Q1 Results: BPCL Expects Refining Margin To Improve From Second Half Of 2019-20

Bharat Petroleum Corporation Ltd. expects to report higher refining margin in the second half of 2019-20 on account of the global shipping industry’s shift to cleaner fuel.

“We are expecting the third and fourth quarter refining margins to be better due to International Maritime Organization regulations,” N Vijayagopal, director (finance) at BPCL, told BloombergQuint in an interview. “Also, we expect crude prices to remain around $63-64 a barrel for the rest of 2019-20 compared with $68 per barrel in June quarter.”

The IMO established new standards to cut pollutants blamed for environmental damages. Ships from January 2020 are required to use fuel oil—a residue of petrol, diesel and jet fuel—with a sulphur content of less than 0.5 percent compared with the existing 3.5 percent. That’s expected to benefit refiners as they have already started producing low-sulphur fuel.

BPCL’s operating margin contracted to 2.9 percent in the quarter ended June 30 from 6.5 percent in the preceding three-month period. While its refining margin rose slightly to $2.81 a barrel, its marketing margin fell.

BPCL Q1 Results 2019-20: Key Highlights (QoQ)

• Net profit fell 66 percent to Rs 1,075 crore.
• Revenue rose 3 percent to Rs 76,318 crore.
• Ebitda declined 55 percent to Rs 2,180 crore.
• Operating margin fell to 2.9 percent from 6.5 percent.

Watch the full interview here: