 "bpcl")
Sell-off-bound Bharat Petroleum has procured 500 million barrels of distress crude (five shiploads) at a discount of USD 3-5 per barrel to the already low prevailing price following order cancellations by coronavirus-hit China this month.
Since the outbreak of the epidemic, crude prices have plunged over USD 15 a barrel to around USD 50 now as large parts of China, the largest importer and consumer of crude, are under Beijing-ordered lockdown and millions of factories are closed.
The deadly virus outbreak in China since mid-January has left more than 2,660 dead and over 77,600 infected in China alone even as it has spread to countries like Korea, Japan, Iran and far-flung nations like Italy and France.
"We have bought 500 million barrels of what we call opportunity crudes from distress sale in February. Price is so attractive it is coming at USD 3-5 per barrel cheaper than the already low prices which is trading at under USD 50 a barrel," R Ramachandran, the director of refineries at BPCL told reporters.
When asked whether the company will be snapping up more such crudes, he answered in the negative saying that will only make inventory management unwieldy.
"Our inventory cycle is 30-40 days. Just because crude is cheaper now does not make sense for us to ramp up inventory too high as it will invariably lead to inventory losses, something we don't want to invite upon ourselves," he said.
Meanwhile BPCL has been the biggest customer of US crude since the last two years, when that country lifted the ban on exporting crude for the first in decades.
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"We imported 1.6 million tonne crude from the US in FY19, and the same has already touched 1.57 million tonne this fiscal so far, making us the largest customer for the US crudes from the country," he said.
He also ruled out contracting Russian crude, unlike IndianOil did last week, saying the landed cost will not cost-effective for them.
Meanwhile, a report from New Delhi quoting the visiting US energy secretary Dan Brouillette said in the past two years, Indian imports of crude from the US has jumped 10-folds to 2,50,000 barrels a day.
In 2017, the country imported just 25,000 barrels per day from the US.
"In the past two years, we've seen a remarkable off-take in US oil and gas by India, from 25,000 bpd in 2017 to 250,000 bpd now, a 10-fold spike and we expect it to be better from here," Brouillette said in the National Capital, adding this makes the US the sixth-largest source market for India.
India began importing crude oil from the US in 2017 as it looked to diversify its import basket beyond the Opec block. It bought 1.9 million tonne (38,000 bpd) crude from the US in FY18 and another 6.2 million tonne (1,24,000 bpd) in FY19.
In the first six months of FY20, the US supplied 5.4 million tonne crude oil to India.
Oil minister Dharmendra Pradhan later said India is the fourth largest export destination for US crude now, while LNG import from the US is also increasing progressively ever since import started in March 2018. India is now the fifth largest destination of US LNG exports.
Pradhan said the bilateral hydrocarbon trade has increased exponentially during the past three years touching USD 7.7 billion mark in FY19, accounting for 11 per cent of total two-way trade.
Iraq is India's top crude oil supplier, meeting close to one-fourth of oil needs. It sold 26 million tonne crude to India in April-September, relegating Saudi Arabia to the second spot with 20.7 million tonne. The country meets as much as 83 per cent of oil demand through imports and has shipped in 111.4 million tonne during April-September.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
