Released on = July 30, 2007, 6:04 am

Press Release Author = Dipayan Mazumdar and Associates

Industry = Financial

Press Release Summary = Reliance Industries Limited (RIL) has once again announced
good results for the first quarter of FY2007-08. The GRM for the first quarter was
US$ 15.4 /bbl as against US$ 12.4 / bbl in the corresponding period of the previous
year.



Press Release Body = Reliance Industries Limited (RIL) has once again announced good
results for the first quarter of FY2007-08. The GRM for the first quarter was US$
15.4 /bbl as against US$ 12.4 / bbl in the corresponding period of the previous
year.

This performance is a result of a highly complex refinery along with most efficient
liquid port, location advantage and following sound economics of buying cheap and
selling premium products. The complex refineries allows RIL to buy and process some
of the heaviest and sour crude the world has seen and which only a handful of
refineries have the capability to process. The refinery regularly tries out crude
from new sources, which are both cheaper and challenging to process.

During the last quarter RIL tried out crude with an API of 21 - 24. API is an
indicator of how heavy, sour and difficult the crude is to process. The differential
in light and heavy margins has been growing in the past few quarters and today it
stands at US $ 5 - 5.5/bbl

With RIL refinery converted into EoU the company has focused on exports with
reducing sales in the local market where it is incurring losses as government
refuses to give RIL subsidy at par with what it gives to the PSU oil companies.

For a long time now RIL has outperformed the Singapore complex benchmark GRM by a
wide margin. In fact the margin has become so wide that there is no point in
comparing RIL's refining margins with the Singapore complex benchmark. The factors
that have contributed to high GRMs are

Cost of sourcing crude oil
Manufacturing reliability and efficiency
Ability to produce quality transportation fuels
Flexibility of crude oil receipt and product evacuation infrastructure

The highly complex configuration of the RIL refinery gives it the ability to process
heavy and sour crude. The incremental oil supply through new discoveries is also in
this category. Further, many of these crude are in the \"challenged\" category and
require unique technical capabilities for processing. These factors continue to
support high levels of light heavy differentials and provide a unique advantage to
the refineries who posses the capability to process heavy and sour crude oils.
During the quarter RIL processed 4 new crude which it procured at a substantial
discount.

The RIL refinery continues to reap the benefits of access to world class logistical
infrastructure. This allows the refinery to import up to 100 percent of its crude
oil requirement in VLCC\'s (Very Large Crude Carrier) capable of bringing up to 2
million barrels in each shipment. This reduces the freight costs considerably and
optimizes the overall landed cost of crude oil. The product evacuation
infrastructure again provides the flexibility to evacuate the products in varying
parcel sizes and optimizes the supply chain costs of the buyers. This again results
in higher realization to RIL for its products

RIL continues to demonstrate its superior manufacturing capabilities by continuing
to run its refinery in a smooth, safe and flexible manner. While worldwide refinery
outages have led to spikes in margins, RIL refinery has maintained its reliable
operations to take advantage of these opportunities. Efficiencies in energy
consumption, ability to swing production and quality at short notices, readiness
and adaptability to accept different crude blends on a continues basis, adjusting
operating parameters, blending management and several other factors all add up to
a significant contribution to RIL\'s GRM.

Growing concerns on the environmental front have lead to most countries making their
fuel specifications stringent. As RIL is critically dependent on export markets, it
continuously optimizes its product pattern to maximize netbacks to the refinery.
This is done while feeding fuels to suit requirements of different quality
conscious markets across the world on the one hand and simultaneously making its
crude slate heavier and sourer and maximizing \"bottom of the barrel\" conversion.

In summary while market condition have remained favourable, the large scale,
flexible and complex configuration, path breaking efficiency in operations,
innovation around crude procurement and the structural advantages of the refinery
have uniquely positioned RIL to take advantage of the unfolding opportunities in
the refining sector.



Web Site = http://www.dmanewsdesk.com

Contact Details = Dipayan Mazumdar and Associates
J-1824 (LGF) Chittranjan Park
New Delhi- 110019
91-11-26270629
91-11-26273155
Email: dmanews@gmail.com
Website: www.dmanewsdesk.com