© Reuters. FILE PHOTO: Oil tankers are seen parked at a yard outside a fuel depot on the outskirts of Kolkata February 3, 2015. REUTERS/Rupak De Chowdhuri
By Nidhi Verma, Sudarshan Varadhan and Manoj Kumar
NEW DELHI (Reuters) – India has imposed an income tax on oil producers and refiners who have boosted exports of products to gain higher profits abroad as the government seeks to increase local fuel supplies to meet increased demand and increase federal income.
The new tariffs along with export restrictions will limit fuel exports by refiners Reliance Industries and Nayara Energy, owned by Russia’s Rosneft, and could further tighten product supplies global oil and price support.
Their shares, along with those of oil producers Oil and Corp, Oil India Ltd and Vedanta (NYSE: Ltd) fell because the tax would reduce their earnings.
Private refiners Reliance and Nayara are among India’s biggest buyers this year for discounted Russian supplies and have reaped large profits by reducing domestic sales and increasing strongly boost fuel exports, including to buyers in Europe, where many buyers are avoiding imports of Russian crude.
In contrast, state-owned refineries have ramped up operations to meet growing local demand and sell fuel at lower government-restricted prices. Several state-owned refineries have also put up tenders to import fuel.
Reliance shares fell 8.9% to Rs 2,365, their biggest single-day percentage drop since November 2020, while Mangalore Refining and Petrochemical Company dropped 10% to Rs 81.55 crore.
Prices of state rivals Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum rose after the announcement of export restrictions and a tax of Rs 6 per liter on both gasoline and jet fuel and Rs 13 per liter on gasoline. oil.
“While crude oil prices have risen sharply in recent months, prices for diesel and gasoline have surged further. Refineries export these products at prices common globally, which are very high,” the government said. said in a statement.
“As exports are becoming high earners, it has been seen that some refineries are running out of their pumps in the domestic market.”
The new restrictions require oil and gas companies that export gasoline to sell to the domestic market the equivalent of 50% of gasoline sold abroad for the financial year ending March 31, 2023.
For diesel oil, they must sell to domestic buyers equivalent to at least 30% of the quantity they export.
Vedanta shares fell as much as 7.6% to their lowest level since March 2021 and shares of ONGC fell 14.2%, their worst intraday percentage drop since March 2020.
The new export restrictions will not apply to export-focused entities such as Reliance’s 704,000 bpd refinery at Jamnagar in western Gujarat and for supplies to Bhutan and Nepal, the order of government said.
Refinitiv Eikon data, refining margins for 10 ppm gasoil rose to $54.93 per barrel against Dubai crude on Friday. Jet fuel margins increased by $6.72 to $47.22 per barrel against Dubai crude, while regional gasoline prices rose to $28.75 per barrel.
“Crude oil prices have risen sharply in recent months. As a result, domestic crude oil producers are making profits,” the government statement said, justifying the imposition of the 23,250 rupees duty. Degrees (294.04 USD)/ton for domestic crude oil sales.
The new income tax will not apply to incremental barrels produced by companies this financial year and to small operators that produced less than 2 million barrels in the last fiscal year to May 31. 3 year 2022.
($1 = 79.0700 Indian rupees)
(Additional reporting by Aftab Ahmad, Sethuraman N. R and Mohi Narayan; editing by Robert Birsel and Emelia Sithole-Matarise)