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BPCL: In New Horizons

BPCL is strategically diversifying into renewable energy, petrochemicals and natural gas

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Bharat Petroleum Corporation Ltd. (BPCL) is among the leading players in the oil and gas sector, with many diverse feathers in its cap. It has for instance, been featured in the Asia Book of  Records for running the largest corporate brand engagement programme in Asia. During the floods in Kerala in 2018, BPCL’s donation to the state was Rs 4 crores, when the total donation of all of the petroleum industry was Rs 25 crores. The Kochi refinery of  BPCL has recently launched a specialty product, the food- grade Quality Hexane (FGQ Hexane) that aims to promote agro-processing. The product could turn out to be a boon for the agriculture sector.

The public sector undertaking is a Maharatna with a market share of 23.8 per cent in petroleum products. In the 2017-18 financial year (FY 2018) BPCL had earned a net profit of  Rs 7,919.34 crore on a gross revenue of Rs 2, 77, 162.23 crore. Like its peers in the oil and  gas industry, BPCL too is foraying into the renewable energy space. As Urvisha H. Jagsheth, an oil and gas industry expert from CARE Ratings points out, “State-owned PSUs have been able to foray into the renewables space and have been able to expand their natural gas business, especially where gas is replacing liquid fuels.”

Assuming that renewable energy (RE) will overtake fossil fuels in the long run, oil and gas majors will have to find ways to improve their performance to survive. Sabyasachi Majumdar, ICRA Group Head for Corporate Ratings says, “We expect to increase the share of  RE in the all-India (power) generation to 10 per cent by FY 2020 and further to 13 per cent by FY 2022, based on capacity addition forecasts.” Being a smart player BPCL has already begun focusing on its gas resources. It has drawn up ambitious plans to become a significant player in the gas business, establishing its footprints across the entire gas value chain. In the long  term BPCL is expected to have a focused presence in the downstream gas business and ensure demand security in the sector. Announcing the incorporation of Bharat Gas Resources Limited (BGRL) into the company as a subsidiary in June 2018, BPCL Chairman & Managing Director D. Rajkumar had said, “Formation of  BGRL is, indeed, a significant milestone on the journey of BPCL, proving yet again, that the company will continue to create and surpass unparalleled benchmarks and accelerate into the realm of exceptional performers.”

“BPCL has also decided to diversify into petrochemicals in a big way to tap the immense potential in the market,” he went on to say. “As a strategy, all future expansion plans of BPCL Group refineries are oriented towards production of petrochemicals, both commodity and niche derivatives. I am confident that soon BPCL will be a frontrunner in this space to deliver enhanced performance,” Rajkumar had said, spelling out the company’s strategy to diversify simultaneously into gas and petrochemicals.

Bharat Petroleum has had a global presence for a long time. In FY 2018 it added to its portfolio a high-quality asset in the UAE. The integrated development of  the 12.88 MMTPA LNG project in Mozambique was a critical milestone for BPCL too, positioning the consortium as a strategic global LNG supplier.

 The BPCL’s Numaligarh Refinery (NRL) earned a profit after tax of  Rs 2,042 crore in 2017-18. Bharat Oman Refineries Limited is now on a growth trajectory as well and earned a profit after tax of  Rs 984 crore, which is a phenomenal increase of 22 per cent over the previous year. At the company’s annual general meeting, Rajkumar had said, “I had shared with you last year that BPCL’s upstream subsidiary, Bharat Petro Resources Ltd. (BPRL) has established itself as a revenue generating company, with assets in all phases of upstream, ranging from exploration to production.”

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