The product cracks in Q3FY21 declined by close to $10 per barrel for petrol and diesel. For Petrol it fell to $2.91 per barrel compared with $8.9/ barrel a year ago.
N Vijayagopal, director finance, BPCL
N Vijayagopal, director finance of BPCL, told Vikas Srivastava, that the refinery throughput is back to normal level in the October-December quarter of 2020, and going ahead, the improvement in throughput will depend on market sales. The refinery throughput which was around 76% during Q2FY21 has increased to 105% of the nameplate capacity in Q3FY21. The company has also seen slight improvement in product cracks in the month of January and expect it will help improve the GRMs.Excerpts:
Your refinery throughput reached the pre-covid level at 7.24 million metric tonne (MMT) in Q3FY21 but it is still below the year ago level. How soon we can see revival in throughput to last year levels?
We are back to pre-covid levels in Q3FY21 as we recorded the best performance in high speed diesel (HSD) and motor spirit (MS) in market sales amongst the peer PSUs. Our market sales in Q3FY21 have grown by 24% Q-o-Q and to support this demand, throughput has increased by 29% sequentially. However, lower demand have led to drop in throughput on year-on-year basis.
Since we lost 5 MMT of throughput and sales during pandemic i.e during Q1 and Q2 period of FY21, it will be difficult to recover it now. The refinery throughput which was around 76% during Q2FY21 has increased to 105% of the nameplate capacity in Q3FY21. Currently, our refineries’ throughput is back to normal level and going ahead, the improvement in throughput will depend on the market sales. We have seen slight improvement in product cracks in the month of January and this will help improve the GRM.
What has been the impact on cracks (product prices) and how soon the recovery is seen?
The product cracks in Q3FY21 declined by close to $10 per barrel for petrol and diesel. For Petrol it fell to $2.91 per barrel compared with $8.9/ barrel a year ago. Diesel cracks were lower at $4.3/barrel compared with $15.13/ barrel a year ago. In January the petrol cracks have improved to $4.14 per barrel, while the diesel cracks have improved to $5.16 per barrel. Lower cracks have resulted into lower GRM.
What are your views on gross refining margins (GRMs) in coming quarters given the gloomy demand scenario?
We have recorded the GRM of $2.47 per barrel in Q3FY21 as against $3.23 per barrel a year ago. Although, the numbers are lower due to tough global environment that negatively impacted the product cracks, it is the best amongst the OMCs. It is very difficult for refinery industry to operate at such low levels, but we are hopeful that higher cracks in January will lead to improve in performance in coming quarters.
What is the status on the Bina and Numaligarh refinery deal?
We are on track with the sale of Bina and Numaligarh refineries. We have already agreed commercial terms for the acquisition of 36.62% stake in Bharat Oman refinery (BORL) from Oman Oil Company for Rs 2,399 crore. After the acquisition of stake, BPCL will hold 100% equity stake in BORL. Govt of Madhya Pradesh holds certain convertible warrants in BORL. As far as Numaligarh is concerned we are on track and hope to complete the deal by March. There are certain approvals required and we are working closely with the government on completion of the deal. It is likely that Consortium of Oil India and Engineers India will buy 48% of stake and Assam government will buy 13.65% stake from BPCL.