Madras Refineries revokes agreement with Bharat Petroleum

Vol 4, PW 2 (01 Mar 00) Midstream & Downstream

There is growing anger at Bharat Petroleum, following a decision by Madras Refineries to revoke a marketing agreement between the two companies.

This report learns that the board of Madras Refineries held a meeting on 18th February in which a decision was made to bury the agreement with BPCL, in favour of Indian Oil Corporation (IOC). "They (IOC) have been plotting revenge ever since they lost the rights," a source tells Petrowatch, "It is a serious blow for BPCL's plans to expand into southern India." A formal proposal to strip Bharat Petroleum of the right to market MRL products has now gone before the union cabinet in Delhi, and is expected to receive approval and become effective shortly.

In return, a source tells Petrowatch, IOC has agreed to take a stake in MRL, something it has been offering for some time. Petrowatch learns that senior Bharat Petroleum officials were aware that the issue would come up at the MRL board meeting on 18th February, but strangely, did nothing to prevent it.

"Very powerful considerations operated and kept them (the BPCL board) totally paralysed." Shortly after it was granted marketing rights last year, BPCL successfully exported 35,000 tonnes of naphtha on behalf of Madras Refineries, in a tender widely praised by Mumbai-based oil traders for its "transparency" and the speed with which it was carried out - attributes rarely attached to tenders called by IOC. Now, BPCL is plotting revenge of its own.

"We will pinch them (IOC) till it hurts", learns this report. Madras Refineries has an annual capacity of about 4m tonnes.