Financial Daily from THE HINDU group of publications
Monday, Jan 05, 2004
Industry & Economy - Petroleum
BPCL to hedge oil imports this year
Mumbai , Jan. 4
BHARAT Petroleum Corporation Ltd (BPCL) has appointed advisors for formulating its risk management policy on forward trading in oil imports. The company hopes to begin hedging transactions before the second quarter of the coming financial year, according to company officials.
"The policy will be placed before the board of directors for approval within the next couple of months. We hope to begin hedging transactions five to six months from now," a senior BPCL official told Business Line.
He, however, did not name the newly appointed advisors.
BPCL has been hedging forex risks after it introduced a risk management policy few months ago.
Hedging in crude and oil products is being looked upon as an extension of the risk management measures, the official said.
The company has been increasing its dependence on imported crude ever since the sector was deregulated in April 2002.
"ONGC has not only revised its crude prices, it has also shown interest in expanding into downstream petroleum products marketing. The obvious result has been efforts by Indian Oil Corporation, Hindustan Petroleum and BPCL to scout for deals on crude oil imports. All three companies seem to be moving towards putting oil risk management systems in place," said a senior sector analyst.
Imported crude formed only 28 per cent of the total throughput in BPCL's Trombay refinery in 1999-2000. In 2000-01, the ratio went up to 32 per cent while in 2001-02, it was up to 41 per cent.
RBI had on September 2, 2000, granted permission to oil sector companies with a physical underlying exposure to oil prices to make use of risk management tools.
Currently, Reliance Industries is the only Indian company that hedges crude transactions.
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