BackRIL considers reviving Iran trade as oil drop boosts profit
Lifting of curbs from Iran will allow Reliance to restart gasoline sales after a gap of six years to the Persian Gulf nation
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Mumbai/New Delhi: Reliance Industries Ltd, operator of the world’s biggest oil-refinery complex, will be looking to re-establish trading ties with Iran once sanctions are eased following the nation’s nuclear accord with world powers.
“Clearly it has opened up opportunities on both sides, meaning it’s also for sourcing, it’s also for products," joint chief financial officer V. Srikanth said at a briefing in Mumbai after the company’s first-quarter earnings on Friday. “We’re also trying to find how the engagement will happen."
Lifting of curbs will allow Reliance to restart gasoline sales after a gap of six years to the Persian Gulf nation, which faces a shortage of the fuel. Access to Iran will also help the company, controlled by billionaire Mukesh Ambani, curtail freight costs currently incurred to ship to markets as far as Europe and the US.
Reliance was a big supplier of gasoline to Iran prior to sanctions, and it will be the obvious candidate to boost supplies into Iran once restrictions end, Tushar Tarun Bansal, a senior oil consultant at FGE, said on 14 July.
As of Friday, Reliance’s shares are up 15% since 1 January, compared with a 2.2% gain in the benchmark S&P BSE Sensex.
Reliance, among a handful of global refiners with the ability to process low-grade crude into high-value products and switch between fuels depending on market prices, is gaining from crude’s slump. The company reported on Friday its highest quarterly profit in 7-and-a-half years as lower crude costs boosted earnings from fuel sales.
Refining margins
During the quarter, $10.40 was earned for every barrel of crude turned into fuels, compared with $8.70 a year earlier and $10.10 in the three months ended 31 March, Reliance said. The refining margin was the highest in six years because of “strong gasoline cracks led by robust demand growth, lower energy cost and favourable crude differentials," the company said.
The company, which runs two refineries with a combined capacity of 1.24 million barrels a day in Gujarat, processed 16.6 million tonnes of crude with an average utilization rate of 107% in the quarter.
Global refinery capacity additions will surpass demand over the next two years, which may impact the current unusually high refining margins, the International Energy Agency (IEA) said in its monthly oil market report in July. Bloomberg
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