Indian refiners raise rates as Covid curbs ease: Update

Adds comment from Pradhan in paragraph 6, demand figures in paragraphs 9-10

Indian state-controlled refiners have continued to increase run rates as many parts of the country slowly emerge from strict lockdowns following a slump in new Covid-19 cases.

Many states have eased lockdowns with the rate of daily new cases of around 50,000 falling from a record of more than 400,000 cases in early May. But restrictions remain in place on increased concerns about the Delta Plus coronavirus variant.

The country's biggest state-controlled refiner IOC is operating its 1.34mn b/d of capacity at 88-90pc, a source familiar with plant operations said. The rate is at least three percentage points higher than earlier this month.

Bharat Petroleum (BPCL) has been operating its 240,000 b/d Mumbai and 310,000 b/d Kochi refineries at 85-90pc capacity, while run rates at fellow state-controlled refiner MRPL's 300,000 b/d Mangalore refinery have increased by 10 percentage points to 85pc, sources said.

MRPL will continue to operate at around 85pc capacity in July, another source close to the company told Argus.

Indian oil demand has shown signs of a resurgence in the last three weeks as economic activity picks up and is likely to return to pre-pandemic levels by the end of this year, oil minister Dharmendra Pradhan said at a BNEF summit in Delhi today.

The increase in run rates comes despite higher retail motor fuel prices as refiners anticipate that demand will recover in the coming months. The sentiment was reflected in a pick-up in driving activity this month and higher diesel and gasoline consumption in the first half of June.

Retail gasoline prices are at 104.90 rupees/litre ($1.41/l) in Mumbai today after rising past the three-digit mark for the first time earlier this month, while diesel is being sold at Rs96.72/l. Prices have gone up in line with higher global crude oil prices and domestic taxes, which make up 60pc of the retail prices.

Indian diesel consumption rose to 1.23mn b/d in the first half of June from 1.1mn b/d a month earlier, although it is still well down on levels of 1.57mn b/d in the first half of June 2019, before the pandemic, according to data from state-controlled refiners that account for around 90pc of the country's fuel sales.

Gasoline demand reached 510,000 b/d in the first half of this month, up from 450,000 b/d but below 643,000 b/d during the same period in 2019.

By Sathya Narayanan, Sarah Giam and S Dinakar