IndianOil to pip RIL in refining margin stakes

Refining margins at Indian Oil Corporation's (IOC) upcoming Paradip refinery in Orissa would be "the highest in the country at $11-12 a barrel at current prices," chairman Sarthak Behuria said.

At present, Reliance Industries manages the highest margins in the country "" about $9 a barrel last quarter "" from its refinery in Jamnagar.

Though it is the largest refiner in the country, IOC has a mix of old-and-modern refineries. It has been facing pressure on refining margins, which have dipped to $4.2 a barrel from $6 a barrel a year ago.

The company today unveiled an upgraded fluid catalytic cracking (FCC) technology called Indmax "" short for Indane maximisation "" that will enable it to maximise the production of LPG, and net higher margins.

"Indmax will be deployed at the Paradip refinery. We are also in talks to sell the process to other oil refiners both in the country and abroad," Behuria said.

The company is also in talks with Hindustan Petroleum for deploying the technology at its upcoming greenfield Bathinda refinery, while Mangalore Refinery and Petrochemicals has also shown interest in deploying the process, IOC officials said.

The process has been in use at the company's Guwahati refinery since 2003. Bongaigaon Refinery is also using the technology.

FCC is a secondary refining process for conversion of low-value feedstock to high-value LPG, nahptha, petrol and diesel.

At the Guwahati and Bongaigoan refineries the technology processes crude without leaving any waste residue.

"The technology also has the capability to produce 100 per cent transportation fuels. But that will need further research," said R P Verma, executive director (R&D), IOC.

Behuria also said IOC was likely to import 40 million tonne of crude oil in the year ending March 2008, a marginal increase from 37.5 million tonne in the current financial year.

Between April and October this year, the company had imported 24.7 million tonne of crude.

He added that a recent government decision to cut retail fuel prices was costing the state-run refiner and retailer an additional Rs 8 crore a day, taking the total under-recoveries to about Rs 53 crore a day.

While the company's is making profits of Rs 1.67 a litre of petrol, it is losing Rs 2 on every litre of diesel sold, and Rs 132 on a cylinder of LPG.

IOC also expects to complete its merger with Bongaigaon Refinery and Petrochemicals by the end of 2007. A similar absorption of IBP is likely by the end of March.