Oil & Gas - diesel under-recoveries in double digits - Edelweiss

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Simple and Singapore GRMs surged 5.2% and 8.4% M-o-M, respectively, during February due to improvement in cracks of middle distillates (jet/kerosene +18.8%, diesel +10.1% M-o-M) partially offset by reduction in cracks of light distillates (gasoline -15.5%, naphtha -215.5%, and LPG -34.8%). Diesel under-recoveries averaged INR 9.0/lt while current (February 28) under-recoveries were at INR 10.3/lt. While LPG under-recoveries averaged INR 286/cylinder (-13.4% M-o-M), kerosene under-recoveries were at INR 20.7/lt.

Some major company events during the month:

ü  RIL announced a 30% stake sale in its 23 O&G blocks to BP for USD 7.2 bn. 

ü  Essar Energy signed exclusivity agreement with Shell to buy its UK refinery for USD 350 mn.

ü  Crude prices surged during the month due to political tensions in Egypt and Libya.

ü  No changes in excise and customs duty structure in Budget 2011.

ü  GAIL likely to settle long pending arbitration over gas pricing with RIL-BG at INR 7.38 bn.

ü  India asked Qatar to double its LNG supply to 15 mmt.

ü  IOCL and MRPL announced plans to shutdown refineries in April and August, respectively, for maintenance.