India, the world’s third-largest oil importer, is the biggest buyer of seaborne Russian crude.
| Photo Credit: Reuters

Image used for representation purpose only. Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemical Ltd — have not sought Russian crude in the past week or so
| Photo Credit: Reuters

A fire broke out at the Indian Oil Corporation refinery in Gujarat’s Vadodara today. The blaze started at plant number A-1, A-2 and a boiler around 2 pm. The boiler exploded with a loud sound and the fire spread to the storage tanker as well. A siren was sounded after the explosion.

There are no reports of any serious injuries or fatalities so far, a police official said.

Visuals showed smoke billowing out of the refinery and the explosion was heard in a radius of 8 km. The locals came out of the nearby buildings as the blast shook their homes.

The cause of the fire is yet to be ascertained, the Indian Oil Corporation (IOC) said.

“Rescue operations are on. Things will be clear gradually,” said DCP (Traffic) Jyoti Patel. Workers who were present in the refinery were evacuated after the blast

BJP MLA Dharmendrasinh Vaghela said no death has been reported though a few people sustained minor injuries and were taken to a hospital.

The Indian Oil Corporation runs a 13.7 million metric tonnes per annum integrated refinery-cum-petrochemical complex in Gujarat.

Image used for representation only.
| Photo Credit: Murali Kumar K

State-owned fuel retailers on Tuesday hiked commission paid to petrol pump dealers but there will be no change in retail petrol and diesel prices.

Petrol and diesel prices will fall in Odisha, Chhattisgarh, and Himachal Pradesh due to a rationalisation of intra-state freight.

“IndianOil is pleased to announce a revision in the dealer margins (effective from 30th October 2024), following the resolution of a pending litigation. This will have no additional impact on the Retail Selling Price of products,” Indian Oil Corporation (IOC) said in a post on X.

Dealer commissions would vary according to sale and place. Details were, however, not immediately available. At present, dealers are paid ₹1,868.14 per kilolitre, plus 0.875% of produce billable price as commission on petrol. The same on diesel is ₹1,389.35 per kilolitre, plus 0.28% of product billable price. This will further enhance customer service standards and the welfare of staff employed in retail outlets, IOC said.

“Further, demonstrating the core value of Nation First, our endeavour to provide affordable petrol and diesel across the length and breadth of the country on a sustained basis has come to fruition. #IndianOil has undertaken intrastate rationalisation of freight which will reduce variation of retail selling price of product across various markets within a state, except in geographies where Model Code of Conduct is in place,” IOC said.

Union Oil Minister Hardeep Singh Puri welcomed the intra-state freight rationalisation that he said will “benefit consumers located at remote locations (far from petrol and diesel depots of oil marketing companies) which will result in a decrease in petrol and diesel prices in several parts of the country. (Decision in poll-bound States and constituencies will be implemented later)“.

In a post on X, he cited the example of Kunanpally and Kalimela in Odisha’s Malkangiri where petrol price will reduce ₹4.69 and ₹4.55, respectively; and diesel rates will be cut ₹4.45 and ₹4.32, respectively. Similarly, petrol prices will reduce by ₹2.09 and ₹2.02 in diesel in Chhattisgarh’s Sukma. Rates will also be cut in Bijapur, Bailadila, Kateykalyan, Bacheli, and Dantewada of the State. Similarly, prices will also be cut in several places in Arunachal Pradesh, Himachal Pradesh, Uttarakhand, and Mizoram.

“The dealer commission increase will provide better services to approximately 7 crore citizens who visit our fuel retail outlets in the country every day, without increasing fuel prices,” he said. “The fulfilment of this demand pending for the last seven years will bring joy and happiness in the lives of petrol pump dealers and nearly 10 lakh staff working at more than 83,000 petrol pumps across the country.”

Indian Oil Corporation Ltd (IOC) reported a massive 98.6% drop in net profit in the September quarter, as refinery margins fell and marketing margins shrunk.
| Photo Credit: G.N. Rao

State-owned Indian Oil Corporation Ltd (IOC) on Monday (October 28, 2024) reported a massive 98.6% drop in net profit in the September quarter, as refinery margins fell and marketing margins shrunk.

The company posted a standalone net profit of ₹180.01 crore in the July-September period — the second quarter of the current 2024-25 fiscal year — compared with a profit of ₹12,967.32 crore a year back, according to a stock exchange filing by the company.

The profit also declined sequentially, when compared to an earning of ₹2,643.18 crore in the April-June period.

While refinery margins fell, the company also booked under-recoveries on selling domestic cooking gas LPG at government-controlled cost, which was lower than the cost.

For the six months ended September 30, IOC had an under-recovery on LPG of ₹8,870.11 crore, the filing showed.

It earned $4.08 on turning crude oil into fuels like petrol and diesel as compared to gross refining margin of $13.12 per barrel last year.

