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Bharat Petroleum Corporation Ltd Management Discussions

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Jul 15, 2024|09:34:59 AM

Bharat Petroleum Corporation Ltd Share Price Management Discussions

The global economy remains in a precarious state amid the protracted effects of the overlapping negative shocks of the pandemic, the Russian Federations invasion of Ukraine, and the sharp tightening of monetary policy to contain high inflation. This difficult context highlights a multitude of challenges.

The global economic trends have been mixed, reflecting both improved conditions and persisting downside risks, largely centering on inflation and geopolitical uncertainty. The actions taken in the recent past by the policymakers are likely to play a significant role in the pace and course of the worlds economic recovery.

GLobAL ecoNomY

In the fiscal year 2022-23, policymakers faced a paradoxical challenge of managing inflation while simultaneously supporting economic growth. During the first half of the year, global economic activity was experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than that seen in several decades.

Global inflation surged to 8.7% from 4.7% in 2021, overshooting targets in most countries throughout the year. Central banks have contended that near-term growth sacrifice would be needed to bring down inflation to protect the long-term prospects for growth. This surge in inflation triggered successive interest rate hikes by central banks, thereby pulling back liquidity from the system, which eventually marred the growth outlook. As per the International Monetary Fund (IMF), the global

GDP growth rate experienced a slowdown, declining from 6.0% in 2021 to 3.4% in 2022. Furthermore, it is projected to drop to 2.8% in 2023. Advanced economies are expected to see slower growth in near future, with a forecast of below 1.3% in 2023 compared to 2.7% in 2022. However, recent high-frequency indicators suggest that the momentum of global growth is sustained in the second quarter of 2023. The global composite Purchasing

Managers Index (PMIs) rose to an 18-month high in May

2023, powered by the services sector. The US economy is slowing but at a gradual pace, with jobs growth and wage levels holding despite successive hikes in interest rates by the Federal Reserve since March 2022. Global inflation is easing, but slowly. Some commodity prices have declined amidst the easing of supply chain pressures. Global food prices have also fallen to their lowest levels in two years, with declines in grains, vegetable oil and dairy prices. Global trade remains a challenge and has taken a hit due to rising protectionism in several countries. There has been a realignment of global supply chains due to the war in Ukraine and fragmentation in finance and technology flows. Foreign flowshave slowed.Direct Investment Various projections show that while services exports will be high, export of manufactured goods is likely to be on the lower side.

With monetary policy focused on moderating inflation while stabilizing financial markets, fiscal policy is left as the potential tool to boost economic growth. With public debt at historically elevated levels, there is less room for expansionary fiscal policy. However, receding of the dislocations created by the Russian-Ukraine war, easing pressure on global supply chain, decline in shipping costs and the opening up of China after the prolonged COVID restrictions offer a semblance of positivity to the global economy.

iNDiAN ecoNomY

Amid the global uncertainties, Indias economy has been an outperformer, reflecting robust domestic consumption and lesser dependence on global demand. The Indian economy is cautiously shining and the growth moderation for India in the financial year 2022-23 is premised on an ongoing global economic slowdown, tight monetary conditions, and elevated oil prices.

As per the National Statistical Offices provisional estimates released on May 31, 2023, the Indian economy grew 7.2% in 2022-23, up from 7.0% estimated earlier.

The GDP growth for the year exceeded the estimate due to strong growth in the last quarter of the year. GDP grew 6.1% in the January-March quarter, up from 4.5% in the October-December quarter. The GDP growth was 9.1% in 2021-22, supported by a favourable base effect due to low growth in the pandemic year. Among the broad sectors in the economy, the services sector continued to rebound, driving growth during the year. Services sector grew 9.3% in 2022-23, much more than the growth in agriculture and industry combined. The governments thrust on infrastructure has also helped boost growth. In the year 2022-23, the gross

(GFCF), a crucial measure of fixed investments in the economy, demonstrated significant growth, increasing by 11.4%. The growth was primarily driven by increased construction activity, which, in turn, positively impacted key indicators like steel consumption, cement production, and imports of capital goods.

India also experienced a surge in inflation during 2022-

23, mainly due to global supply shocks and high input costs. The sharp rise in international crude oil prices, food, fertilisers and metals exerted broad-based price pressures during the year. As a result, Consumer Price

Index inflation reached a peak of 7.8% in April 2022. Inflation moderated after the gradual normalisation global supply chains, softening of global commodity prices, government supply management measures and monetary tightening by the Reserve Bank of India. Overall, inflation rose to 6.7% in 2022-23 from 5.5% in 2021-22.

The Indian Rupee declined by 8.5% against the US dollar over the last fiscal. This depreciation, rather than a reflection of Indias macro-economic fundamentals, is more as a result of capital outflow and appreciation in the dollars value due to interest rate hikes in the US.

Driven by strong domestic demand and capital expenditure push from the government, India will be one of the major beacons of growth in 2023-24. The Indian economy is expected to grow by 6.5% in 2023-24. Several high-frequency indicators suggest that the Indian economy is on course to meet the growth projection for the year.

The year 2023-24 is expected to see faster growth in investment, thanks to sound macroeconomic policies & fundamentals and robust balance sheets of corporates and banks. Global geopolitical tensions, slowdown in the global economy & volatility due to new stress events in global financial systems pose a downside risk to the growth outlook.

treNDs iN the GLobAL oiL AND GAs sector

The global energy markets were engulfed by a crisis very different from the ones in the past as the major primary energy sources, viz., crude, gas and coal were disrupted in a scale of unprecedented breadth and complexity. Russia has been among the largest exporter of fossil fuels, but its chocking of natural gas to Europe and EU sanctions on imports of oil and coal from Russia has severely impaired global energy trade.

The spot prices of natural gas had reached levels never seen before, regularly exceeding the equivalent of USD

250 for a barrel of oil. Coal prices had also hit record levels, while oil rose well above USD 100 per barrel in mid-2022 before falling back. High gas and coal prices account for 90% of the upward pressure on electricity costs around the world. The crisis has stoked inflationary pressures and created a looming risk of recession. The loss of the Russian pipeline gas supply to the EU in 2022, which accounted for almost 20% of the gas consumption, drove the LNG prices to record highs. There was immense global competition to procure spot LNG cargoes as European countries looked to shore up storage stocks ahead of the winter. Global trade in LNG reached a record high in 2022, averaging 51.7 billion cubic feet per day (Bcf/d), a 5% increase from 2021.

LNG imports by the EU increased by 73% in 2022, or by

6.3 Bcf/d, from 2021 as they aimed to replace imports by pipeline from Russia. Japan regained the spot as the cantly in Q1 of the year 2022-23, signifi top LNG importer as Chinas LNG demand fell due to its zero-COVID policies and increased imports of natural gas by pipeline from Russia. Other Asian countries reduced spot purchases because of high LNG prices. Natural gas spot prices reached historic highs.

Brent crude oil prices averaged $100.93 per barrel in 2022, up from $70.86 per barrel in 2021. With energy markets remaining extremely vulnerable, todays energy shock is a reminder of the fragility and unsustainability of our current energy system. Global oil markets are gradually settling in after the worst energy crisis in 50 years. Oil prices retreated in the last few months due to concerns over the global economy and slacking demand for oil. Gains that followed the surprise announcement by some OPEC+ countries to cut production got reversed as concerns remained over the challenging macroeconomic environment. The sector is in flux, with prices not behaving in line with forecasts by reputed agencies. Global crude oil production rose by little more than 5% in 2022 despite the sanctions on Russia from Western countries. Russian export volumes, in the end, remained more or less at similar levels, with several other importers like India and China picking up Russian cargoes.

On the supply side, oil flows from Russia have remained higher than expected, which kept a check on the prices.

In April 2023, OPEC+ members agreed to cut oil production through 2023, which took the markets by surprise. In June 2023, Saudi Arabia announced that the countrys output would drop on top of the broader OPEC+ deal to limit supply into 2024. Energy-related CO2 emissions grew in 2022 by 0.9%, or 321 Million Metric Tonnes (MMT), reaching a record high of over 36.8 billion tonnes. The growth of renewable sources, including solar, wind and electric vehicles (EVs), helped slow the rise in emissions. Emissions in 2022 were lower compared with 2021, which saw a jump of over 6% due to economic rebound. Emissions still remain on an unsustainable growth trajectory, needing accelerated clean energy transition.

The Brent-Dubai differential, an important parameter impacting profitability of domestic refineries, was largely positive, with Brent crude trading at a premium to Dubai crude for almost the whole of the year. The differential averaged at a premium of USD 3.62 per barrel in the year 2022-23, as against a premium of USD 2.7 per barrel in the previous year. The premium increased mainly due to reduced US production, expectations of Iranian crude coming to market and prospects of Russian barrels to be replaced by Brent related crude oils, especially in Europe. However, it got tapered down due to concerns about the possible economic recession and severe COVID-19 containment measures in China.

Moving in tandem with international prices of crude oil, the petroleum product prices also witnessed high volatility and steep rise in prices. The prices of Motor Spirit (petrol) (Unleaded Singapore Platts) and High-Speed Diesel (diesel) (Gasoil Singapore Platts) averaged higher, at USD 106.82 per barrel and USD 132.95 per barrel, respectively, in 2022-23, as against USD 89.7 per barrel and USD 90.6 per barrel in the previous year.

Jet fuel/kerosene (SKO) also witnessed significant increase in price to USD 125.16 per barrel as against USD 87.4 per barrel, in the previous year. However, the average price of naphtha marginally declined to USD 77.03 per barrel, as against USD 79.7 per barrel in the previous year.

Much to the delight of the refiners, the international cracks of petroleum products skyrocketed during the year 2022-23, as against the previous year, primarily owing to fractured supply chains across the globe. The cracks, particularly of petrol and diesel, increased substantially in the first quarter of the mainly driven by uncertainty surrounding Russian exports, reduced exports of petrol and diesel by China and lower inventory levels across all major hubs of the world, while demand for the products improved steadily.

The average cracks of petrol for the year stood at around USD 14.7 per barrel, as against USD 11.4 per barrel in the previous year, while those of diesel averaged at USD 40.7 per barrel, as against USD 12.3 per barrel in the previous year. The jet fuel/kerosene cracks averaged at USD 32.9 per barrel, as against USD 9.0 per barrel in the previous year, registering a significant increase attributable to resumption of air travel during the year. However, Naphtha cracks average negative USD 15.1 per barrel, as against USD 1.5 per barrel in the previous year owing to depressed demand.

The market is still in choppy waters as the OPEC+ supply cuts this year are yet to impact oil prices much as the hangover of higher industry stocks helps the supply chain absorb shocks. The outlooks by leading agencies imply a large deficit towards the end of this year. But the global economy continues to face headwinds in the form of stubbornly high inflation.

On an annualized basis, oil demand is forecast to grow by 2.1 million b/d to 102.7 million b/d in 2023, reaching pre-pandemic levels for the first time. Global demand growth is expected to moderate to 1.9 million b/d in

2024, still higher than the long-term growth trajectory.

iNDiAN PetroLeUm sector

Consumption of petroleum products in India hit a new record in the financial year 2022-23, underscoring robust demand for transportation fuels. Consumption of major fuels like diesel, petrol, and liquefied petroleum gas

(LPG) broke previous records. India consumed 223 MMT of petroleum products in 2022-23, up 10.6% from 201.7

MMT in the previous financial year. Hitherto the highest consumption of petroleum products was 214.13 MMT in 2019-20. The rise in petroleum product consumption, seen as a proxy for energy demand, was in line with

Indias scorching growth rate of 7.2% in 2022-23.

Consumption of diesel, the most-consumed fuel, was at 85.90 MMT in 2022-23, up 12.0% from 2021-22. The petrol consumption was 34.98 MMT, up 13.6% from 2021-22. LPG consumption in 2022-23 grew less than 1% during the year but to a new record of 28.50 MMT. The Petroleum Planning & Analysis Cell has estimated that for

2023-24, diesel consumption is expected to rise to 90.56

MMT and petrol consumption is seen rising to 37.80 MMT.

The countrys crude oil processing at refineries rose to 255.2 MMT, up from 241 MMT in 2021-22. The refinery capacity utilization during the year was more than 100%.

India is looking to scale up its refining capacity by over 50% through greenfieldand brownfieldprojects to cater to the increasing oil demand. The production of petroleum products grew 4.8% over the year to 266.5 MMT. Crude oil production in India fell to 29.2 MMT from 29.7 MMT in 2021-22 and 30.5 MMT in 2020-21. This trend is due to the lack of new discoveries, diminishing output from matured fields and operational issues encountered in some fields.

India imported 232.7 MMT of crude in 2022-23, up from 212.4 MMT in the preceding year. The import bill for crude oil surged 31% on a year-to-year basis to $158.3 billion.

Indias gross petroleum imports, which include crude oil and petroleum products, totalled 277.3 MMT, incurring an expense of $184.4 billion. This is as compared to 251.4 MMT in the previous year, amounting to outflow of $144.3 billion. India exported 61 MMT petroleum products worth $57.3 billion, compared with 62.8 MMT or $44.4 billion worth of products in 2021-22. Indias reliance on imported crude increased to 87.3% of domestic consumption in 2022-23, up from 85.5% in 2021-22. Oil import dependency was 84.4% in 2020-21, 85% in 2019-20, and 83.8% in 2018-19. The production of petroleum products from domestic crude oil was 28.2 MMT in 2022-23, roughly 12.7%, down from 14.5% in 2021-22. Processing of high sulphur crude in total crude processing rose to 77.5% in 2022-23 from 76.6% in 2021-22.

During 2022-23, natural gas production rose slightly to 34,450 Million Metric Standard Cubic Meters (MMSCM) and consumption in India fell to around 60,000 MMSCM from 64,159 MMSCM in the previous year. LNG imports into India fell 14% to around 26,000 MMSCM during the year.

Indias expected growth rates for the next ten years and the growth rate of automobile sales, even with rising adoption of EVs, clearly indicates that the current demand levels for auto fuels will remain strong at least for the next ten years. Until heavy vehicles and buses adopt alternate fuels, including CNG, demand for liquid auto fuels will remain strong. International Energy Agency (IEA) says Indias oil demand could rise to 6.7 mb/d by 2030 and to 7.4 mb/d by 2040.

Having achieved the target of 10% ethanol blending in 2022, India has advanced the target of achieving 20% ethanol blending and 5% biodiesel blending to the years 2025 and 2030, respectively. India is also witnessing early signs of transition towards EVs on the back of policy mandates. However, the challenges related to battery technology and the range-anxiety of EVs remain, which are being addressed.

Most of the growth in renewables energy is expected to come from solar and wind. The domestic capability in technology and related equipment, including hardware, has increased through well-targeted Productivity Linked Incentive (PLI) schemes. Indias energy demand is projected to increase at a rate of about 3% as the country aims to achieve a 10-trillion-dollar economy. The energy sector will play a crucial role in sustaining and accelerating Indias economic growth by having an energy agenda that is inclusive, market-based and climate sensitive. India is focusing on expanding the use of renewables, including bioenergy, to ensure energy security and reduce energy imports, along with continued commitment to climate change mitigation goals.

oPPortUNities AND threAts

Energy security has taken a central role in the aftermath of the war and the significant price fluctuations that have inflicted hardships on countries and their populations.

