Private refiners tap India’s drivers as export markets tighten

By Nidhi Verma

NEW DELHI (Reuters) -India’s two major private-sector refiners, which have long prioritised exports, are turning to local sales, grabbing share in the country’s fast-growing $150 billion fuel retail market as weaker global demand squeezes profit margins offshore.

Reliance Industries and Nayara Energy are stepping up sales at home as fuel demand growth slows in developed markets and China, the world’s second biggest oil consumer, with the transition to electric vehicles.

The lower demand offshore combined with supply competition from new refiners, such as Dangote in Nigeria, and rising exports from China’s underutilised processors have compressed global refining margins and have made the Indian market, where suppliers save on freight and taxes, more attractive.

As a result, “private refiners are increasingly looking to supply to the domestic market, which is still growing at a healthy pace,” said Prashant Vasisht, senior vice president at credit rating firm ICRA.

The International Energy Agency expects India will become the largest source of global oil demand growth out to 2030, in contrast with China, where fuel demand may have already peaked.

FGE analyst Dylan Sim said Indian gasoline consumption and diesel demand are on track to grow around 4% and 2% per year, respectively, over the next decade or so.

“Couple that with the market volatility and uncertainties seen in recent years, it makes sense for these private companies to try and diversify their businesses,” Sim said.

PRIVATE PLANTS HOLD CRUDE ADVANTAGE

Offering discounts and growing their networks of big, modern stations featuring expansive retail offerings, private sector operators expanded their share of diesel sales to 11.5% and gasoline sales to 9.2% in the fiscal year that ended in March 2025, up from 5.2% and 6.7% respectively two years earlier, government data showed.

Reliance, controlled by billionaire Mukesh Ambani, and Nayara have a key advantage that allows them to undercut the dominant state-owned refiners at the pump. They can run cheaper crudes through their plants than their bigger rivals, which have simpler, aging refineries.

The two are the country’s biggest buyers of discounted Russian crude, available since 2022.

While the private refiners do not publish their refining margins, analysts at Jefferies expect Reliance’s margin to hold around $2 a barrel stronger than the benchmark Singapore refining margin due to its blending of cheaper Russian and Canadian crudes.

Reliance sells fuels through Jio-BP, its retailing tie-up with UK major BP which has 1,916 outlets in India.