ONGC Videsh may have slipped into the red in FY16 due to the combined effect of flat growth in its oil and gas output, low crude oil prices and impairment of assets.

In the just concluded fiscal year, OVL’s output stood at 8.914 million tonnes of oil equivalent (mtoe), hardly 1% more than the 8.874 mtoe it had produced in the previous year, sources said. In FY15, the government-owned company had reported a 6% rise in output against FY14.

Average crude price in April-December 2015 was $51 a barrel, which fell to $44 a barrel by March 31, 2016. This is against average annual crude oil price of $85 a barrel in FY15, $108 a barrel in FY14 and $110 a barrel in FY13.

In addition, OVL is likely to have suffered impairment; the net worth of its assets has eroded with the fall in crude oil prices. A senior OVL official said the firm is working on impairment losses as it is important for accounting standards. But the official did not divulge the extent of impairment, saying the exercise is yet to be completed.

“Due to a drastic fall in crude prices, OVL is likely to report impairment losses in FY16. This, along with flat output, could push the company into losses,” said a Mumbai-based analyst at Emkay Global Financial Services. Without accounting for impairment losses, analysts expect OVL to report a net profit of Rs 400 crore on revenues of Rs 12,000 crore in FY16.

OVL’s cumulative investments, which are in the range of more than $26 billion, could not help the explorer to proportionately ramp up production. It has achieved the highest ever output in FY11 of 9.45 mtoe, which has since not been surpassed.

A director on the board of OVL said that the company would achieve double-digit production growth in FY17 after it gets its share from the recent $1.25-billion acquisition of a 15% stake in the Vankor oilfields in East Siberia. In addition, production from Imperial Energy is showing “signs of improvement”. OVL’s assets in countries such as North and South Sudan, and Syria are in distress because of geopolitical disturbances. Also, another prolific asset in Venezuela is at the risk of facing similar hindrances.

In 2009, OVL bought Imperial Energy for a whopping $2.1 billion. The acquisition turned out to be the worst buy for OVL in recent times, where output has drastically dropped to less than 9,000 barrels per day now against forecast of 80,000 barrels per day.