The surge in energy prices in many developing nations, disproportionately affecting vulnerable households that allocate a substantial portion of their income to energy and food expenses. As a result, approximately

100 million people could be compelled to revert to using firewood for cooking, forsaking cleaner and healthier alternatives. These challenges have elevated energy security, affordability, and sustainability to the forefront, now serving as the guiding principles for the energy sector.

Climatologists say that 2023 will likely end up being the hottest year ever. The average worldwide temperature reached 17.23?C (63.01?F) in July, which is a record. The rising temperatures are increasing the frequency of extreme weather events in recent years. Despite strong governmental intent, carbon emissions have only increased since the Paris Climate Change Conference, COP 2015. Therefore, more commitments are needed urgently. India has made the historic announcement of reaching Net Zero by the year 2070. To achieve this milestone, the scale of transformation required in India is massive, given the countrys galloping energy needs due to a growing economy, industrialisation, and urbanisation.

About $2.8 trillion is set to be invested globally in energy in 2023, of which more than $1.7 trillion is expected to go to clean technologies – including renewables, EVs, and nuclear power. The remainder, slightly more than $1 trillion, is going to coal, gas, and oil. This means around 60% investment is flowing in renewables and the rest in fossil fuels. The path to becoming net zero carbon companies opened many revenue-generating opportunities. There has been a rapid growth of

renewable energy in Indias energy mix in recent years. India is currently ranked 4th in renewable energy installed capacity and the share of renewable energy is continuously on the rise due to strong policy support and a fall in input costs. Green mobility and the proliferation of renewable energy are increasingly becoming viable due to the continuous development in technology, which is driving down the cost while increasing efficiency. policy support, as well as a growing environmental awareness is spurring the adoption of electric vehicles.

Electricity generation via solar and wind offers significant opportunities. Investment in solar is set to overtake the amount of investment going into oil production for the first time, an IEA study has revealed. India has huge potential for solar energy, and the cost of solar power has come down. Other technologies that could attract investments are those relating to battery storage technology, pumped hydro, and upgraded intelligent electricity grids. Some of these areas in renewables will serve as high-investment and innovation areas requiring sustained focus and support from companies, including traditional oil and gas companies.

biofuels are expected to play an important role in the oil and gas industry in promoting energy sustainability and security as India progresses toward a clean energy ecosystem. Long-Term Offtake Agreements between oil companies and ethanol plants have been helping. India achieved the targeted 10% ethanol blending in May 2022, much ahead of the target date of November 2022 and has gone on to prepone the timeline by 5 years to 2025 for an ambitious blending target of 20%. The National Policy on Biofuels announced in 2018 by the Government of India put thrust on the production of advanced biofuels such as 2G ethanol, CBG, Waste to Fuels, drop-in fuels etc., through the utilization of indigenous feedstocks. India set a target of 5% biodiesel blending in diesel by 2030. The Policy encourages the setting up of supply chain mechanisms for biodiesel production from non-edible oilseeds, used cooking oil (UCO), and short gestation crops. ‘SATAT (Sustainable Alternative Towards Affordable Transportation) initiative on Compressed BioGas cb ( G) envisages production of 15 MMT of CBG and 50 MMT of manure from 5,000 CBG plants.

hydrogen is increasingly being seen not only as a potential solution to the predicaments of the present global energy system – mainly climate change and air pollution – but also as a means of scaling up ways of complementing other clean energy forms. Presently, hydrogen is primarily being used as feedstock in many industries. However, with technological advancements in electrolyzers (for Green hydrogen) and developments in carbon capture and storage technology (ccs used for blue hydrogen), it is expected to be the clean fuel for the future, notably to be utilized by the many countries pledging for carbon neutrality and reducing emissions in line with the Paris Agreement. According to the recently held COP26 summit in Glasgow, hydrogen is integral to the global 2050 vision, with nearly 30 countries releasing hydrogen roadmaps. Green hydrogen is widely regarded as an ideal, clean solution. A steady but consistent adoption of green hydrogen will be the way to go. The possibility of integrating hydrogen with the existing gas infrastructure offers immense potential. Currently the challenges in transportation and storage remain. Subsequent applications could be in the area of mobility through hydrogen fuel cells, but that could be some distance away.

Aviation fuel demand is expected to continue to grow at 3.5% CAGR but will be gradually substituted by sustainable Aviation Fuel (SAF) due to Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) mandates. As India is a low per capita energy consumption country, the mandates could vary. Demand for petrochemicals has been robust for their use in multiple sectors. Petrochemicals offer a natural hedge and a significant diversification opportunity against the expected long-term decline in oil consumption. The petrochemical sector is projected to emerge as the primary driver of growth for the global oil and gas sector, accounting for more than a third of incremental oil demand by 2030. Indias reliance on petrochemical imports has been high, and adding a petrochemical complex near or as part of a refinery would significantly benefit energy companies.

India has taken an ambitious target of increasing the share of natural gas in its primary energy basket to

15% by 2030. Growth in LPG demand is expected to decline after seven to eight years, ceding ground to Piped Natural Gas (PNG), for which massive City Gas Distribution (cGD) grid expansion is underway, and then to the electrification of cooking. Demand will be stable, but incremental demand could be met through PNG. CGD network will continue to be an area of growth for energy companies, as there is a greater shift towards urbanization and a growing preference for apartment complexes, even in smaller cities.

In this new landscape of competing energy sources, it is important that companies continue to invest in better technologies for exploration and production of oil and gas. Immediate tapering of investments in fossil fuels would impact energy security. Although a decline in the contribution of oil and gas in the primary energy basket is imminent over time, one cannot wish away hydrocarbons. It is likely that demand for hydrocarbons will remain relevant for global energy needs. Considering Indias expected growth rates for the next 10 years and the growth rate of automobile sales, even with the rising adoption of EVs, the current demand levels for liquid auto fuels will hold for several years. Until heavy vehicles and buses adopt alternate fuels, including CNG, demand for liquid auto fuels will remain strong.

Upstream spending has fallen from around USD 700 billion in 2014 to around USD 370-400 billion in 2022.

While this reflects the expansion in energy industry to include alternative cleaner form of energy and a gradual move away from fossil fuels, this is very low considering the continued demand for oil and gas. The average global decline rate of oil fields is around 6%, which means oil & gas companies have to invest in new projects to maintain production levels. In addition to the above, the recent geopolitical tensions have highlighted how vulnerable the global energy system is and the right balance has to be found while prioritizing sustainability over energy security.

risKs, coNcerNs, AND oUtLooK

The last year was different in the sense that energy was weaponized. The instability that defined the oil & gas market for much of last year has continued into 2023. The events happening in European markets, OPEC+ decisions and other geopolitical hotspots like Iran, Libya, etc. will have a major bearing on the direction oil & gas markets take. The global oil & gas markets are experiencing significant volatility due to the ongoing demand-supply imbalance.

For the sake of energy security and to prevent volatility, healthy investments and optimal use of the existing assets become imperative. As demand continues to surge, underinvestment could hurt countries and companies. Better international cooperation, faster development of potential fields, structured investments in short-gestation assets and enhancing extraction efficiency, along with leveraging research and development while lowering emissions, will be critical. In view of climate mandates, today global oil & gas companies are facing dilemma in capital allocation between ensuring energy security verses meeting sustainability goals. The outcome of the war in Ukraine will have a potentially lasting impact on the oil & gas industry. As Europe secures energy supply for 2023-24 winter, South & Southeast Asian markets may struggle to compete, with the agriculture sector likely to suffer the most as high gas prices keep fertilizer cost high. This situation is particularly problematic for countries like India that rely heavily on imports, to meet oil and gas needs.

Oil & gas companies have worldwide operations and a complex ecosystem of partners and suppliers. If even one of these third party experience a cyber breach, it could put anyone in the network at risk, as is evident from the incidents in the recent past.

Indias electricity demand is expected to grow more rapidly than the rate of growth of its overall energy demand. This will, in turn, put significant grids and battery storage. The situation poses both a challenge and an opportunity to oil & gas companies. Climate change, heat waves and strong economic growth will continue to nudge demand for electricity higher. In an environment of energy transition, creatively reimagining and repositioning business diversification into adjacencies are crucial steps to survive and grow.

To that extent, there will be substantial opportunities for the Companys plans for solar energy.

The Indian Rupee displayed surprising resilience. It became the most stable currency, at least among emerging market peers. Its implied volatility, the metric that captures the markets view of the likelihood of fluctuations in its value, is at its lowest since 2008. This is despite a sharp rise in the dollar index during the year because of the US Federal Reserves aggressive interest rate-raising campaign.

Belying market fears of a possible spike in Indias external vulnerabilities, Indias current account at 2% of GDP during 2022-23 remained sustainable, although it expanded from 1.2% a year ago. The merchandise trade deficit widened to $265.3 billion from $189.5 billion a year ago. This, combined with lower net capital inflows than in the previous year, led to depletion in the foreign exchange reserves to the tune of $9.1 billion on a balance of payments basis during

2022-23. Including valuation effects, however, Indias foreign exchange reserves declined by US$ 28.9 billion during 2022-23. Forex reserves in July 2023 stood at

USD 609 billion.

With the US and other major economies raising interest rates or keeping them high for a long time, countries like India and even China would findit hard to cut interest rates or take other measures to support domestic demand. Any premature interest rate cuts by emerging market countries could trigger capital outflows and weaken domestic currencies. Exchange rate depreciation remains a key risk for the country and all the oil marketing companies. The central bank could be inclined to shore up its foreign exchange reserves to be able to build buffers to deal with external volatility, including in crude oil prices.

In addition to currency risks, the central banks interest rate policies have moved into a restrictive stance from an accommodative stance, which could further have a bearing on cost of capital for corporates.

Safe and environmentally responsible operations become even more critical in the oil & gas industry, as the products are naturally hazardous. Safety and security of assets and people and a cleaner environment are always priorities. At BPCL, we continuously reinforce the laid-down operating and safety systems and processes and sharpen our capabilities for disaster management. Continuous education and workforce training are essential to adhere to standard operating procedures and avoid human errors. A culture of safety and readiness has been inculcated through simulated stress tests periodically. Upkeep and maintenance of assets reduce the chances of breakdowns and accidents while ensuring better operational availability. The company makes available considerable resources in this endeavour. As companies and economies benefit from technology and digital infrastructure, they also have to ward off cyberattack risks, and utmost care will have to be taken to insulate the company from financial loss, supply-chain interruptions, and reputational damage. Controlled hackathons could be a way.

BPCL is agile in dealing with challenges as well as in seizing opportunities. With the energy sector in transition, the strategic focus is to diversify and expand into alternative and adjacent revenue streams like petrochemicals, renewables, electric mobility, and consumer retailing, while constantly improvising on its core business. The Company is on track to achieve Net Zero emissions in operations by 2040.

PerFormANce reFiNeries

The Oil & Gas industry encountered a multitude of challenges stemming from supply-chain disruptions and volatile prices during the year 2022-23. Through a blend of proactive planning, effective risk management, implementing technology-driven solutions and making informed decisions, BPCL group refineriesrecorded a formidable operational performance in the financial year, clocking the highest ever throughput of 38.53 million metric tonnes (MMT). The group refineriesalso placed on the record the highest-ever Gross Refinery Margin (GRM) of $20.24 per barrel. This remarkable performance reflects your Companys ability to optimize the refining operations, maximize product yields, and effectively manage costs. All three refineries surpassed their design capacity and registered an average capacity utilization of 109%, notwithstanding the major turnarounds of Mumbai and

Kochi refineries. This remarkable accomplishment is particularly noteworthy considering the robust demand for transportation fuel in Indian market.

A broad glimpse of refinery performance is provided below, shedding light on specific initiatives and strategic interventions behind the delivering of a strong physical and financial performance whilst the Company traversed challenging situations. These initiatives encompassed cutting-edge digital transformations, a steadfast focus on energy efficiency, meticulous optimization efforts, a culture of innovation, and a proactive approach to embracing emerging technologies to improve reliability. Each of these elements played a crucial role in ensuring the continued success of the group refineries, enabling them to rise above the challenges.

The merger of BORL with BPCL marked a significant step towards consolidating resources, expertise, and capabilities to create a stronger and more integrated refining entity. This integration represented a strategic focus on strengthening the overall business operations. By bringing BORL under the umbrella of BPCL, Bina Refinery has emerged as a powerful force in the Indian refining industry, poised to leverage synergies and maximize operational efficiencies.

In the face of challenges, innovation becomes a vital tool for providing solutions and meeting ever-evolving needs of customer. In this financial year, a new specialty product called "D40" was launched. It is an industrial solvent that offers unique properties and characteristics, catering to a variety of industrial applications, including for paint and metal industries. Furthermore, the LOBS unit undertook a significant project to develop and commercialize smokeless kerosene to meet the requirements of Indian Army. The traditional kerosene faced issues related to combustion quality and smoke generation at higher altitudes, posing challenges for Army operations in those regions.

At BPCL, enhancing energy efficiencyis one of the key focus areas. Improving energy efficiencyin refineriesnot only helps to reduce operational costs but also minimizes environmental footprint and contributes to sustainable development. By adopting strategies such as process optimization, advanced control systems, energy recovery, equipment upgrades, renewable energy integration, and employee engagement, refineries can simultaneously unlock substantial energy savings, reduce emissions, and achieve sustainable and cost-effective operations.

Installation of Flexible Removable Insulation Jackets (FRIC), implementation of Electrical Heat Tracing (EHT), changing of turbine drive to motor, installation of Welded Plate Type

Heat Exchangers in place of shell and tube exchangers, installation of Variable Fluid Coupling, replacement of Air Fin Cooler (AFC) fan blades with new-generation energy-efficient E-Glass Epoxy Fibre Reinforced Plastic (EFRP) blades are some of the key energy-efficient activities carried out by the refineriesduring the financial year. Cumulatively, the refinerieshave implemented initiatives leading to a potential saving of 78,064 metric tonnes of oil equivalent (MTOE), which corresponds to a reduction energy efficiency and energy conservation initiatives undertaken by the refineries, kindly refer to Annexure-A of this report. It is pertinent to mention that these initiatives demonstrate your Companys commitment to sustainable practices and driving positive change in energy.

In the year 2022-23, a series of impactful activities were carried out to promote environmental sustainability and address key challenges. These initiatives encompassed various areas, including afforestation, water conservation, and waste reduction, apart from energy efficiency. Under the banner of Mission LiFE (Lifestyle for Environment), a comprehensive campaign was launched to address critical environmental issues. This campaign covered various themes, including energy conservation, water conservation, elimination of single-use plastic, waste reduction, and e-waste reduction. Through awareness programs, educational initiatives, and community engagement, these campaigns aimed to instil sustainable practices and encourage positive behaviour change toward the environment.

