As of May, the company’s throughput was at 55 per cent of its rated capacity. It rose to 78 per cent by May-end. “Capacity utilisation at the refineries had dropped to almost 39 per cent in the beginning of April,” the company said.
On its planned capital expenditure, IOC said, the company was on track to spend the approved Rs 26,143 crore in the financial year 2020-21 (FY21).
However, not all oil companies
are continuing with their capital expenditure plans. Bharat Petroleum Corporation (BPCL), for instance, is looking to spend Rs 8,000 crore to Rs 8,500 crore — lower than its usual Rs 11,000-crore capex per year.
BPCL scaled down its capex in the wake of reduced project activity during the lockdown and lower profitability.
According a Reuters report on Wednesday, Hindustan Petroleum Corporation (HPCL) has pushed back the completion of its Vizag refinery expansion to at least October-November due to labour shortage and monsoon.
For IOC, demand for products in the market has increased, along with strategic product exports.
Product-wise, IOC said, growth of petrol demand was higher at about 70 per cent and diesel at 59 per cent in May, compared to April this year.
Demand for petroleum products like petrol and diesel fell to as low as 30 per cent of the usual demand in April owing to a nationwide lockdown which curtailed movement of people.
A year-on-year comparison, however, still shows a weak demand trend for these products.
“Compared to May 2019, or the early months of the current year prior to the lockdown, the growth percentage has still to catch up by 24 per cent to 26 per cent for all products. In the case of liquefied petroleum gas (LPG), with IOC rolling out about 2,500,000 cylinder refills a day, the average backlog is less than a day,” the company said.
IOC said demand for aviation turbine fuel (ATF) is still low, at about 24 per cent of the normal demand level. “The demand for black oils and specialty products like fuel oil, bitumen, petcoke and sulphur has also shown marked improvement, facilitating increase of refineries’ throughput,” IOC said.
The overall demand destruction so far is expected to further impact margins for Indian refiners.
Rating agency CRISIL, in an April report, said gross refining margins in the first quarter (April-June) of FY21 are likely to plunge because of demand destruction.
CARE Ratings — in an Oil and Gas FY20 update and FY21 outlook report, released this month — said consumption of crude oil
is set to fall by 7.3 per cent during FY21. This is because processing of crude oil
undertaken by refiners is likely to fall in light of subdued demand for consumption of petro products, given the sharp fall in demand in the domestic and global economy.
The report added uncertainly as to how long the pandemic will last may also add to the curtailment of refinery activities.
“Indian refineries usually operate more than their listed nameplate capacity but given the current situation most of them have declared force majeure and are not operating as well,” the report said.