MUMBAI, April 22 - India's largest energy group,
Reliance Industries Ltd (RELI.BO), is expected to report a
second consecutive drop in quarterly profit as the global
economic crisis squeezed demand and shrank refining margins. Reliance, valued at $54 billion, should show significant
growth in coming quarters from gas sales it started pumping
this month from its deep-sea field off India's east coast. By the year-end gas output from the Krishna-Godavari Basin
is expected to reach a peak production of 80 million standard
cubic metres a day -- a level the upstream regulator has said
can be sustained for six years. [ID:nDEL327402] [ID:nDEL459719] "The major value driver going ahead for Reliance is the E&P
(exploration and production) business," said Deepak Pareek, an
analyst at Angel Broking, adding the gas sales from the Bay of
Bengal field would boost revenue and earnings. "They have started exploration in prospective blocks
recently. So, any new discoveries could lead to reserve
accretion and in turn boost the valuation of the company," he
said. Reliance will also benefit from a new 580,000 barrels per
day (bpd) refinery, built by unit Reliance Petroleum (RPET.BO),
which was commissioned last December. The company is in the
process of absorbing the subsidiary, in which it owns 70
percent. Last week, the company surrendered export status and tax
breaks on its old 660,000 bpd refinery due to a global slump in
demand, freeing it up to sell petrol and diesel in its home
market and to local state marketing companies. Its refining margins are expected to have fallen to $8-$12
a barrel in the March quarter from $15.5 a year earlier,
tracking the decline in Asia's benchmark Dubai crack margin
. The Asian benchmark Dubai crack margin
averaged $5.6 per barrel in the quarter versus $7 a year ago,
data from Thomson Reuters showed. Reliance's refining margins are higher than the Asian
benchmark as its refinery is capable of processing cheaper
heavy crude to produce high value products. January-March net profit is expected to have dropped nearly
8 percent from a year ago, after dropping 9.8 percent in
October-December.
Reliance Industries Ltd (RELI.BO), is expected to report a
second consecutive drop in quarterly profit as the global
economic crisis squeezed demand and shrank refining margins. Reliance, valued at $54 billion, should show significant
growth in coming quarters from gas sales it started pumping
this month from its deep-sea field off India's east coast. By the year-end gas output from the Krishna-Godavari Basin
is expected to reach a peak production of 80 million standard
cubic metres a day -- a level the upstream regulator has said
can be sustained for six years. [ID:nDEL327402] [ID:nDEL459719] "The major value driver going ahead for Reliance is the E&P
(exploration and production) business," said Deepak Pareek, an
analyst at Angel Broking, adding the gas sales from the Bay of
Bengal field would boost revenue and earnings. "They have started exploration in prospective blocks
recently. So, any new discoveries could lead to reserve
accretion and in turn boost the valuation of the company," he
said. Reliance will also benefit from a new 580,000 barrels per
day (bpd) refinery, built by unit Reliance Petroleum (RPET.BO),
which was commissioned last December. The company is in the
process of absorbing the subsidiary, in which it owns 70
percent. Last week, the company surrendered export status and tax
breaks on its old 660,000 bpd refinery due to a global slump in
demand, freeing it up to sell petrol and diesel in its home
market and to local state marketing companies. Its refining margins are expected to have fallen to $8-$12
a barrel in the March quarter from $15.5 a year earlier,
tracking the decline in Asia's benchmark Dubai crack margin
. The Asian benchmark Dubai crack margin
averaged $5.6 per barrel in the quarter versus $7 a year ago,
data from Thomson Reuters showed. Reliance's refining margins are higher than the Asian
benchmark as its refinery is capable of processing cheaper
heavy crude to produce high value products. January-March net profit is expected to have dropped nearly
8 percent from a year ago, after dropping 9.8 percent in
October-December.
