The Hindu Business Line : Comfortable profit outlook for IndianOil

Kolkata, Dec. 31 But for a huge marketing loss, especially in December, the third quarter might have ended well for IndianOil. According to sources, the gross refining margin stands at approximately $9.5 a barrel during October-December period.

High refining margin helped the company to more or less square up the marketing loss during October and November even without the Government support through oil bonds.

Since the government has recently approved the issue of bonds for the first half, which will be taken into the account in the third quarter, IndianOil is expected to step into 2008 with a comfortable profit on book.

Refining margin

According to sources, unlike last year the company has maintained $2-3 higher refining margin during the first nine months. The cumulative GRM till December stands at a handsome $9 a barrel, of which $1-1.5 a barrel additional margin is accrued by processing higher quantities of cheap heavy and high sulphur crude and improving the distillate yield by 0.5 per cent as well.

Compared to the corresponding period in the last fiscal, IOC has so far processed over seven per cent of high sulphur crude. Such crude grades generally attract the lowest price. This apart, the company has also processed three to four per cent more heavy but low sulphur crude (which is cheaper than sweet crude but costlier than heavy high-high sulphur crude).

“We have processed 58 per cent heavy-high sulphur crude at our biggest (13.5 million tonne) refinery at Koyali in Gujarat during this fiscal. We could have processed more such crude but for supply agreements with ONGC for processing the local heavy-low sulphur crude,” a senior IOC official said.

Interestingly, the country’s oldest as well as smallest Digboi refinery (0.65 million tonne) has also filled the IOC coffers with a refining margin $20 a barrel during April-December, 2007.

“To further improve our distillate yield and ensure better refining margin we are currently implementing a delayed-coker unit at Koyali. A similar project is also taken up at Panipat (12 million tonne),” a company official said.