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Hurricane gains
Unexpected gains likely for RIL, PCL, HOEC as refining capacity abroad is hit.
CONTENT COURTESY SHAREKHAN
| Company |
Refining capacity
(barrels per day) |
| Chalmette Refining |
190,000 |
| Chalmette Refining |
325,000 |
| Chevron Corp |
247,000 |
| ConocoPhillips |
245,000 |
| Marathon Oil Corp |
225,000 |
| Motiva Enterprises LLC |
240,000 |
| Motiva Enterprises |
125,000 |
| Murphy Oil Corp. |
190,000 |
| Exxon Mobil Corp |
493,500 |
| Valero Energy |
83,000 |
| Total |
2,363,500 |
2 September, 2005: Hurricane Katrina in the Gulf of Mexico has caused the shutdown of at least 1.8 million barrels a day of US crude-oil refining capacity, ie more than 10% of the country's total refining capacity.
The shut-down of refineries in the USA could be beneficial to Indian refining and petrochemical players like Reliance Industries Ltd (RIL), which exports nearly 30-40% of its output, as because of the shut-down of these refineries the prices of crude derivatives have started moving up.
Indian Petrochemicals Corporation along with RIL will be the major beneficiaries, since the Asian ethylene prices are also rebounding because of petrochemical plant outages in Taiwan and Thailand, as a fire at a plant owned by Taiwan's Chinese Petroleum Corp and a water shortage at Thailand's Siam Cement Pcl cut the supplies from these companies by nearly 20%. Thailand has been facing below normal monsoon which has resulted in a short supply of water needed to run the plants. Further in Japan and South Korea there may be as many as four more maintenance shut-downs while in China there may be around two closures in petrochemicals plants. The Chinese petrochemical demand, which had reduced over past couple of months due to high prices as the buyers deferred their buying decisions, is expected to pick up now as inventories move down. Thus the reducing gap between the demand and the supply should further help the prices to push upwards.
HOEC: Another beneficiary
The hurricane in the Gulf of Mexico has also damaged the oil and natural gas-producing platforms and ports in the
region. Royal Dutch Shell Plc's 220,000 barrel-a-day Mars platform, which is able to pump as much as 15% of the US Gulf output, has been damaged. Katrina has shut 92% of the total production pumped out of the Gulf of Mexico. The result: oil prices have breached the $70-per-barrel mark only to settle at $65-66 per barrel. The major beneficiaries of these developments would be Oil and Natural Gas Corporation (ONGC) and Hindustan Oil
Exploration Company (HOEC). However with ONGC being struck with the Bombay High tragedy, HOEC will be the prime beneficiary of the soaring oil prices.
(The author doesn't hold any investment in any of the companies mentioned in the article.)
CONTENT COURTESY SHAREKHAN
DISCLAIMER
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