To combat water scarcity and promote sustainable water management, efforts were made to develop facilities for rainwater harvesting. With combined efforts from refineries, cumulative savings of 4.12 lakh kilolitres of water was achieved through rainwater harvesting. Apart from regular tree plantation initiatives, the Miyawaki method of tree plantation was also adopted in our refineries, wherein saplings of native species were diligently planted. This approach, known for its dense and diverse forest creation, aimed to restore and enhance the natural ecosystem. By focusing on native species, the initiative aimed to preserve native biodiversity and promote ecological balance. To ensure effective implementation and monitoring of environmental strategies, the "Environment

Champion" strategy was introduced in each refinery. This approach emphasized an ‘Ownership mindset among the process teams, fostering a sense of responsibility and active participation. The champions played a crucial role in driving change, promoting new ideas, and implementing improvements to enhance environmental performance and control. Overall, the activities carried out during this period demonstrated a proactive and comprehensive approach of your Company towards environmental sustainability. As India continues its rapid development, there is a substantial projected increase in energy demand over the coming decades. To meet this growing demand, the country is actively seeking new projects in the oil and gas fields. These projects are aimed at ensuring a reliable and sustainable energy supply to support the nations economic growth and meet the needs of its expanding population. In the current fiscal year, three major projects were successfully commissioned. The details of the projects, viz., Kerosene Hydrotreater Unit (KHT), ‘Lube Oil Base Stock (LOBS) revamp and De-Aromatized Solvent (DAS) are provided in this Annual Report under the head ‘Major Projects.

Significant strides were made towards the digital transformation of refineries, aligning with the objective of

Go Digital! New projects were initiated and successfully completed, focusing on cutting-edge technologies such as Machine Learning (ML), ArtificialIntelligence (AI),

Robotics Process Automation (RPA), Industrial Internet of Things (IIoT), new applications, Advanced Process Control (APC) models, and infrastructure development. These initiatives are aimed at enhancing operational efficiency, optimizing processes, and leveraging innovative solutions to improve overall refinery performance. A Study

Project was undertaken for carving out Digital Strategy and Roadmap for BPCL Refineries. This was titled Project

Utkarsh and as an outcome, key digital initiatives related to various functions, viz., reliability improvement, reduction in energy consumption, etc. were identified, reviewed for implementation and are being pursued as per business priorities in the year 2023-24 and beyond. Digital solutions were deployed during the turnarounds at refineriesto facilitate turnaround planning and to bring in productivity improvement and safety. This came to be recognized as ‘Digital turnaround. The Digital team ensured close monitoring of turnaround progress, resource mobilization and critical path evaluation in the first ‘Mega Turnaround of Kochi Refinery (KR) and achieved on-time completion without any cost escalation. Machine Learning-based models were developed and deployed at all three refineriesfor addressing various business problems, some of them being prediction of propylene purity, C3 Stripper Bottom propylene purity, Anomaly Detection for Recycle Gas Compressors in Naphtha Hydrogen Treating Unit and for enhancing process reliability. Advanced Process Control (APC) has been implanted in critical process units and is currently being standardized across the three refineries, which enhances consistent control strategies, knowledge sharing and best practices.

The refineriesalso rolled-out in-house developed digital solution tools, viz., "BPMARRK: Real-time Crude Oil Characterization Software" and "K Model for Crude Oil

Compatibilities", which enables the refineriesto optimize the crude mix and refinery operations.

retAiL

The Indian economy showed a broad-based growth in 2022-23, led by a strong domestic demand, as several sectors reached their pre-pandemic demand levels. The country witnessed a record consumption of petroleum products during the year, highlighting the demand for transportation fuel and other petroleum products. The growth in the retail business segment was led by increased inter and intra-state movement after the pandemic and the revival of the manufacturing and commercial sectors. This recovery led to the fuel retail industry witnessing a 17.31% growth, while the PSU Oil Marketing Companies (OMCs) registered an overall growth rate of 23.80%. As a result, PSU OMCs saw their market share increase from 90.15% to 95.12% during the year.

BPCLs retail business segment experienced remarkable growth during the year 2022-23. Total sales from the retail business stood at 32.34 MMT, registering a growth of 22.56% during the year. Against this, PSU OMCs registered a growth of 23.75% during the year 2022-23. The Motor Spirit (MS, i.e. petrol) sales grew substantially, recording a 17.91% increase to 9.58 MMT of sales during the year, compared to 8.12 MMT in the previous year. In the MS retail business, BPCL has consistently maintained its leadership position for the last nine years. The Companys market share in the MS retail business increased by 0.22% during the year and stood at 29.47% among PSU OMCs. Diesel sales registered a 25.2% growth with a sales volume of 21.93 MMT, as compared to 17.50 MMT during the previous year. PSU OMCs registered a 28.87% growth in diesel sales. During the year, the Lubes sales through Retail channel achieved a sales volume of 35.8 thousand metric tonnes (TMT), which includes 22.9 TMT in Lubes and 11.9 TMT in Diesel Exhaust Fluid (DEF), reflectinga combined growth of 16.58% for the Lubes and DEF, and a growth rate of 7.40% for Lubes.

During the year, the Company commissioned the Krishnapatnam Coastal Installation, Gulbarga Railway Siding, Leh Depot, and Cherlapally-Ghatkesar Pipeline (CGPL) rerouting, and revamped Warangal siding. Inter-depot transportation of Ethanol through tank lorries was also introduced. Ethanol tankage capacity was also significantly increased from 46.4 TKL to 112 TKL during the year. BPCLs Retail business recorded the highest-ever sales throughput and MS-HSD (i.e., petrol-diesel) handling of 32.5 MMT in the year 2022-23 BCPLs goal is to ensure that its products are easily accessible to customers. To achieve this goal, the Company commissioned 986 new retail outlets (NROs) during the year, taking the total number of retail outlets to 21,031 as on March 31, 2023. The Company strengthened its presence in the highly strategic markets and highways by commissioning 5 Company-Owned Company-Operated outlets (COCOs) and 4 GHAR outlets during the year, taking the tally to 333 COCO outlets. BPCLs signature brand of GHAR (One Stop Trucker Shops – OSTSs) are strategically located on major highways to provide transporters and drivers ‘a home away from home experience.

BPCL is further pursuing setting up NROs in newer geographical areas and along upcoming expressway stretches to capitalise on the growth potential of these untapped regions. With the Government emphasising moving from liquid fuels to gas and considering the change in the customers preferences, BPCL aggressively expanded its Compressed

Natural Gas (CNG) fueling infrastructure, with mechanical completion of 482 CNG stations and commissioning of 234 CNG stations during the year. With this, CNG fueling facility is now available at 1,599 of the Companys ROs across the country. CNG recorded a robust 32.47% growth, with total sales of 759 TMT during the year.

With the focus on improving customer experience and providing personalised services, BPCL strengthened and expanded its customer engagement initiatives across its outlets.

Building on the acclaimed Pure for Sure (PFS) initiative,

BPCL extended the reach of ‘NextGen PFS to 179 cities through 2,500 ROs. NextGen PFS offers the highest standards of Quality & Quantity, enabled through advanced technology, thereby fostering trust. The automated Integrated Payment System (IPS) ensures that customers are digitally billed for the exact quantity of fuel they fill each time. These attributes, along with the new enhanced service standards, ensure that customers experience a seamless fueling journey from starttofinish

Acknowledging the growing demand for value-added services, the Company further expanded its non-fuel initiatives at the ROs. These services are designed to cater to the dynamic needs of diverse customer segments – rural, urban, and highway – differentiating BPCL from other OMCs in the marketplace. BPCLs collaboration with

M/s. Fino Payment Services to provide comprehensive banking services to customers has now reached more than 12,000 ROs. It includes Aadhaar Enabled Payment System (AePS), Micro ATMs, Domestic Money Transfer, Cash Management System (CMS), and Government to Citizen (G2C) services. These initiatives helped the Company achieve Gross Merchandise Value (GMV) of

Rs. 5,189 crore during the year. Over 2.6 million BPCL-SBI cardholders redeemed reward points to avail 12.8 million litres of free fuel during the year. The BPCL-Bank of Baroda (BOB) Debit Card-based programme, along with the loyalty offerings of the BPCL SmartDrive programme, has reached over 2.5 million BPCL–BOB customers, lending this initiative the distinction of being the largest co-branded debit card in the country.

With the objective of delivering exceptional experiences to customers in this digital era, the Company launched an Advanced Loyalty Programme (ALP) across all markets. This programme is designed to provide customised solutions as well as enhanced customer convenience and personalisation. Further, as a value added service, API integration of the ALP with IT systems of Fleet customers was commenced during the year. BPCL enhanced its convenience offerings by commissioning 86 In & Out stores in addition to the already existing network of 114

In & Out stores.

In the continued efforts to make customers fueling experience seamless, transparent, and efficient, BPCL expanded its UFill initiative (a unique service in the industry) to more than 11,000 ROs in the country during the year 2022-23, catering to a customer base of 1.2 crore and facilitating about 42 million transactions. UFill allows customers to have total control over their fueling, i.e., convenient payment options, with preferred time and location. The auto-setting of the Multi-Product Dispenser

(MPD) ensures that the customer gets a refill for a pre-paid amount without manual intervention, thereby providing a seamless fueling experience at the RO.

Keeping in mind the convenience of customers, 71 "Fuelkarts" were commissioned under BPCLs Door-to-Door Diesel Delivery (DDD). With this, the total number of these mobile fuel bowsers has increased to 719. Additionally, 102 "FuelEnts" (Fuel Entrepreneur startups) were commissioned during the year, taking their total number to 265. BPCL has an exclusive pilfer-proof technology for its DDD service in place. A novel Quick Oil Change promotion campaign was also launched across 7,290 ROs during the year. The campaign provided two-wheeler customers with the convenience of changing oil at BPCL ROs. Over 3.8 million customers benefited from this campaign during the year

For the convenience of customers undertaking long road journeys, BPCL introduced an innovative concept of Highway Fast-Charging Corridors. A pilot project was undertaken in 2021-22, whereby DC 25 kW fast chargers were installed at 10 strategic outlets throughout the 900-km stretch of Chennai–Trichy–Madurai highway (NH-45).

These charges are located at a distance of approximately

100 km from each other – to effectively address the range anxiety of EV users. The Retail business further strengthened this concept by commissioning 80 highway fast-charging corridors in the country during the year 2022-23. BPCL commissioned a total of 603 electric vehicle charging stations (EVCSs) during the year 2022-23, taking the total network of EVCSs to 692, which include 546 4W (CCS2) chargers for quick charging. BPCL has also entered into strategic alliances with MG Motors, Ola Electric, Hero Motors, Ather, RACEnergy, and VoltUp to set up fast-charging as well as battery-swapping facilities for electric four-wheelers and two-wheelers in cities and along highway corridors. BPCL is cognizant that technology plays a critical role in facilitating and providing seamless customer service. Under its digital transformation programme, BPCL has implemented cloud-based automation solutions at 19,690 ROs, with unique wireless Forecourt Controllers (FCC) and Android Point of Sale (APOS) machines that integrate with the loyalty solutions and all types of digital payments. To fortify strict and real-time monitoring at the RO forecourt, BPCL has leveraged technology for intelligent operations, and has introduced 16 IRIS cloud-based Interlocks to monitor fuel tanks, MPDs and nozzles across its fuel-retailing network. To improve efficiency, the Company has launched iBROMA, a platform for smart management of network through technology, which enables auto generation and closure of complaints through the system without manual intervention so as to reduce downtime.

The Company has started auto accounting at all COCOs/

OSTSs with the help of state-of-the-art automation system, which will ensure accuracy in accounting and avoid manual labour. The generation of invoice and stock accounting happens automatically based on readings from MPDs and Automatic Tank Gauging (ATG) systems provided at the ROs.

To strengthen operations at the depots, BPCL evaluates safety and reliability at its locations through "Operability

. Index", which is monitored on a real-time basis by IRIS

(BPCLs Digital Nerve Centre). The average Operability

Index at retail locations was more than 99 for the year

2022-23, signifying safe and smooth operations. The Company has also leveraged IRIS for managing Violation Tracking Systems (VTS) violations. Additionally, all permits for ultra-critical activities at retail locations are issued with mandatory monitoring through IRIS.

BPCL further leveraged technology for ease of business and introduced fully digital Electronic Dealer Financing Scheme (EDFS) platform with ICICI Bank. From dealer onboarding to disbursement of limit to dealers, everything is performed through the system, and onboarding is done within one day. A total of 1,450 dealers were on-boarded to ICICI EDFS platform during the year.

In the endeavour to strengthen safety measures for all operations and preparedness for any untoward incidents, BPCL conducted various initiatives to inculcate a culture of safety, incorporate safe practices, create awareness and impart safety training, including simulated fire at all depots and installations.

BPCL is dedicated to fulfillingits commitments toward a green environment. All Retail operating locations are Zero

Waste to Landfill (ZWL) certified. As a conscious corporate citizen, BPCL has implemented a ban on single-use plastic at all its locations. To reduce power consumption, all conventional lights at locations have been replaced with energy-efficient lights (LEDs). Considering the safety of people and the planet, BPCL has eliminated the use of asbestos from all its locations. The Company strictly follows the directives of the Central Pollution Control Board (CPCB) and National Green Tribunal (NGT), and accordingly it implemented Vapour Recovery System (VRS) at 1,700+ ROs in order to reduce emissions. Overall, BPCL Retail business remained the front runner among its peers, delivering Trust, Convenience and

Personalization with efficient operations and by offering digitally enabled solutions for customer convenience and to create value for all stakeholders.

biofuels

In line with Governments Ethanol Blended Petrol programme, BPCL achieved the highest-ever Ethanol blending percentage of 10.59% (consuming 143.1 crore litres of Ethanol) this year, from 8.68% in the previous year and aims at exceeding 12% in 2023-24. BPCL also commenced E12 (MS with 12% Ethanol blending) dispatches at 90 locations and E20 (MS with 20% Ethanol blending) dispatches at 12 locations during the year. The Company has been blending 1G Ethanol produced from molasses, sugarcane, damaged food grains and surplus rice across all its locations pan-India. It has also augmented its Ethanol storage capacity at its supply locations from 51 thousand kilolitres (TKL) to 112 TKL in the last financial year and ensured Ethanol availability across the length and breadth of the country by carrying out movement of EBMS as well as Ethanol by rail to deficit locations/states.

BPCL is the industry coordinator for ethanol procurement and is spearheading the Ethanol Blended Petrol Programme by procuring 1G Ethanol from multiple sources. BPCL procured 8.21 TKL of Biodiesel in the year 2022-23 and sold 116 TKL of Biodiesel-blended Diesel, thereby achieving a blending of 0.028%.

BPCL has also taken initiatives in the field of production of Compressed Bio-Gas (CBG) from biomass waste/ biomass sources like agricultural residues, sugarcane press mud, municipal solid waste, etc. and issued 322

Letters of Intent (LOIs) for a total estimated production capacity of about 5 lakh tonnes per annum (TPA) of CBG. During the year, 2 CBG plants were mechanically completed by BPCL LOI holders. The Company added 37 ROs for Compressed Bio-Gas (CBG) retailing, increasing the number of outlets for CBG to 41.

i NDU striAL AND commerciAL (i&c)

The Industrial & Commercial business unit (I&C BU) is the marketing unit catering to the Business to Business

(B2B) segment. During yet another year of complex patterns of business and exciting opportunities, the I&C

BU continued to deliver customer delight with innovative solutions on the strength of cherished business relationships and unwavering customer focus. Deeper understanding of customer options and competition canvass remained the core of the business units market intelligence and the dynamic strategies deployed across the entire product portfolio. With increased impact of global scenario on the domestic market, particularly in the Petchem segment, gathering real-time inputs related to global production and demand assumed greater significance during the year.

The I&C team stayed tuned to the evolving scenario and made significant inroads into the import-dependent market.

