BPCL to cut crude imports from West Asia to 50% from 65%

By: |
April 13, 2021 3:16 AM

Bharat Petroleum Corporation (BPCL), a major public sector oil refiner, plans to further reduce its dependence on crude oil from West Asia to 50% from 65% at present as the company plans to increase sourcing from countries in West Africa, Far East and Latin America.

BPCLExcise duty on petrol is around Rs 32.98 per litre and on diesel it is around Rs 31.83 per litre.

Bharat Petroleum Corporation (BPCL), a major public sector oil refiner, plans to further reduce its dependence on crude oil from West Asia to 50% from 65% at present as the company plans to increase sourcing from countries in West Africa, Far East and Latin America. The plan, to be implemented in phases over the next two-three years, comes close on the heels of Opec and Opec+ countries decision to continue with production cuts in the near term.

The Opec decision is likely to impact the economics of retail price (petrol, diesel) in the country, which is already affected by high excise duty and state level taxes, that together account for around two-third of the petrol and diesel prices. The government recently directed PSU refiners to diversify their crude procurement sources to avoid dependence on West Asian crude.

The petrol and diesel prices have already skyrocketed in the recent past to near Rs 100 per litre and if the production cut continues, together with taxes, it will make the situation further difficult for the consumers and the government. Excise duty on petrol is around Rs 32.98 per litre and on diesel it is around Rs 31.83 per litre.

According to sources, BPCL plans to increase its sourcing from Ghana, Congo, Nigeria, Brazil, Australia, Malaysia and Norway to make up for West Asian crude. “The company is already sourcing from these countries and given the opportunity and value of crude it will like to increase it further,” sources said. The source said, the light-heavy price differential has reduced in the last couple of years, which led to increase in procurement of sweet crude from African countries, Latin America and Far East. Sweet crude with less sulphur content goes towards production of gasoline.

The demand for diesel dropped by 8% year-on-year in 2020 and it is unlikely to grow in the near future given increased usage of ethanol and bio-fuel, the sources added. The procurement from non-West Asian countries had been dropping in the last few years and it is expected to drop even further. Procurement from West Asia in 2016 was around 75% of the total fuel imported and now has come down to 65% mainly due to availability of low and high sulphur crude available from other places like the US, West Africa and Mediterranean.

“Procurement from non-ME countries contribute around 25% of BPCL’s crude requirement, while 10% is from domestic crude. The remaining 65% is from Middle-East. In coming years we will reduce the ME component to 50%-51%,” the source said. India imported around 225 MMTPA of crude in 2019-20 meeting 88% of its requirement, whereas domestic crude oil availability was around 30 MMTPA only.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Jet Airways’ annual general meeting on June 8
2Reliance brings back chatbot to assist investors on rights issue
3Power consumption grows nearly 19 pc in 1st fortnight of May