New Delhi: Mangalore Refinery & Petrochemicals Ltd is hoping its gross refining margin will surge to around $10 a barrel during the current financial year to March due to the relentless rise in global crude oil prices, managing director R Rajamani said.

The gross refining margin of Oil and Natural Gas Corp Ltd’s subsidiary had risen to $6.96 a barrel during 2007-08 from $4.7 per barrel in the previous year.

“This year, we have started with strong GRMs and we expect this trend to continue for the rest of the year due to high crude prices. For the full year, it can be around $10 per barrel,” Rajamani said.

He said the company registered gross refining margin of $13 a barrel in April, compared with around $7-8 a year earlier.Rajamani said a $3 rise in GRM to $10 per barrel would add around Rs 1,260 crore to the company’s revenues during 2008-09.

“Every $1 per barrel rise in GRMs leads an increase in revenues by around Rs 420 crore,” he said.

Rajamani said crude prices are expected to be remain high during the current financial year due to demand-supply gap, weakening of the dollar against euro and some geo-political issues, but prices of petroleum products will rise faster than price of crude.

He said the company could face a time overrun for the expansion of its refinery in Mangalore, which was scheduled for completion by end 2010.

The company,which is expanding its refinery to 15 million tonne from current 9.69 million, is faced with a cost overrun of around 37%.

The approved cost of the project is Rs 8,000 crore, but could rise to around Rs 11,000 crore.

“There could be some slippage. We have just received the environmental clearance,” Rajamani said.

Source : DNA