Covid Impact on Refineries in India
Covid-19 pandemic has severely affected the global economy and financial markets. Even though its impact on key end-user segments has significantly reduced the demand for fuel products in India; the country’s ability to swiftly adapt to challenges has ensured business continuity.
With lockdown being re-imposed in many states to combat the spread of coronavirus pandemic and maintenance shutdown at many refineries, average capacity utilization of refineries in India declined to 76% in August from 83% in July, according to the latest survey of the oil ministry. The run rate was 104% in the year-ago period.
Refineries like Indian Oil Corp's Paradip, Reliance's export-oriented unit, and Hindustan Petroleum Corp. Ltd's Vizag refinery carried out maintenance programs at a time when retail demand is low due to the pandemic impact.
IOC recorded an average 67% combined run for all its nine standalone refineries compared with 102% in the year-ago period and 91% in July. Bharat Petroleum Corp. Ltd. registered 75.5% run in August compared with 118% in the year-ago period and 83% in July. HPCL recorded a run rate of 98% in August as compared with 117% in the year-ago period and 101% in July.
In the joint-venture refineries category, overall runs stood at 96% in August compared with 102% in the year-ago period and 89% in July. Private refineries recorded a 79% run in August compared with 104% a year-ago and 78% in July.
Though the projects have been delayed by several months due to the lockdown to combat the pandemic, Indian refining companies are likely to remain focused on key growth projects to deliver strong future growth.
HPCL's $3.2bn project to expand Vizag's capacity to 300,000 barrels per day (bpd) is in advance stage of completion. The refiner has also started construction work at its 180,000 bpd inland refinery at Barmer, Rajasthan, and will complete the project in 2023. The 40,000 bpd expansion of the Mumbai refinery to 190,000 bpd will be completed in 2021.
IOC's refinery in Gujarat will have the largest capacity among its portfolio of refineries by 2022-23. The company plans to raise the capacity to 360,000 bpd by March 2023 from the current 275,000 bpd.Reliance Industries Ltd. has received clearance to raise the capacity of its export-oriented Jamnagar refinery on the west coast of India by 17% to 41 million mt (820,000 bpd) by 2030, while the expansion plan to raise the capacity of the Numaligarh refinery to 9 million mt/year from 3 million mt/year has been approved by the Indian cabinet.
Among high-value proposed new projects are Chennai Petroleum Corp Ltd’s 180,000 bpd refinery at Cauvery Basin at Nagapattinam in Tamil Nadu, Haldia Petrochemicals Ltd's $4.05bn integrated refinery and petrochemicals facility in Balasore, Ratnagiri Refinery & Petrochemicals Ltd’s 1.2 mbpd refinery in the Raigad district, and IOC, HPCL and BPCL’s JV refinery project in Maharashtra.
The situation is gradually getting back to normalcy and the demand impact from lockdowns is poised to improve further in months to come.
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