Continuous enhancement of functional skills of the field force and leveraging technology to deliver Trust,

Convenience and Personalization remained key focus areas to deliver superior customer experiences and maximize value and volumes.

The key initiatives of the year included dynamic pricing, new product segments, state-of-the-art logistic solutions and establishment of product supply-chain beyond refinery production. These initiatives facilitated capturing new market opportunities as well as enabled us to move into traditional strongholds of competitors. The typical challenges faced besides strong competition were extreme price volatility in the Companys products as well as the finished products of the customers due to the extreme geopolitical developments, differential with

Retail fuel prices, domestic industrial growth variations and weather-related vagaries. During the year, the I&C team exhibited sharp focus, good execution of plans and strategies, while carrying out all requisite mid-course corrections as warranted.

For the year 2022-23, I&C achieved total sales of 6,167 TMT and the overall market share stood at 22.52% – the highest ever during the last six years amongst the three major PSUs, continuing clearly as the growth leader. The market share growth over the last year was 0.89%.

The HSD (diesel) sales performance by I&C was exemplary during the year amidst the huge challenge faced in terms of price differential vis-?-vis retail channel. HSD market share grew by 4.62% in the B2B channel. The potential from key segments of fisheries, railways, bunkering, mining, and infrastructure was well harnessed, with the new business volume of 180 TKL per annum from Gujarat Fisheries being the cornerstone of superior performance. The team leveraged strategic customer tie-ups and the effective logistic arrangements of multi-modal transportation and secondary Petchem storage facility at Kandla to register sales of 190 TMT of niche products.

Diversified industry segments such as paints, plasticizers, adhesives, water treatment, as well as agriculture and textile chemicals were catered to with a virtual tonne-to-tonne import substitution of these products, resulting in estimated foreign exchange savings to the order of Rs. 2,400 crore for the user industries. Based on the indigenous technology developed by BPCLs Corporate Research &

Development Centre, the first supply of Super Absorbent Polymer (SAP) was made from Kochi Refinery.

Pursuing the strategy of trading, the BU registered sales of 67 TMT of Bitumen through third-party sourcing and imports, enhancing the geographical reach in key growth markets.

Bunkering remained a strong focus area, and with efficient product placement and smart business deals, a record Very Low Sulphur Fuel Oil (VLSFO) sale of 360 TMT was registered during the year at the three port locations of Kochi, Mumbai and Kandla. With customized offerings, the BU also achieved highest-ever sales of Benzene, Hexane, Toluene and LPG Bulk.

Sustaining the efforts on product development, a new grade of kerosene, namely, "Smokeless SKO" was developed, which will go a long way to improve the working environments for the Indian Armed Forces operating in higher-altitude locations. The first supply of the new grade was made to Indian Army in Northern Command in January 2023. During the year, I&C commissioned state-of-the-art scattered tankage facilities for Indian Army at Nimmu for uninterrupted operations at the strategic location.

With tailored and prudent commercial offerings, the BU entered into 73 key MoUs with major customers for securing 1,000 TMT of annual business volumes across various product portfolios.

The business obtained REACH (Registration Evaluation Authorization and Restriction of Chemicals) compliance certification for all six Petchem products, Mineral Turpentine Oil (MTO) and Food-Grade Hexane.

The business unit continued the journey of digital transformation under the initiative Project Anubhav and took several steps for a smooth roll-out of the feature-rich customer engagement platform HelloBPCL and customized dashboards for elevated customer experience, while enhancing the overall internal efficiency to serve the customers.

Structured engagements with customers and other stakeholders were ensured through seminars and workshops for various business segments such as infrastructure, pharma and food, and manufacturing.

Backed by excellent past performances amidst very challenging times and growing competition, I&C looks forward to sustaining the momentum in the golden era of the nations growth.

GAs

BPCL is committed to realising the aim of developing India as a predominantly gas-based economy. It strongly advocates the vision of green and clean environment. It has taken steady steps in upscaling its operations and ensuring supply of gas. BPCL is further strengthening its position and developing its ecosystem across the value chain in terms of sourcing, securing long-term tie-ups, tie-ups in import terminals, booking of regasification capacities, entering into tie-up agreements in major pipelines, establishing and expanding City Gas Distribution

(CGD) networks to reach gas to its customers.

The Company has its footprints in all gamuts of gas business. It caters to the requirement of its refineries,

CGD network comprising Compressed Natural Gas (CNG) stations, as well as Piped Natural Gas (PNG) for its domestic (household), industrial and commercial customers. BPCL has sourced its gas requirements through long-term contracts, spot purchases, domestic gas purchases through bidding in e-auctions,RegassifiedLiquefied

Natural Gas (RLNG) tenders and trading on India Gas

Exchange (IGX). These platforms for purchasing gas have been instrumental in the Company minimising its purchase cost, maximising its profitability, insulating the company from risks and securing the needs of its customers in a highly volatile market. The Company has sourced a total of 1,524 TMT of gas, out of which 615 TMT was consumed internally by its refineriesand 905 TMT was sold to various customers in

Fertilisers, Power, Petrochemical, Steel and to the CGD network across the country. CGD sales have grown by 2.25 times, from 18.47 TMT to 41.39 TMT during the year. BPCL has fast-paced the development of its CGD network by investing Rs. 1,343 crore in capital expenditure for the year 2022-23 and earmarking another Rs. 3,000 crore for 2023-24. For the 8 new Geographical Areas (GAs) secured in the 11 and 11A CGD Bidding Rounds of Petroleum and Natural Gas Regulatory Board (PNGRB),

BPCL has pegged capital expenditure of Rs. 35,355 crore. BPCL, together with its joint ventures, has secured a trade area of total 50 GAs that covers 105 districts. Out of the 25 own GAs that cover 62 districts across the country, 13 GAs have been commissioned and sales in the balance 12 will commence in the next financial year. Presently, the Company has mechanically commissioned a total of 448 CNG stations, out of which 238 have been gas-charged and the balance will be gas-charged in the next financial year. During the year,

90,300 PNG domestic connections were added to the existing base of 53,800 connections. BPCL laid 5,035 inch-km steel pipeline to reach and cover its allocated GAs during the year. For reaching its target customers and gas proliferation, BPCL launched the tagline #TheGoodPrint on social media. The Suraksha Mein Shakti campaign was conducted for educating customers on safe usage of gas. To spread awareness on natural gas, the "Catch them young" campaign was organised for schools and colleges students.

With the merger of BGRL with BPCL, the Company is on its way to realize great synergies and enhanced efficiencies.

Despite the highly volatile market, the Company managed its gas business effectively to increase its marketing volumes and margins, and expanding its reach to newer geographies.

LUbricANts

The Indian lubricants market is the third-largest and one of the fastest growing in the world. The lubricants space in India is fiercely competitive, with 35 seasoned players vying for a larger share in the market. The year

2022-23 saw a consumption of approximately 3,823

TMT of lubricants in the country. A recent Kline report on "Opportunities in Lubricants: India Market Analysis" has provided a forecast for the next 5 years, projecting the demand for finished lubricants to grow at a CAGR of 1.9%. In the year 2022-23, Indian lubricants industry was impacted by the global economic slowdown, fluctuating base oil prices, increase in raw material and packaging costs and dollar exchange prices, creating stress on the entire value chain. The Lubes Business has overcome these challenges by reorganizing and rebuilding itself during the year. BPCLs proficientresearch team, robust business model, brand strength, customer-centric approach, supply-chain resilience and strong customer base helped MAK Lubricants to sustain business in the year 2022-23. Export business in South Asian countries and the Middle East witnessed headwinds, impacting revenues. MAK Lubricants continued to engage and reach the existing customer base in these geographies and made its first footprint in East African countries.

Customer engagement through various ‘Below the Line (BTL) activities was a key driver for business during the year. MAK Lubricants focused on Environment, Sustainability and Governance (ESG) with continuous process upgradation, product development and leveraging of technology. For clean environment, the Company commissioned 4 AdBlue (Diesel Exhaust Fluid) plants for ensuring self-sufficiency and reducing carbon footprint.

For a sustainable future, 3,172 MT of plastic waste was recycled under Extended Producers Responsibility

(EPR) and the MAK ECO range was introduced for two-wheelers/cars/auto/heavy commercial vehicles (HCVs) and hydraulic vehicles, developed from re-refined base oil. To counter spurious products in the market and ensure last-mile genuineness of product to end-consumers, a QR code-based verification process has been introduced, with QR code printed on product packs.

With the stupendous response received for this initiative, it has been scaled to all product packs. With a humongous nationwide network of 21,031 retail outlets, continuous customer engagement through various initiatives like Quick Oil Change (QOC) machines, dispensers, rural-focused initiatives and product-specific campaigns have helped MAK Lubricants to improve its visibility and increase awareness of the brand. In the Bazaar channel, the business unit focused on strengthening the network, empowered with digital tools and policy changes. The business continued to maintain leadership in two-wheeler original equipment manufacturers (OEM) business by providing advanced technology lubrication solutions. For the industrial sector, the business unit re-defined its business processes by providing comprehensive solutions, i.e., value-added services, such as condition monitoring and coolant management. The customer interface platform HelloBPCL is being leveraged for providing end-to-end solutions for consumers. To fulfil the market requirements, BPCL introduced 15 new grades and 37 new stock keeping units (SKUs) in the synthetic and mineral space, which helped in capturing niche segments.

With extension of network reach and product proliferation as business pillars, and technology and service-centricity as growth engines, the MAK team plans to grow its business in both domestic and global markets.

LPG

Amidst the global turmoil, rising inflation and surge in international LPG prices, the LPG business faced a challenging environment during the year. However, with its continued focus on efficiency and customer-centric initiatives, the LPG BU not only ensured sustained expansion of the business, but also improved its market effectiveness.

The business registered its highest-ever sales of 7,925 TMT of LPG for the year, attaining a growth of 3.41%, against the industry growth of 2.67%, thereby increasing the market share by 0.19% during the year. With the objective of ensuring promotion of clean fuels and to increase the proliferation of LPG further, another 15 lakh customers were acquired under Pradhan Mantri Ujjwala Yojana (PMUY) and Ujjwala 2.0, taking the total BPCL customer base under the PMUY scheme to 2.49 crore since the inception of the scheme in the year 2016-17. New customer enrolment of 27 lakh during year took BPCLs domestic

LPG customer base to 9.08 crore at the end of the year. To ensure enhanced service levels and assured availability of cooking fuel at home, the Company encouraged customers to opt for Double Bottle Connections (DBCs) and upgraded 10.02 lakh customers to DBC. To ensure that Bharatgas is available at places closer to customers, the business unit added 37 new distributorships during the year, taking their number to 6,244 as on March 31, 2023. Also, 137 non-domestic distributors were added to BPCLs portfolio to increase the commercial LPG footprint and improve service levels. Focusing on rural outreach and to improve awareness and availability of LPG in rural areas, an additional 4,302 village-level women entrepreneurs, christened as "Urja Devis", were enrolled. These entrepreneurs promote clean cooking fuel, and spread safety awareness, while also promoting non-fuel offerings in rural areas. Urja Devis are helping BPCL to spread enhanced awareness about the usage of LPG, to ensure availability of LPG nearer the home, bridging the last mile connect, and enhancing women entrepreneurship, leading to empowerment of women in rural areas. To provide convenience and ease of being able to pay from anywhere, anytime, under the Honble Prime Ministers mission of "Digital India", BPCL rolled out different options for digital payments like online, UPI, wallets, UPI123Pay, etc. For the first time in the industry,‘Buy Now and Pay Later (BNPL) was piloted during the year at Lucknow, to address affordability issue of the low-income segment of consumers. Under the initiative, consumers can pay 50% of the cost at the time of delivery of LPG refills and the balance through weekly instalments.

The business took a significant step by initiating a

Consumer Retailing model through its "In & Out" brand of convenience stores at LPG distributorships. The first store was commissioned at Sehore, Madhya Pradesh, and during the year, a total of 23 stores were commissioned to leverage cross-sales opportunities.

In terms of LPG bottling, the production stood at 7,699 TMT of LPG, recording a growth of 1.32%, with capacity utilisation of 100%. Furthermore, the augmentation of cryogenic storage facility at Uran Terminal is currently in progress, which will enhance storage infrastructure on the west coast, thus facilitating higher imports.

During the year 2022-23, BPCL procured its fifth LPG rake, not only boosting its logistics capability but also reducing the placement cost, apart from reducing road movement of bulk LPG.

LPG bottling plants in BPCL continue to maintain their record of best practices in Health, Safety, Security and Environment (HSSE), coupled with improvement in productivity and cost leadership. During the year, to reduce energy consumption, an energy audit was conducted at 21 LPG bottling plants under Energy

Efficiency Indexing (EEI). All plants have completed Energy Efficient Lighting (EE), reducing the carbon footprint.

Solar plants of 1,290 kilowatts-peak (kWp) capacity were commissioned at various LPG bottling plants, taking the total installed solar power capacity to 2,957 kWp. Towards greening of the environment, the LPG BU planted 6,267 trees during the year. All BPCL LPG bottling plants have successfully obtained certification for "Zero Waste to Landfill" (ZWL) and Integrated

Management System (IMS).

To further improve the safety culture across the value chain among the stakeholders, Bharatgas Safety Day is observed on the 21st day of every month. On this day, all stakeholders come together and spread LPG safety awareness among the stakeholders on handling and using LPG. To build competency of plant officers, HSSE officers and plant in-charge were provided with training, who later received the internationally acclaimed NEBOSH certification. To improve customer awareness regarding the safe usage of LPG, 70,000+ safety clinics were conducted during the year, along with over 12,000 LPG Panchayats.

During the year, Operation & Maintenance (O&M) services were started at 5 more LPG plants (Bakania, Dharwad, Bareilly, Surat and Jaipur) and now a total of 10 LPG plants are operating on O&M services.

To make the availability of bottling of LPG Cylinders closer to consumption centres and to economise the operations, 7 private bottling plants were commissioned under an Industry tender during the year.

Thermal Efficiency) BPCLlaunched Indias first hotplate in 2021-22, with in-house developed patented technology that delivers 74% thermal efficiency, which is the highest available in the industry, and marketed more than 75,000 of these hotplates during the year.

The new Import Terminal of Aegis at Kandla was utilized, and the first Ship-to-Ship (STS) transfer of LPG vessels took place at Dhamra (Odisha) for supply to Haldia

Terminal, resulting in significant cost savings.

During the year 2022-23, BPCL completed the development of technical specifications for High Tensile

Strength Steel (HTS) cylinders, which are about 20% lighter than conventional cylinders. The use of these cylinders will substantially reduce physical strain on delivery staff, while also generating cost savings.

AViAtioN

During the year 2022-23, the Aviation Sector in India rebounded with the containment of COVID-19 and the lifting of travel restrictions worldwide. The recovery was mainly led by the domestic sector. ATF sales in domestic and international segment reached 93% and 88% of the pre-COVID year of 2019-20, respectively. The Aviation business achieved sales volume of 1,738 TMT with the highest growth amongst OMCs and experienced highest-ever jump in market share, from

22.34% to 25.04%. This stellar performance was due to increase in sales in domestic segment, from 15.35% to 17.36%. This was largely on account of increased share of business with the Tata Group of Airlines. Also, a bright beginning was made with the enrolment of Akasa Air – the youngest domestic airline. In the international segment, the business successfully rolled over contracts with leading international airlines of the world.

