COVID-19 pushes oil boom in India with oil refineries operating at maximum efficiency

As per Bloomberg Quint, three state-run processors including Indian Oil Corp, the nation’s top refiner, are currently functioning at close to 100% capacity or higher, as disclosed by people with knowledge of the matter. The strong demand for gasoline and liquefied petroleum gas has pushed this speedy recovery as many are choosing to drive their own cars overtaking public transport and cooking at home to avoid restaurant delivery.

The situation in the world’s No. 2 oil market is in lieu with a massive boomerang in top consumer China and underscores how Asian markets are leading crude’s rally even as vaccines offer hope for a wider revival. The uneven distribution of India’s recovery is similar to its neighbour’s revival — gasoline usage in both nations shot up when people returned to work — while demand for diesel in the still-faltering Asian economy delayed that of China.

In the first half of this month, Indian gasoline and LPG sales stepped up 10% than the same time last year, according to preliminary data compiled by the nation’s top three fuel retailers. The sale of diesel, the country’s most popular fuel, dropped down in comparison with year-ago figures by 5% while the use of aviation fuel was halved.

The strong gasoline demand and seemingly “endless” thirst for LPG have prompted the Mangalore Refinery and Petrochemicals Limited to run its plant in southern India at close to 100%, with runs expected to rise above-installed capacity in January and through the first quarter, Managing Director M. Venkatesh said. The Mangalore plant will increase intake to about 1.3 million tons of crude in December, up from 1 million in November, he said. Crude runs are predicted to rise to 1.4 million in January and February.

Many Indian refiners can hike processing rates above capacity due to debottlenecking and expansion projects. Strong automobile sales and a boost in industrial and construction activity are also expected to heave up demand, said Hindustan Petroleum Corp. Chairman Mukesh Kumar Surana. Refinery runs at HPCL are currently at over 100%, with petrol sales escalating at a pace of about 5%.

At Indian oil, crude throughput soared to 100% of designed capacity in November from 88% a month before and 55% in early-May, the company said in a statement. Overall consumption of petroleum products was almost at pre-COVID-19 levels last month with gasoline and LPG sales reporting a year-on-year increase.

Unlike China, where the demand recovery resulted from a near-complete eradication of COVID-19, India’s plants are returning to full capacity before the disease is driven out. While daily cases are declining, restrictions on public transport and travel continue.

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