BPCL crude sourcing is shifting toward the Middle East as higher freight costs reduce the appeal of Russian oil, with the Indian refiner expecting significantly fewer Russian cargoes in November 2026.

Key Takeaways

  • Russian crude accounted for about 37% of BPCL’s purchases in the July–September quarter.
  • Middle Eastern supplies have become more commercially viable, although shipments from Iraq and Kuwait have not fully normalized.
  • BPCL expects to take its proposed Andhra Pradesh refinery project to its board in the coming weeks.

BPCL crude sourcing responds to freight costs

Finance Director Vetsa Ramakrishna Gupta told analysts on an October 26 earnings call that Bharat Petroleum Corporation Ltd had secured enough crude to sustain refinery operations despite shipping challenges.

Gupta said Russian crude had carried a premium of $12–$13 a barrel in October, but that the premium had more recently narrowed to about $1–$2. The economics of Russian supplies could improve in December, depending on freight costs and offers available when purchases are finalized.

Crude freight costs have risen without a corresponding increase in product freight, putting pressure on refining margins. BPCL’s average landed crude cost was about $10–$12 a barrel above its benchmark, depending on the source and delivery route.

Middle Eastern supplies gain ground

BPCL expects higher volumes from the Middle East in October and November than in the first quarter. Saudi Arabian supplies improved during the July–September quarter, while shipments from Iraq and Kuwait had yet to return fully to normal, Gupta said.

The company’s Singapore-based international crude desk, which began operating in September, has helped it find new sourcing opportunities, including a discounted cargo from the Caspian region.

Andhra Pradesh refinery proposal

BPCL is evaluating a proposed refinery and petrochemical complex in Andhra Pradesh with capacity of 10 million tonnes a year and petrochemical intensity of about 32%–33%. Its detailed feasibility report is in the final stages, and cost estimates are being reviewed.

The board has approved creating a wholly owned project subsidiary with initial share capital of up to Rs 4,900 crore, subject to applicable approvals. BPCL is considering diluting at least 30% of the project’s equity as development progresses, though ownership arrangements remain under discussion.

Next milestone

BPCL expects to seek a final investment decision from its board on the Andhra Pradesh project in the coming weeks, subject to financing arrangements and regulatory approvals.

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