The Mukesh Ambani-led Reliance Industries' (RIL) refinery margins will continue to improve as it completes margin-enhancing petroleum coke gasification and refinery off gas cracker projects, Moody's Investors Service said on Tuesday.

"We expect RIL's margins will improve by at least $2 per barrel on completion of these projects," Moody's said in a note.

Last week, RIL reported its highest ever quarterly net profit of Rs.6,720 crore for the second quarter ended September. The company earned $10.6 on turning every barrel of crude oil into fuel in the second quarter of the current fiscal year, the highest in the last seven years.

"Earnings improved despite a decline in the Singapore benchmark refining margin and decline in the petrochemical product spread," Moody's said.

"Although RIL's refining margin only improved marginally compared to $10.4 per barrel during 1Q FY2016, it outperformed the Singapore refining benchmark that declined to $6.3 per barrel from $8.0 per barrel over the same period," it added.

During the quarter, fuel oil cracks declined significantly while gasoline cracks largely remained stable compared to the first quarter, resulting in RIL's gross refining margin (GRM) outperforming the benchmark refining margin by $4.3 per barrel, which was the company's highest in the last six years.

"We expect the Singapore refining margin to average a healthy $8 per barrel in 2015 and $7-7.5 per barrel in 2016," Moody's said.

Pre-tax profit for the petrochemical segment improved by 8% over the previous quarter despite softening product spreads as RIL's production increased by 7%. 

"We expect petrochemical spreads to remain soft over the next 12 months in line with our expectation of a slowdown in growth in the global economy including India and China."

"However, as RIL rolls out its petrochemical expansion projects over the next 12-18 months, its production mix will improve, increasing the proportion of high-value chemicals with little to no incremental input costs. This should result in higher contribution from the petrochemical segment over the next 12 months," the note said.

Moody's said earnings of the upstream segment continued to deteriorate with a 70% decline as production levels and oil prices remain weak.