NEW DELHI : India’s largest refiner, Indian Oil Corp. Ltd (IOC), has slashed its refining capacity by 25% to 30%, following a sharp drop in India’s petroleum product demand because of the Covid-19 pandemic.
Transportation demand has come down with citizens cooped indoors, though there has been an increase in the demand for domestic cooking gas against the backdrop of the three-week nationwide lockdown in the world’s largest such exercise aimed at stemming the spread of the virus.
“In the wake of the Covid-19 outbreak in the country, the demand for petroleum products such as petrol, diesel, fuel oil and bitumen have reduced substantially. The demand for ATF (aviation turbine fuel) has also come down sharply because of the suspension of flights," state-run IOC said on Wednesday.
The development is important as India is a key refining hub in Asia, with an installed capacity of more than 249.36 million tonnes per annum (mtpa) through 23 refineries. Large Indian refiners include IOC, Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd, Nayara Energy Ltd (formerly Essar Oil) and Reliance Industries Ltd.
“Keeping this in view, Indian Oil has regulated crude oil throughput at most of its refineries by 25% to 30%. Upliftment of finished products from them in the last one week has helped upcountry bulk storage locations of the corporation build up their stocks for future readiness once the countrywide lockdown is lifted and demand picks up again," the company said.
India is the world’s third-largest crude buyer and the fourth-largest liquefied natural gas importer. The virus outbreak may be a blessing in disguise for India’s energy security efforts, with the Centre exploring ways to leverage the depressed prices to fill its strategic crude oil reserves, Mint reported earlier. Goldman Sachs expects crude prices to touch $20 per barrel.
“In the midst of a reduction in demand for major petro products, there has been an increase in demand for LPG. To meet the rising demand for LPG, Indian Oil is taking steps to increase LPG production in its major refineries by optimizing operations, improving LPG yield in LPG producing units like FCC/Indmax. Bottling plant operations and LPG refill deliveries are being streamlined accordingly," the company said.
“Adequate stocks are available and there is no need for panic booking by LPG customers," it said.
“In the wake of the countrywide lockdown, the Corporation is addressing several issues related to movement and turnaround time of POL tank-trucks; restricted mobility and attendance of workforce at LPG distributorships and fuel stations; and restricted business hours of fuel stations at a few places," IOC said.
With the world’s largest crude oil producer Saudi Aramco planning to boost supplies to 12.3 million barrels per day in April, and Russia lifting all production curbs against the backdrop of the pandemic, global oil markets have turned on their head. A case in point are the Chinese state-run firms, which are willing to offload their equity oil to Indian firms.
“The supply surge unleashed by the Saudi-Russia price war will benefit India as a major crude importer and this is an opportune time for additional filling of SPR caverns due to weak oil prices in the near term," S&P Platts Analytics said in a report.