Pre-tax earnings from downstream fuel retailing businesses slumped to just ₹10.03 crore from ₹17,7555.95 crore in July-September 2023.

Revenue from operations dropped to ₹1.95 lakh crore in the July-September from ₹2.02 lakh crore a year back as international oil prices softened.

Later in a statement, IOC said it sold 21.931 million tonnes of petroleum products during the second quarter as compared to 21.941 million tonnes a year back and 24.063 million tonnes in the April-June period.

Its refineries processed 16.738 million tonnes of crude oil, down from 17.772 million tonnes in July-September 2023 and 18.168 million tonnes in April-June 2024, it said.

The company and other state-owned fuel retailers — Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) — had last year made extraordinary gains from holding petrol and diesel prices despite a drop in cost.

The price freeze was justified in the name of recovering losses HPCL and the other two retailers had suffered in the previous year when they did not raise retail prices despite a surge in cost.

The gains arising from the price freeze were eroded with petrol and diesel prices being cut by ₹2 per litre each just before general elections were announced. This together with a drop in product cracks or margins on relatively stable crude oil prices led to a fall in profits.

Cracks — the difference between raw material crude oil and final product price — have shrunk from the highs of 2022-23.

Indian Oil Corporation, the nation’s largest oil firm, is targeting to become a $1 trillion company by 2047, combining growth in traditional oil refining and fuel marketing with clean energy avenues like green hydrogen and EV charging, its chairman said.

Indian Oil Corporation (IOC) posted a record net profit of ₹39,619 crore ($4.7 billion) on a revenue of ₹8.66 lakh crore ($104.6 billion) in the 2023-24 (April 2023 to March 2024) fiscal.

IOC to focus on expand oil refining capacity, biofuels and clean mobility

The company will continue to invest in fossil fuels and new energy avenues to have a balanced portfolio that will help achieve net-zero carbon emissions by 2046, company chairman Shrikant Madhav Vaidya said in its latest annual report.

It will expand oil refining capacity, and invest in petrochemical units that will convert crude oil into value-added chemicals directly, while also increasing its focus on gas, biofuels and clean mobility.

“With India’s economy on the rise, the energy needs of the country are growing exponentially. As ‘The Energy of India’, we have been stepping up the pace and expanding our capabilities. We aim to become the nation’s lead energiser, fulfilling 12.5% of India’s energy needs by 2050,” he said.

IOC, Mr. Vaidya said, “embarking on an aspirational journey to become a ‘One Trillion Dollar Giant’ by 2047.”

“Our goal to attain a revenue of $1 trillion is set against the backdrop of India’s vision to transform into an economy of over $30 trillion by 2047,” he added.

IOC will “make significant capital investment in both brownfield and greenfield expansions to ensure uninterrupted energy,” he said.

Petrochemical expansion

“Petrochemical integration will also be a key focus area that will greatly enrich our value chain,” Mr. Vaidya said.

While the first phase of petchem expansions at Panipat in Haryana and Paradip in Odisha is complete, the one at Gujarat refinery is scheduled for commissioning in 2024-25. The firm is also setting up a polypropylene unit at Barauni refinery.

“We are scaling up our capacity, targeting an increase to 13 million tonnes and achieving a petrochemical intensity index of 15% by 2030,” he said.

“By integrating petrochemicals into our refining investments, we are expanding our product range to include niche offerings like speciality chemicals and biopolymers,” he added.

Alongside, it will pursue green initiatives, including hydrogen mobility, hydrogen transportation, biofuels, electric mobility, solar cooktops and minimising water footprint, he said.

“In pursuit of our vision for a greener future, your company has resolved to consolidate its green initiatives under a single umbrella by setting up a wholly-owned subsidiary Terra Clean Limited. This new entity will undertake low carbon, new, clean, and green energy businesses,” he said.

By putting all green initiatives under one arm, IOC is looking to optimise resource allocation, enhance innovation, and implement cutting-edge solutions more efficiently.

“As part of its carbon-neutral energy vision, your company plans to establish 1 GW of renewable energy capacity with an investment of over Rs 5,000 crore,” the chairman said.

“This green arm will spearhead our initiatives in renewable energy, ensuring that we remain at the forefront of the energy transition and contribute significantly to India’s ambitious renewable energy targets.”

Eye on renewables

The firm aims to enhance its renewable energy capacity to 31 GW by 2030, primarily through solar and wind projects, Mr. Vaidya said, adding that IOC is integrating renewable power into its refinery operations. It is also energising fuel stations and installations with solar power.

IOC has formed a joint venture with Israeli technology company Phinergy for aluminium-air batteries and with Panasonic Energy of Japan for advanced cell manufacturing of lithium-ion batteries in India.

“With a vision to propel ‘Make in India’ for the world, the JV plans to establish a one GWh capacity factory by 2027, with an ambitious expansion to 5 GWh by 2031,” he said on the joint venture with Panasonic.

