In 2016, the Union government mandated compulsory usage of BS-VI vehicles from April 1, 2020, skipping the BS-V regime in between to curtail the growing pollution hazard from commercial and passenger vehicles.
Bharat Petroleum Corporation (BPCL) has started production of Bharat Stage (BS)-VI fuel in all its four refineries to conform to the new fuel norms from April 1, 2020. R Ramachandran, director, refineries of BPCL, told FE that they have already started the production of BS-VI fuel from the first week of November to keep the system flushed with the fuel for timely delivery, whenever required. “The tankages and facilities are being converted to carry the new fuel. It may take two-three months for complete conversion of the system from BS-IV to BS-VI,” Ramachandran said.
In 2016, the Union government mandated compulsory usage of BS-VI vehicles from April 1, 2020, skipping the BS-V regime in between to curtail the growing pollution hazard from commercial and passenger vehicles. The new norms will help reduce the sulphur content in the fuel to 10 parts per million (ppm) from 50 ppm at present. Also, the harmful NO (nitrogen oxides) from diesel cars can be brought down by nearly 70%. In petrol cars, they can be reduced by 25%. However, particulate matter like PM 2.5 and PM 10 are the most harmful components, and it is estimated that BS-VI will bring the cancer causing particulate matter in diesel cars by a phenomenal 80%.
Responding to a question on falling Singapore gross refining margins (GRMs), which have dropped to 40 quarter low on lower product spreads in Q3FY20-to-date, Ramachandran said, “Our refineries yield pattern are not similar to Singapore bench mark’s yields, which has a higher contribution from high Sulphur fuel oil. We expect our GRMs to grow 10-15% in the December quarter. This quarter, the domestic demand for diesel has grown 6-7%, which has had a positive impact on our margins. Also, with bottoms upgraders in our refineries, we produce more jet fuel and diesel, which in currently much higher than fuel oil.”
With better growth in domestic diesel market, the company is also planning to put on hold the export of diesel, which the company started in September. Ramachandran said, “As many refineries have planned shutdowns to prepare for the International Maritime Organisation’s Regulation 2020 for lower sulphur content in fuel, it will provide BPCL the opportunity to meet the domestic demand.” Ramachandran said.
The Singapore GRM is currently at a 40-quarter low of $3.04/bbl in Q3FY20-to-date, hit by fuel oil cracks at 46-quarter low of (-$18/bbl). Singapore GRM was last lower than current GRM’s in Q3FY10 at just $1.9/bbl. However, in Q3FY10, Singapore GRM was hit by petrol and diesel cracks being low at just $3.3-7.3/bbl, respectively, while fuel cracks were stronger than now at (-$6.2/bbl).