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European energy crisis to benefit Reliance and Nayara: Reports

European energy crisis to benefit Reliance and Nayara: Reliance Industries and Nayara Energy are among the Asian refiners that produce winter-specification diesel for the European Union, therefore the ongoing energy crisis in Europe is anticipated to be advantageous for them.

European energy crisis to benefit Reliance and Nayara: Key Points

  • Since state-owned oil businesses do not export, Reliance and Russia’s Rosneft-owned Nayara benefit from this.
  • Reliance is the largest importer of Russian crude and the major exporter of diesel from the nation.
  • According to oil analysts at LSG group’s market data provider Refinitiv, the energy crisis will only worsen as of next month, when Opec’s output cut of 2 million barrels per day goes into effect, and as of February 5, when the restriction on Russian imports of refined goods goes into effect.
  • They claim that since the start of the Ukrainian conflict, Reliance and Nayara have purchased 2.82 million tonnes of Russian oil per month between March and September, which is almost ten times as much as they did before the invasion.
  • Following Russia’s invasion of Ukraine in late February, Indian exports to Europe have already began moving northward.

Reliance Industries and Nayara Energy: Analysis

  • Indian refiners increased their exports to Europe following the invasion, increasing them from the pre-invasion average of 5,70,000 tonnes per month to an average of 7,30,000 tonnes per month, or 21% of their overall exports of 2.64 million tonnes/month, which peaked at 1.1 million tonnes in March.
  • Since the war, domestic refiners have averaged operating at 99.86% of their 5.14 million barrel per day (bpd) capacity, compared to a pre-war average of 94.26%.
  • Their gasoline production increased significantly from the pre-invasion average of 8.95 million tonnes per month to a peak of 10.57 million tonnes in March, averaging 9.75 million tonnes per month from March through August.

After the invasion, Reliance’s 5.68 million tonnes per month Jamnagar refinery was operating at 93.8% of its maximum capacity, which was higher than the pre-invasion average of 92.3% but still less than the pre-Covid average of 110%. This suggests that the benefits of Reliance’s diesel output are positive. Nearby Hazira is home to the 1.67 million tonnes per month Nayara refinery, which is controlled by Rosneft.

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