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State-run Bharat Petroleum Corporation Ltd (BPCL) will spend Rs 32,500 crore to expand its refining capacity from the current 30.5 million tonnes (mt) to 47.5 mt in the next three-four years.
The company will spend Rs 10,000 crore on its Numaligarh refinery to expand its capacity from three mt to nine mt. BPCL owns 61.65 per cent in the Numaligarh Refinery. The Assam government holds 12.35 per cent in the refinery and Oil India Limited holds the rest.
At its Mumbai refinery, however, capacity would go up from 12 mt to 14 mt through change of its crude oil distillation unit, increasing distillation.
While its Kochi refinery will expand from 9.5 mt to 15.5 mt at a capex of Rs 15,000 crore by December 2015, the Bina refinery at Madhya Pradesh will expand from six mt to nine mt by de-bottlenecking at Rs 2,500 crore by the same period. BPCL owns a 49 per cent stake in the Bina Refinery.
“We would be expanding our refining capacity to meet market growth. Our current refining capacity of 30 mt is just about sufficient for its marketing volume. We would be spending Rs 32,500 crore in expanding refining capacity over the next few years," said R K Singh, chairman and managing director, BPCL, told Business Standard.
The Bina refinery is currently operating at 110-per cent capacity utilisation, with gross refining margin of $8-10 per barrel. "If similar capacity utilisation trends continue, the management expects Bina to break even in FY14," said Harshad Borawake and Kunal Gupta of Motilal Oswal Securities in a recent report on BPCL.
At its Kochi refinery, the capacity expansion will also involve improvement in the Nelson Complexity from 6.5 mt to 9.5 mt, said Singh. Besides, with the Kerala government extending sales tax deferral up to 15 years, BPCL could have an annual benefit of up to Rs 600 crore.
On the exploration and production front, BPCL's share of capex in Mozambique development will be $2 billion which it expects to fund through reserve-based funding in US dollars. "As a strategy, BPCL would like to consolidate its current E&P investments and focus on new E&P acquisitions only post revenue generation from Brazil (2017) and Mozambique (2018)," said Borawake and Gupta.
BPCL is currently drilling in Mozambique and Brazil. The development capex in Mozambique is around $20 billion for the first two trains and its share of 10 per cent comes to around $2 billion.
Bina refinery IPO in FY15; to offload 24% stake
BPCL will launch an initial public offering (IPO) for its Bina refinery or Bharat Oman Refinery Limited (BORL) in FY15. "We would be offloading 24 per cent during the IPO," said R K Singh, CMD of BPCL. "The pricing, however, would be decided later". (BS Reporter)
