NEW DELHI : There's a split emerging in India's refining sector as private refiners tap cheap Russian crude and boost profits from exports just as domestically focused state refiners get squeezed by high oil costs and government-capped domestic fuel prices.
In contrast, state refiners are much smaller buyers of Russian crude as they largely buy oil under annual term supply deals. They face potential losses in the June quarter, industry sources say, as they grapple with rising global crude costs and controlled retail fuel prices that are unchanged since early April to rein in spiraling inflation.
In turn, private refiners have helped drive total Indian fuel exports 15 per cent higher in the first five months of 2022 compared to the same period in 2021, according to data firm Kpler.To accommodate sharply higher fuel exports, private refiners have reduced their market share of domestic fuel sales to 7 per cent in April from 10 per cent in the fiscal year to March 2022, an Indian state refinery source said.
"This is the golden age of refining margins for refiners. But in India state refiners' negative marketing margins are offsetting the gains from refining business," said Ehsan Ul Haq, an analyst with Refinitiv. Private refiners have priced their fuels at a higher rate compared to their state peers and have reduced supplies to their pumps, several dealers from Reliance and Nayara Energy said, leading to customers turning to state retailers fuel stations.
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