Page 146 - CW E-Magazine (4-6-2024)

Hydrocarbons

INDUSTRY TRENDS
‘OMC’s gross refi ning margins likely to moderate

for second consecutive year in FY25’

Domestic oil marketing companies mics triggered by outbreak of the expected to be decent when compared
(OMCs) are likely to face margin pres- Russia-Ukraine war. Geopolitical factors with pre-COVID years and it provides
sures in FY25 on account of a modera- played a signifi cant role, leading to adequate headroom to absorb any
tion in Gross Refi ning Margins (GRMs) an increased supply of cost-effective potential shocks in marketing margin
due to reduction in product cracks, parti- Russian crude oil to India. Simultaneously, during the year,” CareEdge Ratings
cularly diesel, and shrinking discounts the cessation of natural gas supply Director, Mr. Hardik Shah explained.
on Russian crude oil. from Russia to Europe resulted in a
substantial rise in diesel cracks, further Russian supply
According to CareEdge Ratings, enhancing the GRMs for Indian refi ners, CareEdge pointed out that the share
after enjoying exceptionally high GRMs CareEdge said. The subsequent normali- of Russian crude in India’s total crude oil
in FY23 at an average of $16-18 per sation of diesel cracks and contraction imports reached a nine-month high level
barrel, the GRM of Indian refi ners has in discount available on Russian crude of 40% in April 2024. Despite the shrink-
moderated to an average of $10-12 in led to a moderation in GRMs during ing Ural-Brent differential over the last
FY24. The agency expects the GRM FY24 to an average of $10-12 a barrel. few months and fresh sanctions imposed
of Indian refi ners to moderate further However, the GRMs of Indian refi ners by the US, the share of Russian crude oil
in FY25 and remain in the range of consistently outperformed the bench- import increased as offtake from China
$6-8 a barrel. Marketing margin is also mark Singapore GRMs, refl ecting the remained subdued and Russian refi ning
expected to moderate due to reduction in evolving dynamics of their business infrastructure is partially impaired by
retail price of petrol and diesel by Rs. 2 operations, it added. Ukraine drone attacks, thereby making
a litre, effective March 15, 2024. higher crude oil volumes available for
“While FY23 and FY24 were India’s refi ners, it added.
Margin pressures exceptional years for Indian refi ners,
In FY23, Indian refi ners experi- FY25 is expected to witness some nor- “Going forward, the share of
enced an extraordinary period charac- malcy with moderation in refi ning and Russian crude oil in India’s total imports
terised by all-time high GRMs, which marketing margins. Refi ning margin of is expected to remain sizeable at more
were primarily influenced by disrup $6-8 a barrel in FY25 with full utili- than 30 percent as long as arbitrage is
tions in the demand-supply dyna- sation of refi ning capacities are still available for Indian refi ners,” it said.
Oil India, NRL ink deal for transportation of additional

petroleum products

Oil India Ltd. (OIL) and Numali- a period of 25 years. Currently, OIL 2030 for Northeast India’, NRL is
garh Refi nery Ltd. (NRL), OIL’s mate- evacuates 1.72-mtpa of petroleum executing Numaligarh Refi nery Expan-
rial subsidiary company, have signed a products through NSPL, delivering sion Project to enhance capacity from
new long-term agreement for the trans- to the marketing terminal of NRL at 3-mtpa to 9-mtpa. To evacuate NRL’s
portation of additional petroleum pro- Siliguri. Since its commissioning in additional petroleum products through
ducts through OIL’s Numaligarh-Siliguri 2008-09, the NSPL has served as the existing NSPL, OIL and NRL entered
Product Pipeline (NSPL) following the lifeline for evacuating products from into an MoU in December 2020 under
commissioning of Numaligarh Refi - NRL’s refi nery to Siliguri marketing which OIL agreed to invest in augment-
nery Expansion Project. terminal for onward distribution to ing the capacity of the NSPL from 1.72-
various demand centres in eastern and mtpa to 5.50-mtpa by way of establish-
The agreement will be effective northern India. ing additional booster pump stations
from the date of commencement of and other facilities at different pump
augmented pipeline operations for In line with ‘Hydrocarbon Vision stations along its right of way.

146 Chemical Weekly June 4, 2024

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