As Oil futures touched an unprecedented negative pricing on Monday over low demand and scarce storage, closer home Indian refiners are facing a similar issue with their refined products, forcing companies like Bharat Petroleum Corporation (BPCL) to float some products in the Arabian Sea.
This is not the first time oil companies have used floating storage, however, officials point out using this option due to a large scale slump in demand and fully utilized tankages is a first.
"We are floating products like motor spirit and reformates," said a senior BPCL official. "These are in chartered ships, floating in the Arabian Sea. They will either go to exports or be brought back for internal consumption depending on demand." The official pegged the volumes to be lower at a few thousand tonnes of different products.
Since the nationwide lockdown was announced in March, India's fuel consumption has taken a major hit. Most industry executives said demand for petrol and diesel fell to a third of the normal, while demand for aviation turbine fuel (ATF) is now negligible, following the suspension of international and domestic flights.
The decline in demand has forced oil companies to run refineries at lower utilisation levels. "Right now, the utilisation for refineries is at 50 to 60 per cent," the official quoted earlier in the story said. Industry executives remain hopeful with that factory and agricultural work now resuming, demand for petrol and diesel will improve.