Bharat Petroleum Corporation (BPCL), a main public sector oil refiner, plans to additional minimize its dependence on crude oil from West Asia to 50% from 65% at present as the corporation plans to raise sourcing from nations in West Africa, Far East and Latin America. The strategy, to be implemented in phases more than the next two-3 years, comes close on the heels of Opec and Opec+ nations choice to continue with production cuts in the close to term.
The Opec choice is most likely to effect the economics of retail price tag (petrol, diesel) in the nation, which is currently impacted by higher excise duty and state level taxes, that collectively account for about two-third of the petrol and diesel costs. The government not too long ago directed PSU refiners to diversify their crude procurement sources to keep away from dependence on West Asian crude.
The petrol and diesel costs have currently skyrocketed in the current previous to close to Rs one hundred per litre and if the production reduce continues, collectively with taxes, it will make the scenario additional challenging for the shoppers and the government. Excise duty on petrol is about Rs 32.98 per litre and on diesel it is about Rs 31.83 per litre.
According to sources, BPCL plans to raise its sourcing from Ghana, Congo, Nigeria, Brazil, Australia, Malaysia and Norway to make up for West Asian crude. “The company is already sourcing from these countries and given the opportunity and value of crude it will like to increase it further,” sources stated. The supply stated, the light-heavy price tag differential has lowered in the final couple of years, which led to raise in procurement of sweet crude from African nations, Latin America and Far East. Sweet crude with much less sulphur content goes towards production of gasoline.
The demand for diesel dropped by 8% year-on-year in 2020 and it is unlikely to develop in the close to future offered improved usage of ethanol and bio-fuel, the sources added. The procurement from non-West Asian nations had been dropping in the final handful of years and it is anticipated to drop even additional. Procurement from West Asia in 2016 was about 75% of the total fuel imported and now has come down to 65% mostly due to availability of low and higher sulphur crude obtainable from other locations like the US, West Africa and Mediterranean.
“Procurement from non-ME countries contribute around 25% of BPCL’s crude requirement, while 10% is from domestic crude. The remaining 65% is from Middle-East. In coming years we will reduce the ME component to 50%-51%,” the supply stated. India imported about 225 MMTPA of crude in 2019-20 meeting 88% of its requirement, whereas domestic crude oil availability was about 30 MMTPA only.