The Hindu Business Line : IOC set to post record refining margin in Q1

In stark contrast to losses on the marketing front (till early this month), Indian Oil Corporation (IOC) is now set to post a record refining margin during the first quarter of this fiscal.

The company has posted its highest-ever monthly gross refining margin (GRM) of $11 per barrel in May and the average GRM for the first quarter is pegged at around $9 per barrel.

After discounts to the marketing division as per government's prescribed formula, the refining margin (net of discount, taxes and duties) for the quarter is expected to be close to $6 per barrel, much higher than that for the corresponding period of last year. A higher GRM would cushion a part of the loss incurred on the marketing front till May.

A senior company official told Business Line that apart from the advantage of import parity pricing, which was in force till May, the major contributor to a higher refining margin was the positive impact of a series of projects undertaken during the last few years.

"We are now using close to 45 per cent of high sulphur crude which was as low as 35 per cent last year. The distillate yield has also improved substantially," the official said.

Operational efficiency

The commissioning of PTA plant and the crude evacuation system will bring about immediate improvements in operational efficiency of the Panipat refinery. The refinery may become even more efficient with the projected commissioning of delayed coker unit in the middle of July.

The commissioning of Haldia-Paradip pipeline in July will impact the GRM of Haldia and Barauni refineries by $1 each. The expansion-cum-quality upgradation project undertaken at Haldia, however, will not be completed in this fiscal.

The company is also going ahead with its plan to implement a quality upgradation project at Koyali refinery in Gujarat. Part of the proposals for technology licences may be placed for the board approval soon.

IOC will place technology licence proposals for approval at its next board meet. The company is also in the final stages of preparation of the project management contract proposals.