Oil Refiners Bet On Exports To Overcome Falling Domestic Demand
An oil refinery in India. (Photographer: Adeel Halim/Bloomberg)

Oil Refiners Bet On Exports To Overcome Falling Domestic Demand

Indian fuel refiners and retailers look to tap the export market amid falling domestic consumption and mobility as cities across Asia’s third-largest economy impose lockdowns to curb the second wave of Covid-19 pandemic.

That comes as overall fuel consumption in India fell to a seven-month low of 17.01 million metric tonnes in April 2021, according to data provided by the Petroleum Planning and Analysis Cell. Barring furnace oil or low sulphur-heavy stock, all fuel categories witnessed a month-on-month slump in consumption.

Demand for the key transportation fuels—petroleum and diesel—dropped by 13% and 7.5% month-on-month in April, the data showed.

However, the build-up of inventories and economic recovery in the U.S., Europe and China presents export opportunities. India, Bloomberg reported citing consultants from the Facts Global Energy Group, will boost petrol and gas oil exports in May and June amid improved margins. While gas oil exports will be directed mostly towards Africa, petrol will find demand in the Atlantic Basin region, the FGE consultant was quoted as saying.

Data from the PPAC bears out this trend. India’s petroleum product exports in March stood at a 15-month high of 6.08 MMT. The exports grew 2.6% year-on-year and 46.6% over a month ago. Petrol and diesel alone accounted for over 71% of total exports.

Also read: IEA Says Oil Glut Gone Even as Demand Forecast Cut on India

Overall refinery utilisation rate in India in March was 98.9%, according to data with the Oil Ministry, with state-run and private refineries clocking rates of 106.1% and 86.99%, respectively.

However, Bharat Petroleum Corp. and Indian Oil Corp., Bloomberg reported, are cutting refining rate amid falling demand—but not to the extent seen a year ago. The impact of falling demand, FGE estimates, won’t be significant amid export opportunities.

Vortexa, an oil and gas analytics firm, agrees. It expects India’s petrol exports to remain elevated as the pandemic threatens the nation’s demand recovery. India’s petrol surplus has pushed exports to a 15-month high of 4 lakh barrels per day in March and more gasoline cargoes were seen headed to Asia and Africa, it said, adding exports to Indonesia rose to 30,000 barrels per day in the first three months of the year.

Company-Wise Export Figures

Indian Oil’s petroleum product exports rose 4.5% year-on-year to 1.61 million metric tonnes in the quarter ended December, the highest among Indian oil marketers. Bharat Petroleum’s exports declined 81% over last year to 0.25 MMT, whereas Hindustan Petroleum Corp.’s exports fell 55% year-on-year to 0.37 MMT.

Reliance Industries Ltd.’s exports, too, fell over 41% year-on-year to Rs 31,559 crore in the quarter ended December. A quarter later, exports grew 1.5% over last year to Rs 46,406 crore, according to company statements.

Also read: India’s Fuel Prices Seen Rising Despite Falling Demand

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.