Oilmax Energy Group CFO optimistic despite fall in crude prices, sugarcane ethanol ban

Sumit Maheshwari, Group CFO of Oilmax Energy Group, an integrated oil and gas company, sees no significant or negative impact on their future outlook despite oversupply, weak demand and a drop in crude oil prices to a six-month low ahead of the Federal Reserve rate decision outcome.

"We are able to generate healthy margins irrespective of the fluctuations in market prices," he said, adding that the company has an array of buyers from both the private and public sectors, which ensures diversified and de-risked cash flows, and its new technologies maximise margins and output efficiency.

"While it is impossible to say what will happen in the future, especially in the geopolitically fraught times we live in, we do not forecast any major volatility in crude prices in the coming year, up or down, as US domestic oil production is now healthy and OPEC has been pre-empting a sluggish global market with production cuts to stabilise prices," he added.

Impact of the ethanol ban from sugarcane juice

The ethanol ban might slow down the ethanol blending levels in the short term, Oilmax Energy Group CFO said. But as the markets for sugar and ethanol feedstocks (sugar and non-sugar) evolve over the coming years, Maheshwari sees ethanol blending targets being unaffected over the long term.

On December 7, the central government curbed the production of ethanol from sugarcane for blending with fuel but it is expected to increase the production of sugar. India's fuel retailers buy ethanol from sugar mills to blend with petrol and pay a higher price for ethanol produced from juice and B-heavy molasses. Ethanol is a renewable fuel made from various plant materials collectively known as "biomass." Petrol contains E10 (10% ethanol, 90% petrol), which reduces air pollution.

Maheshwari said, "The government has been judiciously pragmatic in keeping inflation in control, especially considering the unprecedented challenges posed not only by the geopolitical climate over the past few years but the geographical climate as well, as we learn to cope with climate change."

Upbeat on the economy

Maheshwari is optimistic about the Indian economy and said it will be in excellent shape as the ruling party has received a grand endorsement not only from the domestic public through the recently concluded state polls but also from investors and commentators from across the globe.

"India has become the world's fastest-growing major economy for many years straight now and is expected to maintain that status in the coming financial year as well. The only major risk, if any, would come from external factors like the wars in Europe and West Asia, or any hawkish monetary policy moves by the Federal Reserve," he said.