IndianOil's refining margins slip
New Delhi   09-Apr-2009
It’s a double whammy for the country's largest oil marketing company, IndianOil. The oil major has not only had to deal with slim marketing margins thanks to populist measures like fuel price cut twice in two months, but also to very low refining margins. While IndianOil enjoyed high margins of as much as $ 16-17 a barrel in the first quarter of 2008-09, margins have now crashed to $3-4 a barrel. "At a time when crude oil prices fall it is the narrowing differential between crude and product prices that dips margins," said Mr. BN Bankapur, Director (Refinery), IndianOil while explaining the steep fall in margins. In fact, IndianOil expected margins to average out at $4-5 a barrel at the end of 2008-09. Bankapur said the high-margins in the first quarter were an aberration and the company is comfortable with margins at about $7-8 a barrel. Refining margins have a direct impact on the company's bottomline and low margins mean low profits.