BPCL to invest Rs 1.7 lakh crore in core, new energy business

Bharat Petroleum Corporation Ltd (BPCL) plans to invest Rs 1.7 lakh crore over the next five years in its core oil refining, fuel marketing and petrochemical business as well as in clean energy such as hydrogen, its chairman G Krishnakumar said on Friday.

As part of 'Project Aspire', a five-year strategic framework, BPCL plans to raise its oil refining capacity, augment petrochemical business and expand its presence in cleaner fuel space with an eye on energy transition and meeting country's fuel demand, he said at a post earnings investor call.

"Our strategy is based on two fundamental pillars - 'Nurturing the Core'; and 'Investing in Future Big Bets'. We remain committed to our core businesses, which include the refining, marketing of petroleum products and upstream. In addition, we are focusing on our big bets, which comprise petrochemicals, gas, green energy, non-fuel retail, and digital," Krishnakumar said.

This will not just help meet the rising fuel demand of the world's fastest growing economy but also help the firm meet its target of achieving net zero carbon emissions by 2040.

"Overall, we plan to invest Rs 1.7 Lakh crores over a period of 5 years. Of this, Rs 75,000 crores is earmarked for refineries and petrochemicals. We plan to undertake strategic pipeline projects with an investment of Rs 8,000 crores, of which projects worth Rs 5,000 crores have already been identified.

"We will invest more than Rs 20,000 crore in our marketing business. We have also earmarked investments of Rs 32,000 crores in upstream production, mainly in Mozambique and Brazil, depending on positive developments on ground. We will invest Rs 25,000 crores on gas business, (and) Rs 10,000 crores on green energy business," he said.

BPCL, which owns three refineries that convert crude oil extracted from below earth's surface into fuels like petrol and diesel, plans to expand refining capacity to 45 million tonnes per annum by March 2029 from current 35.3 million tonnes, he said.

The capacity addition would majorly be at Bina refinery in Madhya Pradesh, which is being expanded to 11 million tonnes from current 7.8 million tonnes. Smaller capacity additions through debottlenecking are planned at Mumbai and Kochi refineries as well.

On fuel retailing infrastructure, BPCL is looking to add about 4,000 petrol pumps to its 22,000-odd retail stations.

Also, the company is undertaking two petrochemical projects at Bina and Kochi, he said.

"In line with the government's focus to increase gas share in the Indian energy portfolio from 6 per cent to 15 per cent, we intend to increase our gas footprint by building optimal city gas infrastructure and acquiring high opportunity geographic areas. We are also exploring enablers like diversification of sourcing, trading capabilities, storage facilities and LNG regasification infrastructure etc. To support our aspirations," he said.

Alongside, it will pursue green ambitions.

"We aim to build 10 GW of renewable energy portfolio through organic and inorganic acquisition of operating assets, by 2040," he said.

The clean energy business will include producing green hydrogen, which emits only water when burnt. "We will produce 30,000 tonnes per annum of green hydrogen in our refineries by 2030, to meet 10 per cent of our hydrogen demand. We will also engage in pilots for green hydrogen fuelled mobility and other applications," he said.

The firm is also aggressively pushing for biofuels and plans to set up 26 compressed biogas plants in the near term."In the EV charging business, we plan to reach a total of 7,000 EV charging stations by FY25. As of March 2024, we added 2,443 new EV charging and battery swapping stations, taking our total to 3,135 EV charging and battery swapping stations," he said.

The EV charging stations will complement its fuel retailing network which also includes 2,034 CNG stations.

Expecting petrol and diesel demand to grow in the near term, he said the growth in demand of petrol is expected to be around 5 per cent whereas in diesel about 1.5-2 per cent.

"India has struck the right balance between its energy security and climate goals. Our rapidly expanding economy will inevitably lead to a surge in energy demand, prompting a continued demand and growth in BPCL's core and new businesses," he said.

India has set a goal of attaining net-zero emissions by 2070. "This will accelerate the adoption of green and low carbon energy solutions, opening significant economic opportunities for companies operating in the broader energy sector, including BPCL." On price outlook, he said the expectation is that global supply and demand will be relatively balanced and the prices would be in the range of USD 83-87 per barrel. "The factors that could impact prices are largely related to unplanned production disruptions, a risk highlighted by the recently escalating tensions in the Middle east."