BPCL plans diversification into gas, E&P, power

State-run Bharat Petroleum Corporation Ltd (BPCL) has chalked out a five-year strategy to diversify its business into other core areas like gas, exploration and production, power generation, increasing its marketshare and refining capacity, a top company official said.

"With hydro-carbon as our core-business, we are aware of the challenges the company is going to face down the line and after an internal exercise, we decided to diversify our business into other areas," BPCL's Chairman and Managing Director S Radhakrishnan told reporters here.

As a part of this five-year plan, the company has planned its foray into some specific power segments with an investment ranging between Rs 600-1,000 crore with a view to generate 500 MW, he said.

The locations and the fuel medium will be decided later, based on how economical the fuel will be, and most of the power plants will be joint ventures (JVs), Radhakrishnan said.

BPCL is one of the serious players in the city gas segment, taking into account that CNG is taking away some parts of its LPG and retail fuel business, and the company has tied-up with many others for city gas distribution and is expected to bag distribution rights in 10-15 cities, he said.

He said that there is pressure on the company to diversify into gas due to several reasons, including the emission norms set by the courts and as fuel gas is cheaper than others.

Refining capacity-addition is another major area included in the plan with a view to increase it by 50 per cent, from its present 30.5 million tonnes per annum to 45 million tonnes following the launch of Bina refinery and capacity addition in Cochin, he said.

There is no decision on the IPO of the Bina Refinery, he said, in response to a query.

The company has no immediate plan to re-locate its Mumbai refinery, as it is not easy to create the 12-million tonnes capacity and infrastructure.

But an octroi of USD 2.3 per barrel makes this refinery uneconomical and the company is discussing the issue with the BMC and State Government, he said.

In the E&P business, the company owns 26 blocks in Mozambique and Brazil and production from these blocks is expected to start in 2013. The company has planned to invest Rs 7,500 crore in its E&P business with Rs 3,000 crore as equity.

According to Radhakrishnan, BPCL will focus on buying blocks in the last stages of exploration so that they will turn in to revenue-making soon.

Latin America, East Africa and Australasia with Indonesia are the major geographies that the company is eyeing to acquire E&P blocks, D Rajkumar, Managing Director and CEO of Bharat Petro Resources Ltd, which is a wholly-owned subsidiary of BPCL to handle E&P business, said.

BPCL has earmarked Rs 800-1,000-crore for new projects, including new blocks, he said.