Refiners to halve crude import

Sliding demand results in a huge increase in inventories

Indian refiners — from Indian Oil Corporation (IOCL) to Hindustan Petroleum Corporation Limited (HPCL) — are looking to cut down their crude oil imports for April by as much as 50%, even as the oil firms have offers to buy crude at $20 a barrel or even less.

The reason? All their storage capacities are full and refining need not be done at full capacity due to the over- 50% fall in petrol and diesel sales and the nil sales of aviation turbine fuel (ATF).

Confirming the development, R. Ramachandran, director-refineries, BPCL, told The Hindu, “We are looking at cancelling [or] deferment of April crude oil supplies. Our refineries are now operating at 80%, which will be reduced further. Hence, we have to cancel, postpone or sell the cargoes.”

IOCL has already written to west Asian suppliers citing ‘force majeure’ clause as its petrol sales have fallen 54% and diesel sales by 63% after the government announced a nationwide lockdown to contain the spread of COVID-19.

IOCL, which owns about a third of India’s 5 million barrels per day (bpd) refining capacity, has reduced its refining capacity by a third as demand for petroleum products has declined substantially. The demand for ATF has also come down sharply due to suspension of flights.

HPCL and Mangalore Refineries and Petrochemicals Limited have also reduced their refining capacities and cut crude oil imports.

“We are getting deep discounts on price of $20 per barrel, but we can import only if we can store the crude. So, we are deferring crude oil imports now,” said a director of an oil marketing company.

According to IOCL, the uplift of finished products from refineries in the last one week has helped upcountry bulk storage locations of the corporation build up stocks for future-readiness, once the lockdown is lifted and the demand picks up again.

“The corporation is keeping a close watch on global cues and the changing market scenario, and initiating actions accordingly,” said an IOCL statement.

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Printable version | Jul 7, 2020 7:00:25 PM |

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