Indian Oil Corporation, an oil and gas company, is reportedly boosting its operations across the refineries owing to the rising demand for fuel from April lows, in India. The company targets to increase utilization by 80% by the end of May, as compared to 45% at the beginning of April.
The refineries of Indian Oil currently operate at nearly 60% of the design capacities, which the company plans to boost to over 80% of the capacity. The company reportedly stated that its refineries were operating at full scale prior to the coronavirus lockdown. However, in the 1st week of April, the company limited its throughputs, bringing the operations down of the design capacities to over 45%, in the wake of product containment issues due to the steep decline in demand. Despite this low capacity utilization, it has the ability to increase the oil refining throughputs once the demand rises.
Demand for diesel and gasoline in India, the world’s 3rd-largest oil importer, was estimated to have dropped by nearly 60% annually, following the coronavirus lockdown that was imposed nationwide at the end of March to contain the spread of coronavirus. The nationwide lockdown has been extended till mid-May.
Due to these factors, including various struggles to curb the virus spread amid the lockdown, the demand for fuel declined significantly in April. Several refineries have struggled with storing the refined and crude products in the available, low storage capacity as well as reducing the run rates. However, the recent rise in the crude processing throughput at the Indian Oil may be indicating the end of the low fuel demand in India.
Worldwide demand for gasoline has also been scaling up in the last 2 weeks, as some European countries and the U.S. states are beginning to ease the coronavirus lockdowns. This has led to the belief that rising oil demand from road transportation could significantly help recover the global demand for oil.