BPCL aims to double refining margins with refinery expansion2 min read . Updated: 30 Oct 2014, 11:52 AM IST
BPCL aims to complete the expansion and upgrade of its Kochi refinery to process high sulphur crudes by 2016
Singapore: State-owned Bharat Petroleum Corp. Ltd (BPCL) aims to double its refining margins once it completes the expansion and upgrade of its Kochi refinery in Kerala to process high sulphur crudes by 2016, a senior company official said.
The refiner’s margins dropped to $3 a barrel this year, from $4.50 to $5 a barrel last year, but levels will increase by about $3 to $4 a barrel by mid-2016, said Neeraj Shukla, a chief manager at BPCL’s refineries division.
Asian diesel margins have been lower this year compared with previous years due to an economic slowdown in China, the world’s second largest oil consumer, and new refining capacity. Naphtha margins have been weaker due to an influx of the light fuel from western countries, mainly Europe and the Mediterranean.
“We want to process only high sulphur crude at Kochi refinery, which is why we’re setting up this plant," he said, speaking on Thursday on the sidelines of an industry conference in Singapore.
Crude grades with a high sulphur content are cheaper, and refineries that have installed specialty secondary units to process them can lower feed costs and increase their margins.
BPCL aims to raise the capacity of the Kochi refinery to 310,000 bpd from the current 190,000 bpd by May 2016. Besides boosting margins with the upgrade and expansion, the refinery will also be able to produce fully Euro IV compatible petrol and diesel, Shukla said.
This will meet tentative plans by the government to mandate the use of Euro IV oil products throughout the country by 1 August 2017, and euro V in some cities by 2020, he said.
“I think this is a step to self-sufficiency in our marketing network and we will not be depending on others," he said. BPCL now markets about 12% more fuel than it refines on its own, he said.
There are no immediate plans to export any oil products once its refining capacity is increased, Shukla said.
BPCL also operates a 240,000 bpd refinery at Mumbai, and has majority stakes in the 60,000 bpd Numaligarh refinery in Assam and the 120,000 bpd Bina refinery in Madhya Pradesh.
It plans to double capacity of the Bina refinery in about two years and increase the capacity at Numaligarh in 4 to 5 years, he said. Reuters