Unlocking Savings: How BPCL Plans to Boost Profits by $20–30 per Ton by Swapping Middle East LPG for Affordable US Supplies

Indian fuel retailer Bharat Petroleum Corp Ltd (BPCL) is making strategic moves to enhance its operations. The company expects to gain between $20 and $30 per metric ton by swapping U.S. liquefied petroleum gas (LPG) with Middle Eastern suppliers. This insight comes from Vetsa Ramakrishna Gupta, BPCL’s head of finance.

BPCL is in discussions to replace some contracted Middle Eastern cargo with U.S. supplies. Recent trends show that a tariff dispute between the U.S. and China has created price disparities, affecting trade routes for LPG. China has implemented tariffs on U.S. goods, leading to this shift in LPG pricing.

Gupta noted, “We’re exploring options with suppliers to make use of U.S. LPG. There’s a chance to benefit financially.” This influx of cheaper U.S. LPG could cushion BPCL from the substantial revenue losses it faces—about 6.5 to 7 billion rupees (around $77 million to $83 million) each month due to selling cooking fuel below market rates.

In a move to adapt to changing dynamics, Abu Dhabi National Oil Co is also set to provide some LPG to India at lower costs starting in June. Gupta expressed hope that the Indian government will introduce a compensation scheme for refiners, helping to mitigate losses incurred from LPG sales.

Historically, India has relied heavily on the Middle East for its LPG, sourcing over 80% from countries like Saudi Arabia and the UAE. However, recent shifts indicate that this reliance might be changing. Gupta mentioned that BPCL has increased its import of Russian crude—a response to U.S. sanctions—now making up about 30% to 32% of their crude processing, a rise from 24% earlier this year. This crude is being purchased at around $3 below the Dubai benchmark.

Looking ahead, BPCL is planning to develop a new refinery in Andhra Pradesh, targeting a capacity of either 180,000 or 240,000 barrels per day. They anticipate finalizing investment decisions by the end of 2025.

In summary, BPCL is navigating a complex landscape of global fuel trade to optimize its supply chain and financial health, adapting its strategies based on market conditions and geopolitical influences.

For more detailed insights on the energy market, check out this report by the International Energy Agency.

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