India’s Mangalore Refinery and Petrochemicals Ltd MRPL.NS plans to phase out fuel exports in the next two to three years as it expands its local retail network to diversify its sources of revenue, its managing director said.
MRPL, a subsidiary of state-controlled Oil and Natural Gas Corp ONGC.NS, operates a 300,000 barrel-per-day coastal refinery in southern Karnataka state, mostly supplying the state refiners that own about 90% of India’s retail fuel stations and exporting the remainder.
Sanjay Varma told Reuters that MRPL plans to expand its retail outlets in southern India to 1800 by 2027 from about 71 now.
“When refining margins are low (retailers) make a handsome profit because marketing margins are good. It gives a natural hedge if we have marketing margins,” Varma said.
MRPL’s exports, previously 2-3 cargoes each of diesel and jet fuel monthly, have suffered in the last six months as maintenance shutdowns at other refiners raised demand for its fuel.
“Our plan is to go for zero exports as we would like to push volumes through our retail outlets,” Varma said.
In the current fiscal year to March 31, MRPL aims to operate its refinery at about 107-108% capacity, down from 115% a year ago, with plans for a 35-40 day maintenance outage of a 60,000 bpd crude unit and secondary units from late August.
MRPL would cut crude imports from countries including Russia in August and September because of the outage, Varma said.
“We don’t want to carry a higher crude inventory level,” he said, adding that MRPL did not plan to enter into a term contract for Russian oil as spot prices offered “more flexibility” to secure cheaper supplies.
MRPL in 2016 announced a plan to expand its refinery’s capacity to 360,000 bpd. Given an expected rise in local demand for petrochemicals, it is now looking to set up an oil to chemical plant with a view to producing specialty chemicals and active pharma ingredients, Varma said.
The company is aiming to have a detailed feasibility report in 6-7 months.
