Crude oil refinery output falls 11% in FY21 on Covid-led demand destruction

The refinery output is in line with sustained pressure on the Indian economy as lockdowns affected consumption patterns
India’s crude oil refinery output fell by 11.22 per cent in financial year 2020-2021 as the first wave of Covid-19 and subsequent demand destruction due to lockdowns pulled down domestic consumption. According to data shared by the Ministry of Petroleum and Natural Gas, cumulative production of petroleum products by refineries during April-March 2020-21 stood at 229.22 million tonnes (mt). This stood at 258.18 mt in the April-March 2019-20 period.

Domestic crude oil and natural gas production also took a hit. But this is largely in line with the broader trend of declining hydrocarbon output every year. The lower crude oil and natural gas output is mostly attributed to ageing fields that continually produce less output. For most months of the year, upstream oil companies also cited lack of demand from their consumers for curtailing production.

Cumulative crude oil production during April-March, 2020-21 stood at 30.49 mt, this is 5.22 per cent lower 32.17 mt than production during corresponding period of last year. Cumulative natural gas production during this period stood at 28.67 billion standard cubic meters (bcm), 8.06 per cent down from 31.18 bcm production reported in 2019-20.

A Mobile Offshore Processing Unit (MOPU) that has been stuck at GPC yard Abu Dhabi since June 2020 is also cited as the reason for lack of production from the WO16 cluster by Oil and Natural Gas Corporation (ONGC). The protests in North Eastern Areas after the Baghjan gas well blowout is also a highlighted as reason for delays in asset monetisation by Oil India (OIL).

In March 2021, natural gas production stood at 2.68 bcm, 11.11 per cent higher than March 2020. During the same month, crude oil production stood at 2.61 mt, 3.13 per cent lower than March 2020. Production of petroleum Products by Oil’s Refineries was reported at 22.4 mt, 0.52 per cent lower when compared with March 2020.

The refinery output is in line with sustained pressure on the Indian economy as lockdowns affected consumption patterns. India recorded a nine per cent decline in total fuel consumption in financial year 2020-21 compared with the previous year, the first recorded overall decline in the country’s fuel consumption. According to data shared by the Petroleum Planning and Analysis Cell, India’s total fuel consumption stood at 194.63 mt in 2020-21, down from 214.13 mt a year ago. This was a four-year low.  

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