BPCL receives board approval for ethylene cracker project at Bina refinery

BPCL is making investments in Petroleum Oil Lubricants and Lube Oil Base Stock installations.

Bharat Petroleum Corporation Limited (BPCL) said it received board approval for the ethylene cracker project at Bina refinery with a capital expenditure of Rs 49,000 crore.

The oil giant said the project encompasses the establishment of an ethylene cracker complex, downstream petrochemical plants, as well as the expansion of the existing refinery capacity from 7.8 MMTPA (million metric tonne per annum) to 11 MMTPA and associated facilities at Bina refinery.

The BPCL board also approved the setting up of two 50 MW wind power plants in Madhya Pradesh and Maharashtra for captive consumption at Bina and Mumbai refineries respectively with a total project cost of approximately Rs 978 crore and Rs 489 crore for each project.

BPCL said it is also making investments in Petroleum Oil Lubricants (POL) and Lube Oil Base Stock (LOBS) installations with receipt pipelines at Rasayani in Maharashtra. The project, with an estimated cost of approximately Rs 2,753 crore, aims to augment storage capacity, smoothen the supply chain and streamline the distribution of essential petroleum products, the company said.

The expansion plan in the petrochemical segment by the oil marketing company comes ahead of its announcement of Q4 results on May 22. Analysts expect improvement in OMCs results with the decline in crude oil prices.

“OMCs' earnings would further improve QoQ, as Brent averaged at ~USD81/bbl in Q4FY23, down 8% QoQ, closing ~USD5/bbl lower between the two quarter-ends at ~USD80/bbl, implying small inventory losses for OMCs (of USD1-2/bbl). Benchmark GRMs rose ~USD2/bbl to ~USD8/bbl, with petrol cracks recovering to ~USD15/bbl. Diesel, however, softened to ~USD25/bbl. Petrol marketing margins stood strong at ~Rs9/ltr, while diesel and LPG hovered near break-even levels at ~Rs0.1/ltr and negative Rs2/cylinder, respectively,” said Emkay in a report dated April 6.

Meanwhile, Indian Oil Corporation Limited (IOCL) and Hindustan Petroleum Corporation Limited (HPCL) posted profits in the fourth quarter of the financial year 2022-23.

Domestic brokerage Prabhudas Lilladher said it expects OMC results to be operationally better owing to a recovery in marketing gains (blended margins Rs3.3/ltr vs loss of Rs3 in Q3) despite lower GRMs.

“Benchmark Singapore margins were higher at USD8.2/bbl vs USD6.1/bbl in Q3 due to improvement in petrol refining spreads to USD19/bbl (+USD10/bbl QoQ).  However, for the domestic refiners, diesel accounts for ~45% of refining volumes where spreads are down USD14/bbl QoQ. So while refining profits wil be lower, sharp recovery in marketing margins will drive Q4 PAT to Rs115.7bn from Rs27.4bn in Q3,” the brokerage said in a report.