Struggle to source Russian crude in the face of fresh US sanctions, will manifest as direct impact on Bharat Petroleum Corp. refining margins from January onwards, according to people with knowledge of the matter told NDTV Profit.
Refining margins will be under pressure going forward as discounts available on Russian crude will disappear, two people that NDTV profit spoke to said.
The public sector oil marketing companies and Reliance Industries Ltd., who imported majority of the Russian crude, were getting discount between $3–4 per barrel, till the sanctions were imposed.
Refining margins will be under pressure going forward as discounts available on Russian crude will disappear, two people that NDTV profit spoke to said.
The public sector oil marketing companies and Reliance Industries Ltd., who imported majority of the Russian crude, were getting discount between $3–4 per barrel, till the sanctions were imposed.
India imported close to 33% of its total crude requirement from Russia as of December-end.
"Although BPCL is likely to cut imports from Russia following the sanctions, they are unlikely to fully stop the imports given India's domestic requirements," one of the person spoken to said.
The state-run refiner is looking at alternative options, including West Asia and even the US, to overcome the shortage that may arise from non-delivery of the Russian crude.
"Russian crude import is sustaining at this level despite sanction. We are finally a commercial company, we will look at best source of crude with cheapest rate," G Krishnakumar, chairman of BPCL, told NDTV Profit in a separate televised interaction.
Immediately, BPCL can go to the US and Middle East for its crude requirement, with Brazil and Argentina being considered for further supply, the BPCL chairperson said. The crude needs to be compatible with refineries before they can be put in, he said. "There'll have to be a lot of trial. It'll take some time"
India saved around $14 billion, or $1.4 a barrel, from Russian imports in the last two years since the Russia invaded Ukraine. However this price benefit has already dropped to $0.97 per barrel in January as volumes were hit.
The tankers, two large producers and exporters were sanctioned, traders organising hundreds of shipments have been listed, pivotal insurance companies have been named, and two US oil service providers have been told to exit. A Chinese oil terminal operator was also included.
While Russia had been a good source of supply at "very reasonable rates", the discounts were shrinking over the past year, and BPCL has been looking for alternative sources.
"85% of the cost is crude. It is very important we optimise. With Trump promising more crude, there will be surplus and it will not be very costly," Krishnakumar said.
He exuded confidence that BPCL will be able to rebalance in the next two to three months. "Initially for a month some difficulty in getting supply but with rebalancing of all of these and supply increasing we will have no problems on crude," the senior BPCL official said.
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