State-run Bharat Petroleum Corporation (BPCL), which saw a 19.6% increase in consolidated profit in the third quarter of FY2025, has revised its capex target for the current fiscal upward from Rs 13,000 crore to Rs 16,000 crore for 2025-26. approximately 19,000 billion rupees. The company is also planning an initial public offering of Maharashtra Natural Gas Ltd., a joint venture with GAIL India, by mid-2025-2026, Chairman and Managing Director G Krishnakumar and Director Finance Vetsa Rama Krishna Gupta, in-charge, told Arunima Bharadwaj. Interview. The company expects U.S. sanctions to result in some short-term Russian oil supply shortages, but expects Russian supplies to recover. excerpt:
About the company’s third quarter financial performance and short-term outlook
This quarter, we recorded great results. The company’s standalone profit after tax was Rs 4,649 crore compared to Rs 2,397 crore in Q2 FY25, representing an increase of almost 94% quarter-on-quarter. The company witnessed healthy sales growth of around 4% and EBITDA of Rs 20,001 crore during the April-December period. Despite the outage period during the quarter, our capacity utilization across all three refineries combined was 107%.
On petrochemicals, we have just signed a Rs 31,800-crore project finance for the expansion of our Bina refinery. Regarding our renewable energy ambitions, we have approved the formation of a 50:50 joint venture with Sembcorp Green Hydrogen India to create approximately 3.5-4 GW of renewable assets. In addition to this, we are also working on expanding our CGD business. We have made good progress in achieving the minimum work plan.
Refining performance this quarter is much better compared to the previous quarter. Our refining margin for the third quarter of 2025 was $5.6 per barrel, compared to $4.41 per barrel in the prior quarter.
How the latest US sanctions on Russian oil supplies will impact the company
Approximately 35-38% of throughput is supplied by Russian crude oil each month. Approximately 180 ships are currently subject to sanctions, which may temporarily affect supplies from Russia. We will have to wait and see for 2-3 months. Even Russia has not cut back on production at all and continues to maintain the same production levels. There may be a shortage of Russian cargo in the next month or two, but at the same time crude oil will become available from other markets such as the Middle East. There is no problem on the supply side. Perhaps commercially they were making a little profit from Russian cargo that might not be available for several months.
Regarding the price difference between Middle Eastern crude oil and Russian crude oil
When you go to the Middle East market, you’re asking for a premium of $2 to $3 per barrel because it’s spot-based rather than period-based. In the spot market, demand is increasing due to the unavailability of Russian cargo.
But when we approach the (Russian) traders, they tell us not to worry. Merchants will find several ways and means for supplies to return. It’s only a matter of time, maybe 1-2 months. We’ll have to wait and see.
Whenever commercially viable crude oil is available, we approach specific traders. We recently received a shipment from Argentina.
Regarding capital investment targets for 2025-26
The capital expenditure target for FY25 was initially estimated at Rs 13,000 crore. The capital expenditure disbursed from April to December 2024 is around Rs 12,000 crore. We have revised our target for the current fiscal year to around Rs 16,000 crore and expect to achieve this target by the end of the year.
We estimate the capital expenditure for FY26 to be around Rs 18,500-19,000 crore. This is an initial estimate and we plan to finalize the figure by the end of February.
Ongoing and future projects
The Bina refinery has an annual production capacity of 7.8 million tons, which can reach 11 MMTPA. The refinery expansion is expected to be completed by September 2027. Along with that, the company is installing a world-class ethylene cracker, which is expected to be operational by May 2028.
Currently, the company is installing a de-aromatizing solvent unit at its Mumbai refinery at a cost of Rs 500 crore, which is expected to be commissioned in 2025. In line with this, the Kochi Refinery has introduced a polypropylene unit at the cost of one unit. 500 billion.
For coal regasification, we are collaborating with Coal India. Once the DFR (Detailed Feasibility Report) is prepared, we will be able to provide more detailed information. We are looking at regasification of coal into syngas, which will be converted to natural gas. Became a joint venture with Coal India. Broadly speaking, we are considering setting this up near Chandrapur in Maharashtra.
About current crude oil prices and marketing margins
We expect oil prices to be around $70 to $75 per barrel, at least in the long term. In the short term, Brent prices have risen to $80 per barrel, but as demand from China has not recovered, we do not see any logic for oil prices to exceed the $80 per barrel level.
Once oil prices return to levels of $70-$75 per barrel, profit margins will be at normal levels and unaffected. Refining spreads have already eased and we believe this low level of refining spreads will persist for an extended period of time.
About a greenfield refinery that doubles as a petrochemical complex in Andhra Pradesh
The board approved Rs 6,000 crore towards pre-project activities such as land identification, feasibility study and environmental assessment for the complex in Andhra Pradesh. A final investment decision (FID) has not yet been reached. The project is viable, as originally estimated, but numbers are expected to be finalized by December 2025.
About diversification into renewable energy
At present, the installed capacity is very small, approximately 120 MW. One project is already underway with 150 MW. Recently, we received one tender for 150 MW from NTPC and one tender for 30 MW from NHPC. Our goal for at least the next few years is to increase this renewable energy capacity to 2 GW, and we want to increase this specific capacity to 10 GW by 2030. That’s why we formed a joint venture with Sembcorp. Initial investments in renewable energy will be in solar, wind, and green hydrogen.
About Maharashtra Natural Gas IPO
Gail India and BPCL are promoters of MGNL. We have given in-principle approval from the Board of Directors and will now require other regulatory approvals from the Ministry and DIPAM. We have submitted a proposal to the ministry. Once you have approval, you can submit it to your merchant banker for approval. Probably by mid-2025-26, it will be around Rs 1,000 crore (IPO).
Regarding the share of petrochemicals in the business structure
This is about 2%, but our goal is to get it to 8% of the total portfolio by 2028-29.
About BPCL’s overseas E&P activities
We expect that force majeure on our exploration and production projects in Mozambique will be lifted at any time. All backend activity is in progress. You may have to wait for 1-2 months. Once the force majeure situation is resolved, activities will accelerate. In Brazil, the FID is not yet complete as the bidding process has not yet been completed. At the same time, we are also developing production areas in regions including Africa.
Expectations within budget
ATF and natural gas are expected to be subject to GST. The government has been supporting us in the recovery of LPG. We are confident that the government will support us again this year.