BPCL currently has 65 Aviation Fueling Stations (AFS)

(including 4 AFS at defence locations), which is excluding the Army stations. The Company has successfully commenced fuel farm and into-plane operations at the new Manohar International Airport, Goa, and is in the final stages of commissioning a state-of-the-art fuel hydrant system. BPCL has also won the bid for laying a dedicated ATF pipeline of 34 km from Piyala (Haryana) to the upcoming Noida International Airport at Jewar in Uttar Pradesh.

AFSs at Deogarh (Jharkhand), Jeypore (Odisha), Aizawl (Mizoram) and Nashik (Maharashtra) were commissioned in congruence with the opening of airports in Indias hinterland under the Regional Connectivity Scheme of Government of India. The Company augmented ATF facilities at the existing installations and depots. This reaffirms BPCLs commitment to develop aviation infrastructure in the country.

In line with CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) mandate for Sustainable Aviation Fuel (SAF), BPCL is actively engaged in pursuit of this goal. This is another significant initiative towards protecting the environment.

NeW bUsiNesses

Through the recently formed business unit "New Businesses", BPCL has started making its imprints on Consumer Retailing in rural India and offering consumables, durables and services, by leveraging BPCLs network of retail outlets and LPG distributors. As part of the business model, the Company is creating village eco-centers by training rural women and providing them the necessary support and inputs to become village-level entrepreneurs. These village-level entrepreneurs – "Urja Devis" – are BPCLs mascots in deep rural areas of the country, taking fuel and non-fuel offerings to the rural customers and representing the ethos and values that BPCL has stood up for over the years.

The Company commissioned 109 In & Out stores and enrolled 1,000+ Urja Devis during the year 2022-23, and aims to expand aggressively in this space going forward.

The proof of concept of the comprehensive strategy of a unique digitally enabled omni-channel ‘consumer rural retailing mode has been established. It focuses on the ever-growing rural market, where a bouquet of fuel and non-fuel products are being arranged together, catering to the wide assortment of fuel and non-fuel needs of consumers.

The rural consumer retailing model not only helps in increasing fuel turnover, but also gives an avenue for revenue generation to BPCL as well as its channel partners. BPCL will be one of the first companies to reach deep rural customers and set up an organized retailing ecosystem of this scale.

reNeWAbLe eNerGY

In line with the national commitments, BPCL intends to diversify its energy portfolio by building a robust renewable energy business. The ambition is to build 1 gigawatt (GW) of renewable energy capacity by 2025 and 10 GW by 2040, through organic and inorganic routes.

In this context, BPCL is aggressively pursuing various initiatives and is tapping investment opportunities to propel the journey of energy transition. The RE BU is pursuing clean energy objectives of BPCL and diversifying the Companys product portfolio to be an integrated energy company. The plan is to make BPCL a leading clean and renewable energy company by providing sustainable energy solutions through deployment of technology and innovation in a socially responsible manner. In supporting the cause of nurturing the planet through cleaner energy solutions, the BU is implementing various projects for the Company to achieve net zero (in Scope 1 & 2) by 2040.

Currently five solar projects across Kerala, Maharashtra and Madhya Pradesh are in various stages of execution with an aggregate capacity of 45.5 MW at an investment of Rs. 245 crore. BPCL is also implementing 2 wind power projects in Maharashtra and Madhya Pradesh with an aggregate capacity of 100 MW at an investment of Rs. 978 crore. In line with the National Hydrogen Mission and meeting emission targets, and BPCLs net-zero roadmap, the first green hydrogen plant, is being implemented at Bina Refinery.

PUbLic reLAtioNs & brAND

The cardinal goal of brand communication is to achieve a unique impression on target audiences to garner greater brand recognition and brand loyalty. In this quest, especially in this age of hyper-scale digital interactivity, BPCL has evolved in sync with the changing times.

360-Degree brand building and marketing campaigns

During this year, BPCL strengthened its social media presence even further, up from its already strong position in this space. A well-tuned strategic impetus helped the Company in expanding the base of its followers, exceeding the expectations in sheer numbers as well as depth of engagement. Especially remarkable in this endeavour is the Companys Facebook page. With 25.7 lakh followers at the turn of the year 2022-23, it became the second largest followed page among Oil & Gas majors in Asia, only behind the global giant Aramco. By the same token, BPCLs Twitter handle became the highest followed among Indian Oil & Gas companies and a leader among OMCs on LinkedIn, with 2.16 lakh followers. The Companys social media handles recorded a jump in the number of followers by 7.30 lakh on all social media handles, resulting in a combined growth of 26.80% and taking the followership to 34.50 lakh. Leveraging the Companys product strengths and their unique appeal, 12 mega marketing campaigns were launched during the year, in collaboration with Business

Units and Entities, generating a reach of approximately

13.32 crore.

The focus was on diverse approaches to brand building. Going beyond brand promotion, the Company targeted capturing the essence of CSR, HSSE, technological advancements and a series of impactful activities and initiatives.

Public relations for Deeper impact

The PR accomplishments spoke for themselves as BPCL achieved the highest Advertorial Value Equivalent (AVE) of its media coverage, among OMCs, with 41% share of voice.

The Company occupied the media space predominantly and extensively with currently relevant topics. These included BPCLs far-reaching digital transformation, promotion and expansion of greener fuels and other product offerings, investments in EV fast-charging infrastructure and renewables, as well as its net-zero ambition. This helped BPCL stay ahead of the curve in customer-centricity, innovation, energy transition and sustainability.

strong brand identity through Website During the year, the underpinnings of the Companys web presence were enhanced in several crucial ways.

The BPCL web migrated to a cloud infrastructure platform. This has brought clear gains in terms of improved cost, speed, security, operational efficiency, and faster disaster recovery. The Company also invested in Search Engine Optimisation (SEO), which boosted its discovery in the crowded web space and allowed it to gain traffic on the website, while also increasing the online visibility of BPCLs broad gamut of activities. These targeted efforts helped immensely in increasing organic website traffic by a quantum of 80%, and traffic value by 61% (US$ 191,300). Moreover, BPCL website now has a monthly monetizing value of Rs. 98 lakh-plus. Another tangible metric showed that 34 out of 100 keywords made to the firstpage and there was a 29-fold increase in second and third page keywords with intelligent SEO.

brand Positioning on Global Platforms

One of the defining international events of the year was the inaugural edition of India Energy Week 2023, where BPCL showcased its stature amongst the biggest names in the industry, elevating its brand position globally. The BPCL pavilion reflected the Companys formidable capabilities and global span. A charismatic crowd-puller, the pavilion was punctuated with high-profile visits.

The Company launched a series of communications through high-impact branding to amplify its participation beyond its exhibition presence before, during and after the event.

BPCL also showcased its technological prowess, world-class products and future endeavours at Abu Dhabi

International Petroleum Exhibition and Conference

(ADIPEC) in Abu Dhabi and World LPG Forum in New Delhi.

BPCL PODCAST

Adding a glorious chapter to its online communications,

BPCL became the first Indian Oil & Gas company to launch an energy podcast, reaffirming the Companys thought leadership on a range of subjects concerning energy transition, environment, technology, and much more – and not just limited to BPCL activities, but also covering broader industry perspective. At India Energy Week 2023, BPCL Podcast – Unlocking Possibilities, Empowering Lives was launched by Shri Hardeep Singh Puri, Honble Union Minister for Petroleum & Natural Gas and Housing & Urban Affairs, making the program an instant hit. It was also a privilege for BPCL to have the Honble Minister as its first guest on the inaugural episode of the BPCL Podcast. The podcast provides a platform for engaging thought leaders in rich discussions on how India is meeting the challenges of energy security and environmental sustainability, impacting long-term energy transition and paths towards decarbonizing energy.

Awards

BPCL was showered with numerous accolades during the year. The PR & Brand team reaped a bumper crop of

9 excellence awards at the 16th Global Communication Conclave organized by Public Relations Council of India

(PRCI) at its 2022 awards ceremony, reflecting the

Companys purpose-driven public relation and brand strategy. Lauded at the forum was BPCLs dynamism and highly effective approach to brand communication that leverages the power of both traditional and digital media to reach niche audience segments as well as society at large.

The Company was also conferred several more prestigious recognitions – ‘Most Preferred Brand 2022 award from Marksmen Daily in association with TimesNow, and ‘Corporate Communication Outreach Award from Economic Times, as well as 8 more

Excellence awards for Corporate Collaterals from Public Relations Society of India.

BRAND QUIZ BAADSHAH

This year, it was yet another head-scratching season for Brand Quiz Baadshah (BQB) – BPCLs long-running iconic employee-engagement quiz program on Corporate IQ. BQB tested the mettle of contestants, pitting teams from across various regions against each other in fierce battles. Restarted last year after a brief pause during the pandemic period, this Asian award-winning program continued its inimitable journey, challenging the sharpest minds to achieve the crowning glory.

thought Leadership

The purpose behind the thought leadership content presented goes beyond brand awareness. It aims to establish richer, more meaningful relationships with the target audience. For almost two years, the Company has been using its vast experience and leaderships to reach out to target audiences through media interviews, participations in panel discussions, speaker opportunities, etc. This year as well, through a series of television, print and digital interviews and media engagements, BPCL reaffirmed its position as a prominent thought leader in its field and areas of expertise.

ProJect ANUbhAV – bPcLs DiGitAL trANsFormAtioN iNitiAtiVe

Project Anubhav is an ambitious digital transformation initiative aimed at delivering the best customer experience across all touchpoints of BPCL, achieving operational efficiencies, and enabling agility in the field.

All initiatives under Project Anubhav are underpinned by the three foundational pillars –Trust, Convenience and Personalisation. The customer engagement platform HelloBPCL is an umbrella platform for customers to avail of all BPCL products and services at one place. At the same time, it gives BPCL a 360-degree view of customers energy needs. With HelloBPCL unified mobile app and portal, customers can order LPG refills, buy fuel, earn loyalty and reward points as well as redeem them, and make payments, all in one place. HelloBPCL is a one-stop solution for BPCLs B2C as well as B2B customers. HelloBPCL has more than 30 lakh registered users and has a footprint of over one lakh customers per day. The platform handles bookings of more than 20,000 LPG cylinder refills, 1,000+ distributor portability requests,

100+ Double Bottle Connection (DBC) requests, 4,000+ Lubes reward coupon redemptions and more than Rs. 180 crore of fuel purchases through SmartFleet loyalty program on a daily basis. The platform also serves as a one-stop business portal for industrial and commercial customers, with end-to-end indent management. This platform digitally empowers customers and their logistics partners to track and trace product delivery. Further, Project Anubhav has revamped and developed the next generation of SmartFleet (ALP, or Advanced Loyalty Program) for fleetowners, which is now available on HelloBPCL platform. It enables the entire value chain, from the driver in the fueling bay to the group fleet managers dashboard, to the back-end ERP solution of the corporate customer, with personalized reports, simplified fleet management and fueling controls. It can even be integrated with the back-end ERP solution for corporate customers, with Cash Management System

(CMS) and provide personalised reports to fleet

With more than one million-plus registered customers, the Advanced Loyalty Program is extensively used by fleet customers, registering fuel purchases worth more than Rs. 5,000 crore per month through this application.

BPCL has introduced conversational ArtificialIntelligence

(AI)-driven and NLP-enabled chatbot, "Urja", for customers. It is capable of conversing with customers in 13 languages, on WhatsApp and the BPCL website. As an intelligent virtual assistant, Urja provides a range of services, including LPG bookings, mobile number updates, fuel station locations and prices, fuel delivery requests, BPCL product information, handling complaints and feedback, and answering FAQs. Around 9 lakh unique users interacted with Urja in the year 2022-23. MAK Lubricants is a key player in the highly competitive Indian lubricants industry with a strong market presence.

Known for its intricate supply chain, diverse portfolio of brands and sub-brands, and evolving customer schemes, the lubricants business has implemented an integrated supply-chain initiative utilizing QR code technology. This initiative ensures complete product traceability, enables genuineness checks for customers, offers loyalty schemes to mechanics and retailers, and facilitates instant coupon redemption and cashback for coupons found in MAK Lubricants packs.

UFill, an innovative customer-centric digital initiative, which was launched during the previous financial year, has also received high traction from the consumers. It is a unique and innovative UPI-based solution for instant generation of pre-paid fuel vouchers which can be redeemed at BPCL fuel stations. The solution, which is integrated with fuel dispensing machines, ensures inherent transaction and fueling transparency. Customers generated about 42 million UFill vouchers worth Rs. 1,678 crore during the year 2022-23.

With an objective to empower BPCL field force in building stronger customer relationships, SalesBuddy, a Customer Relationship Management (CRM) platform powered by the M/s SalesForce, is being leveraged. SalesBuddy enables BPCLs front-end sales team to manage customer visits, manage leads, provide a 360-degree view of the customer, manage tasks and activities as well as carry out customer service.

IRIS – BPCLs Digital Nerve Centre – continues to remotely monitor and facilitate operations across the Companys vast network of fuels depots, LPG bottling plants, fueling stations and tanker fleet, integrates various systems, such as Internet of Things (IoT) sensors, automation systems, GPS tracking systems, CCTV monitoring, and more at these locations, processing 3 million inputs per second from these systems. IRIS ensures optimal performance, guaranteeing the delivery of high-quality products at the right price, reinforcing customers trust. It establishes compliance, monitors equipment health, triggers automated alerts and actions for equipment failures or hazardous situations, empowering BPCLs workforce to make informed decisions and take pre-emptive actions to enhance product and service quality. Currently, IRIS is integrated with 19,000+ fuel stations, 89 Retail terminals, 53 LPG plants, and 25,000+ tankers, handling more than

4 lakh exceptions every month.

BPCL is leveraging best-in-class cutting-edge technology solutions and collaboration with leading technology companies to deliver Trust, Convenience and Personalisation to both external as well as internal customers.

Having implemented 10 major applications for enhancing customer engagement, ensuring smarter operations, and enabling an efficient sales force, Project

Anubhav has positioned BPCL at the forefront of digital transformation in the Oil and Gas industry in India. As

BPCL continues to evolve existing digital applications, more such applications and platforms are being developed and implemented under Project Anubhav.

CORPORATE STRATEGY

To achieve organizational vision and goals, the Corporate Strategy department plays a pivotal role in developing and evolving medium to long-term strategies. The department continuously engages with various business units within BPCL to co-create their strategic plans. The team continuously scans the environment to track cutting-edge technologies that can disrupt the current business and also explore organic and inorganic opportunities which will help the company to deliver and sustain high performance.

Across the world, Governments are making policy announcements to ensure that the energy landscape shifts towards low-carbon solutions and technologies. India, too, has taken ambitious targets towards a greener and cleaner environment, promoting proliferation of various alternate energy sources like ethanol, bio-diesel, sustainable aviation fuel, solar, wind, energy storage, electric vehicles, green hydrogen, etc.

Aligned with the national priorities, BPCL is actively looking at diversification opportunities to develop a business case for future investments, to open avenues of growth and de-risk the existing businesses in this rapidly evolving scenario. Major focus areas of the Corporate Strategy department are building low-carbon portfolio of gas, biofuels and renewables; transforming fuel retailing by developing the new age mobility solutions; and building a resilient hydrocarbon portfolio, including petrochemicals to make existing business more efficient, flexible and profitable. Corporate Strategy is evaluating

M&A opportunities in sectors like non-fuel, renewables, hydrogen, etc. to meet the long-term aspiration of BPCL to become an integrated energy company.

