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India's BPCL expects to gain $20-30/ton by swapping Middle East LPG for cheaper US supplies

Bharat Petrol Corp. Ltd., an Indian fuel retailer, expects to make a net profit of $20 to $30 per metric ton when it delivers U.S. LPG through a swap agreement with Middle Eastern suppliers. Its head of finance stated this on Friday.

Analysts were told by Vetsa Ramakrishna that BPCL, India’s second largest state refiner, was in discussions with suppliers about swapping Middle Eastern cargo for U.S. supplies.

The U.S.-China trade war has increased the gap in price between Middle Eastern LPG and U.S. LPG, and disrupted trade routes.

China imposed tariffs on U.S. goods in response to the U.S. tariffs on imports from China.

"We are contacting suppliers." We do not see much opportunity with U.S. LPG. Gupta stated that he expects a net gain of $20 to $300 per ton.

Abu Dhabi National Oil Co will also replace some of the LPG that it supplies India in June with cheaper U.S.-made cargo.

The cheaper U.S. LPG helps BPCL to offset the revenue loss of 6.5 to 7 billion rupees (77 to 83 million dollars) it experiences on a monthly basis due to the sale of cooking fuel locally at prices below the market.

Gupta hopes that the federal government will implement a quarterly compensation scheme for refiners who suffer a loss of revenue on LPG sales.

India purchases more than 80% its LPG annually from the Middle East. This includes Saudi Arabia, Qatar, Kuwait, United Arab Emirates and Saudi Arabia.

Gupta said BPCL also expects that the percentage of Russian crude oil used in its three refineries will rise to around 30% to 32%, up from 24% during January-March when U.S. Sanctions disrupted supply. He said BPCL was buying Russian crude for a $3 discount per barrel compared to Dubai benchmark.

BPCL plans to build a refinery in southern Andhra Pradesh that can produce either 180,000 barrels of oil per day (bpd) or 240,000 bpd within four years after a final investment is made, which Gupta expects will be by the end 2025. $1 = 83.9850 Indian Rupees (Reporting and editing by Nidhi verma)

(source: Reuters)