RIL, Essar start reopening Indian retail outlets

OREANDA-NEWS. Indian private-sector refiner Reliance Industries (RIL) is gradually opening its retail stations after Delhi deregulated diesel pricing last October, while rival Essar Oil has restarted sales of diesel at its domestic outlets.

RIL has already commissioned around 230 of its 1,430 retail outlets, which were shut down a little less than a decade ago as the government reintroduced price controls on diesel. State-controlled refiners IOC, Hindustan Petroleum and Bharat Petroleum were all compensated by Delhi for losses incurred on their retail sales, making it impossible for RIL and Essar to compete in the domestic market.

Gasoline prices in India were deregulated in 2010, following which Essar operated a small portion of its outlets selling the fuel. But diesel is India's largest consumed oil product at 1.2mn b/d. Essar has about 1,400 fuel stations across India, with plans to add another 300.

Essar and RIL had accounted for around a fifth of India's diesel and gasoline sales before they closed most outlets by 2008. RIL had a market share of 14pc in diesel and 7pc in gasoline before it shut outlets.

Average gross refining margins at RIL fell by 12pc during October-December to \$7.30/bl from \$8.30/bl in the previous quarter, as a plunge in oil prices left stocks at a lower holding value. Brent crude price has dropped more than 50pc to around \$47/bl since last June.