How Reliance GRM fares against Singapore GRM

Riken Mehta & Shaheen Mansuri

Ahead of Reliance Industries Ltd’s Q2 earnings announcement today, analysts have highlighted that improved gross refining margins (GRMs)— the difference between the cost of processing crude and the revenue from selling finished petroleum products—will partially offset weaker petchem margins and dwindling gas output from the energy giant’s KG-D6 fields.

According to a consensus of at least five brokerages, RIL’s GRMs, a key source of income for its core biz is expected to be anything between USD 9-9.5/bbl in comparison to Singapore  refinery which is estimated to average at USD 9.13/bbl during the quarter.

Due to the complex nature of its Jamnagar refinery, RIL’s  refining margins are benchmarked with the Singapore refinery which is also a testimony for other Asian refiners.

RIL has always highlighted the premium to the Singapore benchmark, but of late the premium has shrunk due to inventory losses.

Though, RIL’s GRMs in the sequential quarters have enhanced on improvement in LPG and naphtha spreads, business environment for refining companies continues to be tough the world over; blame weakness in demand and capacity additions globally.

Unit: $/bbl 

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