Hindustan Oil Exploration shares dive 8% after HPCL flags crude quality issues

Shares of Hindustan Oil Exploration Company Ltd (HOECL) plunged in Tuesday's trade after Hindustan Petroleum Corporation Ltd (HPCL) reported operational problems at its Mumbai refinery linked to crude oil supplied by HOECL. The stock fell 7.66 per cent to hit a low of Rs 149.55 on BSE.

HPCL, in an exchange filing, said its Mumbai refinery encountered operational issues, including corrosion in downstream units, after processing crude oil sourced from HOECL’s B-80 Mumbai Offshore oil field. The PSU noted that it had procured 54.6 thousand metric tonnes (TMT) of crude oil from the B-80 field through an auction dated August 25, 2025.

"A part of the said crude oil received subsequently was processed in October 2025 and found to be causing operational issues, including corrosion in downstream units, yielding suboptimal outputs and turned down production," HPCL stated.

The company attributed the problems to very high salt and chloride contents in the crude, which it said were beyond contractual specifications. HPCL added that it has taken up the matter with the supplier and will pursue claims and damages in line with contractual terms, while taking steps to restore normal operations at the refinery.

Responding to the development, HOECL clarified that it had entered into a crude oil sales agreement with HPCL on September 3, 2025, and completed the offtake and custody transfer on September 25, 2025, for a volume of about 54.6 TMT. The company said the indicative quality in the contract was based on an independent laboratory crude assay dated July 12, 2025.

HOECL stated that HPCL had collected its own sample at the offloading port at the time of offtake, which was later analysed by HPCL. The company acknowledged HPCL's claim regarding high chloride content but maintained that the matter was under examination and that no loss, damage, or claim was attributable to HOECL under the agreement.

It added that discussions would be held with HPCL to redress the issue, noting that previous supplies from the same block had not faced any quality concerns.