Reliance Industries Ltd (RIL), which operates one of the world’s most advanced refineries at Jamnagar in Gujarat, is expected to see a boost to its refining margins after ramping up purchases of Venezuelan crude oil in October.
The heavy, sour Merey 16 crude from Venezuela is difficult to process, making it less attractive to most refineries despite being available at a significant discount. However, RIL’s ability to refine the grade profitably gives it an edge over peers, experts said.
This adds to the benefit Reliance is already reaping from fuel cracks being at an all-time high, the experts added. Cracks refer to the difference between the price of a barrel of a refined product and that of crude oil. For instance, if crude oil costs $80 a barrel and diesel sells for $160 a barrel, the diesel crack is $80 a barrel.
Processing Venezuelan oil could help Reliance Industries generate a sustainable structural premium of $3 per barrel over domestic public sector refiners like Indian Oil Corporation Ltd, according to Yes Securities. On an annualised basis, every $1 per barrrel boost to the refining margins could translate into ₹4,200 crore of Ebitda (earnings before interest, taxes, depreciation, and amortisation) boost, according to the brokerage.
This is despite the higher logistics costs of shipping crude from Venezuela, which is farther away than suppliers such as Russia and countries in West Asia.
Venezuelan oil imports at seven-year high
RIL’s purchase of Venezuelan oil in October is expected to be at a seven-year high, as per data from Kpler, a market intelligence firm. The company is expected to receive about 370,000 barrels per day of oil from the country this month, according to early projections from Kpler. The actual volumes could change if some of the cargoes scheduled for October slip into November.
India’s oil trade with Venezuela resumed in April following a long hiatus. Reliance accounts for most of these shipments.
“The key point is that Venezuelan crude has returned as a meaningful part of India’s crude basket in 2026 after being largely absent in recent years,” said Sumit Ritolia, senior manager, modelling, at Kpler. “Flows accelerated particularly from April onwards.”
Reliance Industries did not offer a comment for this story.
Shares of RIL settled 1% lower at ₹1,159 apiece on the BSE on Monday. The stock has lost over a fourth of its value since the beginning of 2026 compared to an over 15% decline in the benchmark Sensex over the same period.
Jamnagar’s refining edge
The company has historically been a large buyer of crude from Petróleos de Venezuela, S.A. (PDVSA), Venezuela’s state-owned oil and natural gas company based in Caracas. However, the trade relationship was impeded in recent years due to US sanctions and PDVSA’s falling production.
“RIL’s historical GRM premium over domestic peers was fundamentally anchored by deeply discounted Venezuelan heavy crude, world-scale deep-conversion capability, and integrated captive logistics,” Harshraj Aggarwal, executive vice-president – institutional equity research at Yes Securities, noted in a report on Saturday.
The refining-margin premium RIL earned from processing discounted Venezuelan crude narrowed in recent years as US sanctions curtailed supplies from the country and Indian state-run refiners upgraded their capabilities to process heavier crude, he said. Discounted Russian Urals oil, which became India’s largest source of imported crude, further levelled the playing field in the domestic market, he said.
“With Venezuelan crude now selectively returning at multi-year highs and Russian crude discounts narrowing, we see structural headroom for Jamnagar’s margin spread to re-widen,” Aggarwal noted.
The Merey 16 crude oil has an API gravity of 15°-16°, which is significantly lower than the benchmark Brent’s 38°-39° API, according to S&P Global. This means the oil is very dense, almost like a sludge, earning it the classification of being extra-heavy. The sulfur content of this oil is also higher at about 2.5-3.4% compared to 0.3-0.4% for Brent, earning it the classification of being sour.
API gravity, a measure developed by the American Petroleum Institute, indicates how heavy or light crude oil is relative to water. The higher the API gravity, the lighter the crude. Crude oil with an API gravity of 10° is as heavy as water.
Only a few refineries in the world have the necessary equipment to refine Venezuelan oil into fuels without much residue. Reliance’s Jamnagar refinery has a Nelson Complexity Index (NCI) of 21.1, as per the company’s website, which is much higher than the average rating of 9.5-12.5 for most refineries in the US and in India. The scale is a scoring system developed by Wilbur Nelson in 1960 that measures an oil refinery’s sophistication and conversion capability.