India’s Reliance Industries Limited (RIL) has reported a significant increase in profitability in its oil-to-chemical (O2C) business. This is attributed to India sourcing cheaper crude oil from Russia. Despite global uncertainties and disruptions in commodity trade flows, the company’s O2C segment posted its highest-ever operating profit.
Chairman and Managing Director Mukesh Ambani noted that RIL’s oil to chemicals O2C segment posted its highest-ever operating profit despite global uncertainties and disruptions in commodity trade flows. “Our oil and gas segment also delivered very strong growth and is now poised to contribute nearly 30% of India’s domestic gas production,” he noted.
Revenue Decreased While Profitability Increased
The O2C segment’s lower revenue was primarily attributed to the sharp reduction in crude oil prices and lower price realization of downstream products. However, the segment’s operating profit improved significantly due to cheaper crude sourced from Russia, which helped optimize feedstock costs and drive advantageous ethane cracking economics. The O2C business clocked revenue of Rs 1.29 trillion ($17.2 billion).
Record Operating Profit Despite Global Uncertainties
Despite global uncertainties and disruptions in commodity trade flows, Reliance Industries Limited’s oil-to-chemicals segment has posted its highest-ever operating profit. This profitability increase can be attributed to the company’s optimization of feedstock costs and advantageous ethane cracking economics. The segment’s operating profit improved by 14.4% year-on-year to Rs 162.93 billion ($2.2 billion). The margin also expanded by 290 basis points to 12.7%, driven by the strength in transportation fuel cracks.
Strong Growth in Oil and Gas Segment
Reliance Industries Limited’s oil and gas segment has delivered strong growth and is now poised to contribute almost 30% of India’s domestic gas production. This growth is due to the company’s strong performance in the oil-to-chemicals business and its continued optimization of feedstock costs and advantageous ethane cracking economics.