Outlay part of `50,000 cr earmarked for expansion in next five years
Refining major Bharat Petroleum Corp Ltd (BPCL) has earmarked `13,000 cr to develop the oil and gas discoveries in its three overseas blocks, including `3,000 cr on the supporting infrastructure in India for importing its share of hydrocarbons from these discoveries.
This investment is over a quarter of the `50,000 cr investment planned over the next five years. “In the next five years, we have to spend something like `10,000 crore on the developmental activities (of the discoveries),” said RK Singh, chairman and managing director.
“See, these discoveries have been done, but for monetisation, we have to develop lot of facilities.”
Bharat Petroleum forayed into the upstream sector in 2003 and set up a separate subsidiary - Bharat PetroResources Ltd — in 2006.
Bharat PetroResources has struck major reserves in two blocks in offshore Brazil and one in Mozambique.
It now has participatory interest in 26 exploration blocks spread over 86,000 sq km. Of these, nine blocks are in India, two each in Australia and UK, one each in Mozambique and East Timor, and 10 in Brazil.
The company has been the most successful among its state-owned peers in its upstream ventures.
Indian Oil Corp, which also has several oil and gas blocks overseas, has made only one discovery in Iran's highly prospective Farsi block, but that has been in limbo for several years now.
Hindustan Petroleum Corp’s upstream arm Prize Petroleum has stake in only three domestic blocks, without any significant success.
Singh, who took over as head of the company last year, says Bharat Petroleum does not wish to immediately add more assets to its portfolio and will instead concentrate on developing the three discovered assets.
“We are quite happy with what we have,” Singh said, adding that the ultimate ambition now is to develop Bharat PetroResources into an operator.
“BPRL nowhere is on its own (now). As time goes, we want to see BPRL becoming an operator.”
“I see huge upside (for Bharat PetroResources). The complexion will change totally when we start getting oil and gas from upstream and depending on the revenue that we generate, we certainly have the ambition of expanding in that upstream business,” he said.
The company holds 10-40% stake in most of these blocks now, which are operated by foreign exploration majors.
Bharat PetroResources will also be raising on its own, a part of the funds as debt required over the next five years for developing the discovered assets.
However, BPCL has no plans to dilute its 100% holding in the exploration subsidiary and it will provide the balance fund requirement to its subsidiary as loans, Singh said.
“We are thinking of raising through BPRL itself about `4,000 crore,” Singh said. “We are working out a model-based on the discoveries announced so far, we are talking to financial institutions and we are hopeful of raising money.”
To leverage its success in the upstream segment, Bharat Petroleum is now getting ready to strengthen its midstream capabilities and may even set up liquefied natural gas regasification terminals and pipeline infrastructure in India, mainly for importing gas from the Mozambique block.
US’ Anadarko Petroleum Corp is the operator of the block in Rovuma Basin, Area-1, offshore Mozambique in which Bharat PetroResources holds a 10% participatory interest.
The consortium exploring the block has reported significant gas finds and is touting it as one of the largest discoveries globally. It is likely to start production in 2016-17.
“The consortium has decided to do downstream facilities,” Singh said. “Anadarko being the operator will develop the jetty, pipeline, liquefaction plant. We will be contributing our share... BPCL will do the marketing (in India).”
He said the regasification terminals can be set up in collaboration with other companies.
“Since we have the gas, our own gas, which will start flowing 2017, we need to earmark some money if you want to part-take in the infrastructure or any such terminal facilities... but we certainly have the ambition to become a big player in gas,” he said.
The `50,000 crore capital expenditure plan that the state-owned company has drawn up for the 12th Five Year Plan beginning April 2012 also includes expansion of its refining capacities, and retail and distribution network.
“We have to put up additional pipelines (for crude oil and petroleum product), tankage, expand the capacity of our refineries,” said Singh.
The company plans to expand the capacity of its existing 9.5 million tonne per annum (mtpa) refinery in Kochi, Kerala by 6 mtpa and that of the recently commissioned 6 mtpa refinery in Bina, Madhya Pradesh to 9 mtpa.
Unlike peer Hindustan Petroleum, Bharat Petroleum is not too keen on relocating its refinery in Mumbai. In fact, the company may look at raising its refining capacity slightly through some debottlenecking and reconfiguration of existing units. Of the investment plan, `17,000 crore will be deployed for expanding and augmenting capacities of its refineries, Singh said.
The plan to increase the capacity of Bina refinery is already on the drawing board and may take off in around three years' time.
“Preliminary work has started. We have land with us, 3,000 acres of land,” he said, adding that the existing Bina unit is likely to achieve 100% utilisation by the month-end.
The state-owned company also has big plans for venturing into petrochemicals business that will come up alongside its refinery in Kochi. It plans to invest `6,000-7,000 crore in the business and is currently scouting for a foreign partner, mainly for technology.
Bharat Petroleum has also earmarked investments of around `10,000 crore for expanding its infrastructure and retail network as it aims to capture a 30% market share in the country from around 23% now.
