Exports: Govt policies no big pump-up for oil refiners

Discussion in 'Economy & Infrastructure' started by Ray, Sep 22, 2012.

  1. Ray

    Ray The Chairman Defence Professionals Moderator

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    Exports: Govt policies no big pump-up for oil refiners

    NEW DELHI/LONDON, MAY 6:
    Refining hub! Sounds good. But only on paper, says the domestic oil refinery and retailing industry.

    The lack of a regulatory level playing field at home means the industry's options are constrained, and not necessarily driven by profits or choice.

    India is well positioned to be such a hub: Refining capacity is close to 213 million tonnes and by March 2017, it should exceed 310 mt, with modern refiners being able to churn out products that match the highest international standards.

    In 2011-12, the country earned $58.23 billion from petroleum product exports, up from $43.34 billion in 2010-11, overtaking the equivalent figure for gem and jewellery exports.

    In Europe, India is already the third largest foreign supplier of petrol and diesel, supplying 110 kb/d (thousand barrels/day). But well behind the US and Russia, which supply 390 and 380 kb/d, respectively, according to data from Wood Mackenzie.

    Both in Europe and the US, where a number of domestic refiners have been forced to close down — as weak margins have hindered their ability to invest and upgrade — there are opportunities for India to increase its exports even further.

    “Many European refiners are not as sophisticated as the new refiners in India and the US, which can produce well to European specifications. And the costs in Europe are rising,” says Mr Ehsan Ul Haq, Senior Market Consultant, at KBC Energy Economics.

    He cites the example of Turkey; its shift to European specifications in 2011 meant it was not able to get as much diesel of the necessary quality from Russia, so got most of its imported diesel supply from India.

    Going forward, European demand from India will be for middle distillates, as dieselisation continues, says Mr Jonathan Leitch, Senior Analyst, Downstream Team, Wood Mackenzie.

    “What we are going to see are more refinery closures and more imports to Europe, but this will be fairly gradual,” says Mr Simon Wardell, Director, Global Oil at IHS Global Insight.

    While these opportunities exist, India's policy is far from being even. While standalone refiners such as Mangalore Refinery & Petrochemicals Ltd and Reliance Industries are at an advantage as far as exports are concerned, the public sector companies — Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, being integrated refining-cum-retailing entities — are compelled to cater to domestic demand first.

    DOMESTIC SELLING

    Adding to the problem is the Government's domestic fuel pricing, which means that the private sector struggles to sell domestically.

    Diesel, kerosene, and domestic LPG are sold at Government-controlled prices, below market rates, by public sector retailers.

    This has put private retailers at a disadvantage, compelling them to either exit or shut down their retailing business.

    Though petrol has been deregulated since June 2010, artificial Government control continues.

    For the industry, selling products on the global market is not always as delectable, often requiring the players to absorb freight and other costs. Besides, almost 80 per cent of the exports take place through the traders.

    Being a refining hub can only be a good thing, but the Government needs to create a level playing field and leave it to the companies to decide whether they want to tap the export market or sell only within the country.

    Business Line : Industry & Economy News : Exports: Govt policies no big pump-up for oil refiners

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    I never knew that India imports oil and then exports the same.

    Could someone explain as to even when we are exporting oil, the Govt is raising prices so regularly and that too by huge jumps?!
     
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  3. jamesvaikom

    jamesvaikom Regular Member

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    We import crude oil and export petroleum products.
     

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