Annual Report 2008-2009 - Bharat Petroleum

year. An unique program on Workplace Health & Hygiene
was launched, where trained officers were included as
trainers to impart necessary knowledge to the employees
and contract workmen at locations.
Given the prevailing scenario, BPCL with its countrywide
spread faces a unique challenge to ensure security for
people and property. All locations were sensitized and
advised to develop and put in place a “Security Plan” and
to monitor security practices. An online reporting system
has been extended to report any security related incident
at locations.
On the environment front, focus continued on Clean
Development Mechanism (CDM) initiatives. During the
year, the 5 MW windmill project at Kappatguda village
in Karnataka state was approved by United Nations
Framework Convention on Climate Change (UNFCCC)
effective 27th February, 2009. BPCL has accrued the
Verified Emission Reductions (VERs) from the date of
commissioning of the project till the date of registration of
UNFCCC. Certified Emission Reductions (CERS) will start
accruing from 28th February, 2009. Several other CDM
proposals are being processed for various approvals.
During the year BPCL published its 2nd Corporate
Sustainability Report for the year 2007-08. The report has
been published as per GRI norms with A+ rating. BPCL
is the first Company amongst public sector undertakings
to receive A+ rating and the second in the oil sector.
The report has been assessed by an independent third
party assurance provider, M/s. DNV as per AA1000AS
standard. BPCL is the second company in India to be
assured as per this standard.
INTERNATIONAL TRADE AND RISK MANAGEMENT
The year saw crude oil prices in the international markets
touch record highs, reaching a peak of USD 147.27 per
barrel before receding. As the prices fell sharply, the
average price of dated Brent crude oil in 2008-09 at
USD 84.55 per barrel was only marginally higher
than the average price of USD 82.11 per barrel in the
previous year. However, there was a substantial fall in the
sweet / sour crude oil (Dated Brent / Dubai) difference from
USD 5.03 per barrel in 2007-08 to USD 1.68 per barrel in
2008-09.
During the year, BPCL had imported 12.7 MMT of crude
oil as compared to 14.5 MMT imported in 2007-08.
In value terms, the total cost of the imported crude oil
amounted to USD 7960.93 million (Rs. 36,114.26 crores)
as compared to USD 8448.95 million (Rs. 33,827.18
crores) in 2007-08. The average FOB price stood at
USD 85.3 per barrel as compared to USD 79.2 per
barrel in the previous year. The ratio of ‘Term to Spot’
purchase of imported crude was 85:15, which was also
significantly higher than the level in 2007-08 when it
stood at 79:21. Further, BPCL had imported 1057 TMT
of HSD, 254 TMT of SKO and 195 TMT of LPG to meet
the shortfall in supply from domestic sources.
On the exports front, BPCL exported 1381.88 TMT of
refined products during the year, which was lower than
the level of 1934.04 TMT during the previous year.
Export of Fuel Oil was down by 1.22% to 466.41 TMT
from the previous year’s level of 472.16 TMT. Export of
Naphtha came down from 1,154.87 TMT in 2007-08 to
703.45 TMT in the current year. The lower export
volume was due to higher domestic demand. The foreign
exchange earnings from these exports amounted to
USD 757 million (Rs. 3,362 crores) as against
USD 1,174 million (Rs. 4,727.62 crores) during the
previous year.
Logistic support was provided for imports, exports and
coastal movements of products at the least cost. A
combination of Time Charter, Contract of Affreightment
and Voyage Charter were used to ensure logistic security
and optimize the freight cost.
Hedging of refinery margins continued to be an area
of focus to manage the volatility affecting the refining
margins. During the course of the year, hedging volumes
for refinery margins was around 11.6 million barrels,
as against 12.6 million barrels during 2007-08. All the
deals were executed on the e-tender platform developed
in-house to reduce the response time. The hedging
activity was expanded to cover exposures arising out
of Platinum required for the reformer catalyst at Kochi
refinery. Besides, fixed price deals to end consumers of
the Industrial & Commercial business were provided for
about 72 TMT of Naphtha supplies.
The Risk Management Committee continued to provide
direction and guidance, besides carrying out regular
review of hedging positions. New counter parties
were registered and trades were distributed among the
concerned counter parties judiciously.
RESEARCH & DEVELOPMENT
BPCL is continuously enhancing its Research &
Development capabilities at the Corporate R&D Centre,
Greater Noida, Uttar Pradesh, Product & Application
Development Centre, Sewree, Mumbai and the R&D
Centre at Kochi Refinery. During the year, the Corporate
R&D Centre made significant contributions in value
addition at the Refineries through development and
commercialization of in-house developed products like
Annual Report 2008-2009 31