two decades, oil demand may, in fact, go down in absolute terms.
It is very difficult to separately identify the extent to which the oil price decline is attributable to either of these factors, ONGC said.
