Monday, April 28, 2008

Oil facts

Govt. OMCs viz., IOC, HPCL and BPCL sell about 2 Million Barrel Oil daily to retail consumers. Their combined under recovery for rise in each dollar of crude price is $2 Million or Rs 8 crore, approx.

At the current selling prices of their finished products, there is no under recovery for Crude at about 51 $ per barrel. In H-1 2007-08, the average price of Indian basket was about $69 per barrel thus resulting into daily under recovery of Rs 144 crores and total under recovery of about Rs 26,208 crores.

The daily under recovery for the given prices of Indian basket in H-2 comes out to be as under:

The estimated under recovery of about 69,700 Crores as estimated by the Govt. for the year of 20007-08 is based on Crude prices of 70$ per Barrel for the entire year of 2007-08. Currently when the Indian basket is ruling around $100 per barrel, the daily under recovery of OMCs is about 400 Crores. Petrol is being sold at a loss of Rs 8.74 a litre, diesel at Rs 9.92 per litre, kerosene at Rs 20.53 a litre and LPG at Rs 256.35 a cylinder.

As per the loss sharing mechanism of oil marketing companies, the GOI issues oil bonds to the tune of 42.7% of under recoveries, 33.33% of the loss if born by the E&O companies and remaining by the marketers.

The price of India's crude oil basket, which comprises of Oman-Dubai sour (high sulphur) grade crude oil and Brent dated sweet (low sulphur) crude oil in a 61.4:38.6 ratio, has averaged $101.23 a barrel so far this month as against $99.76 per barrel in March and $92.37 per barrel in February.

The high oil prices have resulted in the country's oil marketing companies losing over Rs 77,300 crore in 2007-08 as they sell petrol, diesel, LPG and kerosene at subsidised prices. At current crude oil prices, the revenue loss of these companies is expected to go up to around Rs 150,000 crore in 2008-09.