New Delhi, October 24 (IANS) Unchanged retail fuel prices amid ongoing geopolitical tensions and fluctuating oil prices will help the industry gain.
Operating profits will average more than $9-11 per barrel over the 10-year period to fiscal 2025, according to a report released on Thursday. This will support continued substantial capital expenditure (capex) by oil marketing companies (OMCs), CRISIL Ratings report said.
It is estimated that the operating profit of oil marketing companies will decline to $12-14 per barrel in the financial year 2025 from $20 per barrel in the last financial year.
Prices are expected to remain subdued due to softening diesel prices, reduced discounts on Russian crude and impact of inventory losses.
The price of crude oil currently averages $75 per barrel, which was $82 per barrel in the first half of FY 2025.
According to Aditya Jhaver, Director, CRISIL Ratings, Gross Refining Margin (GRM) is seeing a sharp decline this financial year and is likely to average $ 3-5 per barrel.
Also, the spread of diesel will also become balanced, as refineries globally have increased production, while consumption has decreased.
“Despite this, overall returns will be bolstered by marketing margins (after operating expenses), which are likely to remain at Rs 4.5 per liter (or $9 per barrel) despite no reduction in retail fuel prices,” he said. Is.”
Oil marketing companies earn income from two businesses – refining business and marketing business.
While oil prices declined 11 per cent year-on-year to average $83 per barrel in FY24, inventory price fluctuations had a marginal impact on the overall GRM (stated at $12 per barrel).
Core margins remained healthy due to higher diesel spreads but geopolitical uncertainties disrupted the global energy supply chain, keeping international prices high.
Additionally, the report said largely unchanged retail fuel rates resulted in good marketing margins (after operating expenses) of Rs 4 per liter or $8 per barrel, giving an overall net profit of $20 per barrel for the year. Made high profits.
The resulting cumulative cash infusion of Rs 52,000-54,000 crore, estimated to support the capital expenditure of Rs 90,000 crore planned by OMCs.
“Although profits may have moderated year-on-year, the industry is expected to continue capital expenditure, which will be funded through debt,” said Joan Gonsalves, associate director at CRISIL Ratings.
—IANS
SKT/GKT