IOC also has a joint venture with Sun Mobility Pte Ltd to establish one of the largest battery-swapping networks in India by 2030.

In the realm of compressed bioGas (CBG), it plans to set up 30 CBG plants nationwide this year.

On hydrogen, the firm is looking to convert half of its current hydrogen consumption to green by 2030. “Our plan involves setting up green hydrogen plants across all refineries and propelling the advent of hydrogen mobility in the country,” the chairman noted.

IOC is betting big on battery swapping solutions, particularly for the two and three-wheeler segment, with plans to expand this avenue for heavy-duty vehicle applications.

BPCL posted a net profit of ₹22,449.32 crore in the 9-month period of current fiscal as compared to a loss of ₹4,607.64 crore in the same period last year.
| Photo Credit: The Hindu

State-owned fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) reported bumper profit totalling more than ₹69,000 crore in the first nine months of the current fiscal which far exceeded their annual earning in pre-oil crisis years.

The combined net profit of IOC, BPCL and HPCL in April-December FY24 was better than their annual earning of ₹39,356 crore in pre-oil crisis year, regulatory filings by them showed.

The retailers have resisted calls to revert to daily price revision and pass on softening in rates to consumers on grounds that prices continue to be extremely volatile — rising on one day and falling on the other — and that their past losses have not been fully recouped.

The three companies, which control roughly 90% of India’s fuel market, ‘voluntarily’ have not changed petrol, diesel and cooking gas (LPG) prices for almost two years now, resulting in losses when input cost was higher and profits when raw material prices were lower.

They posted a combined net loss of ₹21,201.18 crore during April-September 2022 despite accounting for ₹22,000 crore announced but not paid LPG subsidy for the previous two years.

Subsequent softening of international prices and government giving out LPG subsidy helped IOC and BPCL post annualised profit for 2022-23 (April 2022 to March 2023 ) but HPCL was in the red.

This fiscal year, things have changed dramatically. The three firms posted record earnings in the first two quarters (April-June and July-September) when international oil prices — against which domestic rates are benchmarked — almost halved to $72 a barrel from a year ago.

International prices rose again in the subsequent quarter to $90, leading to moderation of their earnings. But, on a year as a whole they had rich profits. “IOC in the first nine months of the current fiscal (April-December 2023) posted a standalone net profit of ₹34,781.15 crore,” according to the company’s regulatory filing.

This compared with ₹8,241.82 crore annual net profit in 2022-23. While the company could argue that FY23 was impacted by the oil crisis, the 9-month earnings are higher than even the pre-crisis years — ₹24,184 crore net profit in 2021-22 and ₹21,836 crore in 2020-21.

BPCL posted a net profit of ₹22,449.32 crore in the 9-month period of current fiscal as compared to a loss of ₹4,607.64 crore in the same period last year.

This profit was higher than ₹1,870.10 crore earning in 2022-23 and ₹8,788.73 crore in FY22. HPCL’s 9-month profit of ₹11,851.08 crore compared with a ₹8,974.03 crore loss in FY23 and a profit of ₹6,382.63 crore in 2021-22.

The fuel price freeze that began on April 6, 2022, had a loss as high as ₹17.4 a litre on petrol and ₹27.7 per litre on diesel for the week ended June 24, 2022. However, subsequent softening led to losses being eliminated. The three firms had a margin of ₹11 a litre on petrol and ₹6 on diesel last month.

According to Girishkumar Kadam, senior vice-president and group head, corporate ratings, ICRA Limited, the three oil marketing companies reported healthy operating margins in H1 FY24, recouping the losses incurred during FY2023.

“The aggregate operating profitability of the OMCs was ₹90,000 crore in H1 FY2024 against a loss of ₹14,600 crore in H1 FY2023.” International oil prices have been turbulent in the last couple of years. It dipped into the negative zone at the start of the pandemic in 2020 and swung wildly in 2022 — climbing to a 14-year high of nearly $140 per barrel in March 2022 after Russia invaded Ukraine, before sliding on weaker demand from top importer China and worries of an economic contraction. But for a nation that is 85% dependent on imports, the spike meant adding to already elevated levels of inflation and derailing the economic recovery from the pandemic.

So the three fuel retailers froze petrol and diesel prices for the longest duration in the last two decades. They stopped daily price revision in early November 2021 when rates across the country hit an all-time high, prompting the government to roll back a part of the excise duty hike it had effected during the pandemic to take advantage of low oil prices.

The freeze continued into 2022 but the war-led spike in international oil prices prompted a ₹10 a litre hike in petrol and diesel prices from mid-March 2022 before another round of excise duty cut rolled back all of the ₹13 a litre and ₹16 a litre increase in taxes on petrol and diesel done during the pandemic. That followed the current price freeze which began on April 6, 2022 and still continues.