Bharat Petroleum Corporation Ltd. (BPCL) is looking to invest about Rs 45,000 crore in its petrochemical business over the next five years. This is part of the state-run oil company’s planned capacity expansion of Rs 1 lakh crore.
“Currently, only 1 percent of our throughput is getting converted into petrochemicals. Going forward, anywhere between 10-15 percent will be our target,” D Rajkumar, chairman and managing director told reporters at a press conference. The additional investment will translate into higher profitability by 2023, he said.
The oil refining and marketing company will use this investment to venture into niche petrochemicals through its Propylene Derivatives Petrochemical Project at the Kochi refinery. This is part of BPCL’s integrated refinery expansion project at Kochi aimed at creating a capacity of up to 15.5 million metric tonnes per annum.
BPCL operates its upstream operations through wholly owned subsidiary Bharat PetroResources and has invested $1.7 billion on exploration and production so far, excluding Russia where it has invested another $900 million. The company has upstream assets in Mozambique, Brazil, Australia and Indonesia. The valuations of these assets have fallen in the last two years due to lower crude and gas prices.
The company owns a 10 percent stake in the Mozambique Rovuma basin, which has a capacity of about 75 trillion cubic feet and is ranked as one of the top ten discoveries by IHS Markit in 2010. The basin is operated by U.S.-based Anadarko Petroleum Corporation.
A funding arrangement for the Mozambique basin is currently being worked out but that will depend on whether the company is able to reach a capacity of 8-9 million metric tonnes by June next year by securing long term LNG contracts. A final investment decision for the basin would then be looked at by end of financial year 2017-18, said Rajkumar. “The first gas from the project can be expected out of Mozambique by end 2022 or 2023 beginning. So that is when we’ll start getting our revenues and profits,” he said.
The company also plans to cash in on the returns from its two blocks at Vankor and Taas Youyakh fields in Russia. With a combined investment of $1 billion with Indian Oil Corporation (IOC) and Oil India, the company is targeting returns of $80-90 million in about a year from these two blocks.