Soaring prices may hit oil firms` expansion plans

[phantom power]

Huge retail losses due to soaring global crude oil prices are likely to hit the expansion plans of domestic oil marketing companies.

“If we continue to incur these kinds of under-recoveries for another year, our project funding will get impacted,” said Indian Oil Corporation (IOC) Chairman and Managing Director Sarthak Behuria.

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Major refinery projects around the world have been hit by rising project costs. For example, ConocoPhillips’ refinery in the UAE and a Saudi Aramco refinery project are being reviewed due to rising project costs.

The debt component for these projects had grown bigger than equity, resulting in projects being reviewed, said a Mumbai-based analyst.

“Previously, oil companies would self-finance their projects. Now it is becoming very difficult for these companies to get loans at competitive rates. This will seriously affect their project funding,” said an analyst of a leading consultancy firm.

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