Oil Prices Pressurise Marketing Margins

Mumbai, Aug 30 | Updated: Aug 31 2004, 05:35am hrs
The customs and excise duty cut on petroleum products by the Centre, has only partially assisted oil companies in maintaining prices in the domestic market.

However, the prevailing domestic prices would be inadequate to cover costs, if international prices keep ballooning in the days to come.

Bharat Petroleum Corporation Ltd (BPCL) chairman and managing director Sarthak Behuria while addressing the annual general meeting (AGM) of the company here said, The major increases in the international oil prices, coupled with maintaining prices of major retail products for the customers, has put substantial pressure on the marketing margins. This has resulted in gains for the refineries at the cost of the marketing companies.

He added that the oil prices are expected to remain at considerably high levels during the rest of the current year and even during 2005. The International Energy Agency estimates that the world oil demand is likely to increase in the region of 3 to 3.3 million barrels per day.

Describing the upswing in the crude prices as a major gain in the refiners margins, he said the physical performance on the marketing side has been encouraging with most of the products showing significant sales growth.

On the marketing front, the company plans to increase the number of its In and Out stores network to 400 from the present 234 stores.

The company was also examining an integrated store model with a grocery propostion for a larger rollout in its present form. The refining capacity has been increased to 12 million tonne per annum.

Mr Behuria added that the company has signed agreements with Gail India Ltd for paticipating in gas distribution projects in Pune and Kanpur and added that it was also undertaking gas distribution projects in Gandhinagar, Mehsana and Sabarkanta in Gujarat.

This will provide opportunities for diversification, he said.