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India is quickly running out of space to store a growing reserve of fuel as all possible containers, including those from 66,000 pumping stations across the country, threaten to overflow.
Refineries in India, the world’s third largest consumer of oil, have filled 95% of approximately 85 million barrels of fuel storage capacity, according to officials at three state processors. The virus-inflicted blockade of more than a billion people has whetted India’s appetite for key transportation fuels as travel and movement remain restricted across large swaths of the world’s second most populous country.
Options for hiding unwanted barrels are rapidly running out globally. The world’s largest independent oil storage company, Royal Vopak NV, said it has leased almost all of the space available to store crude and refined fuels due to over-expansion that caused oil prices to be negative for the first time in history.
“Demand does not appear to be returning quickly,” said R. Ramachandran, director of refineries at Bharat Petroleum Corp. “Major consumer centers such as Mumbai, Delhi and Calcutta are now in trouble due to the increase in coronavirus cases” as the nation struggles to contain the spread pandemic.
In addition to BPCL, major state refineries and fuel retailers include Hindustan Petroleum Corp and Indian Oil Corp. Spokesmen for the three companies did not immediately respond to emails and calls seeking comment Wednesday.
Indian refineries cut foreclosures to less than 50% on some units to counter a record drop in fuel demand in April, as the world’s largest blockade emptied highways, halted flights and halted most economic activities. Consumption of diesel and gasoline, which account for more than half of India’s oil demand, decreased by more than 60% in the first half of April. Prime Minister Narendra Modi extended the blockade until May 3 and has dashed hopes of a strong recovery.
In addition to retail stations, Indian refineries also store petroleum fuels in more than 300 depots and terminals, as well as 250 aviation fuel stations. More than two thirds of the total capacity is used to store diesel and another 20% for gasoline.
Overflowing tanks have forced Indian refineries to sell very fast loads of petroleum products, and some tenders offer loads in about a week, compared to the normal load range of three to four weeks ahead.
State processors aside, the country’s largest private refiner, Reliance Industries Ltd., is likely shipping cargoes to leased storage outside India, according to industry consultant FGE, which estimates India’s total demand for petroleum products. it will drop by 1.4 million barrels per day this current quarter the year before.
State giant Indian Oil Corp. has cut execution rates at its 10 refineries by almost half. Other refineries are likely to operate at minimum utilization rates of around 35%, said Senthil Kumaran, FGE’s oil markets consultant.
“Both national oil companies and private refineries are dramatically reducing oil yield as they soon see product tanks filling to the brim,” said Kumaran.
This story has been published from a cable agency source without modification to the text.
