Bharat Petroleum Corporation (BPCL) could face a short-term impact of 1-2 months on its operations as it adjusts its crude oil sourcing mix amid the evolving geopolitical situation.

With sanctions on Russian crude oil tightening, the company is rebalancing its purchases by increasing supplies from Saudi Arabia and the United States. However, this shift comes at a premium of $2-3 per barrel, according to BPCL Chairman and Managing Director G Krishnakumar.

Currently, about 35% of BPCL’s crude mix currently comes from Russia.

“We will look at more of Middle East crude and the US, and with Mr. Trump saying that he’s going to free the energy and there’s going to be a lot of drilling, I don’t think there will be a shortage of crude in the near term,” he added.

On LPG under-recoveries, Krishnakumar said, “We are very hopeful. Last year, the government supported us with a subsidy of about ₹5,000 crore, and we are very hopeful that this year, too, they will support us in time. We do not know exactly when it will come, but we are hopeful that will come by March.”

BPCL’s current LPG under-recovery stands at ₹7,200 crore.

BPCL reported a gross refining margin (GRM) of $5.60 per barrel for the third quarter, which was lower than market expectations but higher than the previous quarter’s $4.41 per barrel. “We hope to be around $6.5 per barrel by the end of the year,” he said.

The company is also moving forward with the IPO of Maharashtra Natural Gas Limited (MNGL), a joint venture with GAIL India.

“Our board has approved the proposal. As you understand, both the joint venture partners have to get their approvals in the board, and then we have to get the approval of DIPAM. We hope GAIL will also be done. Probably in the next four to five months, this should be through,” Krishnakumar said.

BPCL’s market capitalisation is at ₹1,18,049.75 crore, and its shares have gained 17% over the last year.

These are the edited excerpts of the interview.

Q: With regards to the liquified petroleum gas (LPG) under-recoveries, could you give us a sense of what would you expect on that front? What is the quantum for BPCL, and will this come in by March?

A: We are very hopeful. Last year, the government supported us with a subsidy of about ₹5,000 crore, and we are very hopeful that this year, too, they will support us in time. We do not know exactly when it will come, but we are hopeful that will come by March.

Q: What is the Under recovery for BPCL so far?

A: It is about ₹7,200 odd crore. That is the kind of number for LPG gas now.

Q: You would be compensated to the full extent?

A: I am not sure it will be the full extent. As much as possible, they will give us, the rest we will have to take it.

Q: There is this talk about an IPO of an entity where you are one of the joint venture partners, Maharashtra Natural Gas, and they are large distributors in Pune. Any updates on this? Have the JV partners discussed this? What are the timelines?

A: We have a joint venture with GAIL India for MNGL. Our board has approved the proposal. Both the joint venture partners have to get their approvals in the board and then we have to get the approval of DIPAM. That is the standard process for doing an IPO. So we have got our approval. We hope GAIL will also be done. So probably in the next four to five months, this should be through.

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Q: There is one 2 million tonne plus petrochemical project in Bina, and another one in Kochi. Are all these on track? If you could just talk us through, what are timelines looking like here?

A: We have announced two projects. One is a 2 million ethylene cracker plant at Bina, along with the expansion from 7.8 million metric tonne of the refinery to 11 million metric tonne. We have a project size of about ₹48,000 crore including the goods and services tax (GST) component. That is expected to be on commission by May of 2028 and that is on track so far.

We have just done a financial closure with SBI as the lead banker, and a consortium of banks for about ₹31,800 crore. The financial closure is done, and we are very confident that this is on track. Our execution is our strongest focus right now. Likewise, in Kochi, a ₹5,000 crore polypropylene plant has been commissioned. We are very confident that the project will come before time. We had expected that to be sometime in July of 2027, we are expecting now closure around April of 2027.

Q: Can you leave us with an expectation on the marketing side of the business? What level of margin are you at? Where will it be sustained? And if crude comes down further, would you be passing that on to the customer, or would you be retaining some of the margin cushion?

A: We will have to look at it as and when the crude moves up or down. But we are very confident in marketing. We have one of the strongest networks in the country. We are about 22,000 stations outlet. We are coming out with a bouquet of energy stations where, apart from petrol and diesel, we will also be offering CNG and EV charging. Along with EV charging, we have come up with a new proposition and a few select outlets now, which was done on a pilot basis, called BeCafe, where we have created a very good, experienced coffee station.

When the person charges the EV, which is about 20-25 minutes – even if a two-wheeler, he will have to charge for 20-25 minutes – he can be engaged in this coffee shop. And this coffee shop is entirely sourced by BPCL. We have not taken any outside help, so that is branded as BeCafe. You can see it on some of the highways. We are very confident that marketing will do very well in the years to come.

For the full interview, watch the accompanying video

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