 Indian Oil Corp. plans to export surplus refining capacity to Sri Lanka and expand the petrol retail network.
Its subsidiary, Lanka IOC Plc., will open 300 outlets over five years
at a cost of 6 billion Sri Lankan rupees (Rs259.74 crore), K.R. Suresh
Kumar, managing director of Lanka IOC told Mint during Petrotech 2009,
held earlier this month in New Delhi. Each outlet will require an
investment of Sri Lankan rupees 2 crore, he said.
IOC’s business plan is based on the premise that surplus refining
capacity in India will be used to service the Sri Lankan market that
currently has a demand of 3.5 million tonnes per annum, or mpta, and a
refining capacity of 2.2mtpa.
India has a refining capacity of 149mtpa of crude oil, and IOC, the
country’s largest refiner, has a 40.4% share of the business. It
controls 10 of India’s 19 refineries.Lanka IOC currently retails
petroleum products and also supplies them in bulk to industrial
consumers out of a storage facility in Trincomalee in northeast Sri
Lanka.
The expansion plans in Sri Lanka come at a time IOC, which lost money
when oil prices soared because of the administered price regime for
fuel products in India, has returned to profitability.
The company earns a profit of around Rs30 crore a day, according to an
IOC executive who didn’t want to be identified. It earns a profit of
Rs7.8 on the sale of a litre of petrol, and Rs2.50 per litre on diesel.
It, however, loses Rs14 per litre on kerosene and Rs32 on each cylinder
of cooking gas, added this person.
IOC’s refining margin was $6.36 per barrel for the first half of the
fiscal year ended September, compared with $8.44 per barrel in the same
period the previous fiscal year.“As IOC’s new refinery capacity comes
online, there will be significant surplus,” said an oil and gas
industry analyst at a Mumbai based-brokerage firm, who didn’t want to
be identified. “It is a good move to increase one’s presence in a
market where there is a deficit of domestic supplies.”
Lanka IOC competes with Ceylon Petroleum Corp., which has 1,070 retail outlets in the island nation.
PetrolWorld 240109
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