The Corporate Strategy setup also leverages Indias vibrant startup ecosystem by supporting promising startups under its Startup initiative christened as Project Ankur. The initiative was started in 2017, in line with Government of Indias "Startup India" initiative and recognizing its importance as an innovation engine. The aim of Project Ankur is to develop an ecosystem that nurtures entrepreneurship in the country by backing innovative ideas/concepts that have the potential to grow into promising startups and create a multiplier effect. By engaging with the startups at an early stage, BPCL also gets access to some of the path-breaking technologies and solutions in the energy space. BPCL has allocated

Rs. 78 crore for this purpose in three phases. This fund is being utilized to support deserving and budding startups in various ways, including grant funding. A total of 31 startups have been selected for grant funding, amounting to a total of about Rs. 27.9 crore, out of which

Rs. 26.7 crore has already been disbursed up to March 31, 2023. In addition to grant funding, BPCL is also providing mentoring and guidance to the startups. BPCL continuously engages with the startup ecosystem in India, including Startup India, leading academic institutions, incubators, accelerators and venture capital investors, etc. to ensure that BPCL funds are utilised to address the challenges related to energy sector.

HEALTH, SAFETY, SECURITY & ENVIRONMENT (HSSE)

Health, Safety, Security and Environmental are core to all spheres of our business. The objective is to achieve zero incidents, effective containment of hydrocarbons and mitigation of associated hazards. The Companys endeavour is to achieve its mission of ‘Zero Incidents,

Zero Harm and Zero Excuses.

BPCL has in place a Corporate Safety Management System (CSMS) and 12 Life Saving Rules (LSRs) cutting across all business units, which bring in standardisation and a uniform understanding of Safety Management Systems

(SMS). Internal and external audits are an integral part, and compliance of recommendations are given topmost priority. External Safety Audits (ESAs) are frequently undertaken by Oil Industry Safety Directorate (OISD), Petroleum and Natural Gas Regulatory Board (PNGRB), Factory Inspectorate, etc., and recommendations are implemented in a time-bound manner. The Company has a well-structured Emergency Response Disaster Management Plan (ERDMP), which encompasses Preparedness, Mitigation, Planning and Restoration (PMPR). Mock drills are regularly conducted and reviewed to ensure emergency preparedness at all locations. Incident Reporting is a very critical activity with respect to disseminating the learnings across the Company. Incidents reported in the system are thoroughly investigated, while root cause analysis is undertaken and shared with all stakeholders to enhance collaborative learning for safer operations and greater adoption of best practices. Governance practices of the safety systems and standard operating procedures (SOPs) are regularly monitored and reviewed to ensure safe operations across all locations. To enhance safety across all business units, various technological interventions like robotic cleaning of confined spaces, IIoT (Industrial Internet of Things) based Wireless Asset Monitoring System, cloud-based HSSE portal, Manpower Monitoring System, camera feeds and drones (for turnaround safety surveillance in refineries) are being used. Integrated Electronic Work

Permit System (e-WPS) with Integrated Risk Information System (IRIS) is used for monitoring all ultra-critical activities. The Pipeline entity implemented Interlock Bypass Online Authorization System to enhance process safety with mapping of Geographical Information System (GIS) to enable comprehensive data management of entire pipelines on a single platform, with concurrent access from anywhere at any time.

The technology of Vehicle Tracking System (VTS)/

Electromechanical (EM) digital locks was integrated with IRIS at central command and control centre, ensuring Industrial Transport Discipline Guidelines (ITDG) for recording, monitoring and corrective actions against en route violations, which had an impact on reduction of in-transit accidents. Process Safety Management (PSM) has been successfully implemented to enhance safety at all refineries.

Training of more than 2,350 man-hours, covering 500 participants, was imparted on various topics of Health, Safety, Security & Environment. This included mandatory online trainings for HSSE role holders on 14 strategic modules through M/s. Du Pont. High-impact webinars were organised on Health (Lifestyle improvement), Safety

(Scientific Accident Investigation Safety Leadership) and Environment (net zero, lifecycle assessment, waste management, etc.) across BPCL. Refineries conducted training programmes on process safety management, contractor safety programmes on scaffolding, turnaround management, maintenance activities, etc.

Refineries, Pipelines and Marketing have been re-accredited with ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 standards for Quality, Environment & Occupational Health, and Safety Management systems. BPCL is dedicated to addressing the issues of climate change and global warming, and believes that a comprehensive solution, which includes technological advancements, efficient use of energy and economically viable energy transition alternatives, is the need of the hour for ensuring environmental safety and sustainable development ecosystem. In line with the nations objective of achieving net-zero emissions by 2070, BPCL has set a target of achieving net-zero for its controllable (i.e., Scope 1 and 2) greenhouse gas (GHG) emissions by 2040. BPCL has identified various short-term and long-term levers to reduce emissions and achieve net-zero targets. Renewable

Energy (RE) generation has been identified as one of the key thrust areas, with the initial objective of addressing in-house power requirements through renewable sources and, subsequently, establishing itself as a renewable power producer. For setting up major solar projects, land parcels within

BPCL group have already been identified and feasibility studies are in progress. The company has collaborated with various State Governments and organizations like Bhabha Atomic Research Centre (BARC), Solar Energy Corporation of India (SECI), Hero MotoCorp, etc. for cooperation in the RE space, with specific focus on solar, wind, electric mobility, green hydrogen, and waste-to-energy projects. With increased impetus on green hydrogen, BPCL has carried out internal studies, which indicate that to achieve a target of 10% green hydrogen for all its refineries by 2030, around 72 metric tonnes (MT) per day of hydrogen would be required in refinery operations. To begin with, BPCL is implementing a green hydrogen plant at its Bina Refinery. Besides, BPCL is also setting up a pilot project with BARC technology at its Corporate Research and Development Centre (CRDC), Noida to study the commercialization of the technology and further scaling it up in due course of time.

BPCL is in the process of identifying viable Carbon Capture, Utilization and Storage (CCUS) technologies emissions. These emerging technologies shall be adopted gradually with focus on Scope 1 emissions. In alignment with the net-zero goals of BPCL, CRDC is working on various CCUS technologies such as carbon capture from refinery off-gases. The Company has simulated Moving

Bed Adsorption (SMB), methanol production from CO2 captures and Sustainable Aviation Fuel (SAF).

The Company has institutionalized sustainability as a core parameter in its philosophy and endeavours to make the performance on its sustainable development initiatives transparent and available in the public domain. BPCL benchmarked its sustainability initiatives on Environment, Social and Governance (ESG) parameters on the Dow Jones Sustainability Index (DJSI) platform and was ranked 8th best company globally in the Oil and Gas Sector for the year 2022-23. BPCL also benchmarked its performance on Carbon Disclosure Project (CDP), a platform of sustainability and climate change, representing Companys transition towards environmental stewardship and maintaining its rating at Management Level, which is the best amongst the Indian Oil and Gas sector and on par with international peer group. The Companys efforts on sustainability were recognized during the year by various institutions and agencies through a number of awards and accolades such as Golden Peacock, and from renowned institutions such as the Energy and Resources Institute (TERI), the Confederation of Indian Industry (CII), etc.

The latest report on sustainability was published in the year 2021-22 following Global Reporting Initiative (GRI) Standards and other global frameworks and mapped with the United Nations 17 Sustainable Development Goals. The Sustainable Development Report of BPCL is assured by an independent third party as per Accounting Ability (AA) 1000 Assurance Standard (AS) 2008 and International Standards of Assurance Engagement (ISAE) 3000.

Your company is continuously implementing various initiatives in the direction of minimizing operational impacts on the environment. The capacity of renewable energy was increased from 46.44 megawatts (MW) to

62.3 MW and the energy-efficient lighting (EEL) capacity was increased from 60.55 MW to 63.52 MW during the year. Mumbai Refinery, Pipelines, Retail and LPG locations have implemented 100% EEL, while other locations have taken up targets to achieve this by 2024.

The initiatives on renewables resulted in an annual reduction of GHG emissions by approximately

0.31 MMTCO2e in the year gone by. Additionally,

other sustainable initiatives such as Ujjwala Yojana, transportation of product through pipelines and use of biofuel in MS and HSD helped in reduction of emissions

by approximately 12.04 MMTCO2e, totalling to 12.35 MMTCO2e for the year 2022-23.

BPCL has entered into a contract with Servotech Power Systems, Delta and BHEL for supply of 1,000 Nos. of 30 kW and 350 Nos. of 60 kW chargers to provide EV fast-charging stations at ROs. The primary thrust is on highways to develop Highway Fast Charging Corridors, which will help in reduction of Scope 3 emissions, fostering a cleaner environment.

This year, BPCL planted more than 86,500 trees to improve the green cover and enhance biodiversity. Around 5 lakh seed bombs were planted using seed bombing technique in Maharashtra region, with a survival rate of more than 20% with the help of NGOs, college students, NCC cadets, etc. The Miyawaki technique (Multi-layered

Dense Forestation) was adopted at various refinery and marketing locations and trees were planted at 25 locations across India. The total number of trees at BPCL locations are presently more than 8.9 lakh, which helped in increasing the CO2 sink by sequestrating 20,000

MTCO2e during the year.

BPCL has been working proactively and continuously towards increasing the rainwater harvesting (RWH) capacity to reduce dependency on other sources of water. The total catchment area under rainwater harvesting has increased from 10,80,121 sq. m to 11,95,878 sq. m, which has helped in conserving 6,07,000 kl of water during the year 2022-23. BPCL has carried out a study on

RWH at Mumbai Refinery to identify more areas where

RWH can be implemented, and to improve the present efficiencyand collect maximum possible amount of water to reduce its freshwater consumption from municipal supply. BPCL has also conducted water balance studies at marketing locations in an endeavour to make locations water-neutral. BPCL, as a responsible corporate entity having its obligation towards prevention of soil contamination, carried out third-party audits to get their locations certified for ‘Zero Waste to Landfill. Mumbai Refinery, all Retail, LPG and Lubricants locations have now been certified for Zero Waste to Landfill,while other refineries and marketing locations have taken up a target to be certified by 2023-24.

BPCL is following the 5R principle of waste management, i.e., to Refuse, Reduce, Reuse, Repurpose and Recycle waste in all its operations. The Lubricants

BU has obtained a license for Extended Producers

Responsibility (EPR) under brand owner category for lubricant packaging plastic containers and disposed of approximately 3,172 MT of plastic waste responsibly.

The Company has adopted composting in a big way to dispose of organic waste from refineries and marketing locations in a responsible manner. Approximately 400

MT of organic waste was converted into compost and used for gardening purposes during the year.

BPCL carried out a pilot life cycle assessment study from cradle to grave at Wadilube Installation, which carries out blending of lubricants. The project, assigned to National Institute of Industrial Engineering (NITIE), one of the leading research institutes in Mumbai, was carried out through Gabi software and helped in identifying possible hotspots for improvement and alternatives that could reduce energy consumption as well as biodiversity and environmental impacts.

BPCL is committed to leveraging sustainable development, operational efficiency, improved processes and technologies, to reduce resource consumption, in line with national policy and to comply with the related regulatory norms to conserve and sustain natural and social ecosystems as an integral element of business, thus creating a healthy, safe, secure and environment-friendly workplace.

hUmAN resoUrces

Human capital is the backbone of our organization, and its importance cannot be overstated. It drives creativity, innovation, and productivity, contributing not only to the operational efficiency but also to the strategic growth of our organization. From the decision-making executives who devise strategic plans to the frontline employees who interact with customers, every employee plays a critical role in shaping the BPCLs success. The diverse perspectives and experiences of BPCLs talent serve as catalysts for problem-solving and adaptability, empowering us to flourish in an ever-evolving world. Recognizing the significance of investing in people, we have embraced Development of People as one of BPCLs core values, understanding that it is not only a moral imperative but also a strategic requisite for ensuring enduring success.

Looking back on this transformative year, it is a delight to share the unwavering commitment to fostering a culture of ‘learning and development that propels BPCL and its talented workforce towards new heights. In an ever-evolving landscape, investing in the growth and development of people remains at the core of the Companys vision and strategy.

The leadership capability assessment and development process is carried out on a biennial basis under the Talent

Management Framework ‘ASCEND. The fifth cycle of

ASCEND began with the launch of a revised leadership competency framework and introduction of a rigorous assessment methodology in the form of personality self-assessments and Assessment Centres. More than 1,000 officers were covered in this years Assessment Centres in addition to similar numbers covered in the previous financial year. Individual feedback sessions for senior and mid-level officers, followed by development centre workshops and development dialogues for senior leaders, were carried out. Focused development plan workshops were conducted to build an understanding of assessment outcomes, helping them identify and strengthen their areas of development. Multiple talent insights emanating from the conclusion of the fifth cycle of ASCEND are being analysed and applied to drive people, practices and related developmental priorities.

The Behavioural Learning Framework was revamped and relaunched to synchronize with the revised leadership competency framework. Twenty-seven programmes at various levels were conducted, covering 730 employees and clocking 11,680 man-hours of training. Thirty-two simulation-based experiential learning programmes were conducted for multiple Businesses/Entities/target group of employees, with focus on enhancing various managerial and functional competencies. To promote a culture of self-paced learning, the Corporate Learning Centre provided popular platforms like Percipio and LinkedIn Learning to all interested users, which had unlimited content in various modes like videos, audios, e-learning modules, books, articles, etc. While 169 employees from across various job groups were provided learning opportunities at premiere institutes like the IIMs, XLRI, MDI, etc., 527 employees were nominated to programmes at other institutes as part of their professional development.

Multiple experiential team alignment interventions were conducted in outbound format via a series of workshops called "Winning Together", which were conducted for diverse teams like New Businesses, Industrial & Commercial, Finance, Retailing Initiatives, and Central

Refineries Project Organisation.

In order to get the target cohort of officers appreciate the importance of strategic alignment to organizational goals, a customized learning journey was designed and delivered in partnership with Indian School of Business

(ISB), keeping it relevant to the BPCL context. A three-day programme on "Strategic Acumen for Sustained

Competitive Advantage" was rolled out through expert and reputed faculty members and learnings were delivered using methodologies like business simulations and industry-specific case studies that could effectively drive business in the organizational context.

To build and inculcate a culture of continuous career conversations in teams, a ‘Feedback Month campaign was launched for managers and their teams to engage in ‘Conversations that Matter, hence helping them take the next step from performance management to development.

In the endeavour to promote a culture of diversity and inclusion, an in-depth survey called ‘Voice Your Vision was administered to all women employees coupled with a two-day discovery workshop ‘Choose to Challenge. This workshop brought to the fore key thematic areas for promoting diversity and a strong presence of women in leadership and frontline critical roles.

emPLoYee sAtisFActioN eNhANcemeNt (ese)

The pandemic further amplified what was already known, that the future of work is tightly linked to employee well-being. Today, employee well-being has expanded beyond physical well-being to focus on building a culture of holistic well-being, including physical, emotional, financial, social, career, and community. BPCL has been a forerunner in making its workplace emotionally safe and thriving for employees. BPCL has a dedicated entity called Employee Satisfaction Enhancement (ESE), which touches the lives of employees to ensure a healthy, productive, vibrant, and energized workforce. For more than a decade, ESE has been offering Employee Assistance Program (EAP) services to its employees by the name Roshni Plus to help them deal with anxiety and stress, either arising out of personal or professional issues.

