NEW DELHI : The rise in prices of liquefied natural gas and a global supply crunch has impacted the gross refining margins (GRM) of oil marketing companies, said people in the know of the developments.
Two officials aware of the developments said this has prompted OMCs, as the three state-run companies are called, to move to alternatives like naphtha and diesel in their crude refinery processes instead LNG.
But refining margins have been impacted despite the shift because the alternatives too are priced high under long-term agreements.
“We have had to shift from gas to other alternatives like diesel, naptha and even grid power. This has hit our GRMs,” said an official with one of the OMCs.
Another official said several refineries have more or less stopped using gas in the refining process.
Gas plays a significant role in the oil refining process, in all three stages—separation, conversion and treating of oil. Refining margin refers to the difference between the price of the refined product and crude.
In the last financial year (FY22), Indian Oil Corporation reported an average GRM of $11.25 per barrel of crude oil, Bharat Petroleum Corporation Ltd (BPCL) $9.09 per barrel and Hindustan Petroleum Corporation (HPCL) $7.19.
The impact on GRM due to high gas prices and low supplies comes at a time when the three public sector are already reeling under heavy losses due to high global crude prices.