India hasn’t put the pandemic behind it, but its oil refineries have. Three state-run processors including Indian Oil Corp., the nation’s top refiner, are currently operating at close to 100% capacity or higher, according to people with knowledge of the matter. Behind the recovery is strong demand for gasoline and liquefied petroleum gas as many opt to drive their own cars overtaking public transport and cook at home to avoid restaurants.
In the first-half of this month, Indian gasoline and LPG sales were 10% higher 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, lagged year-ago figures by 5% while use of aviation fuel was halved.
The thrumming refineries are a stark contrast to the situation in July when lockdowns destroyed demand and prompted a diversion of excess fuels to onshore tanks, filling them to the brim.
The strong gasoline demand and seemingly “endless” thirst for LPG have been enough for Mangalore Refinery and Petrochemicals Ltd. to operate its plant in southern India at close to 100%, with runs expected to rise above nameplate capacity in January and through the first quarter, Managing Director M. Venkatesh said.
Many Indian refiners can raise processing rates above capacity due to debottlenecking and expansion projects.
The Mangalore plant will process 1.3 million tons of crude in December, up from 1 million in November, he said. Crude runs are expected to rise to 1.4 million in January and February.
Strong automobile sales and an uptick in industrial and construction activity are also expected to lift demand, said Hindustan Petroleum Corp. Chairman Mukesh Kumar Surana. Refinery runs at HPCL are currently at over 100%, with petrol sales growing at a pace of about 5%.
At Indian oil, crude throughput rose 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 levels last month with gasoline and LPG sales posting a year-on-year increase.
Buying interest from processors in India and China has lifted physical oil differentials across the world, even as demand from Europe, the U.S. and other Asian nations such as South Korea struggled due to lockdowns prompted by new waves of infections.