Reliance Industries Ltd. (RIL), operator of the world’s biggest oil refining complex, declined for the ninth straight day, its longest losing streak since 1997, as profit from turning crude into fuels declined.
The shares dropped 0.8 percent to 777.5 rupees, the lowest since Nov. 26, as of 1:07 p.m. in Mumbai after declining as much as 2.4 percent. The benchmark S&P BSE Sensex fell 0.2 percent. The shares have fallen 9.6 percent since March 14.
“Refining profits are coming off their highs and that will affect Reliance,” said Deven Choksey, managing director at Mumbai-based K.R. Choksey Shares & Securities Pvt., said by phone. “This is the one business that was helping the company post higher quarterly profits.”
Lower refining earnings will add to falling natural gas production from the company’s biggest field off India’s east coast, hurting profit that rose for the first time in a year last quarter. The economic downturn in Europe, slower growth in China and new refining capacity will drive down margins globally, George Nicolaides, president of refining technology at Reliance, said earlier this month.
Diesel’s premium to Dubai crude in Singapore, Asia’s oil trading hub, has declined 30 percent to $15.32 a barrel today from this year’s high of $21.96 a barrel on Feb. 25, according to data from PVM Oil Associates Ltd. in London.
The difference between Brent crude futures contract and Dubai oil has also declined 30 percent, according to the data. A wider difference benefits Reliance as they can buy cheaper grades to process into high-quality fuels at its refineries in in the west Indian state of Gujarat.
Reliance, controlled by billionaire Mukesh Ambani, reported a better-than-estimated profit of 55 billion rupees ($1 billion) in the quarter ended Dec. 31. Refining accounted for 58 percent of operating income in the quarter, more than double from a year earlier, according to data compiled by Bloomberg.
The company and partner BP Plc (BP/) are struggling to reverse a more than two-year decline in gas output from the KG-D6 block. The companies are spending spending about $1 million a day to look for new reserves more than a mile below its biggest field, a person with direct knowledge of the matter said this month.
Reliance produced an average 28 million cubic meters of gas a day from the KG-D6 block in the nine months ended Dec. 31, 37 percent lower than a year earlier, according to a Jan. 18 report. The company started output in April 2009 and planned to raise it to a peak daily rate of 80 million cubic meters in a year.
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