Power hunger

India's Reliance and Nayara reap a harvest from Europe's energy crisis

The Indian refiners have increased exports to the EU since the Ukraine war broke out in February
Blessing in disguise? 
Blessing in disguise? 
Image: Shailesh Andrade (Reuters)
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The Ukraine war and the ensuing energy crisis in the European Union (EU) have considerably benefited private Indian refiners.

Europe’s energy demand far outstrips supply and this is only expected to worsen until the Russia-Ukraine war ends.

A few refiners in Korea and India are the only ones who produce winter-specific diesel for the EU.

Reliance Industries (RIL), India’s biggest diesel exporter, and Nayara Energy, a Mumbai-based Indo-Russian downstream oil company, are among them.

Europe’s power crisis fuelling refineries

The Indian refiners have been making more money than usual from strong diesel margins since the invasion in February, a recent analysis by market data provider Refinitiv has shown.

Their exports to Europe have increased to an average of 730,000 tonnes a month since March, as against the pre-invasion average of 570,000 tonnes. This average is around 21% of RIL and Nayara’s total monthly exports of 2.64 million tonnes, Refinitiv noted.

Their exports to the EU peaked at 1.1 million tonnes in March.

With experts now worrying that the crisis will continue longer than expected, the refiners are looking to make up for the covid-triggered slump.

Europe’s loss is Reliance’s gain?

India’s state-owned oil firms do not export oil. This puts RIL and Nayara at an advantage. Both have reportedly increased their production capacities to meet the EU demand.

This demand has come as a significant relief to Russia-backed Nayara. Its September quarter profit had nearly halved from the previous quarter after India imposed a windfall tax on exports of refined petroleum products.

This tax had hit RIL, too, but only marginally. It is, however, expected to further erode the company’s profits.

The demand from Europe has helped prune their losses.