India’s largest refiner, Indian Oil Corp. Ltd (IOC) said that the demand for petroleum products is picking up, with the country slowing opening up for business.
The state owned refiner that had slashed its refining capacity to 45%, following a sharp drop in India’s petroleum product demand because of the Covid-19 pandemic, said that its refineries are “operating at about 60% of their design capacities with plans to scale up to 80% of the design levels by the end of the month."
Energy consumption, especially electricity and refinery products, is typically linked to overall demand in an economy. The development is also 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. “With the demand for petroleum products gradually picking up, Indian Oil has re-started several process units at its refineries that were down due to the lockdown," IOC said in a statement.
Transportation demand has come down with citizens cooped indoors, though there has been an increase in the demand for domestic cooking gas during the nationwide lockdown in the world’s largest such exercise aimed at stemming the spread of the virus.
India’s 40-day long lockdown resulted in a 30% fall in the country's energy demand, according to Paris-based International Energy Agency (IEA). India, the world’s third-largest crude buyer leveraged the depressed energy price scenario to fill up its strategic crude oil reserves that are expected to be full by mid-May.
“Even though the nationwide lockdown had severely impacted the entire value chain of petroleum products, IndianOil has kept all its refinery units on ‘hot’ standby to be ready for scale-up to higher throughputs once the product demand picks up," the statement added.
This comes in the backdrop of extremely low global crude oil prices, with Brent crude hitting a 21-year low, and US oil futures slumping into negative for the first time in history. The prices since then have recovered.
“The Corporation’s refineries were operating full throttle before the COVID lockdown but had to curtail throughputs and bring operations down to nearly 45% of design capacities by the first week of Apr. ’20 in view of product containment issues forced by a steep drop in demand.
Despite substantial reduction in sale of petrol, diesel, ATF, fuel oil, bitumen, etc., there was a spike in demand for LPG cooking gas and the refineries responded to the challenge by improving LPG yield from units like FCC/IndMax, etc," the statement said.