“Overall, we are planning to go up to 30% plus... that's our dream. To actualise our dream, you (the company) have to do a lot of work,” Singh said, adding that the company aims to add around 1,000 fuel retail outlets each year for the next five years.
Q1 net loss at ’2,561.8 cr
Bharat Petroleum Corp recently reported a widening of its net loss to `2,561.8 crore for the quarter ended June 30, as the government did not fully compensate it for selling fuel below cost.
BPCL’s net loss in the April-June quarter, at `2,561.89 crore, was higher than the net loss of `1,718.1 crore it suffered in the corresponding period of the previous fiscal, the company said in a statement.
BPCL lost about `12,290 crore on selling diesel, domestic LPG and kerosene at government-controlled rates during the quarter.
Of this, it got `3,409.05 crore from upstream firms like ONGC and another `3,524.46 crore from the government by way of cash subsidy.
Under the subsidy government’s sharing mechanism, upstream companies meet one-third of the under-recoveries that retailers like BPCL make on selling fuel at a government-controlled cost, while the government compensates the OMCs for approximately 50 per cent of the cost. The remaining losses have to be absorbed by the fuel retailers.
“The net under-recovery (revenue loss after considering government subsidy and upstream support) was `3,356 crore in Q1, up from `1,584 crore of the previous year,” BPCL Director (Finance) Sudhir K Joshi said.
The company, he said, is currently losing about `4 per litre on diesel, `23 a litre on kerosene and `274 per 14.2-kg LPG cylinder. It is, however, making a marginal profit on petrol.
BPCL earned USD 3.02 on turning every barrel of crude oil into refined petroleum products (fuel) in the April-June quarter, as compared to a gross refining margin of USD 3.57 per barrel in the corresponding period of the previous fiscal. Revenue soared from `34,553.4 crore for the quarter ended June 30, 2010, to `46,566.93 crore in Q1 this fiscal.
BPCL’s staff cost of `657.43 crore includes `93 crore toward its estimated liability on a Voluntary Retirement Scheme for its employees.
BPCL said fuel sales in the April-June quarter rose by 5.5 per cent to 7.83 million tonnes from 7.42 million tonnes a year ago.
The increase in sales was mainly seen for petrol-retail (4.87 per cent), diesel-retail (9.72 per cent), ATF (14.32 per cent) and LPG (11.11 per cent), but was partly offset by a decrease in furnace oil (by 38.75 per cent) and naphtha (16.23 per cent) offtake, BPCL added.
Refining major Bharat Petroleum Corp Ltd (BPCL) has earmarked `13,000 cr to develop the oil and gas discoveries in its three overseas blocks, including `3,000 cr on the supporting infrastructure in India for importing its share of hydrocarbons from these discoveries.
This investment is over a quarter of the `50,000 cr investment planned over the next five years. “In the next five years, we have to spend something like `10,000 crore on the developmental activities (of the discoveries),” said RK Singh, chairman and managing director.
“See, these discoveries have been done, but for monetisation, we have to develop lot of facilities.”
Bharat Petroleum forayed into the upstream sector in 2003 and set up a separate subsidiary - Bharat PetroResources Ltd — in 2006.
Bharat PetroResources has struck major reserves in two blocks in offshore Brazil and one in Mozambique.
It now has participatory interest in 26 exploration blocks spread over 86,000 sq km. Of these, nine blocks are in India, two each in Australia and UK, one each in Mozambique and East Timor, and 10 in Brazil.
The company has been the most successful among its state-owned peers in its upstream ventures.
Indian Oil Corp, which also has several oil and gas blocks overseas, has made only one discovery in Iran's highly prospective Farsi block, but that has been in limbo for several years now.
Hindustan Petroleum Corp’s upstream arm Prize Petroleum has stake in only three domestic blocks, without any significant success.
Singh, who took over as head of the company last year, says Bharat Petroleum does not wish to immediately add more assets to its portfolio and will instead concentrate on developing the three discovered assets.
“We are quite happy with what we have,” Singh said, adding that the ultimate ambition now is to develop Bharat PetroResources into an operator.
“BPRL nowhere is on its own (now). As time goes, we want to see BPRL becoming an operator.”
“I see huge upside (for Bharat PetroResources). The complexion will change totally when we start getting oil and gas from upstream and depending on the revenue that we generate, we certainly have the ambition of expanding in that upstream business,” he said.
The company holds 10-40% stake in most of these blocks now, which are operated by foreign exploration majors.
Bharat PetroResources will also be raising on its own, a part of the funds as debt required over the next five years for developing the discovered assets.
However, BPCL has no plans to dilute its 100% holding in the exploration subsidiary and it will provide the balance fund requirement to its subsidiary as loans, Singh said.
“We are thinking of raising through BPRL itself about `4,000 crore,” Singh said. “We are working out a model-based on the discoveries announced so far, we are talking to financial institutions and we are hopeful of raising money.”
