There are divisions that emerged in the Indian purification sector when private rectors tapping cheap Russian crude oil and increasing profits from exports like the country that focused domestically was squeezed by high oil costs and the price of domestic fuel covered by the government.
While many Western buyers avoid Russian crude oil in responding to invasion of Ukraine, Indian private refiners such as Reliance and Nayara have become one of the biggest buyers this year for Russian supply discounts.
They reaped huge profits by reducing domestic sales and aggressively increasing fuel exports, including buyers in Europe, who now boycotted the import of Russian energy.
Conversely, the statement of the state is a buyer who is much smaller than Russian crude oil because they mostly buy oil based on annual term supply offers. They faced the potential loss in the June quarter, the source of the industry said, when they wrestled with the increasing cost of global crude oil and controlled the price of retail fuel that had not changed since the beginning of April to control the spinning inflation.
India has bought around 62.5 million barrels of Russian oil since the Moscow invasion of Ukraine on February 24 – more than three times more than in the same period in 2021 – more than half of the private providers of Reliance Industries and Nayara Energy, Eikon Refinitiv Data show.
In turn, private refiners have helped to encourage total Indian fuel exports of 15% higher in the first five months of 2022 compared to the same period in 2021, according to the KPler data company.
Soldiers cut local sales
To accommodate sharper fuel exports, private drainage has reduced the market share of domestic fuel sales to 7% in April from 10% in fiscal years to March 2022, said the refinery source of the state of India.
State rectors must increase domestic sales, but cause losses of more than 20 rupees per liter due to diesel sales and 17 rupees per liter on gasoline, the second official said in one of the state rectors.
Considering such a different operating environment, Icici Securities brokers cut their ranking in the IOC, state retailers and retailers of the country’s fuel, to ‘hold’ from ‘buy’, and provide dependence as an alternative stock idea.
This is the golden age of purification margin for Penytiling. But in the negative marketing margin of the state of India compensate the benefits of the purification business,” said Ehsan Ul Haq, an analyst with refinitiv.
State rectors also lost more than 200 rupees on each cooking gas cylinder, the state refining officials added.
“The more we sell in the Indian market, the more we lose,” said the second source.
“Placed well”
Reliance, the world’s largest purification complex operator in Jamnagar in West India, has recently delayed the refinery maintenance plan, bought a “arbitrage” barrel at the international crude oil market, and increasing fuel exports, he said last month.
Ril remains well placed to benefit from the ongoing surge in the purification margin given its high complexity, high diesel results, and high export ratios,” Citi said in a new report.
Private refiners have given their fuel prices at a higher level compared to their partners and have reduced the supply to their pumps, several dealers from Reliance and Nayara Energy said, which led to customers who switched to the State Retail Fuel Station part.
We make a purification margin of more than $ 30 per barrel by processing Russian oil and getting huge profits through processed fuel exports,” said an official at one of the private refiners.
Reliance did not respond to Reuters’ email asking for comments.
Nayara Energy in a statement that was removed said they maintain fuel supply to their dealers, and recognize the “nominal” increase in their retail prices for the company’s long -term interest.
Biting the bullet
The Source of the Ministry of Oil said the state retailer – which controls more than half of the 5 million barrels of India per day of purification capacity – generates profits in the March quarter due to inventory profits and income from other businesses, but the underline will be devastated in the June quarter.
They (state fuel retailers) must bite bullets and meet domestic demand, while private refiners print money because they get oil at discounted prices and make large profits by exporting diesel to countries like Europe,” Haq said.
Indian fuel sellers are also recently giving tax cuts to consumers, including the fuel produced before the incoming cutting, further reaching income, said the third purification official.
Our main goal is to meet the country’s request and at the same time try to make a profit because we are a registered company, so this is a challenging task for us,” said a fourth official at the State Fuel Retailer.