Indian Oil Refinery Rates Touch 100 pc Since February, Fuel Demand Spikes Market Sentiments

The country’s largest fuel retailer, Indian Oil Corp. (IOC) revealed on Thursday that its refineries are operating at their full capacities with all of its 9 plants operating at 100% operating efficiency for the first time in November since February, to meet the rising domestic fuel demand. The recovery in economic indicators such as electricity, GST collections and railway freight have further raised the sentiments. The good news comes amid economic fragility that India is subjected to, post the outbreak of COVID-19 pandemic.

IOC’s capacity utilization contracted to around 35% when the nation entered world’s strictest lockdown in March, causing a deep dive in the demand for petroleum products on account of the travel and logistic restrictions. However, looking at the sharp rebound in the demand patterns, it has gradually raised the throughput of its refineries to the maximum capacity in the past six months. Referring a recent interview published in a popular Indian journal, company’s chairman S.M. Vaidya pointed towards Indian economy’s early signs of revival as the world gets closer to the covid-19 vaccine roll-out, thereby turning the growth prospects favorable.

“We see a rapid V-shaped recovery in the overall consumption of petroleum products", stated the personnel. Along with its subsidiary Chennai Petroleum Corp., IOC holds one-third share in the 5 million barrels-per-day refining capacity in India. In November, the company sold 1.06 million tonnes of gasoline, 4% higher than same period last year. For LPG, the demand has gone up by approximately 1.4% to 1.09 million tonnes as compared to the corresponding period last year. However, the company’s diesel sales in November dropped by 9% than previous year, while jet fuel sales spiraled down by about 45% as air travel restrictions persisted. However, sales of diesel and aviation turbine fuel (ATF) in November rose by 2% and 4% from October.

As per Chemanalyst,” Indian refiners are continuously ramping up their throughput rates as the government tries to pull India out from a recession through its consistent energy-driven policies. India's per-capita consumption of petrochemicals accounts for a tenth of the global average, thereby providing a wide scope for the sectoral growth in the post-pandemic era.”