Mangalore Refinery & Petroleum (MRPL) has announced its decision to cease purchasing Russian oil due to the associated risks, particularly those related to potential sanctions violations. This move highlights the growing complexities in the global oil trade amidst ongoing geopolitical tensions.

Key Points of the Decision

• Risk Avoidance: MRPL's executive emphasized the importance of steering clear of potential sanctions violations in Russian oil transactions.
• Banking Scrutiny: Indian banks are now requesting comprehensive transaction records for Russian oil deals, from producers to sellers.
• Compliance Focus: The decision underscores MRPL's commitment to adhering to international trade regulations and avoiding potential legal complications.

Implications for Indian Oil Industry

This development could have significant implications for India's oil import strategy, especially considering the country's growing energy needs. MRPL's decision may prompt other Indian refiners to reassess their stance on Russian oil purchases, potentially reshaping the landscape of India's oil import sources.

Global Context

MRPL's move comes amid a complex global scenario where:

• Western sanctions on Russia have disrupted traditional oil trade routes.
• Many countries and companies are grappling with the balance between energy security and compliance with international sanctions.
• The oil market continues to face volatility due to geopolitical tensions and supply uncertainties.

As the situation evolves, it remains to be seen how other Indian and global oil companies will navigate these challenges, balancing economic interests with geopolitical considerations and regulatory compliance.

Mangalore Refinery & Petroleum (MRPL) has reported a robust performance for the second quarter, marking a significant recovery from the previous quarter. The company's financial results and operational highlights underscore its resilience and strategic positioning in the refining sector.

Financial Highlights

MRPL posted impressive financial results for Q2:

The company's revenue from operations reflected the rise in product cracks and base crude prices compared to the previous quarter.

Operational Performance

MRPL's operational performance showed significant improvement:

• Throughput: Processed 4.4 MMT of crude and other feedstocks, recovering from 3.5 MMT in Q1 after completing turnaround maintenance.
• Fuel and Loss: Stood at 10.42%, expected to normalize to around 10% for the remaining fiscal year.
• Crude Sourcing: Russian crude comprises 30-40% of the sourcing basket, with management expressing confidence in continued economic sourcing despite geopolitical concerns.
• Export Sales: Account for approximately 40% of total turnover.

Product Yield

The company reported the following product yield for Q2:

Retail Expansion

MRPL is actively expanding its retail presence:

• Currently operates 185 retail outlets across Karnataka, Kerala, and Tamil Nadu.
• Targets to reach 250 outlets by the end of the fiscal year.
• Plans to add 100-130 retail outlets annually going forward.
• All new outlets will feature at least one alternative fuel option, such as CNG or EV charging.

Future Outlook

• MRPL expects Q3 throughput to exceed 4.43 MMT.
• The company anticipates strong performance with improved product cracks in October.
• Management remains optimistic about domestic demand growth, particularly in MS (petrol) and HSD (diesel) segments.

Strategic Initiatives

• Implementing a Sustainable Aviation Fuel (SAF) project with a target production of 20 kilolitres per day, aiming to meet the 1% mandate by January 2027.
• Exploring co-processing options for SAF production in existing units.
• Focusing on decarbonization efforts, including a power input project expected to reduce carbon emissions, scheduled for commissioning by mid-next year.

MRPL's strong Q2 performance, coupled with its strategic initiatives in retail expansion and sustainable fuel production, positions the company well for continued growth in the evolving energy landscape. The management's confidence in sourcing economics and anticipated strong product cracks suggests a positive outlook for the coming quarters.