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India Oil Corp., the country’s biggest oil refiner, is planning a major though temporary refining capacity reduction this year for maintenance, unnamed sources told Reuters. The reduction totals around 600,000 bpd and most of the maintenance operations will take place over the summer.
IOC will shut down the crude oil refining unit of its 300,000-bpd Panipat refinery for two weeks in July, taking off 150,000 bpd of refining capacity. Another 120,000 bpd in capacity will be shut down for five weeks in July-August at the Barauni refinery, and the 160,000-bpd Mathura refinery will close doors for maintenance for 15 days in August. Towards the end of the year, IOC will also shut down the 150,000-bpd Haldia refinery for about three weeks.
In addition to these cuts, the refiner, which already suspended operations at its 274,000-bpd Koyali refinery from the start of this month, will do the same with the oil processing unit of the 300,000-bpd Paradip plant, the sources said.
The large-scale maintenance plan will likely prompt an increase in fuel imports as in the current fiscal year India’s fuel demand was projected by the Oil Ministry in January to hit 200 million tons, or 1.466 billion barrels. This would be the highest demand level since 2010/2011.
Over the first quarter of the year demand for fuels actually dropped, on the back of a nationwide demonetization program, but in April it returned to growth, by 3.3 percent to 16.79 million tons, or 123.07 million barrels.
India is what a lot of oil bulls are pinning their long-term hopes on as the most oil-hungry nation in the coming years. Importing as much as 80 percent of the crude it uses, India is seen to be the fastest-growing consumer of the commodity in the years to 2040, according to the International Energy Agency.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.