The Hindu Business Line : BPCL ready for forward trading

"We are ready with everything - from policy approval and command structure to training of our team. We are watching the market conditions. We will conduct a transaction as soon as an opportunity arises in the next month or so," the official said.

The company was among the first Indian oil companies to study risk management options. BPCL obtained its first RBI approval to use hedging as a risk management tool in September 2002. However, it was only earlier this year that BPCL appointed the global consultant firm Accenture as its advisors to put in place elaborate risk management systems.

BPCL has strengthened its 22-member team that conducts physical trades in crude oil and products imports and exports. It will now have 36 people working on forward trading, the official said.

The company has been increasing its dependence on imported crude ever since the sector was deregulated in April 2002, especially since ONGC revised its crude prices and announced its own ambitions to market petroleum products.

Imported crude formed only 28 per cent of the total throughput in BPCL's Trombay refinery in 1999-2000. By 2001-02, the ratio had gone up to 41 per cent. The company was using 48 per cent imported crude by 2003-04.

With international crude prices reaching 30-year highs since April this year, there has been a renewed interest among Indian companies for hedging risks in buying and selling crude and petroleum products.