How oil-to-chemicals integration worked for RIL

Mumbai: In its first-quarter results, Reliance Industries Ltd. (RIL) surpassed the investor estimates to register an increase in consolidated net profit by 6.8 per cent to Rs 10,104 crore.

Even as RIL's newer businesses -- telecom and retail – for the most part led the profit, the earnings could have been reduced had it not started on its oil-to-chemicals integration path a few years ago, said the company management.

"We know the environment for refining and petrochemicals was volatile. The volatility in crude, the macroeconomic headwinds and China-US trade-related development all impacted the market but thanks to the level of integration we have between refining and petrochemicals, a lot of this volatility has gotten absorbed and without having any meaningful impact on our earnings," said V Srikanth, joint CFO, RIL at the company's first-quarter earnings meet on Friday.

Petrochemicals slice in revenue lowered to Rs 37,611 crore by 6.6 per cent year-on-year basis in Q1 FY20 because of price realisations and decrease in volumes, reported the Mint. This happened mainly in monoethylene glycol (MEG) and paraxylene (PX). It was partially balanced by a growth in volumes of polyesters.

Affected by lower volumes, petrochemicals division earnings before interest and tax were down by 4.4 per cent at Rs 7,508 crore year-on-year.

An oil-to-chemical strategy was developed by Reliance to transition the Jamnagar refinery from fuels producer to chemicals producer.

"The objectives are to preserve as well as upgrade existing refinery margins, while maximising asset utilisation, for a sustainable competitive cost of chemicals," RIL said in its 2018-19 annual report.

Multizone catalytic cracking (MCC) process developed by RIL converts an array of raw materials to high-value propylene and ethylene in a single riser.

The company seeks to accomplish more than 70 per cent conversion of crude oil refined to aromatics and competitive chemical building blocks of olefins in Jamnagar.

At the completion of oil-to-chemical transition, the Jamnagar refinery product breakup shall be only jet fuels and petrochemicals.

"All refined products priced below crude shall be eliminated for chemicals at the initial stage. Final fuel de-risking shall target the elimination of gasoline, alkylate and diesel, synchronised to the global evolution of E-mobility and transport fuel demand decline," RIL said in its annual report.