Beleaguered giant transforms itself

Font Size

Print

Feedback

Email

Discuss

: Indian Oil Corporation (IOC) is the country’s flagship oil company with net sales of Rs 1,87,224 crores. The company is fast transforming itself from being an oil refiner and marketer of oil products to that of a major, diversified, transnational integrated energy company and has set its sight to reach US$ 60 billion revenues by the year 2011-12.

While consolidating in the core areas of refining and marketing, IOC is pursuing a string of strategic initiatives across the hydrocarbon value chain for forward integration into petrochemicals and backwards into exploration & production of oil and diversification into natural gas business, besides globalisation of downstream operations.

Despite fluctuations in the international crude oil market, IOC managed to register a net profit of Rs 1,059 crore in the third quarter of the current fiscal (2006-07) and overall net profit of Rs 5,890 crore during the nine month period ending December 2006. As against this, IOC recorded a profit of Rs 885 crore in the same period of the previous year.

This jump in profit, despite huge under-realisations on the sale of petroleum products, was due to the accounting of oil bonds issued by the government.

While private sector oil major Reliance Industries (RIL) recorded one of the highest gross refinery margins at over $11 per barrel, IOC witnessed a fall in refinery margins from $5.16 per barrel (April-December 2005-06) to $3.64 per barrel in the corresponding period of 2006-07.

Lower refining margins have been attributed to inventory losses arising out of fluctuations in crude and petroleum product prices.

Says IOC chairman Sarthak Behuria, “Gross refinery margins, after taking inventory losses into account, stand at $3.64 per barrel during the nine-month period ended December 2006-07, as against $5.16 per barrel in the corresponding period of the previous year.” However, margins in the third quarter of 2006-07 increased to $4.5 a barrel from $3.67 a barrel in the third quarter of the previous fiscal.

With about 16,000 petrol pumps, Indian Oil and its subsidiaries account for 47% petroleum products market share among the public sector oil companies, 43.5% national refining capacity and 74% petroleum products pipeline capacity.