BPCL believes that creating awareness, and sensitizing employees and line managers about emotional well-being goes a long way towards promoting an emotionally safe workplace. The ESE team visits locations to maintain employee connect and proactively interacts with employees to allow them to share their concerns and grievances, and create awareness on overall well-being and EAP services. During the year, the team visited 52 locations and interacted with 642 employees. ESE continuously reaches out to employees and disseminates informative and insightful learnings through digital outreach initiatives such as ActivLife webinars, "Interconnect" newsletters, e-magazines, and mailers. ESE organized 19 webinars, which were attended by 2,262 participants and curated and circulated Interconnect weekly newsletters and 23 mailers. There are 72 employees nominated as Sahkarmi Mitras, who act as emotional first-aid at locations and are trained to help a distressed colleague at the workplace.

In order to help employees in the field to avert stress and burn-outs, ESE organized a residential wellness retreat to encourage participants to find serenity and alignment in their life. The goal was to unwind, rejuvenate and help the participants rediscover their authentic selves through exposure to self-experiential ancient healing techniques and modern scientific methodologies. The retreat helped to spur them on the path to happiness, good health, and a satisfying life.

Apart from regular location visits, webinars, and awareness programs, seminars were organized at 10 locations. ESE closed the year with a conclave for leaders, called Thrive 23 – Nourish, to Flourish, on the theme of "Employee well-being at work – our role as leaders" to sensitize business leaders on the need to provide a conducive work environment to employees.

The conclave had a panel discussion, fireside chat, and learning hours on topics such as the need for emotional intelligence and resilience for leaders, leading with compassion, building an emotionally safe workplace, balancing results with care, and bridging generation gap–towards building a future-ready workforce.

iNteGrAteD iNFormAtioN sYstem (iis)

BPCL, with its dedicated team of seasoned IT professionals, continued its enterprise-wide digital transformation journey during the year 2022-23, encompassing creation of digital tools for ease of doing business, automation for achieving enhanced operational efficiencyand business excellence, and facilitation of data driven-business analytics for informed decision-making. During the year, the merger of BORL and BGRL IT systems into BPCL IT systems were effectively completed without any business disruption. IT solutions ensured full compliance to various government regulations with respect to sale of Ethanol Blended Petrol. Several technology-enabled innovative solutions were developed in-house and implemented, which have added immense value to business processes in sales and operations by enhancing internal efficiencies, saving man-hours, eliminating manual errors and automating repetitive noncritical activities.

Interfaces were established between various IT systems of BUs to implement intelligent business processes. Aadhaar-based e-signing for digitally signing of internal documents was implemented, bringing in improved governance.

Various mobile-friendly solutions were implemented to further simplify business processes for internal and external stakeholders, enabling real-time communication and access to information.

BPCL, along with other PSU Oil Marketing Companies, under the guidance of MoPNG, enabled the formation of Common LPG Data Platform (CLDP), which includes creation of a common LPG Master database with near real-time and offline de-duplication services for new consumer creation and consumer master updates. The platform is also being developed for processing

Direct Benefit Transfer of LPG (DBTL) Scheme subsidy to eligible beneficiaries along with advanced MIS and analytics helping in improved consumer service and enhanced governance. System support was provided for implementation of various Government initiatives, viz.,

Pradhan Mantri Ujjwala Yojana/LPG Sahay Yojana in the state of Gujarat, LPG Refill Scheme for Uttarakhand, and capping of refills for non-PMUY consumers.

A comprehensive security assessment, simulating real-world attack scenarios, was carried out for validating the effectiveness of security controls and for identifying initiatives to strengthen cyber security posture of BPCL. Zero Trust Network Access (ZTNA) was implemented for enhanced security.

Several in-house solutions, viz., Maritime Intelligent Logistics System, Road Intelligent Transport Automation System and E-measurement book were recognised by external agencies as best-in-class initiatives towards digital transformation.

iNterNAtioNAL trADe & risK mANAGemeNt (itrm)

BPCLs International Trade and Risk Management (ITRM) setup performs all activities pertaining to import of crude and import/export of products. ITRM procures crude indigenously, as well as through imports. Petroleum products are imported and exported based on domestic demand-supply scenarios. Allied services of ship chartering and operations are also facilitated by ITRM. Further, the ITRM setup includes an active Derivatives Desk engaged in risk management activities via the paper (financialderivatives) market, thereby covering operating costs of refineries and other associated costs. During the financial year, 279 million barrels (38.2 MMT) of crude oil was procured for BPCL refineries, including

5 new grades of crude oils which were procured for the first time by BPCL. Continuing its success in procuring spot crude oil through own Crude Oil Trading Desk, a total of 135 million barrels were sourced through spot procurement in the financial year, capturing opportunities in the oil market across the globe. The trading desk is fortified with a comprehensive trading policy and a robust governance framework that ensures the highest levels of controls in spot crude oil procurement.

The year 2022-23 was a turbulent one for crude, product and freight market, exhibiting unprecedented price levels and movements, with shift in oil trade routes and oil supply chains, due to the stressful geopolitical situation around the world. ITRM has been proactive in meeting the challenges of new order in world oil market ensuring maximum value to the Company through proper planning and execution. Continuing its excellence in chartering activities, Recap Manager software was implemented for online fixture recap and charter party preparation as digital initiative.

Benefit of freight arbitrage between Suez Max and VLCC was taken for delivered cargo, ensuring proper ship-to-ship arrangements and coordination. As part of fostering strong relationship with stakeholders, Foundation of Organizational Learning sessions were conducted for vessel owners. Also, training programmes were conducted for Boarding Officers from all coastal locations, on vessel performance and associated challenges. ITRM has been a front runner in value creation for the Company through identifying new geographies for sourcing better-value crudes, freight management by leveraging options available in the market, meeting the challenges of ever-changing and dynamic oil markets, understanding infrastructure bottlenecks and ensuring infrastructure augmentation for enhanced performance. These activities are a result of synergies that are developed by interacting with various stakeholders. ITRM has leapfrogged from an era where crude purchases and refinery evacuation were closely controlled and monitored by the Government, to an era where pure economics guides the best-fit decision. With robust working policies and sound governance framework, ITRM has contributed immensely to the Companys growth path.

reseArch AND DeVeLoPmeNt (r&D)

Research & Development is crucial to the long-term growth and sustainability of any business. With the prevailing energy landscape and initiatives such as the net-zero and Aatmanirbhar Bharat programs promoted by the Government of India, the drive to create innovative products and processes have intensified. BPCLs

Corporate Research & Development Centre (CRDC) is, in addition to research in conventional oil refining and related processes, actively pursuing research in niche areas such as petrochemicals, biofuels, alternate energy, green hydrogen and carbon dioxide mitigation.

BPCLs Product & Application Development Centre (P&AD) team, located in Mumbai, is engaged in developing new automotive, industrial, and green lubricant formulations to meet business demands.

In the year 2022-23, CRDC achieved significant milestones by creating innovative technologies and products. These include the Bharat Hi-Star LPG and

PNG stoves with an efficiency of approximately 75%, development of Superabsorbent Polymer (SAP) for agricultural applications, smokeless kerosene for defence applications, niche petrochemical catalysts and ligands, biodegradable films made from 1G ethanol by-products, green silica from 2G ethanol by-products as well as numerous advances in carbon capture and utilization to produce value-added petrochemicals such as methanol and formic acid. During the year, research by the CRDC team resulted in the grant of 5 Indian and 2 foreign patents. Also, 18 new patent applications (5 Indian and 13 foreign) were filed during the year. The R&D department of BPCL is no longer merely an innovation hub, but also a revenue generator through the implementation and commercialization of various solutions.

eXPLorAtioN AND ProDUctioN oF crUDe oiL AND GAs throUGh WhoLLY oWNeD sUbsiDiArY bPrL operations of the company

Bharat PetroResources Limited (BPRL) has Participating Interest (PI) in seventeen blocks, of which eight are in India and nine overseas, along with equity stake in two Russian entities holding the license to four producing blocks in Russia. Five of the eight blocks in India were acquired under different rounds of New Exploration

Licensing Policy (NELP), one block was awarded under Discovered Small Fields (DSF) Bid Round 1 and two blocks were awarded under the Open Acreage Licensing Policy (OALP) Bid Round I. Out of the nine overseas blocks, five are in Brazil, two in United Arab Emirates and one each in Mozambique and Indonesia. The blocks of BPRL are in various stages of exploration, appraisal, development, and production. The total acreage held by BPRL and its subsidiaries is around 21,358 sq. km, of which approximately 50% is offshore.

During the year 2022-23, approximately 4.4 million barrels of crude oil from the Lower Zakum Concession was lifted by BPCL group refineries, out of BPRLs of equity crude oil from the Lower Zakum Concession. Discussions for early monetization of discoveries which were appraised in the overseas operatorship block Onshore Block 1 Concession in Abu Dhabi, UAE are ongoing. The first has also been concluded, with testing indicating the presence of hydrocarbons in one well in the unexplored area of the block.

In BM-SEAL-11 Concession in Brazil, after the Declaration of Commerciality (DoC) in December 2021, the Field Development Plans were submitted to ANP (Brazilian Regulator) in November 2022. The concessionaires are progressing towards procurement of Floating Production Storage Offloading (FPSO) unit and other long-lead items for the project.

In Offshore Area 1, Rovuma Basin, Mozambique, while the construction activities in the 2-Train Golfinho-

Atum LNG Project were progressing as per schedule, security incidents in the region led to the declaration of force majeure at the beginning of the year 2021-22. The Government of Mozambique is working towards reestablishment of peace and resolving the security situation. Mozambican military and joint forces from Rwanda and Southern African Development Community (SADC) continue their operations in the region. In order to contribute to the stabilization of the livelihoods of the communities in Northern Cabo Delgado, the project has developed a comprehensive socio-economic initiative aimed at generating revenues for the communities, developing the local economy, preserving the biodiversity and promoting human rights. There has been an improvement in the security situation there and the project is expected to restart after satisfactory assurances regarding security in Cabo Delgado province. In respect of Indian blocks, the block CY-ONN-2002/2, located in Cauvery Basin, Tamil Nadu currently has six producing wells. During the year 2022-23, BPRLs share of production from the block was approximately 28 thousand tonnes of oil.

In BPRLs Indian OALP Operated block, CB-ONHP-2017/9 located in onshore Cambay Basin, Gujarat, exploration drilling prospects have been identified and activities are planned towards a minimum work program.

The Companys PI in respect of blocks in India are held directly by BPRL. BPRL has wholly owned subsidiary companies located in the Netherlands, Singapore, and India. The subsidiary located in the Netherlands, i.e., . BPRL International BV, in turn, has four wholly owned subsidiary companies, viz., BPRL Ventures BV, BPRL Ventures Mozambique BV, BPRL Ventures Indonesia BV and BPRL International Ventures BV. BPRL Ventures BV phase of the exploration has 61.36% stake in IBV Brasil Petroleo Limitada, which currently holds PI ranging from 20% to 40% in five blocks in offshore Brazil. BPRL Ventures Mozambique BV has PI of 10% in a block in Mozambique, and BPRL Ventures Indonesia BV holds PI of 16.2% in a block in Indonesia. BPRL, through BPRL International Ventures BV, has 30% stake in Falcon Oil and Gas BV, which holds 10% stake in the Lower Zakum Concession in offshore Abu Dhabi, UAE. Further, BPRLs wholly owned subsidiary in Singapore, i.e., BPRL International Singapore Pte Ltd (BISPL) holds 33% each in two

Special Purpose Vehicles (SPV), i.e., Taas India Pte Ltd (TIPL) and Vankor India Pte Ltd (VIPL), which hold 29.9% and 23.9% in the Russian entities LLC Taas-Yuryakh Neftegazodobycha ("TYNGD") and JSC Vankorneft, respectively. BISPL further holds 50% stake in Urja Bharat Pte Ltd (UBPL) in Singapore, which is the Operator of Onshore Block 1 concession in Abu Dhabi with 100% PI. The subsidiary in India, viz., Bharat PetroResources JPDA Limited, held PI in a block in Timor Leste, which has been relinquished.

cUrreNt stAtUs oF bLocKs oVerseAs Assets russia

BPRL, along with Oil India Limited (OIL) and Indian Oil Corporation Ltd (IOCL), jointly referred to as the Indian Consortium (IC), holds 23.9% stake in JSC Vankorneft; and 29.9% stake in LLC TYNGD through joint ventures Vankor India Pte Ltd (VIPL) and Taas India Pte Ltd (TIPL), respectively, both incorporated in Singapore.

In JSC Vankorneft, LLC Vostok holds 50.1% shares, ONGC Videsh Ltd (OVL) holds 26% shares and the IC holds the remaining 23.9%, through their respective subsidiary companies. During the year 2022-23, JSC Vankorneft produced approximately 9.47 MMT of oil and 5.15 billion cubic metres (BCM) of gas (BPRLs effective share being 0.75 MMT of oil and 0.41 BCM of gas). During the year, the IC received a dividend amounting to Rub 5.87 billion, i.e., approximately USD 97 million (with BPRLs effective share being approximately USD 32 million).

In TYNGD, Rosneft holds 50.1% shares, BP holds 20% shares and the IC holds the remaining 29.9% shares through their respective subsidiary companies. During the year 2022-23, TYNGD produced approximately 5.05

MMT of oil and 4.07 BCM of gas (BPRLs effective share being 0.50 MMT of oil and 0.40 BCM of gas). During the year, the IC received dividend amounting to Rub 17.7 billion, i.e., approximately USD 291 million (with BPRLs effective share being approximately USD 96 million).

United Arab emirates (UAe) Lower Zakum concession

The Lower Zakum field, located in Abu Dhabi Offshore shallow waters, has been producing crude oil since 1967. The Indian consortium comprising BPRL, along with OVL and IOCL, acquired 10% stake in the offshore producing oil asset, Lower Zakum Concession in Abu Dhabi, UAE, in March 2018. The Indian Consortiums share in the Lower Zakum Concession is held through Falcon Oil & Gas B.V., an SPV incorporated in the Netherlands, in which BPRL holds 30% shares through its step-down subsidiary BPRL International Ventures B.V in the Netherlands. The Concession has a term of 40 years, effective from March 9, 2018. The other shareholders in the Lower Zakum Concession are Abu Dhabi National Oil Company (60%), JODCO (10%, a wholly owned subsidiary of Japans INPEX Corporation), China National Petroleum Corporation (10%), Italys ENI (5%) and Frances Total S.A. (5%).

During the year, BPCL group refineries lifted approximately 4.4 million barrels (0.58 MMT) of Das

Blend Crude Oil as its equity oil from the Lower Zakum Concession. During the year, BPRLs Netherlands subsidiary received dividends of USD 26.28 million from Falcon Oil & Gas BV.

onshore block 1 concession

BPRL, jointly with Indian Oil Corporation Ltd. (IOCL), was awarded the Onshore Block 1 Concession as Operator with 100% PI in March 2019 under Abu Dhabi 2018 Block Bid Round. The block is held by Urja Bharat Pte Ltd, a 50:50 joint venture company of wholly owned subsidiaries (WOS) of BPRL and IOCL, incorporated in Singapore. Onshore Block 1 covers an area of 6,162 sq. km located in the Al Dhafra region around Ruwais City and the refining complex, including the coastal region to the west. There are two existing undeveloped discoveries in the area, named Ruwais and Mirfa, in addition to available prospects/leads for exploration.

