Fall in Demand for Fuel Prompts Leading State-Refiners to Reduce Oil Processing Runs Amidst Lockdown
Tumbling demand for fuel as an outcome of lockdown, a preventive measure to contain the spread of Covid-19, has led to a significant reduction in crude oil processing runs. Major state refiners and retailers such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL), correspond to around 60 per cent of India’s refining capacity. However, persistent decline in consumption of fuels as an effect of imposed restrictions on domestic flights, trains, metro services and local transport vehicles has led to adverse reduction in crude processing runs as inventories already hold immense number of unsold products. Consequently, one of the leading refiners, Indian Oil Corporation having a subsidiary at Chennai Petrochemicals underwent a production cut by an average of 15 to 20 per cent. In addition, BPCL is anticipated to undergo a significant reduction in its oil processing runs on further decline in fuel consumption in the coming weeks. Head of BPCL’s refineries stated that if lockdown persists, there might be chances of double-digit decline in demand for petrol, diesel and jet fuel in March which can cause a major contraction in Country’s economy. On the contrary, HPCL’s Vizag refinery has been running on its full capacity but, with unprecedented fall in overall demand for fuel, the situation is likely to take a toll very soon.