RIL likely to clock double-digit gross refining margins
Industries Ltd (RIL) has been benefiting due to a shift in feedstock towards ethaneand massive under-utilisation of refining assets in four countriesArgentina (76%), Brazil (74.3%), Mexico and Venezuela (40%). RIL exports a majority of its products from its twin refineries in Jamnagar, Gujarat.
RIL’s twin refineries at Jamnagar, with a crude processing capacity of 1.24 million barrels per stream day (bpsd), provides the company with complexity and flexibility to manage its product yield and crude oil basket better,resulting in ahigher yield.
A refinery’s complexity is measured in terms of the Nelson Complexity index (NCI). RIL currently has an average complexity of 12.6. Procession of cheaper crude oil has been possible because of refineries with a Nelson complexity of 10 or above that are considered complex.
According to an investment analyst, “Post the $25 billion investment in energy, we believe RIL can take advantage of the flux in feedstock oil, gas and coal prices. RIL’s shift in feedstock towards ethane drives margin expansion in FY19.”