BPCL cautious on EU price cap on Russian oil products: Sukhmal Jain

Bharat Petroleum Corporation Ltd (BPCL) is looking with caution on the price cap to be imposed by the European Union (EU) on February 5 on Russian oil products, as it can potentially disrupt the global supply chain, Sukhmal Jain, Director-Marketing of the state-run oil marketing company (OMC), told Moneycontrol.

“If any disruption happens on that account, it has the potential to again disrupt the supply chain across the world,” Jain told Moneycontrol in an interview ahead of India Energy Week.

EU countries have agreed to impose price caps on Russian refined oil products to limit Moscow's funds for its invasion of Ukraine.

EU is set to impose a price cap of $100 a barrel on premium Russian oil products such as diesel and $45 a barrel on discounted products such as fuel oil and naphtha.

“For the fourth quarter, we are keeping our fingers crossed. There are multiple factors at play here, including the price cap that is expected to come into effect from 5 February for refined products, especially for gasoline (petrol) and gasoil (diesel),” said Jain.

BPCL reported net profit in the quarter ended December 2022 after booking losses for two consecutive quarters in FY23. The OMC posted consolidated net profit of Rs 1,747.01 crore in the third quarter.

Jain believes that the worst is behind us in terms of volatility in crude oil prices and expects prices to hover in the range of $75 to $90 per barrel in the near future.

With the EU price cap on Russian petroleum products, he, however, expects volatility in the prices of petroleum products.

“Volatility can be expected in the prices of major petroleum products like gasoil and gasoline. One key reason for the same is the expected price-cap on refined products starting 5 February 2023,” he said.

Jain added that other factors such as the opening up of the Chinese economy and fears of a recession in the US and Europe would also impact prices.

“With so many geo-political and economic factors at play, predicting over a longer horizon is next to impossible. Demand-supply and market sentiment will finally decide when and where all of these will stabilise,” Jain said.

BPCL plans to commission around 1,500 new outlets in FY24, Jain said. He said BPCL had advertised around 21,000 locations in 2018, of which, the company has commissioned over 5,500 outlets, and over 8,000 locations are in various stages of evaluation/commissioning.

To stand out from competition, BPCL is focused on providing a complete digital experience to its customers. “We are in the final phase and then complete digital experience will be available to our customers,” Jain said.

“We will start with our outlets in the Metro cities before we expand into our other outlets in tier 2 and tier 3 cities and towns. Already, through our UFill initiative, we will be offering complete control of fuelling to the customer to give guaranteed Q&Q (quality and quantity) assurance and seamless payment experience,” he added.

BPCL has ambitious plans to leverage its 21,000-strong retail network by diversifying and expanding the non-retail fuel business.

On January 21, the oil giant launched its first café outlet ― BeCafe ― in Uttarakhand en route to tourist locations on the Nainital-Bhimtal corridor.

Jain said that such initiatives will bring in significant business in times to come. Consumers could sit in the café while their electric vehicle (EV) is getting charged at the outlet, he added.

“You would like to sit in a good café, and sip a good cup of coffee by the time your car is fully charged to go, say, another 100 or 150 kilometres. That is how we are reshaping our non-fuel proposition,” said Jain.

Initially, BPCL is planning to set up 300 rural-urban stores by March 23 while in the next year, the company plans to take it to 2,000, he added.