Bharat Petroleum Corporation is betting big on the bunker fuel supply business where its Singapore-based joint venture, Matrix Bharat Marine Fuels, will play a key role.

Matrix Marine Fuels, its ally, is a subsidiary of Mabanaft, the German oil trading company. Bunkering, incidentally, refers to the process of filling furnace oil into ship tanks.

“With so much coastal movement and economic growth, there is a big opportunity for us when it comes to supply of bunker fuel. Our joint venture partner owns huge storage facilities not only in Singapore but across the world and this can be leveraged through this joint venture,” Mr R.K. Singh, Chairman and Managing Director of BPCL, told Business Line .

Growth driver

The company believes that its furnace oil production, especially at the Mumbai refinery, holds the key to growing this business. With many Indian refineries going in for bottom up-gradation facilities to produce lighter products, furnace oil (and bitumen) production will come down substantially. This is also true for BPCL's new Bina refinery, while its subsidiary, Kochi Refineries, is tipped to follow suit in due course.

However, the landlocked Mumbai refinery will continue to produce enough furnace oil to assure adequate supplies to Matrix Bharat Marine Fuels. It is also likely that with lesser production in the future, furnace oil will end up becoming more expensive as demand exceeds supply.

“When this happens, it will be to our advantage. We realise it is important for BPCL to consolidate its position in the bunkering business where furnace oil is predominantly used,” Mr Singh said.

Gas could also replace furnace oil in the years to come and instead of exporting it at a throwaway price, BPCL could even create opportunities in India to absorb all the fuel produced. “We want to expand our joint venture in the local market. There will also be huge demand for bitumen in the years to come and the Mumbai refinery will meet this requirement,” he added.

BOO model

As part of its efforts to focus on infrastructure creation, BPCL is exploring the option of joining hands with private players who are willing to put up bottling plants and tankages which could then be used on a BOO (build-own-operate) basis. “This model will help optimise investments while keeping costs in check. The money can be spent usefully and diverted to more growth-oriented, productive avenues,” Mr Singh said.

In another initiative, BPCL, along with refining counterparts, IndianOil and Hindustan Petroleum Corporation, is also keen on putting up terminals, depots and port facilities through a third party as part of a common user facility. This could become a reality once there is critical mass and return on investments is assured for the company entrusted with this responsibility.

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