Wednesday, May 31, 2023

Fuel export curbs likely to be extended

India plans to extend restrictions on the export of diesel and gasoline after the current fiscal year ends this month to ensure the availability of refined fuels for the domestic market, two government sources with direct knowledge of the matter said.
The extension of rules may discourage some Indian refiners, mainly private companies, from buying Russian fuels for re-exports to countries including those in Europe that have stopped purchases of refined products from Russia due to its invasion of Ukraine.
India, the world’s third-largest oil consumer, imposed a windfall tax on refined fuel exports last year and mandated that companies sell the equivalent of 50% of their gasoline exports and 30% of their diesel exports domestically in the current fiscal year to March 31.
New Delhi issued the rare restrictions after private refiners Reliance Industries and Nayara Energy, key Indian buyers of discounted Russian supplies, began reaping major profits by aggressively boosting fuel exports instead of domestic sales. That forced state refiners to fill the void and meet demand at home by selling fuels at government-capped lower prices.
India’s oil and commerce ministries are discussing the extension of the order to beyond this fiscal year, one of the government sources said.
“We would like to extend it … we want private companies to sell diesel and petrol in the Indian market. Why should only state-run companies suffer when all Indian refiners are buying discounted Russian oil,” the official said.
A new notification is expected this week or early next week, the source added.
After the Reuters report, shares of Reliance fell as much as 1.71% to 2,184.15 rupees, the lowest since March 8, 2022.
India’s trade ministry directed Reuters to seek comments from the oil ministry. The oil and finance ministries did not immediately respond to requests for comment.
Two traders said they expected no near-term impact in the diesel market as there was a supply glut with the East-West arbitrage closed.
They also do not foresee big changes in fundamentals since Mideast and other Asian supplies can easily cover lower exports from Indian refiners.
State fuel retailers Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp booked combined losses of 186.22 billion rupees ($2.25 billion) in the nine months to December due to domestic fuel sales at below market rates, junior oil minister Rameswar Teli told lawmakers this month. In contrast, Reliance reported profit of 527.6 billion rupees while Naraya, backed by Russian oil major Rosneft, made a net profit of 62.3 billion rupees. With inflation still high, “this isn’t the right time to remove the restriction on selling a percentage of petrol and diesel in the country,” another official told Reuters. India’s annual retail inflation rate rose above the Reserve Bank of India’s upper threshold for the first time in three months to 6.52% in January from 5.72% in December.


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