Indian refiners are scaling up crude processing as local fuel demand begins to improve with a gradual easing of the lockdown aimed at stemming the spread of coronavirus, company officials said. Indian Oil Corp, the country's top refiner, has raised crude processing at its plants to 60% capacity and aims to reach 80% by the end of this month, it said in a statement on Monday.
State refiners, which together own about 60 percent of India's 5 million barrel per day (bpd) refining capacity, had to reduce the amount of crude they process as storage facilities filled up with unsold products due to a slump in demand. "With the demand for petroleum products gradually picking up, Indian Oil Corp has re-started several process units at its refineries that were down due to the lockdown," IOC said.
IOC curtailed its crude processing to an average 45% by the first week of April as the nation wide lockdown from March 25 had curbed mobility and grounded economic activity to a halt. The lockdown is set to last until at least May 17. India's fuel demand dipped about 46% in April from a year earlier, its lowest since 2007. Oil Minister Dharemendra Pradhan last week said India's fuel demand growth could return to normal by mid-May.
IOC has re-started several units at its refineries and resumed operations at its Panipat naphtha cracker in northern India, expecting an improvement in petrochemical demand in the coming days. State refiners IOC, Hindustan Petroleum Corp and Bharat Petroleum Corp operate about 90% percent of retail fuel pumps in India.
These companies also buy products from standalone refiners like Mangalore Refinery Petrochemical Crop. and private companies Reliance Industries Ltd and Nayara Energy to meet local demand. MRPL's Southern India-based refinery is operating at about 50% capacity, an improvement from about 42% seen in April, a company official said.
"Further improvement in our crude processing depend on purchases by fuel retailers as exports market is also not attractive," said the official, who did not wish to be identified. India's second biggest state-refiner BPCL is operating its Mumbai refinery at about 70% capacity compared to 50% in April, its head of refineries R Ramachandran said. The company's crude runs at its four refineries average about 52% as some of its refiners are still operating at lower rates, he said.
"We are seeing that our product inventory is gradually reducing which is a good sign," he said.