In a departure from its earlier policy, privatization-bound Bharat Petroleum Corp. Ltd (BPCL) is formulating an export strategy for its petroleum products as covid-19 alters the fuel demand pattern in India.
“BPCL is migrating from the current practice of exports based on supply-demand imbalance to planned and regular exports of petroleum products on a sustained basis, thereby establishing a regular market for its products in the international market," the company said in its annual report.
Finalization of detailed operating principles for the export strategy are under way, it said, adding BPCL will soon embark on a focused methodology for export of petroleum products.
BPCL has set up an International Trade and Risk Management (ITRM) desk for all import and export related activities.
Petroleum products are imported and exported based on the domestic demand-supply equation.
According to industry officials, state-run refineries were earlier not keen on exports as the demand in India was robust. Exporting products meant losing an opportunity back home. But covid-19 has altered the consumption pattern and there is a need to look at how to utilize the existing capacities for producing products which are in demand.
Refineries run by both private and state-owned oil marketing companies (OMCs) are operating at 75-85% of their capacities, far lower than the expected 90%, as a recovery in demand for automotive fuels is still to reach its 2019 levels.
“Today the predicament for refiners is how to utilize their capacities to the maximum despite a low demand. So they are left with surplus and instead of selling that surplus at a lesser value, they can convert it into a contracted sale for users," said a senior refinery official.
India is seeing a patchy fuel demand recovery due to covid-19. In August, petrol consumption rose but diesel, its mainstay, fell.
While refiners clocked a 13.6% uptick in petrol sales this August against the year-ago period and 4.1% higher against August 2019, diesel sales rose 15.9% from the year earlier, but fell 9.8% from August 2019.
According to data from the Ministry of Petroleum’s Petroleum Planning and Analysis Cell, India’s total petroleum product export rose from 3,916 TMT in April to 4,700 TMT in July.
