Widening its operational reach
New Delhi   25-Feb-2010
India’s largest public sector petroleum refiner IndianOil is diversifying fast to become an integrated energy company. IndianOil has entered the upstream oil and gas exploration business even as it is trading in natural gas. IndianOil is also raising its presence in the petrochemicals business. Meanwhile, the company also plans to foray into nuclear power generation business in partnership with Nuclear Power Corporation (NCPIL). The two sides have already signed a memorandum of understanding (MoU) in this regard. IndianOil plans to invest Rs. 14,000 crore every year to grow. The company celebrated its Golden Jubilee year in 2009. "During these five decades, IndianOil has grown to emerge as the country's largest commercial enterprise and India's highest ranked company in the prestigious Fortune Global 500 listing, at 105th position," mentioned Mr. Sarthak Behuria, Chairman, IndianOil. The company has kept ready war chest of $1 billion to finance acquisition of oil and gas assets abroad. Acquiring oil equity abroad makes sense for IndianOil as it would help the company to hedge its crude oil purchase cost in the face of volatility in the world oil market. The company imports more than 50 million tonnes of crude oil a year for its refineries. During the year, IndianOil maintained its dominance in the market place and clocked the highest ever sales of over 66 million tonnes of petroleum products, registering a growth of 5.67% over the previous year, added Mr. Behuria, IndianOil is very bullish on petrochemicals business. The company has been successfully marketing Linear Alkyl Benzene (LAB) manufactured in its Gujarat refinery, in the domestic as well as overseas market. Now it plans to raise its profile in the sector. The company plans to use surplus naphtha from its refineries as feedstock for the petrochemicals business. With power and fertilizer sectors gradually shifting to natural gas, IndianOil will have more and more surplus naphtha from its refineries in coming years. Meanwhile, it is setting up a 15 million tonnes per annum (mmtpa) petrochemical complex at Paradeep, Orissa. IndianOil would benefit if the government implements the recommendations of the Kirit Parikh committee on petroleum pricing. The committee has suggested maintaining the current methodology of calculating OMCs' under-recoveries on retail sale of household LPG and PDS kerosene on the import parity basis. That means the OMCs will continue to enjoy the possibility of reaping windfall gains in international as prices of these products rise proportionately more than crude oil prices. The committee has also recommended that the government should reimburse the OMCs' under-recoveries in cash and not through issuance of oil bonds. The government has decided to compensate the OMCs' under-recoveries from the current fiscal in cash Mr. Behuria, mentioned in his speech, "For downstream oil companies like IndianOil, managing the day-to-day operations in an environment of high volatility hi crude oil prices was a daunting task. During 2008-09 in particular, the peaking of crude oil prices and the sudden switch to a low-price regime dramatically affected the economics of the industry across the value chain." Company's net profit for the period of nine months ended December 2009 was Rs 4,664 crore as against loss of Rs 3,673 crore for the same period last year. The gross turnover was lower by 12.13 % to Rs 1,99,207 crore during the period April-December 2009 from Rs 2,26,717 crore for the corresponding period of the previous year. The company sold 52.19 million tonnes of products, including exports, during the nine-month period ending December 2009. The throughput of its refineries and pipelines network was 37.412 million tonnes and 47.516 million tonnes respectively for the nine-month period.