Private refiners’ share of fuel exports to Europe nearly 95% in April-Feb

According to analysts and industry insiders, Reliance Industries and Nayara Energy have emerged as major winners from the West’s punitive action against Russia’s energy sector. This is because, on the one hand, they can buy Russian oil at a discount and, on the other hand, they can earn solid margins on product shipments to Europe.

From April to February, Indian refiners exported nearly 2,24,900 barrels per day (bpd) of petroleum fuels to Europe, with private refiners accounting for a staggering 95 percent, or over 2,13,300 bpd, Vortexa data showed. Public sector refiners like Indian Oil, Bharat Petroleum and Hindustan Petroleum exported just over 11,500 bpd of fuels to Europe.

In fact, Indian public-sector refiners exported no fuel to Europe at all in the four months leading up to the European Union’s February 5 ban on imports of refined products from Russia — November 2022 and January this year. In the same four-month period, private refiners shipped an average of about 2,45,500 bpd of petroleum fuels to Europe, about 22 percent more than their average export volumes to the continent in the previous six months, the data shows.

From April to February, India imported just over 9,40,600 bpd of crude oil from Russia, with private refiners accounting for a share of about 45 percent, although their cumulative refining capacity of around 88 million tonnes per year (mtpa) accounts for just 35 percent of the country’s total refining capacity Land of around 251 mtpa. This means that Reliance Industries and Nayara Energy together imported more Russian oil per mtpa of refining capacity than their public sector peers.

Public sector refiners and fuel retailers have not revised retail prices for gasoline and diesel since April last year due to high volatility in global energy prices. This forced them to post heavy losses. With public sector actors controlling most of the fuel retail market, private sector refiners have also been unable to adjust domestic fuel prices to global levels. These circumstances in the domestic market combined with high fuel demand in Europe have made fuel exports significantly more lucrative for private sector refiners.

In light of above-average exports from private refiners, the government had imposed windfall profit taxes on fuel exports from July.

“It is important to understand that serving the domestic market well is a top priority for OMCs (public oil marketing companies). This is not the case with private refiners. Therefore, it makes sense for private refiners to prioritize fuel exports in order to achieve higher margins,” said a public sector refinery executive

According to Vortexa data, India imported a record 1.62 million barrels per day of Russian oil in February, up 29 percent from January’s 1.26 million barrels per day, which was also a record. Russia, which was a marginal oil supplier to India before the war in Ukraine, maintained its newfound position as India’s largest source of crude oil in February. The data shows that India’s oil imports from Russia in February exceeded the cumulative amounts shipped by heavyweights Iraq and Saudi Arabia, India’s second and third largest sources of crude oil.

While India, the world’s third largest consumer of crude oil, relies on imports for over 85 percent of its oil needs, the country is a net exporter of petroleum products as its refining capacity exceeds domestic demand.

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