The strike?-now called off?by officers of public sector undertaking (PSU) oil companies demanding higher pay rendered long queues at petrol pumps across the country.
It even affected crude oil production at Mumbai offshore, which was almost half at 1,80,000 barrels. Refineries operated at 25 to 30% of their total capacity.
The strike came at a time when India is poised to become a global refinery hub, and refining margins of both private and PSU oil companies were gradually going up.
In 2007-08, the PSU oil companies posted a refinery margin of $9.02 dollars per barrel as against $4.19 dollars a barrel in 2006-07. IOC, the biggest player, earned a gross refining margin of $8.77 per barrel last year as against $5.74 dollars a barrel in the same period.
With falling demand of petroleum products globally, refining margins will now be impacted, and much will depend on the operating efficiency of the PSU oil companies, which is abysmally low at around 60% compared to 80% globally. Reliance Industries Limited (RIL), the nation?s largest private sector refiner, however, has an average utilisation rate of 90%. Gross refining margins of both public and private sector oil companies have softened significantly during the third quarter of this financial year and the fall in global oil prices will adversely impact performance of upstream oil companies like ONGC and Cairn.
Retailing of petroleum products has also become economically viable now with the fall in global crude prices and it has attracted private retailers like RIL, Essar Oil and Shell India to look at this business once again. In fact, RIL had committed to supply all of the petroleum products it produces at Jamnagar in Gujarat even if the strike by oil PSU officers continued indefinitely. The company had also promised to keep all of their 1,000 petrol pumps open and operate them 24×7 to fill in any disruption in supplies.
This will open up competition in the retailing business, which has so far been a monopoly of the PSU oil companies.
saikat.neogi@expressindia.com