BPCL gears up to make a big push into gas business

Vol 13, PW 8 (24 Sep 09) Midstream & Downstream

Bharat Petroleum chairman and managing director Ashok Sinha is determined to see the state-owned refiner make a big push into the domestic gas business.

Sinha (left) tells PETROWATCH the company currently sells 1m t/y gas (approx: 4m cm/d) but that he expects this figure to rise to 5m t/y (approx: 20m cm/d) in five years. Sinha adds that the key driver for the new big push into gas is the expected completion of Petronet-LNG’s 2.5m t/y Kochi LNG terminal by April 2012.

BPCL will receive 40% of the LNG landed at Kochi and the rest will be divided between IOC and GAIL. BPCL is already earmarking people and resources in anticipation and last month appointed executive director AK Bansal to head the newly set up gas business unit.

“We have set up a system to handle our emerging gas business,â€‌ confirms Sinha. “But we haven’t yet reached our optimal level of engagement in the gas sector.

â€‌ Sinha said the gas business unit has been charged with developing, “a sourcing to retailing business by taking an overall view of the market.â€‌ He also said another driver behind the new gas business unit is the ever-increasing substitution of gas for liquid fuels.

“In one form or another all my products will continue to be replaced by gas,â€‌ he said. “We don’t want to lose our market.

â€‌ Sinha sees little competition for BPCL’s gas business. “There’s a huge unsatisfied demand for gas from the power, petrochemical and other sectors,â€‌ he says.

BPCL will leverage its nationwide network of petrol stations to expand its gas business, we hear, and has identified customers for its 40% share of LNG from Kochi. “Half our share will go to Kochi Refineries,â€‌ he says.

“There’s enough demand for the rest.â€‌ BPCL already has a small presence in the gas sector thanks to a 12.5% stake in Petronet-LNG, as well as several minority stakes in city gas retailers Indraprastha Gas (22.5%), Central UP Gas (22.5%), Maharashtra Natural Gas (22.5%) and Sabarmati Gas (25%).