NEW DELHI/BENGALURU (Reuters) - State-run Indian Oil Corp Ltd, the country’s top refiner, reported a three-fold rise in December-quarter profit on Thursday mainly due to inventory gains.
During Oct.-Dec. 2019, the company registered inventory gains of 16.08 billion rupees, against a loss of 66.55 billion rupees a year earlier. Brent crude price rose 8.6% during the Dec. quarter.
Higher inventory gains improved the companies gross refining margins as well, said Chairman Sanjiv Singh.
IOC’s December quarter gross refining margin - the difference between the cost of crude oil processed and the selling price of refined products - was $4.09 per barrel compared to $1.15 a barrel a year earlier.
IOC posted a net profit of 23.39 billion rupees ($329.11 million) in the quarter ended Dec. 31, compared with 7.17 billion rupees a year earlier. Last year, the company’s net profit in Dec quarter fell by 91% as margins were hit because of a sharp decline in global oil prices
The company’s revenue for the reported quarter fell 9.4% to 1.45 trillion rupees, predominantly because of lower product margins, Singh said.
In the December quarter, the refiner’s crude processing declined by about 8% from a year earlier as it shut units at plants for maintenance and upgraded equipment to be able to sell Euro VI compliant fuel from April 2020.
Singh said the company is not planning to shut units at its refineries for maintenance in 2020-21.
IOC, along with unit Chennai Petroleum, controls about a third of India’s five million-barrels-per-day refining capacity. It is also the country’s largest fuel retailer.
The company was looking at selling liquified natural gas as transport fuel through its retail stations, Singh said.
To diversify its crude import sources, IOC is close to finalising a crude buy deal with Russia’s Rosneft, he said.
“There are some commercial terms which are in the finalisation process. We are still discussing with Rosneft,” he said.
Sandeep Gupta, head of finance at IOC, said his firm is keen to tap new geographies including Norway, Brazil, Ghana and Ecuador for oil imports.
($1 = 71.0700 Indian rupees)
Reporting by Nallur Sethuraman in Bengaluru and Nidhi Verma in New Delhi; Editing by Shounak Dasgupta, Bernard Orr