Oil Refiners Cut Output, Imports As COVID-19 Hits Demand

The top state oil refiners are reducing processing runs and crude imports as the surging COVID-19 pandemic has cut fuel consumption, leading to higher product stockpiles at the plants, company officials told Reuters on Tuesday. Indian Oil Corp, the country's biggest refiner, has reduced runs to an average of between 85 per cent and 88 per cent of processing capacity, a company official said, adding runs could be cut further as its plants at Gujarat, Mathura and Panipat are facing problems storing bitumen and sulphur.

IOC's refineries were operating at about 95 per cent of their capacity in late April. "We do not anticipate that our crude processing would be reduced to last year's level of 65 per cent-70 per cent as inter-state vehicle movement is still there ... (the) economy is functioning," he said.

Several states across India are under lockdown as the coronavirus crisis showed scant sign of easing on Tuesday, with a seven-day average of new cases at a record high, although the government of India, the world's third-largest oil importer, and consumer, has not implemented a full lockdown.

State-run Bharat Petroleum Corp has 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 Corp, expects India's fuel consumption in May to fall by five per cent from 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 per cent of March and we expect May could be about five per cent 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 bpd Mumbai refinery for maintenance and upgrade.

State-run Mangalore Refinery and Petrochemicals Ltd's is 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 constitute 40 per cent of local refiners output, another BPCL official said. No immediate response was available from the companies.