The drilling and testing of appraisal wells in Ruwais Discovery have been completed, which has established the presence of hydrocarbons. Field development plan for Ruwais discovery is submitted for regulatory approval and discussions are ongoing with ADNOC for early monetization of the Ruwais field. In the remaining part of the block area, drilling of exploratory wells has been completed and testing of wells is progressing.

mozambique

BPRL, through its Netherlands based step-down subsidiary company BPRL Ventures Mozambique B.V., holds 10% PI in Offshore Area 1, Rovuma Basin Concession in Mozambique. Total E&P Mozambique

Area 1 Limitada, a wholly owned step-down subsidiary of Total S.A. is the Operator with 26.5% PI, and the other consortium partners are Mitsui E&P Mozambique Area 1 Limited (20%), ENH Rovuma ?rea Um, S.A. (15%), ONGC Videsh Rovuma Limited (10%), Beas Rovuma Energy Mozambique Limited (10%) and PTTEP Mozambique Area 1 Limited (8.5%).

Following the discovery of vast quantities of natural gas in Rovuma Offshore Area 1 off the coast of northern Mozambique, Area 1 consortium partners announced Final Investment Decision (FID) on June 18, 2019 to develop a 2x6.56 MMTPA-Train onshore initial LNG project for monetization of the gas discovered from offshore Golfinho-Atum discovery area.

After FID, while the project was on schedule and within budget till March 2021, due to the security incidents around the Afungi Project Site during end – March 2021, the consortium has declared force majeure. All construction contracts, LNG SPAs and Project Financing

(approximately USD 15.4 billion) are preserved currently. The Government of Mozambique is working towards the reestablishment of peace and resolving the security situation. Mozambican military along with Joint forces from Rwanda and Southern African Development Community (SADC) continue their operations in the region.

During the year 2022-23, in order to contribute to the stabilization of the livelihoods of the communities in Northern Cabo Delgado, the project developed a comprehensive socio-economic initiative called Pamoja Tunaweza, aimed at generating revenues for the communities, developing the local economy, preserving the biodiversity and promoting Human Rights. More than

40 programs have been developed through experienced implementing partners.

There has been an improvement in the security situation and the project is expected to restart after satisfactory assurances regarding the security in Cabo Delgado province.

brazil

IBV Brasil Petroleo Limitada (IBV), incorporated in Brazil, a joint venture company of BPRL Ventures BV with 61.36% shareholding, and Videocon Energy Brazil Ltd (VEBL), step-down subsidiaries of BPRL and Videocon

Industries Limited, respectively, currently holds PI in five deep-water blocks in three concessions.

sergipe Alagoas (bm-seAL-11) concession

The Concession currently consists of two blocks SEAL-M-426 and SEAL-M-349 and Petrobras is the Operator with 60% PI, while IBV holds the remaining 40% PI. The Operator, on behalf of the Concessionaires, submitted the Field Development Plans for the fields to ANP in November 2022. Currently, procurement activities are ongoing for the Floating Production Storage & Offloading (FPSO) unit and other long-lead items.

campos (bm-c-30) concession

In BM-C-30 Concession, IBV has 35.714% PI and PetroRio Jaguar Petroleo Ltda is the Operator with 64.286% PI. Arbitration proceedings are ongoing at International Chamber of Commerce (ICC), London with the Operator (Petrorio) under the Joint Operating Agreement, and at ICC New York with Ovintiv under the Share Sale Agreement.

Potiguar (bm-Pot-16) concession

The Operator has approached the regulator ANP for relinquishment of the blocks and formal approval is awaited. The Operator in this Concession is Petrobras with 30% stake and other partners are IBV (20% PI), Petrogal (20% PI) and BP (20% PI).

ndonesia

BPRL has a PI of 16.2%, held through its step-down subsidiary BPRL Ventures Indonesia BV. PT Pertamina Hulu Energi Nunukan Company (PHENC), a wholly owned subsidiary of Pertamina, the National Oil Company of Indonesia, has 83.8% PI in the consortium and is the Operator. The Production Sharing Contract (PSC) was signed on December 12, 2004 and is valid for a period of 30 years, i.e., till 2034. The block is located in shallow waters offshore of Bunyu Island in Tarakan basin of North Kalimantan province.

The minimum work programme committed as per the

PSC under the exploration phase has been completed.

The results of the appraisal drilling program, geological, geophysical and reservoir studies along with an independent reserve certification has indicated substantial reduction in the recoverable oil and gas resource volume from Parang discovery. Various options are being evaluated to decide the way forward in the block.

bLocKs iN iNDiA A. operated blocks i. cb-oNN-2010/8 (onshore cambay basin, Gujarat)

Under NELP-IX Bid Round, a BPRL-led consortium was awarded one on-land block CB-ONN-2010/8, in Cambay basin. BPRL is the Lead Operator with 25% PI and the other consortium partners are GAIL (India) Ltd - 25% PI (Jt. Operator), Engineers India Ltd (EIL) - 20% PI, BF Infrastructure Ltd (BFIL) - 20% PI and Monnet Ispat & Energy Ltd (MIEL) - 10% PI. Due to MIELs cash call payment default under the Joint Operating Agreement (JOA), the other non-defaulting parties have agreed to distribute MIELs 10% PI in proportion to their existing share.

During the initial exploration period, two discoveries were made, and the Field Development Plan was approved by Directorate General of Hydrocarbons (DGH). However, in view of unviable project economics, BPRL submitted relinquishment proposal to DGH, which is under approval. Miscellaneous closure activities such as Plugging and Abandonment (P&A) and Site Restoration activities for four dry wells have been completed. P&A and Site Restoration activities for two discovery wells shall be completed after obtaining approval from DGH for relinquishment.

ii. CB-ONHP-2017/9 (Onshore Cambay Basin, Gujarat)

The block CB-ONHP-2017/9 in Cambay basin, Gujarat was awarded to BPRL under Open Acreage Licensing Policy (OALP) Bid Round-I, and the Revenue Sharing Contract (RSC) of the block was signed with Govt. of India on October 1, 2018. BPRL is the lead Operator in the block with PI of 60% and ONGC is the partner with 40% PI. Based on integrated interpretation on seismic and well data of existing wells in the block, three prospective locations were released. Currently, land acquisition process, statutory approvals and tendering activities are in progress to complete Committed Work Program in the block.

iii. cY/oNDsF/Karaikal/2016 (onshore cauvery basin, tamil Nadu)

BPRL was awarded the Karaikal Contract Area in the Discovered Small Field (DSF) Bid Round of 2016 with 100% PI. The PML for the block is awaited from State Govt. of Tamil Nadu, and support of DGH has been sought to expedite the same.

b. Non-operated blocks i. cY-oNN-2002/2 (madanam Field, onshore cauvery basin, tamil Nadu)

BPRL has a PI of 40% in an On-land block CY-ONN-2002/2 in Cauvery basin with ONGC being theOperator with a 60% PI.

The block currently has 6 producing wells with a combined monthly average oil production of 5,838 tonnes (BPRL share: 2,335 tonnes). During the year 2022-23, 70,064 tonnes of oil (BPRL share: 28,025 tonnes) has been produced from the block.

ii. cY-oNN-2004/2 (onshore cauvery basin, tamil Nadu)

BPRL has a PI of 20% in this block, and ONGC with a PI of 80% is the Operator of the block.

The FDP was approved on July 13, 2017 and the first two development wells drilled did not yield the desired results, due to which additional studies are being carried out.

iii. NeLP iX blocks a) cb-oNN-2010/11 (onshore cambay basin, Gujarat)

CB-ONN-2010/11, an on-land block was awarded by

Government of India to a Consortium consisting of GAIL, BPRL, EIL, BFIL and MIEL. GAIL, with 25% PI, is the Lead Operator of the block. BPRL with 25% PI is the Joint Operator of the block.

Due to MIELs cash call payment default under the Joint Operating Agreement (JOA), the other non-defaulting parties have agreed to distribute MIELs 15% PI in proportion to their existing share, for which a request has been submitted to DGH for approval.

The Field Development Plan (FDP) of Galiyana1 was approved on February 10, 2020. The construction of surface facilities and workover job were completed in the year 2022-23. The field was put on production on March 18, 2023. Currently, the field

340 barrels of crude oil per month.

b) AA-oNN-2010/3 (Assam Arakan basin, Assam)

AA-ONN-2010/3, an On-land block was awarded by

Government of India to a consortium consisting of OIL, ONGC and BPRL. OIL with 40% PI is the Operator of the block. BPRL has 20% PI and ONGC holds 40 % PI in the block.

Due to complications during drilling the MWP commitment well SDYA-1, it was plugged and abandoned. Operator has requested DGH/MoPNG for a three-year extension for drilling replacement well in the block.

iv. oALP i blocks

a) AA-ONHP-2017/12 (Assam Arakan Basin, Assam and Arunachal Pradesh)

Government of India awarded the block AA-

ONHP-2017/12 to OIL under OALP I Bid Round. BPRL farmed into the block with a PI of 10% in December 2019. The other consortium partners of the block are OIL (60% PI) as Operator, IOCL (20% PI) and Numaligarh

Refineries Limited (10% PI). The total block is 489 sq. km in area, of which 488.50 sq. km is in Assam and 0.50 sq. km is in Arunachal Pradesh.

The exploration period is till November 23, 2023. Operator intends to apply for one year extension in the block. NOC from Aviation Research Center granted for one MWP well. Operator will be approaching DGH for reduction in MWP.

blocks relinquished During the Year

CY-ONHP-2017/1 (Cauvery Basin, Tamil Nadu)

Government of India awarded the block CY-ONHP-2017/1 to ONGC under OALP 1 Bid Round. BPRL farmed into the blocks with PI of 40% in December 2019. Out of the total block area of 731 sq. km, 579 sq. km is onshore area and the remaining 152 sq. km is offshore area. Petroleum

Exploration Licence (PEL) has been granted for the offshore area.

Government of Tamil Nadu, vide its extraordinary Gazette notification dated February 24, 2020 has prohibited exploration, drilling and extraction of oil and natural gas, including coal-bed methane, shale gas and other similar hydrocarbons, from Nagapattinam district and part of Cuddalore district. The major part of the entire envisaged prospective area of the block falls within the Nagapattinam district and part of Cuddalore District. As the offshore area was interpreted not to have prospectivity, the block was relinquished.

Business Process Excellence Centre (Bpec)

Business Process Excellence Centre (BPEC) is a centralized setup which handles various business processes covering processing of non-hydrocarbon vendor payments, accounts receivable, payroll and GST. Over the last few years, various allied processes associated with the above standard process, viz. customer account clearing, collection management, dispute management, etc. have also migrated into BPEC. This centralized setup, with standardized processes and automation at its core, has enhanced internal controls, enabled efficiencies, improved the working capital management - all resulting in optimum utilization of resources and transactional excellence across the Company. The centralization of these core processes and digital interfaces is also enabling meaningful insights through data analytics. During the year, BPEC processed 5.48 lakh vendor invoices amounting to 26,065 crore, with substantial number of invoices processed within 15 days of its receipt at BPEC. The Digital Invoice Management (DIM) initiative enhanced value, by which 82% of vendor invoices were received digitally through the Vendor Invoice Management portal. This green initiative has resulted in transparency and reduction in the processing time.

Recognizing the vital role that Micro, Small and Medium Enterprises (MSMEs) play in socio-economic growth, employment opportunities, eradication of poverty, etc. a separate cell has been created for MSMEs to ensure uninterrupted and prompt payments to them. Further, the Company has implemented the Trade Receivables Discounting System (TReDS), which is a digital platform to support MSMEs to get their invoices financed at a competitive rate facilitating timely payment through an auction where multiple registered financiers can participate. During the year 2022-23, MSMEs discounted

4,236 invoices valued at 318 crore, as against 263 crore during the year 2021-22.

Also, consequent to the merger of Bharat Oman Refineries

Limited (BORL) and Bharat Gas Resources Limited (BGRL) with BPCL in the year 2022-23, processes of these entities were also migrated into BPEC, bringing synergy and thereby enhancing value to the Company..

N i terNAL coNtroL sYstems AND their ADeQUAcY

The Company has a robust internal control system (including Internal Financial Controls over Financial Reporting) that supports timely preparation of reliable financial and management information as well as efficiency, reliability, and completeness of accounting records. The internal control system ensures compliance to all applicable laws and regulations, facilitates optimal resource utilisation, and safeguards the Companys assets and investor interests. To ensure the orderly and efficient conduct, the Company has a clearly defined organisational structure, well-documented decision rights, and comprehensive manuals and operating procedures for its business units and service entities. Internal control system, such as Internal Financial Controls over Financial Reporting, are continuously examined, and any necessary changes are made to bring them into compliance with evolving business and legislative requirements.

The Companys state-of-the-art ERP solutions (SAP) and Business Information Warehouse has inbuilt controls including the authorization controls. This further enhances controls and ensures seamless exchange of information with access controls. The SAP systems provide an audit trail of the transactions. To reduce the risk of fraud, the Company maintains anti-fraud and whistle-blower policies.

The Companys independent Audit function comprises of professionally qualified individuals from the accounting, engineering, and IT domains, who review the business processes and controls to determine the effectiveness of the internal control system through risk focused audits. The Internal Audit Department plans the annual audit plan to cover various aspects of the business. The Statutory/Government Auditors evaluate the efficiency of internal financial controls based on the audit reports published by the Internal Audit Department. Key business process changes are reviewed by respective internal team before implementation.

The Audit Committee/Board regularly reviews significant findings of the Internal Audit Department covering operational, financial, and other areas and provides guidance on internal controls.

DetAiLs oF siGNiFicANt chANGes iN KeY FiNANciAL rAtios

s No. ratio type Unit 2022-23 2021-22 Variation (in %) explanation for changes
1 Debtors Turnover Ratio No. of Days 5.63 7.42 -24.06%
2 Inventory Turnover Ratio No. of Days 27.52 29.17 -5.65%
3 Interest Coverage Ratio (Profit Before interest and Tax + Depreciation)/Finance cost Times 3.99 13.76 -71.00% Reduction in Interest Coverage Ratio in the current year is mainly on account of decrease in Profit coupled with increase in Finance Cost
4 Current Ratio Times 0.77 0.81 -4.25%
5 Debt-Equity Ratio Times 0.69 0.65 6.15%
6 Operating Profit Margin Ratio (OPM) OPM = (Profit before exceptional Items and Tax minus Other Income)/Sales % 0.26 2.64 -90.10% Decrease in Operating Profit Margin Ratio in the current year is mainly due to decrease in the marketing margin coupled with increase in turnover
7 Net Profit Margin Ratio % 0.35 2.63 -86.66% Reduction in Net Profit Margin Ratio is mainly on account of decrease in Profit after Tax
8 Return on Net Worth % 3.60 22.00 -83.65% Reduction in Return on Net Worth is mainly on account of decrease in Profit after Tax

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  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

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RISK DISCLOSURE ON DERIVATIVES
  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
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