Reliance's Jamnagar refinery cuts crude processing by 24% as demand slumps

Joining public sector oil firms in cutting run-rate to align production, Reliance Industries Ltd has slashed crude oil processing at its exports-only refinery at Jamnagar in Gujarat in March by close to one-fourth as coronavirus induces a slump in fuel consumption.

RIL's 35.2 million tonnes a year SEZ refinery processed 2.51 million tonnes of crude oil into fuel in March, a drop of 24 per cent year-on-year, according to data released by the Ministry of Petroleum and Natural Gas on Thursday. However, the company's older refinery at the same site processed 5.7 per cent more crude at 3.01 million tonnes.

Refineries started to cut down on crude processing only in the latter half of March after travel restrictions first imposed by states followed by a nationwide lockdown beginning March 25 evaporated fuel demand. Fuel demand in nations where Indian refiners exported products like diesel and petrol has also stalled following the outbreak of the pandemic.

Public sector refineries in India processed almost 4 per cent less fuel in March. Private sector Nayara Energy's Vadinar refinery in Gujarat too cut crude processing by a similar proportion. The data showed that RIL's SEZ refinery operated at 83.98 per cent capacity in March, as compared to 110.51 per cent capacity utilisation in the same month a year back. Its old refinery, that caters predominately to the domestic market, operated at 101.67 per cent of its 33 million tonnes a year capacity.

PSU refineries operated at 101 per cent of their installed capacity as they used cheap crude to fill depots and storage bunks.

RIL's twin refineries at Jamnagar produced 4.16 per cent more petroleum products in March at 7.3 million tonnes. Nayara Energy produced 3.33 per cent fewer petroleum products at 1.64 million tonnes while PSU refineries produced almost 2 per cent less product at 11.95 million tonnes.

Overall, Indian refineries processed 5.7 per cent less crude oil at 21.2 million tonnes in March and produced 22.9 million tonnes of petroleum products.

In March 2020, the country's petroleum product consumption fell 17.79 per cent to 16.08 million tonnes. Diesel, the most consumed fuel in the country, saw demand contract by 24.23 per cent to 5.65 million tonnes. This is the biggest fall in diesel consumption the country has recorded as most trucks went off-road and railways stopped plying trains.

Petrol sales dropped 16.37 per cent to 2.15 million tonnes, while ATF consumption fell 32.4 per cent to 4,84,000 tonnes. However, LPG sales rose 1.9 per cent to 2.3 million tonnes in March. April consumption is likely to be worse with petrol sales collapsing 64 per cent, while diesel slumping by 61 per cent. Aviation turbine fuel (ATF) consumption dropped by 94 per cent as most airlines have stopped flying.

Prime Minister Narendra Modi had announced a 21-day lockdown beginning March 25, shutting offices and factories, barring those involved in essential services. Also, flights were suspended, trains stopped plying, vehicles went off the road and cargo movement stopped as most people were asked to stay home to help check the spread of coronavirus. The lockdown has been extended till May 3.