Asia’s no. 2 fuel guzzler eyes more exports as Covid hits demand

Oil refiners in virus-battered India may decide to ramp up fuel exports as lockdowns across the country cut into local consumption, while a recovery in global demand lifts profits from potential overseas sales.

State-owned Indian Oil Corp. and Bharat Petroleum Corp. are weighing the option of raising oil-product exports against cutting run rates, according to company officials who asked not to be identified. That’s after record infections in India prompted curfews that kept people off the streets and hurt consumption. Outside India, major economies such as the U.S. and China saw a surge in mobility that has lifted the use of gasoline and diesel.

Global oil demand has been on the road to recovery due to the roll-out of vaccines. The overall improvement, however, has been uneven as a deadly second wave rips through some parts of the world. This week, the OPEC producers’ cartel acknowledged the need for a “cautious and steadfast approach” in managing supplies amid a wider rebound, although it cautioned that the recovery remains at risk from virus outbreaks in India and Brazil.

This week, IOC released a rare tender to sell gasoline in a move seen as indicative of weaker local demand, while contemplating a separate tender to sell diesel in the coming days, a company official said. The refiner was also looking to keep run rates largely stable and lift fuel exports, citing healthy profits from overseas sales after accounting for costs, the person added.

Overall crude-processing rates at IOC’s refineries were at about 93% this week after a power disruption at Barauni refinery caused runs to slip. Full capacity is expected at the affected plant in seven to ten days.

BPCL was also looking to gauge demand and selling prices for cargoes as it considered offering some gasoline and diesel, a company official said. Both companies didn’t rule out a reduction in run rates should export markets deteriorate over time. Oil products from India are typically sold to consumers across Africa, Europe, North America and parts of Asia.

Meanwhile, Mangalore Refinery and Petrochemicals Ltd., which cut run rate at its refinery in southern India this month, plans to boost overseas sales as some fuels struggle to find domestic buyers, a company official said.

India’s fuel exports have yet to show an uptick so far this month as scheduled maintenance closures at some plants crimped supplies. Diesel and gasoil outflows in the first 26 days of this month reached 2.16 million tons, data from ship-tracking firm Vortexa showed, lower than exports in the same period from January to March. Overseas sales of gasoline and blending components were also lower in April at 1.13 million tons, falling almost 20% month-on-month.