Bharat Petroleum Corporation (BPCL) plans to increase refining capacity to over 45 million tonnes (mt) by 2015 — by when it hopes to have a firm foothold in new areas like petrochemicals, gas and power. The company is also aggressively developing its exploration and production blocks overseas.
All this will entail huge investments in infrastructure such as pipelines, tankages, terminals and bottling plants. “Putting all this together in the next five to ten years will require at least Rs 50,000 crore. To achieve these business goals, BPCL must ensure that it makes a profit of at least Rs 2,000-5,000 crore each year. We would, otherwise, not be able to pull it off,” Mr R.K. Singh, Chairman and Managing Director, told > Business Line .
Currently, BPCL's refining capacity is 30.5 mt, of which the Mumbai refinery is the largest with 12 mt, followed by Kochi with 9.5 mt, Bina (Madhya Pradesh) 6 mt and Numaligarh in Assam with 3 mt.
Raising capacities
Over the next five years, BPCL plans to enhance capacities at Bina and Kochi to 15 mt apiece, while Numaligarh and Mumbai will remain untouched. With most of the demand coming from the north and northwest corridor, Mr Singh said Bina's expansion needs to begin right away. Likewise, demand in the south will prompt Kochi's expansion.
BPCL is also categorical that the new Allahabad refinery, planned initially with a capacity of 7.5 mt, will have to be commissioned by 2020. Indications are it will now be enhanced to 12 mt, which means by the end of this decade BPCL's refining capacity will be close to 60 mt. Petrochemicals will be the next priority, and this will happen at the Kochi refinery site as Mumbai is choked to capacity. Being a costal location is another advantage from the viewpoint of imports/exports. “We have surplus naphtha at Mumbai and Kochi and also produce benzene, toluene and propylene and this makes the diversification viable,” Mr Singh said.
Gas is another segment BPCL is looking at closely as a potential business. Across the oil sector, it is touted as the fuel of the future which will replace naphtha and furnace oil. From BPCL's point of view, it is imperative to maintain volumes when its liquid products are replaced by gas.
“Gas is available worldwide and we have to develop our infrastructure. We must be in the business, and development of pipelines in consortium with other players is a possibility,” Mr Singh said.
Mozambique could end up being an important link to India in this foray. BPCL has discovered gas in the country and is looking at bringing it here. Talks are on with some big global names.
One of these is Mitsui of Japan, which is among the biggest oil and gas traders. It has a 30 per cent stake in Mozambique . “We are in talks for developing infrastructure and bringing the gas from Mozambique to India,” he added.
Big growth drivers
Exploration and production has become one of the big growth drivers at BPCL, and it is already working on 26 blocks. It estimates Rs 8,000 crore will be spent in the next five years for developing these blocks across Brazil, Mozambique, Australia and India.
Likewise, diversification into power is also on the anvil, and BPCL is looking at teaming up with another company to commission small plants. One of the names being considered is Nuclear Power Corporation of India. “We see a good future here as India is deficit in power,” Mr Singh said.