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Net HPCL down 36 pc on lower refining cycle, Energy News, ET EnergyWorld


Hindustan Petroleum Corporation Ltd on Wednesday reported a 36% drop in its June quarter net profit after shutting down one of its two oil refineries for maintenance, slashing processing of crude oil. Net profit in April-June fell to Rs 1,795 crore from Rs 2,183.83 crore in the same period a year ago and Rs 3,017.96 crore in the previous quarter.

HPCL chairman and managing director Mukesh Kumar Surana said the company’s Mumbai refinery was shut down for 45 days during the quarter for completing capacity expansion and unit modernization.

This brought the crude throughput (or the amount of crude oil turned into fuel) down to 2.51 million tonnes in April-June from 3.97 million tonnes a year ago.

While the Mumbai refinery was operating at 25% capacity due to the shutdown, HPCL’s Vizag unit was operating at 98% capacity in April-June.

“Profitability also depends on the margins on products (like gasoline and diesel),” he said.

The company made $ 3.31 turning a barrel of crude oil into fuel, compared to a refining gross margin of $ 0.04 per barrel in April-June 2020.

Turnover rose 68% to Rs 77,586 crore as oil prices climbed from lows reached last year.

“During the months of April to June 2021, HPCL achieved a total sales volume of 8.83 million tonnes compared to 7.62 million tonnes the previous year for the same period, representing a growth of 15.9% “, did he declare.

HPCL also buys products from other refiners for sale through its gas pumps.

“During the quarter, sales of major products showed significant growth compared to the same period last year despite an aggressive second wave of the Covid-19 pandemic forcing partial closures across the country.

“Gasoline sales grew 36.6%, diesel 22.2% and ATF grew 118.8%,” he said.

While gasoline sales in July hit pre-pandemic levels, diesel is short by 10%, he said, adding that August is generally a slow month for diesel due to monsoon season, but sales are expected to resume from the holiday season and harvest thereafter in November. December.

“Diesel sales are expected to reach pre-pandemic levels or maybe about a percent below that by the end of the year,” he said.

Surana said that after the expansion, the Mumbai refinery will now have a capacity of 9.5 million tonnes compared to 7.5 million tonnes currently.

Regarding prices, he said national fuel tariffs are dictated by international benchmark tariffs, as India is 85 percent dependent on imports to meet its oil needs.

Crude prices are expected to stay in the $ 70-75 per barrel range in the near term or at least until March 2022, unless there is a third major wave of coronavirus infections that would impact on demand, he said.

He hinted that domestic retail prices for gasoline and diesel are unlikely to be lowered unless international oil rates drop.

“Prices are expected to hold up,” he said.

When asked if Indian fuel demand is price inelastic as gasoline consumption has increased despite rates at an all time high, he said: “Demand is driven by need rather than demand. price. I don’t think there is any impact of price on demand. ”

People are choosing personal transport over public transport due to concerns about Covid-19, thus fueling consumption, he said.

Surana said that in order to provide multiple choices to customers for their energy needs, HPCL has entered into a strategic partnership with Tata Power, India’s largest integrated power company, to provide electric vehicle charging to its pumps. gasoline in various cities and major highways.

During the quarter, HPCL commissioned 142 new retail outlets, bringing the total retail outlet network to 18,776 in June 2021. CNG facilities were added at 50 retail outlets, bringing the total number of HPCL outlets with CNG installations to 724 in June 2021.

During the quarter, HPCL solarized 110 additional points of sale. “With this, 25 percent of HPCL’s point of sale network runs on solar energy,” he added.