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Research And Views Archives | Equitymaster

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BPCL versus HPCL: Which is better - II?

Apr 4, 2012

Equitymaster compares to key players - BPCL and HPCL in the domestic downstream oil and gas sector.

BPCL versus HPCL: Which is better?

Mar 28, 2012

Equitymaster compares to key players - BPCL and HPCL in the domestic downstream oil and gas sector.

Deregulation:A losing proposition for Public Oil Marketing Companies

Mar 2, 2011

Public OMCs are better off with full under recovery compensation than fuel price deregulation

Fuel price hike: Impact on OMCs

Jun 5, 2008

The government's relief package to the PSU oil marketing companies (OMCs)- IOCL, BPCL and HPCL-announced on June 4, 2008 impacts many segments of the Indian economy. There are macro level implications on inflation and fiscal deficit along with micro level implications on companies in the banking, logistics, aviation, auto and FMCG sectors among others. In this article, we shall look at how the package affects the OMCs.

Refining: Can India be global hub?

Mar 7, 2007

The public sector oil refining and marketing major, BPCL has recently decided to establish a trading desk at Singapore to manage its exports of refined products. This once again signifies the intent of Indian refiners to target exports and make India one of the major efining hubs in the world. Now, is the dream of becoming a global refining hub realistic?

Fuel prices: India vis-a-vis the others

Feb 14, 2007

In the previous article, Petrol: What are we paying for?, we had a look at the different components that make up the domestic petrol prices. It was revealed that basic costs form only 48% of the selling price of the petrol and the remaining 52% was accounted for by taxes.

Petrol: What are we paying for?

Feb 12, 2007

Petroleum products have strongly pervaded our daily lives, more so diesel and petrol. We know that the oil marketing companies are losing money on the sales of these products due to high crude oil prices internationally. But have we ever thought about the break-up of the price we pay for these fuels. In this write-up, we have made an attempt to identify the different components of the price of petrol and throw some light on each of them.

Refining: A case for higher spreads!

Jan 10, 2007

While rising petroleum product prices have indeed been a cause of worry in recent times, the fact that this is not entirely crude price driven, makes us believe that they are likely to remain stronger on account of certain structural changes in the refining industry. Put otherwise, we believe that the spread between crude oil and product prices is likely to remain stronger than what it was historically. Here are a few reasons as to why we believe this would happen:

Refining industry: A complete overview- I

Dec 20, 2006

Crude oil is a mixture of scores of chemicals and compounds, primarily hydrocarbons. Crude oil must be broken down into its various components by distillation before these chemicals and compounds can be used as fuels or converted to more valuable products. For converting the basic hydrocarbon, crude, into refined consumer products we require refineries. The refined products are then ultimately sold to end-users. Thus on the basis of this, we classify the oil industry into two segments, first ups

Marketing of petroleum products: An overview

Oct 9, 2006

Marketing of petroleum products is set to witness a paradigm shift. Post deregulation of the sector, private players are entitled to open new outlets provided they fulfill certain investment condition. Ever increasing need and expectations of the customer is changing the operational economics of the retail outlet. Consumers are demanding more convenience in the form of comfort, product options and fleet-monitoring services. While retail outlets are heeding to them and revamping their operations

Private players in fuel marketing: A serious threat?

Oct 6, 2006

The marketing of petroleum products was solely with the public sector oil marketing companies (OMCs) prior to dismantling of the APM and deregulation of the downstream oil-marketing segment. IOC, BPCL, HPCL and IBP were the sole downstream players (OMCs) in the oil value chain. However, the sector was deregulated and opened up for the private players at the start of FY03. Reliance (RIL), Essar and Shell were amongst the key players to be granted marketing rights. With the entry of private player

Crude oil: Basic facts

Sep 25, 2006

Crude oil is the engine that propels the world economy, thus economists and analysts track its movements to see the growth trend in economy and corporate sector. Crude oil has shown great volatility in the past with it scaling highs in early 1980’s and thereafter cooling to lower levels in 1990. However recently, over the last few years, prices again shot-up, followed by the recent cooling down. In this backdrop, we analyze the major consumers and producers of crude oil and the change in demand

Petroleum products: Overview and growth profile

Sep 11, 2006

Crude and its derivatives are the propelling engines of any economy and sales of petroleum products are contingent upon the growth in economy. In the past, we have seen a fair degree of correlation between the growth in petroleum products and the growth in the overall economic activities. In this article, we provide an overview of major petroleum products in India and their growth trend. These products account for nearly 70% of the total petroleum products sold in the country in volume terms.

Refining: Understanding GRMs...

Sep 7, 2006

After touching historic lows in the late 1990s, the oil-refining sector has seen a significant increase in gross refining margins (GRMs) owing to two factors.

Refineries: Some key factors…

Aug 10, 2006

In the previous articles, we highlighted the business model and financial performance of HPCL and BPCL. Taking the same theme forward, we now move on to analyzing the historical valuation of the two companies. However, before we do that a short tutorial on key factors that affect the performance of a refining company is in order.

Indian Oil Corporation (IOC): Business model analysis

Jul 3, 2006

After covering a host of standalone refineries, we now shift our focus towards the refining and marketing (R&M) aspect of the energy value-chain. We start with this segment by analyzing the biggest player on the block, IOC.

CPCL: Then and now

Jun 12, 2006

After having studied Kochi Refineries and MRPL, we now turn our focus to the biggest player in the Southern India, Chennai Petroleum Corporation limited (CPCL). CPCL, which performed excellently in FY05, saw a sudden reversal in its fortunes in FY06.

MRPL: Up and running

May 8, 2006

With the integrated refinery i.e. presence in refining and marketing of petroleum products still bleeding in light of the current pricing policy of the government, standalone refineries have managed to stay afloat. This was on the back of higher refining margins. But even here, forced discounts are an issue. In this background, we take a look at MRPL, the past performance and the future growth prospects.

Energy: A Porter's perspective

Apr 12, 2006

Refining industry worldwide is performing well over the the past few years, which could be attributed to production disruptions due to natural calamities, lower spare capacity worldwide in addition to the growing demand for petroleum products worldwide. All these factors have resulted in refining companies earning significantly high (gross refining margins) and thereby, reporting higher profits. In this article, we take a look at the Indian refining sector through Michael Porter's model of compe

Kochi Refinery: A mixed show

Apr 7, 2006

Considering the current government policy with respect to pricing of petroleum products, the performance of integrated refining players (with marketing presence) has deteriorated significantly. Prospects are also not looking good. In such a scenario, standalone refining majors have many things going in favor of them. Given the high crude prices and strong demand for petroleum products globally, gross refining margins have been favorable. In this article, we take a look at Kochi Refineries, one o


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