<div>State-owned Bharat Petroleum Corp Ltd aims to double its refining margins once it completes the expansion and upgrade of its Kochi refinery in Kerala to process high sulphur crudes by 2016, a senior company official said.<br /><br />Asian diesel margins have been lower this year due to new refining capacity and an economic slowdown inChina, the world's No. 2 oil consumer, while naphtha margins have been weaker amid an influx of the light fuel from western countries, mainly Europe and the Mediterranean.<br /><br />Bharat Petroleum's refining margins dropped to $3 a barrel this year, from $4.50 to $5 a barrel last year, but levels will increase by a about $3 to $4 a barrel by mid-2016, said Neeraj Shukla, a chief manager at BPCL's refineries division.<br /><br />"We want to process only high sulphur crude at Kochi refinery, which is why we're setting up this plant," he said on the sidelines of an industry conference in Singapore.<br /><br />Crude grades with a high sulphur content are cheaper, and refineries that have installed specialty secondary units to process them can lower feed costs and increase their margins.<br /><br />BPCL aims to raise the capacity of the Kochi refinery to 310,000 barrels per day (bpd) from the current 190,000 bpd by May 2016.<br /><br />Besides boosting margins with the upgrade and expansion, the refinery will also be able to produce fully Euro IV compatible gasoline and diesel, Shukla said on Thursday (30 October).<br /><br />This will meet tentative plans by the government to mandate the use of Euro IV oil products throughout the country by Aug. 1, 2017, and Euro V in some cities by 2020, he said.<br /><br />The refinery's distillate yield will go up to 84 percent from 77 per cent, he added.<br /><br />Once the refinery expansion is complete, BPCL also expects to lift lower volumes of oil products from private refiners such as Reliance Industries and Essar Oil.<br /><br />"I think this is a step to self-sufficiency in our marketing network and we will not be depending on others," he said. BPCL now markets about 12 percent more fuel than it refines, he said.<br /><br />There are no immediate plans to export any oil products once the refining capacity is increased, Shukla said.<br /><br />BPCL also operates a 240,000 bpd refinery at Mumbai, and has majority stakes in the 60,000 bpd Numaligarh refinery in Assam and the 120,000 bpd Bina refinery in Madhya Pradesh.<br /><br />It plans to double capacity of the Bina refinery in about two years and increase the capacity at Numaligarh in four to five years, he said.<br /><br /><strong>New Petchem Plant</strong><br />BPCL is also planning to enter the petrochemicals sector to boost its margins further.<br /><br />Construction has begun on a $850 million plant petrochemical plant that will use 300,000 tonnes per year (tpy) out of the 500,000 tpy a year of propelyne BPCL produces in Kochi.<br /><br />BPCL will look for other projects to utilise the remaining 200,000 tpy of propelyne, he added.<br /><br />Until then, the refiner might produce more liquefied petroleum gas or other oil products such as gasoline.<br /><br />(Reuters)</div>
