Violence threatens Assam energy economy; oil fields, gas supply impacted

Supply to refineries, chemical and fertiliser industries in the region may be affected

Protests against the Citizenship (Amendment) Bill in Assam are threatening to derail the economy of Assam, including the energy sector, with production shut at Oil India (OIL) fields for the past four days and output from Assam Gas Company getting affected. 
 

Even work on the upgrade to Euro VI at the Numaligarh Refinery (NRL) has been hampered. S K Barua, managing director of the Numaligarh Refinery, told Business Standard the refinery had gone for a planned shutdown for making the refinery ready for the conversion to Euro VI from November 15 to December 15. 

“That is not happening now, as our staff is unable to reach the refinery due to the blockade,” he said.

The Assam Chamber of Commerce said the daily loss due to the shutdown of wholesale markets is affecting the lifeline of the Northeast. Prices of food and other essential items have shot up.

“Our fields are shut for the past four days. This has led to a cumulative loss of 5,000 kilo litres in terms of oil output, which has an economic impact of Rs 8-10 crore,” said an OIL spokesperson. 

The company is suffering losses on account of drilling equipment that has been hired but not used. Since it has old fields, a halt in production will affect reaching production optimisation once operations restart, said an official.

According to media reports, at least 7,000 protestors blocked work, staging protests in front of the industrial area gate of Oil India. An Oil and Natural Gas Corporation (ONGC) official said the company’s operations, too, stopped because of the unrest. According to an estimate, the energy majors put together have around 4.3 million tonnes (MT) of annual crude oil production and 3.2 billion cubic metres (bcm) of gas production in the Northeast. 

This may affect supply to refineries, and chemicals and fertiliser industries in the region. The Northeast has four refineries, including three of Indian Oil Corporation and the Numaligarh refinery, a subsidiary of Bharat Petroleum Corporation.

IndianOil has refineries in Guwahati, Digboi, and Bongaigaon in Assam. Production in these refineries is “down” because IndianOil is unable to produce more due to stoppage of tanker movements. 

“Our storage tanks are full. Where will we store the products, unless tanker movement happens,” said an official. All the four refineries put together processed around 7 MT crude oil in the last financial year.

The stoppage of oil and gas production may lead to a cascading effect on other sectors. There is fear that supply by Assam Gas Company may also get affected, causing concern on the gas supply to more than 400 tea gardens. Industry sources have said that another major impact will be on the supply of cooking gas in the region. 

“We already have a backlog of 10-15 days for LPG, as transportation is becoming an issue. This protest may start affecting kitchens soon,” Barua added. If the transport of imported LPG from Haldia in West Bengal, too, gets affected, there may be a further rise in the backlog.

The Assam Chamber of Commerce said all the major wholesale markets supplying to the entire Northeast were closed for four days now. 

“On a daily basis, each of these major eight markets is suffering a loss of Rs 8-10 crore. In addition, prices of onion have reportedly touched Rs 180-200 a kg now,” said Sisir Dev Kalita, secretary general, Assam Chamber of Commerce.

Despite curfew and flag march by the army in Guwahati, Tinsukia, Jorhat, and Dibrugarh districts over the past few days, protestors hit the streets and blocked national highways at various places, even on Friday.