BPCL to book capacity in LNG terminals

State-run Bharat Petroleum Corporation Ltd is considering booking one-three million tonnes per annum of capacity in liquefied natural gas terminals on the country’s east and west coasts. A feasibility study for a terminal with capacity of two-three mtpa, expandable to five mtpa, will be carried out. This will be in addition to the LNG terminal the company plans to build in Mangalore, in association with ONGC.

BPCL also holds 12.5 per cent stake in Petronet LNG, a company formed by the Centre to import LNG. “We are looking at booking capacities in LNG terminals. For our international business, we are looking for long-term gas and have signed an agreement with foreign players to import two million tonnes (mt) of gas,” said S Varadarajan, chairman and MD, BPCL.

Through the next four years, BPCL plans to spend about Rs 45,000 crore on a series of projects in refining, marketing, and exploration & production. This will include expanding the capacity of its Kochi refinery from 9.5 mt to 15.5 mt, at a cost of Rs 16,500 crore. The company will also invest Rs 2,900 crore to expand the capacity of its Bina refinery from six mt to eight mt. After the expansion, it might also launch an initial public offering for the Bina refinery (a joint venture with Oman Oil).

BPCL will also lay India's first cross-country pipeline, which will extend to Bangladesh. Assam-based Numaligarh Refineries Ltd (NRL), its subsidiary, will soon begin work on laying the 170-km pipeline, from Siliguri in West Bengal to Parbatipur in Bangladesh.

NRL, which will export high-speed diesel and motor spirit to Bangladesh, is preparing a detailed feasibility report on the matter. It is expected the report will be completed by December this year and the company will begin exporting petroleum products to Nepal, Bangladesh and Myanmar next year.

NRL is expanding capacity from the current three mtpa to nine mtpa; BPCL will spend about Rs 13,000 crore on expanding the refinery by 2017-18.

Earlier this year, the company had signed an agreement with Nepal-based Birat Petroleum Pvt Ltd (BPPL) for sale of high-speed diesel and motor spirit. These will be transported from the Siliguri marketing terminal to Biratnagar, Nepal. NRL is expected to sell about 100 kilo litres of motor spirit and 5,000 kilo litres of HSD a month to BPPL. The overall demand for petroleum products in Nepal is about one mtpa.

In the upstream segment, BPCL will invest about $2 billion (Rs 12,000 crore) on its blocks in Mozambique and Brazil in the coming years.

"We have been trying to put in place a mechanism through which BPCL's balance sheet can be relieved. Based on our discoveries, we have an SBLC (standby letter of credit) range of $2 billion and with that, we have taken foreign currency loans of $900-950 million. This is for the Mozambique asset. As far as upstream is concerned, we have spent about $1.3 billion. Of this, $680 million has gone into exploration in the Brazil block and $480 million for operations in Mozambique," said D Raj Kumar, chief executive and managing director, Bharat Petro Resources Ltd (BPRL), BPCL's exploration arm.

He added, "We are talking to the Mozambique government to see that we have a stable legal, fiscal and contractual regime in place. This stability will mean the operations will be insulated from any change in taxes, rules or regulations."

For the Mozambique block, the consortium members are Anadarko Mocambique Area 1 Limitada (26.5 %), BPRL Ventures Mozambique (10 %), Beas Rovuma Energy Mozambique (10 %), ONGC Videsh Ltd (10 %), Cove Energy Mozambique Rovuma Offshore (8.5 %) and Mitsui E&P Mozambique Area 1 Ltd (20 %) and Empressa Nacional de Hidrocarbonetos EP (15 %).

The consortium plans to set up two LNG trains, of five mtpa each, with a provision of expansion in the future. Members of the consortium have tied up two-thirds of the gas with customers in Japan, China and Thailand, and are in talks with Indian companies, too.