Forced to export oil products at a loss: MRPL

Vol 7, PW 19 (03 Dec 03) Midstream & Downstream
     

ONGC complains that Mangalore Refineries is forced to export its products at a loss because authorities have set a 6m t/y limit on its refining capacity.

MRPL has been consistently running around 9.69m t/y crude throughput, complains ONGC. Yet domestic absorptions have been severely restricted through the industry controlled ILP system.

As a result, MRPL has been forced to export more products. Exports are a value destroyer in comparison to domestic sales due to duty protection in the import parity formulae applied in determining the ex-refinery pricing for products.

This protection is not available on export sales. See below for MRPLs production, domestic sales and export figures from April to September.

MRPLs performance figures from April to September 2003 (tonnes) Product Total production Domestic sale Export Percentage exported LPG 101,000 101,000 Nil Nil Petrol 500,000 316,000 184,000 37% Jet fuel/kerosene 700,000 333,000 367,000 52% Diesel 1,719,000 1,217,000 502,000 29% Sub-total 3,020,000 1,968,000 1,053,000 35% Naphtha 245,000 66,000 179,000 73% Fuel oil 729,000 503,000 226,000 31% Grand total 3,994,000 2,537,000 1,458,000 37% ONGC illustrates how a comparison of MRPLs average gross value realisation from domestic and export sales during the six months to September shows an erosion of the refinerys gross refining margin due to, forced exports. See below: Loss/gain to MRPL from exports between April and September 2003 Product Average refinery transfer price Rs/tonne (domestic) Average realisation Rs/tonne (exports) Difference Rs/tonne Quantity exported (thousand tonnes) (Loss)/gainRs Cr Petrol 14,694.73 13,755.90 (938.83) 184 (17) Diesel 13,573.13 11,057.20 (2,515.93) 502 (126) Jet fuel/kerosene 13,078.12 11,796.79 (1,281.33 367 (47) Naphtha 12,317.02 12,308.01 (9.01) 179 (Negligible) Fuel oil 9,063.76 8,284.49 (779.27) 226 (18) Total (208)