New Delhi: With local lockdowns and ‘corona curfew’ clamped in several states, increased prices, and the resultant low demand for fuel, India’s state-owned oil refiners are reducing production as their storage capacity are saturating, media reported on Tuesday.
India’s top state oil refiners are reducing processing runs and crude imports as the surging second wave of the Covid-19 pandemic have cut fuel consumption, leading to higher product stockpiles at the plants.
Indian Oil Corporation Ltd (IOCL), the country’s biggest refiner, has reduced runs to an average of between 85% and 88% of processing capacity and could do more cuts as its plants at Gujarat, Mathura and Panipat are facing problems storing bitumen and sulfur, reports said.
IOCL’s refineries were operating at about 95% of their capacity in late April.
“We do not anticipate that our crude processing would be reduced to last year’s level of 65%-70% as inter-state vehicle movement is still there … and the economy is functioning,” an official said.
Several cities and towns across states in India are under lockdown as the coronavirus crisis continued apace, with a seven-day average of new cases at a record high of 3.90 lakh and 3,900 deaths on Tuesday morning, although the Government of India, the world’s third-largest oil importer, and consumer, has not implemented a full, nationwide lockdown.
Another state-run refiner Bharat Petroleum Corporation Ltd (BPCL), has also cut its crude imports by 1 million barrels in May and will reduce purchases by 2 million barrels in June, a company official said.
M.K. Surana, Chairman of Hindustan Petroleum Corporation Ltd (HPCL) was quoted as saying that India’s fuel consumption in May could fall by 5% compared to April as the impact on driving and industrial production is not as severe as last year.
“This time it is not a full lockdown like last time,” he said.
“Sales in April was about 90% of March and we expect May could be about 5% lower than April.”
HPCL has no immediate plan to cut crude runs, he said, although the company has shut some units at its 150,000 barrels per day (BPD) Mumbai refinery for maintenance and upgrade.
State-run Mangalore Refinery and Petrochemicals Ltd are already operating its 300,000 BPD complex at lower rates because of maintenance at a 60,000 BPD crude unit and some secondary units, a company official said.
“The crude and other units will start operations from the end of this month, we will decide on the future course after seeing local demand,” he said.
To ease storage problems, India could export some diesel, which constitutes 40% of local refiners’ output, a BPCL official said.
(VP)