Gas, petrol demand boosts India’s refinery utilisation

NEW DELHI:  India’s oil and gas refineries have shrugged off their summer lows, with several hitting maximum, or close to maximum, capacity utilisation over the past few weeks, according to industry reports and preliminary market data.

According to sources, an oil ministry survey made at the end of November indicated that the average capacity utilisation of all types of refineries reached 87 per cent during October. While last month saw fuel demand around 3.3 per cent lower than November 2019, market data for the first two weeks of December indicate that India’s petrol and LPG sales are around 10 per cent higher than the previous year. This trend is likely to further push capacity utilisations.

Headwinds include the still-lagging demand for diesel, with demand during the first two weeks of December around 5 per cent lower than the previous year. According to a report from S&P, India’s top refiners have begun operating close to 100 per cent in November.

The country’s largest refiner Indian Oil Corporation (IOCL), for instance, has been running at full capacity since the first two weeks of November, while Mangalore Refinery and Petrochemicals Ltd has hit 90 per cent capacity utilisation after South Indian retail markets began chugging along during the festive season. BPCL’s Kochi and Mumbai capacities are also at top capacity as are HPCL’s, while the CPCL refinery is running at 95 per cent.

“The high refinery utilisations are  because of an increasing trend of personal transport. Post the Covid outbreak, more people have begun using personal transport, mostly petrol-driven. Public transport and freight have seen the opposite effect, which is why diesel is lagging. Gas demand, like LPG and CNG, have also risen,” said a senior OMC executive.