Shipping may impact oil market in short term, no affect likely on availability as US plans to pump more crude: BPCL CMD | Company Business News

And reWith the US announcing fresh sanctions on two Russian oil producers and several ships, shipping crude oil may be an issue in the international energy market, however, as the US plans to produce more oil under Donald Trump’s presidency, there is unlikely to be a significant impact on the availability and prices of oil, said G. Krishnakumar, chairman and managing director of Bharat Petroleum Corp. Ltd (BPCL).

In an interview with Mint, the CMD said that oil prices are not projected to rise and may remain tepid at $70-75 per barrel. Although shipping will be an issue in the near term due to the sanctions, the situation should ease in a few months, he said.

“It’s a bit early, and we are assessing our situation. But it’s going to have an impact. We are also waiting for how the Opec+ will react to this and whether they will wind down and increase production. But one good sign is, since the US has said they will increase production, there won’t be a shortage of products…Shipping will be an issue because of the sanctions. I think they should reassess and come back quickly,” Krishnakumar said.

“I think we would not have to worry about high crude prices, I think it should be somewhere around $70-75  (per barrel). We will watch till March, and then we will see how the sanctions play out,” he added.

Noting that crude availability is not a problem, the CMD of the state-run OMC also said that supplies from West Asia are making up for the shortage of cargoes from Russia.

Also read | India needs more oil, may scale up energy purchases from US: Puri

“There may be a shortage of 2-3 cargoes from the Russian side, but anyhow, we are arranging from the Gulf and Middle East, and we are taking the crude. Our outlook for the crude supply from Russia is that it’s a matter of time. At some point, the supply and demand for Russian cargoes will rebalance. In the next one or two months, there may be a shortage of cargoes, but definitely, the markets will rebalance,” he said.

He added that the company is also looking at other options besides Gulf countries. Recently, the company received oil from Argentina, and it is a regular buyer of crude from the US.

On talks with Brazil for a long-term oil deal, he said that BPCL is looking for crude from the South American country, however, the talks are still at an initial stage. In June last year, Mint reported that state-run oil marketing companies like BPCL, Indian Oil Corp. Ltd (IOCL), and Hindustan Petroleum Corp. Ltd are in talks with Brazilian energy major Petroleo Brasileiro SA (Petrobras) to secure guaranteed crude oil supplies over the long term.

On progress in the LNG project in Mozambique, which has been under force majeure since April 2021, Vetsa Ramakrishna Gupta, the company’s director (finance), said that work could start on the project by April.

Also read | Collateral damage: Indian refiners feel the heat of fresh US sanctions on Russian oil

“A new government has been sworn in, and we have some indications that work will commence probably at the end of March, or May, or the beginning of April. If that happens (work starts by April), we hope that in FY28-29, gas supplies will start,” he said.

Three state-run companies hold a 30% stake in the project operated by TotalEnergies. ONGC Videsh has 16%, while BPRL Ventures Mozambique BV, a subsidiary of BPCL, and Oil India Ltd hold 10% and 4%, respectively.

The CMD and director (finance) spoke to Mint after the company announced its results for the October-December quarter. BPCL reported a 19.6% growth in its Q3 consolidated net profit on Tuesday, at ₹3,805.94 crore. During the same quarter of the last fiscal year (FY24), the company reported a net profit of ₹3,181.42 crore.

However, its revenue from operations declined 1.9% to ₹1.27 trillion during the quarter compared to the previous year. The increase in profits came amid ease in crude prices. The company attributed the financial performance to efficiency in refining operations and market marketing margins.

And read | RIL net up 12% on nimble Jio and retail sales, reviving oil to chemical biz