Indian refiners raise rates as Covid curbs ease: Update

  • Market: Crude oil, Oil products
  • 29/06/21

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.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
19/06/24

Nigeria tightens sulphur cap on oil product imports

Nigeria tightens sulphur cap on oil product imports

London, 19 June (Argus) — Nigeria has reduced the sulphur cap on refined oil product imports to 50ppm, according to market participants. The new cap — which took effect at the start of June, according to sources — marks a sharp reduction from a previous 200ppm limit set on 1 March . Sources suggest there was no widespread information campaign to make market participants aware of the specification change. The lower sulphur limit comes as Nigeria braces for the imminent ramp-up of 10ppm ultra-low sulphur diesel production at the country's 650,000 b/d Dangote refinery, followed by 10ppm gasoline production in mid-July. A lower sulphur content ceiling for imports will likely favour the sale of diesel, jet fuel and gasoline from the Dangote refinery to the local Nigerian market, which until March was able to import high-sulphur products upwards of 2,000ppm. Some 10ppm diesel has already been delivered to Nigeria since the start of June, as traders have struggled to source any available 50ppm diesel to import into the country under the new cap, one trader said. Despite the regulatory change, one local Nigerian marketer told Argus that a 30,000t cargo of 150ppm gasoline is discharging in the country on 19 June, raising questions around enforcement of the new cap. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

Iran's crude output at 3.6mn b/d, says oil minister


19/06/24
News
19/06/24

Iran's crude output at 3.6mn b/d, says oil minister

Dubai, 19 June (Argus) — Iran's crude output has risen to around 3.6mn b/d, according to the country's oil minister Javad Owji. This puts production at the highest level since sanctions were reimposed on Tehran's oil sector in 2018 following Washington's exit from the Iran nuclear deal. "Our oil production, which was 2.1mn b/d at the beginning of our time in office [in September 2021], has reached 3.6mn b/d," Owji said today during a presentation to the Iranian parliament. "During these three years… with round-the-clock work and effort, production of crude oil in the country rose by more than 1.4mn b/d," he said. "A major part of that increase came through signing investment contracts with [domestic] contractors." When the administration of Iran's late president Ebrahim Raisi assumed office, Iran's crude exports were at their lowest level in a decade, Owji added. Owji's current production figure is 200,000 b/d above where he put Iranian crude output in November last year . At that time, he predicted a rise to 3.6mn b/d by March 2024, continuing an upward trend since the back end of 2022. In July last year, Owji put output at just shy of 3.1mn b/d. His latest assessment is around 300,000 b/d above Argus' estimate for both April and May . The last time Argus estimated Iranian crude output as high as 3.6mn b/d was back in July 2018. The rebound in production has been driven by Iran's ability to boost its exports. Iranian exports began picking up in the months after US president Joe Biden assumed office in January 2021, reaching around 700,000-750,000 b/d compared with 500,000 b/d before the US election. It was not until the second half of 2022 that exports took another leap, to 1mn b/d and beyond. Iran's crude exports have averaged just shy of 1.6mn b/d since the start of this year, according to data from Vortexa, up from 1.42mn b/d in 2023 and 990,000 b/d in 2022. The reasons for the revival in exports have been the subject of much debate, with some attributing it to more relaxed enforcement of sanctions by the US and others saying it has more to do with Iran scaling up its methods of circumvention. The debate even became a point of contention among Iranian presidential candidates this week as they gear up for the country's election on 28 June. Conservative candidates and even regime hardliners largely attribute the boost in exports to methods of circumvention. "Constructive and extensive relations with the world are required for [improving] the economy. This happened during the tenure of martyr Raisi. Now the US foreign secretary must explain to the [US] Senate why Iran can sell 2mn b/d of oil now," former nuclear negotiator Saeed Jalili said on 15 June. Raisi administration officials have repeatedly pointed to their techniques to get around sanctions and "energy diplomacy" as reasons for Iran's success in raising exports. But the reformist camp refutes those claims, with former foreign minister Javad Zarif rejecting the conservative narrative on state television on 18 June. "They [hardliners] said 'we taught them how to sell oil.' Not at all," Zarif said. "When Biden took office, his policy was to loosen the screw. Wait until Trump returns to office, and then we can see what [the hardliners] say." By Bachar Halabi and Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

