BPCL Expects Kochi Plant To Boost Refinery Margin In Coming Quarters

Bharat Petroleum Company Ltd.’s gross refining margin is likely to improve in the coming quarters backed by its new refinery in Kochi and improving benchmark Singapore GRMs, its Director (Finance) K Shivakumar told BloombergQuint.

The company reported a GRM of $4.88 per barrel versus the estimated $5.5 per barrel. The oil giant’s refineries are tagged with directly with Singapore GRMs, which means any upward movement in the Asian benchmark will benefit the company, Shivakumar said in the post earnings management interaction

The Singapore GRM averaged around $7.4 per barrel, 14 percent above the average of $6.4 per barrel in the June-ended quarter.

BPCL’s Kochi refinery will also contribute to higher GRMs from the second quarter once the plant begins operations. Construction of the refinery is slated to end in August. The management had earlier indicated that full benefits of the refinery could boost the GRM by $2 per barrel.

Net profit for the company fell nearly 60 percent over the previous quarter to Rs 744.6 crore while revenue declined 1.1 percent to Rs 66,766 crore. An inventory loss of $2.07 per barrel, due to low crude prices over the quarter, impacted the bottomline.

Here are more highlights from the management interview:

• During the quarter, company sold 10.4 million tonnes of oil which is 8 percent higher compared to last quarter, indicating market share gain
• Transition to Bharat Stage-VI is on track and BPCL expects to complete the same before the deadline
• The oil ministry and state-owned refiners have agreed to start marketing BS VI grade fuel from September 2019.

Also Read: Bharat Petroleum’s Q1 Profit Falls, Misses Estimates