Production Costs of Petro-Products

The Minister for Petroleum & Natural Gas Shri S. Jaipal Reddy informed the Rajya Sabha in a written reply today that the cost of production by Oil and Natural Gas Corporation Limited (ONGC) and Oil India Limited (OIL) in the year 2010-11 is US$ 37.29 per barrel and US$ 27.76 per barrel respectively. 

He also informed that the net crude oil price realized by ONGC and OIL during 2010-11 was US$ 38.35 per barrel and US$ 41.41 per barrel respectively.  The elements of sale price of crude oil per barrel during the financial year 2010-11 for ONGC and OIL are as under:

Particulars US$ per barrel
Gross Price 89.41 89.53
Less: Discount 35.65 28.67
Net Price after discount 53.76 60.86
Less: Cess (including NCCD*, Education Cess) 8.25 8.06
Less: Royalty 5.45 9.07
Less: VAT &CST 1.71 2.32
Net Realized Price 38.35 41.41


*National Calamity Contingency Duty (NCCD)

In reply to another query, the Minister added that refining is a process industry, where crude oil constitutes around 90% of the total cost. Crude oil is processed through several processing units such as Crude Distillation Unit (CDU), Vacuum Distillation Unit (VDU), Fluid Catalytic Cracking Unit (FCCU), Hydro Cracker Unit, Lube Unit etc. Each of these units produce intermediate product streams, which require extensive reprocessing and blending. Petroleum products are processed from blend of various intermediate streams. The blending of intermediate products streams from various units for making finished petroleum products results in difficulty in apportioning the total cost to individual refined products with accuracy. Therefore, individual product-wise costs are not identifiable separately.

Shri Reddy emphasised that, as mentioned above, the actual cost of production is not available separately for petrol and diesel. However, the oil marketing companies pay Refinery Gate price, when they purchase Petrol and Diesel from refineries. Refinery Gate price is based on Trade parity, which is the weighted average price of Import Parity Prices and Export Parity Prices in the ratio of 80:20.


Refinery Gate Price for Delhi as on 1.8.2011 is as under:

Product RTP (Rs./ Ltr.)
Petrol 35.39*
Diesel 37.46

*As per the information received from Indian Oil Corporation Ltd.

More Under Finance

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

June 2021