Bharat Petroleum to venture into niche petrochemicals

India’s second biggest oil marketing company Bharat Petroleum Corporation Ltd (BPCL) will be making a foray into niche petrochemical segment to diversify its business portfolio and de-risk its business model.

RK Singh, chairman and managing director, BPCL said the company has earmarked an investment of Rs40,000 crore over the next five years to not only strengthen its current operations, involving expansion of its refining business, investment in exploration and production and diversification into newer areas such as petrochemicals.

“We are looking at setting up a niche petrochemical complex focussed to fill in the market with products which are currently imported,” he said and added that the main products to be rolled out of the complex will be products such as polypropylene, acrylic acid etc.

He said the complex will accrue an investment of close to Rs5,000-6,000 crore and will come up in the next five years. The company is also currently in talks with several foreign players who might be interested in sharing technology with BPCL and also pick up equity stake in the project.

The project will get its feedstock from BPCL’s 9.5 million tonnes per annum (mtpa) Kochi refinery which will also be expanded further to 15.5 mtpa in the next five year period.

In the next five years, the company plans to reach a refining capacity of one million barrels of crude per day from the current 600,000 barrel per day, which will attract a major part of its Rs40,000 crore capex. Besides, it will also be investing Rs10,000 crore in exploration and production.

Meanwhile, on the under-recovery front, Singh said with the latest hike in petrol price by Rs3.14 per litre, there will be no under recovery on petrol but the company will continue to lose money on the sale of diesel, kerosene and LPG.

He said under current pricing structure, BPCL is losing Rs6.06 per litre on diesel, Rs23.17 per litre on kerosene and Rs264 per cylinder of LPG. The company expects to end the year with an under recoveries of Rs27,000 crore.