South Korea buys less UAE naphtha in May


19/06/24
News
19/06/24

South Korea buys less UAE naphtha in May

Singapore, 19 June (Argus) — South Korea's naphtha imports from the UAE fell to a two-year low in May, following reduced output by Abu Dhabi's state-owned Adnoc. South Korea imported 97,500 b/d from the UAE, a 23pc drop from the previous month and down by 24pc from a year earlier, according to GTT customs data. This was the lowest level since 83,800 b/d in May 2022. This was in sharp contrast to imports in this year's first quarter that averaged 205,000 b/d. South Korea imported 192,000 b/d of naphtha from the UAE in 2023. Adnoc was expected to reduce its naphtha production and exports following a change in its domestic crude slate. Adnoc had started to divert its medium sour crude grade Upper Zakum to its Ruwais refinery complex as part of the company's $3.5bn crude flexibility project, which is designed to free up more of the UAE's lighter, sweeter Murban grade for export. The switch in Ruwais' crude appetite reduces naphtha production, as the yield of naphtha from Upper Zakum crude is less than its Murban grade, said market participants. The actual loss of supplies cannot be confirmed but it is forecast to be around 900,000-1.2mn t/yr (22,000-29,000 b/d), said two petrochemical producers that are also buyers of naphtha from Adnoc. There is also a South Korean customs investigation under way to ensure cracker operators are not importing oil from sanctioned countries such as Russia. The investigation has reduced "but not stopped" imports of naphtha from commercial storage tanks in places like the UAE and Singapore, said a South Korean trader. Adnoc is the main supplier but there are other smaller UAE suppliers in Fujairah and Hamriyah. Some Korean cracker operators are avoiding commercial tank naphtha because of the customs investigations, another South Korean trader said. Qatar and Kuwait were the main beneficiaries with South Korea's shift from UAE naphtha. South Korea's imports in May from Qatar and Kuwait rose by 89pc and 45pc month-on-month respectively. Imports from Qatar were 128,500 b/d, while shipments from Kuwait totalled 105,000 b/d. South Korea had imported 50,000 b/d from Qatar and 54,000 b/d from Kuwait in this year's first quarter. By Aldric Chew Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Malaysia's Lotte Titan yet to produce on-spec aromatics


19/06/24
News
19/06/24

Malaysia's Lotte Titan yet to produce on-spec aromatics

Singapore, 19 June (Argus) — Malaysian petrochemical producer Lotte Titan has yet to produce on-specification aromatics after its aromatics unit in Pasir Gudang restarted on 10 June. The unit, which can produce up to 110,000 t/yr of benzene and 60,000 t/yr of toluene, continues to face technical issues after experiencing delays to its restart date earlier this month, with flaring being observed at the Pasir Gudang complex. The company now aims to produce on-specification aromatics products by the end of the week. The associated No.2 naphtha cracker, which also restarted on 10 June, is producing on-specification olefins, although production rates remain unstable. The No.2 cracker has a nameplate capacity of 430,000 t/yr of ethylene and 220,000 t/yr of propylene. By Joonlei Lee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Phillips 66 targets high Rodeo runs


18/06/24
News
18/06/24

Phillips 66 targets high Rodeo runs

Houston, 18 June (Argus) — Low-carbon feedstock and sustainable aviation fuel (SAF) opportunities will support strong run rates from Phillips 66's converted renewables plant in Rodeo, California, this year, chief executive Mark Lashier said today. The outlook heralded a high output from the converted Rodeo refinery ramping up toward 50,000 b/d of renewable diesel capacity by the end of this month, despite historic lows in state and federal incentives for the fuel. "Where we are today, economically, yes, the credits are kind of compressed, but feedstocks are lower than we anticipated as well," Lashier told the JP Morgan Energy, Power & Renewables conference. "We still see good economic incentives to run and run full." The US independent refiner had started up pre-treatment units at the plant to begin processing lower-carbon feedstocks for renewable diesel in July and August, he said, consistent with previous guidance. "That's how you really make money in these assets — you get the lowest-carbon intensity feedstocks at the best value and process them through the hydrocrackers," Lashier said. " The facility would also bring online 10,000 b/d of renewable jet fuel blendstock production supporting 20,000 b/d of blended sustainable aviation fuel, a product Phillips 66 had not targeted in the initial concept for the site, he said. Both state and federal incentives to supply renewable diesel along the west coast have fallen as the fuel inundates those markets. Renewable diesel alone made up roughly 57pc of California's liquid diesel pool and generated 40pc of the Low Carbon Fuel Standard (LCFS) credits in the state's market-based transportation fuel carbon reduction program by the end of last year. The supply of lower-carbon fuels, led by renewable diesel, to the west coast LCFS markets have outstripped demand for deficit-generating petroleum fuels and led to growing reserves of available credits for compliance. California amassed more than 23mn metric tonnes of credits by the end of last year — more than enough left over after satisfying all of the new deficits generated last year to offset them a second time. The volume of unused credits has sent their price tumbling to nine-year lows. Oregon and Washington credits, which are needed for similar but distinct programs in those states, have similarly dropped as renewable diesel supplies spread out along the west coast. Gasoline consumption generates almost all new deficits in California. Year-over-year demand for the fuel nationwide has fallen below expectations this spring, Lashier said. "We are not really seeing things pick up like a lot of us expected to," he said. Lower-income customers struggling with higher costs on everything they buy may have forgone vacations, he said. The drop in broader buying power meanwhile had rippled through diesel consumption, he said. "As we move towards more expensive energy sources, that's the part of the economy that gets squeezed as well," Lashier said. "Hopefully we move through that and reverse and that part of the economy can pick up as well as the higher end of the economy." By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more