Sliding crude prices, struggling global energy cos deter govt’s BPCL stake sale plan

The Centre’s plans to sell its entire stake in BPCL are expected to face hurdles as the unprecedented slump in global crude prices may deter international interest in the state-owned energy major in the near term, as per a senior government official and sources in the energy industry. The government may have to wait longer for bids at an attractive valuation as major international energy players are battling the financial stress caused by disruption in the crude oil market.

Industry sources said many refining companies globally have filed for bankruptcies recently, creating a negative spiral for energy assets. Since January, a total of 10 companies, including Whiting Petroleum and Echo Energy Partners in the US, have filed for bankruptcies.

As prices of crude fall, domestic oil marketing companies (OMCs) such as Bharat Petroleum Corporation Ltd (BPCL) typically tend to benefit from it. But this is the first time that despite oil prices hitting new lows, OMCs had to shut their refining plants and lower their capacity due to the nationwide coronavirus-induced lockdown.

This is the first time that refineries in India are running at low capacity of 25-30 per cent, industry sources said. Shutting down of refineries is a big challenge as costs of restarting them rises significantly.

Indian Express
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