BPCL unfazed by geopolitics, to buy crude on techno-commercial merit: CMD

BPCL will source crude purely on techno-commercial merit amid geopolitical flux, with talks on Saudi investment in its Andhra refinery, says CMD Sanjay Khanna

State-run Bharat Petroleum Corporation (BPCL) will source crude oil purely on ‘techno-commercial’ considerations amid evolving geopolitical dynamics, Chairman and Managing Director Sanjay Khanna told Shubhangi Mathur in an in-person interaction. He said the company is in discussions with Saudi Arabia and other global players regarding potential investment in its Andhra Pradesh refinery project. The greenfield refinery will enable BPCL to supply additional fuel to the domestic market, though it is unlikely to majorly boost exports. Edited excerpts: 

What is BPCL’s crude sourcing strategy amid the current turbulent geopolitical environment? 

We constantly explore new geographies for crude sourcing. We consider only two aspects — techno-commercial viability and availability of crude at a given time. Last year, we imported crude from Argentina for the first time. This year, we have again signed a one-year contract with Brazil, and if it creates value, we will continue purchases. If a particular crude makes business sense for us, we equip our units to process that crude. 

Would BPCL’s margins be impacted by a lower intake of Russian oil? 

Our margins are not dependent on any specific type of crude. We continuously focus on operational excellence and energy reduction, which have a far greater impact than relying on a particular crude grade. The discounts we receive today may not be available tomorrow. 

Is BPCL equipped to process Venezuelan oil, and what discounts are you seeking? 

Our refineries are not equipped to process neat Venezuelan crude. However, we can take up to 15 per cent Venezuelan crude blended with lighter crude oil. This can be processed at our Kochi and Bina refineries, but not at the Mumbai refinery. 

Discounts are an important part of crude procurement, but we also consider other parameters. In some cases, even lower discounts can make commercial sense. If we source heavy crude from Venezuela and blend it with very light crude, the overall value proposition may improve. 

Have you approached US authorities for the purchase of Venezuelan crude? 

It is an ongoing process, and our international trade team is working on it. It is not limited to US authorities; we can also source Venezuelan crude through traders who deal in it. 

What is the status of Saudi Arabia’s investment in BPCL’s upcoming greenfield refinery in Andhra Pradesh? Would BPCL’s exports increase after commissioning the Andhra Pradesh refinery? 

Discussions with Saudi Arabia are ongoing. Our current refining capacity is 40 million tonnes (mt), while our marketing volume stands at 52 mt. The Andhra Pradesh refinery is expected to add only 3 mt of incremental capacity, mainly petroleum products such as petrol, diesel, and aviation turbine fuel. This additional volume can be easily absorbed by the domestic market. 

With BPCL’s entry into shipbuilding, how do you see this evolving? 

We are part of a joint venture with the Shipping Corporation of India and other oil companies. Having your own resources provides a clear advantage. We are optimistic about the country’s shipbuilding operations. In the long run, India may also look at building very large crude carriers.