Bharat Petroleum Corporation Ltd (BPCL) expects Russian crude purchases to decline in November as higher freight costs erode the grades' price advantage, while Middle Eastern grades have become more commercially viable. According to reports from The Hindu BusinessLine, Director (Finance) Vetsa Ramakrishna Gupta told analysts that Russian cargoes were 'significantly reduced' for November due to increased freight costs. The company, which sourced about 37 per cent of its crude from Russia in the July-September quarter, has continued to diversify its procurement as geopolitical tensions disrupt shipping routes and push up freight and insurance costs.
Russian crude prices, which carried a premium of USD 12-13 a barrel in October, have more recently narrowed to a premium of about USD 1-2, as reported by The Hindu BusinessLine. Gupta noted that the economics could therefore improve for Russian supplies in December, depending on freight costs and the offers available when purchases are finalised. Supplies from the Middle East have become more commercially viable than Russian supplies and have increased compared with the first quarter, with higher volumes expected in October and November. The company's average landed crude cost was about USD 10-12 a barrel above its benchmark, depending on the source and delivery route.
According to Gupta's comments reported by The Hindu BusinessLine, the market remains volatile with procurement economics varying by cargo, freight, insurance and delivery terms. The company has expanded sourcing from the Middle East as Saudi Arabian supplies improved during the quarter, though shipments from Iraq and Kuwait had yet to return fully to normal levels. BPCL's Singapore-based international crude desk, which began operations in September, has helped access new sourcing opportunities, including a cargo from the Caspian region at a discount.
BPCL expects to take its proposed Andhra Pradesh refinery and petrochemical complex to its board for a final investment decision in the coming weeks, subject to financing arrangements and regulatory approvals, as reported by The Hindu BusinessLine. The company is evaluating a refinery with a capacity of 10 million tonne a year and petrochemical intensity of about 32-33 per cent, with the detailed feasibility report in its final stages. The board has approved the creation of a wholly-owned subsidiary to serve as the project company, with initial share capital of up to ₹4,900 crore, subject to applicable approvals. BPCL is considering diluting at least 30 per cent of the project's equity as development progresses.
