FE Editorial : KG basin again
Reliance Industries Limited’s (RIL) results for the three months to September 2012 came in on expected lines, with gross refining margins (GRM) jumping nearly $2 sequentially to $9.5 per barrel—net profits at R5,376 crore, were up 20% q-o-q but fell 6% y-o-y. The petchem piece, expectedly, turned in subdued numbers with ebit margins remaining flat sequentially and volumes coming off slightly. The petchem cycle will take a while to turn depending on demand from China, a factor that will also determine the profitability of the refining business in the coming quarters when more global capacity which has been shut down for a variety of reasons will be up and running—the former will boost RIL’s profits while the latter will dampen them.
The biggest dampener in the September quarter was, of course, the oil and gas segment where revenues came off sharply, by about 36% y-o-y and pbit by over 40% y-o-y. RIL’s capital employed has stayed more or less flat sequentially at R2.54 lakh crore with close to a 12% drop for the oil and gas business or about $700 million.The management offers no clues about how capex for this business will pan out, though there are news reports to the effect that it could scale back the amount by about $3 billion eventually. Cumulative crude oil production from the KG-D6 block was 1.7 million barrels while that of natural gas was 197 BCF in the first half of FY13, a
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