The oil refining and marketing companies are celebrating. The winter demand for petroleum products has pushed the refining margins to a record high of $10 a barrel.

If the trend continues till the close of the current financial year, the aggregate net profit of public sector oil companies may exceed the Rs 23,000 crore (Rs 230 billion) recorded in the last financial year. Reliance, too, will gain but no estimates are available.

On the flip side, the high international prices of crude and petroleum products have put pressure on domestic petrol and diesel prices. The retail prices of these two petroleum products are likely to be raised during the next revision on December 15.

After remaining subdued in the first seven months of 2003-4, the refining margins shot up sharply in the last one month.

The margins, calculated as the difference between the international price of the Indian basket of crude and the global prices of petrol, hovered around $3 a barrel in the beginning of the current financial year. The margins touched $10 a barrel on Friday.

While the price of a barrel of Indian basket of crude on Thursday touched $28.85, unleaded petrol (free-on-board Singapore) was quoted at $38.95.

The composition of the Indian basket is based on the total industry processing of sweet, including indigenous, and sour crude in 2001-02 and represents published free-on-board prices of average Oman/Dubai crude for sour grade and Brent (dated) for sweet grade in the ratio of 57:43.

Industry sources said the average refining margins for the last financial year came to $4.3 a barrel. The margins stood at around $7 a barrel in the last quarter of 2002-03.

For a couple of years before 2002-03, the refining margins were dismal, hovering below $1 a barrel at times. The margins for diesel had turned negative during 2001-02.

Considering the low refining margins during the beginning of the current financial year, Indian Oil Corporation had predicted a 55 per cent drop in its net profit to Rs 2,744 crore (Rs 27.44 billion) in 2003-04 from Rs 6,115 crore (Rs 61.15 billion) in 2002-03.