Reuters reported that the Indian state-run Bharat Oil Corporation purchases crude oil from Middle East in order to replace Russian oil which is cheaper.
According to the report the Indian refiners were unable to obtain about 8 to 10 million barrels for crude oil in January. This was previously available on the market.
Indian refiners prefer to buy Russian oil on the spot market, which is cheaper than contracts.
India began to import Russian crude oil following the invasion of Ukraine by Moscow, which led the West to impose severe sanctions against Russia.
Due to sanctions imposed by Europe and the US on Russia, the crude oil was cheaper than other grades. Russia has replaced Saudi Arabia and Iraq as India’s largest crude oil supplier.
Shortage of Russian supplies
BPCL’s finance chief Vetsa Ramakrishna said that the company is not currently able to get its entire Russian oil supply on the spot market.
He said to Reuters:
We are only buying crude oil from the Middle East.
He added that recent purchases by BPCL included oil from Oman.
According to Reuters’ report, BPCL refineries in India process between 35 and 37 percent of crude oil from Russia. Gupta stated that these refineries can process a total of 706,000 barrels of crude oil per day.
Diversifying your sources
Gupta told Reuters as well that if there are any problems with the Russian oil supply in the coming year, his company will look at other options like Middle Eastern grades and US West Texas Intermediate crude.
Rosneft, a Russian oil company, recently agreed to sell 500,000 barrels of crude oil per day to Reliance, an Indian refiner. This was the largest energy deal ever between India and Russia. The agreement will last for 10 years starting in 2025.
As Rosneft will be exporting half of its oil, this deal should limit the supply to Indian traders.
Gupta stated that BPCL is constantly diversifying their oil sources and 53% are through term contracts.
Gupta, a Reuters reporter, said that the company has recently purchased Argentinian crude oil for the first-time and will be lifting 10,000 barrels of oil per day from Qatara as part of an annual agreement.
Investment plans
According to the report BPCL intends to invest 19.94 billion dollars in the next five-year period, 2028-2029. Half of this will be funded by debt.
The company also took loans from Indian banks worth 320 billion rupies to expand Bina refinery.
He added that BPCL would refinance loans worth 40-50 billion rupees next year and will borrow externally in 2026-2027.
Gupta stated that the US Federal Reserve would need to further reduce interest rates to make foreign borrowing attractive.
According to the report, the company has a foreign debt of 2 billion dollars.
Gupta stated that BPCL would invest 250 billion rupees in the development of oil and gas projects for Mozambique, Brazil and the region in the next five-year period.
The post How does India’s BPCL make up for the shortfall in Russian oil supply? This post How is India’s BPCL making up for shortfall in cheap Russian oil supply? appeared first on The ICD
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