To leverage its success in the upstream segment, Bharat Petroleum is now getting ready to strengthen its midstream capabilities and may even set up liquefied natural gas regasification terminals and pipeline infrastructure in India, mainly for importing gas from the Mozambique block.
US’ Anadarko Petroleum Corp is the operator of the block in Rovuma Basin, Area-1, offshore Mozambique in which Bharat PetroResources holds a 10% participatory interest.
The consortium exploring the block has reported significant gas finds and is touting it as one of the largest discoveries globally. It is likely to start production in 2016-17.
“The consortium has decided to do downstream facilities,” Singh said. “Anadarko being the operator will develop the jetty, pipeline, liquefaction plant. We will be contributing our share... BPCL will do the marketing (in India).”
He said the regasification terminals can be set up in collaboration with other companies.
“Since we have the gas, our own gas, which will start flowing 2017, we need to earmark some money if you want to part-take in the infrastructure or any such terminal facilities... but we certainly have the ambition to become a big player in gas,” he said.
The `50,000 crore capital expenditure plan that the state-owned company has drawn up for the 12th Five Year Plan beginning April 2012 also includes expansion of its refining capacities, and retail and distribution network.
“We have to put up additional pipelines (for crude oil and petroleum product), tankage, expand the capacity of our refineries,” said Singh.
The company plans to expand the capacity of its existing 9.5 million tonne per annum (mtpa) refinery in Kochi, Kerala by 6 mtpa and that of the recently commissioned 6 mtpa refinery in Bina, Madhya Pradesh to 9 mtpa.
Unlike peer Hindustan Petroleum, Bharat Petroleum is not too keen on relocating its refinery in Mumbai. In fact, the company may look at raising its refining capacity slightly through some debottlenecking and reconfiguration of existing units. Of the investment plan, `17,000 crore will be deployed for expanding and augmenting capacities of its refineries, Singh said.
The plan to increase the capacity of Bina refinery is already on the drawing board and may take off in around three years' time.
“Preliminary work has started. We have land with us, 3,000 acres of land,” he said, adding that the existing Bina unit is likely to achieve 100% utilisation by the month-end.
The state-owned company also has big plans for venturing into petrochemicals business that will come up alongside its refinery in Kochi. It plans to invest `6,000-7,000 crore in the business and is currently scouting for a foreign partner, mainly for technology.
Bharat Petroleum has also earmarked investments of around `10,000 crore for expanding its infrastructure and retail network as it aims to capture a 30% market share in the country from around 23% now.
“Overall, we are planning to go up to 30% plus... that's our dream. To actualise our dream, you (the company) have to do a lot of work,” Singh said, adding that the company aims to add around 1,000 fuel retail outlets each year for the next five years.
Q1 net loss at ’2,561.8 cr
Bharat Petroleum Corp recently reported a widening of its net loss to `2,561.8 crore for the quarter ended June 30, as the government did not fully compensate it for selling fuel below cost.
BPCL’s net loss in the April-June quarter, at `2,561.89 crore, was higher than the net loss of `1,718.1 crore it suffered in the corresponding period of the previous fiscal, the company said in a statement.
BPCL lost about `12,290 crore on selling diesel, domestic LPG and kerosene at government-controlled rates during the quarter.
Of this, it got `3,409.05 crore from upstream firms like ONGC and another `3,524.46 crore from the government by way of cash subsidy.
Under the subsidy government’s sharing mechanism, upstream companies meet one-third of the under-recoveries that retailers like BPCL make on selling fuel at a government-controlled cost, while the government compensates the OMCs for approximately 50 per cent of the cost. The remaining losses have to be absorbed by the fuel retailers.
“The net under-recovery (revenue loss after considering government subsidy and upstream support) was `3,356 crore in Q1, up from `1,584 crore of the previous year,” BPCL Director (Finance) Sudhir K Joshi said.
The company, he said, is currently losing about `4 per litre on diesel, `23 a litre on kerosene and `274 per 14.2-kg LPG cylinder. It is, however, making a marginal profit on petrol.
BPCL earned USD 3.02 on turning every barrel of crude oil into refined petroleum products (fuel) in the April-June quarter, as compared to a gross refining margin of USD 3.57 per barrel in the corresponding period of the previous fiscal. Revenue soared from `34,553.4 crore for the quarter ended June 30, 2010, to `46,566.93 crore in Q1 this fiscal.
BPCL’s staff cost of `657.43 crore includes `93 crore toward its estimated liability on a Voluntary Retirement Scheme for its employees.
BPCL said fuel sales in the April-June quarter rose by 5.5 per cent to 7.83 million tonnes from 7.42 million tonnes a year ago.
The increase in sales was mainly seen for petrol-retail (4.87 per cent), diesel-retail (9.72 per cent), ATF (14.32 per cent) and LPG (11.11 per cent), but was partly offset by a decrease in furnace oil (by 38.75 per cent) and naphtha (16.23 per cent) offtake, BPCL added.
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