Indian Oil Refinery Scenario
Energy is an important accelerator for growth of economy and at present oil and natural gas is the main source of energy India has limited oil and natural gas so it is dependent on Arbian and African Countries for supply of the energy Indian industry is at present intransformation period and is growing at around 14% per annum which is not sufficient to meet the increasing requirement of energy.
India has 18 refineries -- 17 in the public sector and one in the private, with an installed capacity of 127.37 mmtpa. During balance period of the 10th Plan, it is estimated that another 26.33 mmtpa capacity would be added, raising it to 153.7 mmtpa in total. It includes HPCL Mumbai: 2.4, HPCL Visakh: 0.83, BPCL Mumbai: 5.1, IOCL Panipat: 6.0 and Essar Oil Jamnagar: 12.0. The information was disclosed in a recent meeting of the Consultative Committee of the Members of Parliament for the ministry of petroleum & natural gas.
India largely imports the sour variety. The overall basket is much cheaper than Brent. Environmental standards in India permit higher sulphur content in petrol and diesel.
The average price of Brent per barrel in October was $50, of Dubai crude was $38.
Approximately 72 million barrels per day. (7.33 barrels make one tonne.)
For petro products manufactured by them, oil refineries in India are paid the ‘import parity price’, the international price plus the insurance and freight cost plus the customs duty. Thus, higher the customs duty, higher will be the gross refining margin.
If the customs duty is cut, say, to 10 per cent, the domestic company would reduce its price from 15 per cent above the landed cost to 10 per cent above the import parity price. In case it does not do so, the customer, that is the marketing company, will import the product. India does not import petrol, but a cut in customs duty on petrol reduces the domestic price of petrol.
Higher duties on products are imposed to encourage the growth of the refining industry. In this case,
India has 18 refineries -- 17 in the public sector and one in the private, with an installed capacity of 127.37 mmtpa. During balance period of the 10th Plan, it is estimated that another 26.33 mmtpa capacity would be added, raising it to 153.7 mmtpa in total. It includes HPCL Mumbai: 2.4, HPCL Visakh: 0.83, BPCL Mumbai: 5.1, IOCL Panipat: 6.0 and Essar Oil Jamnagar: 12.0. The information was disclosed in a recent meeting of the Consultative Committee of the Members of Parliament for the ministry of petroleum & natural gas.
India largely imports the sour variety. The overall basket is much cheaper than Brent. Environmental standards in India permit higher sulphur content in petrol and diesel.
The average price of Brent per barrel in October was $50, of Dubai crude was $38.
Approximately 72 million barrels per day. (7.33 barrels make one tonne.)
For petro products manufactured by them, oil refineries in India are paid the ‘import parity price’, the international price plus the insurance and freight cost plus the customs duty. Thus, higher the customs duty, higher will be the gross refining margin.
If the customs duty is cut, say, to 10 per cent, the domestic company would reduce its price from 15 per cent above the landed cost to 10 per cent above the import parity price. In case it does not do so, the customer, that is the marketing company, will import the product. India does not import petrol, but a cut in customs duty on petrol reduces the domestic price of petrol.
Higher duties on products are imposed to encourage the growth of the refining industry. In this case,