India's nationwide lockdown pummeled demand for transportation and industrial fuels by as much as 70%, forcing a reduction in crude processing and oil imports by refiners.
India, the third-biggest oil consumer, expects fuel demand to return to normal earlier than projections by the International Energy Agency and OPEC. “If you look at the trend of the past few weeks, I’m confident that by the end of second quarter, demand will be as usual,” India’s Oil Minister Dharmendra Pradhan said at the BloombergNEF Summit, referring to the quarter ending September. “At the end of June, we have already achieved 85% of our demand compared to June 2019.”
The world’s biggest lockdown put in place on March 25 in India pummeled demand for transportation and industrial fuels by as much as 70%, forcing a reduction in crude processing and oil imports by refiners. The IEA and the Organization of Petroleum Exporting Countries expect India’s demand to not normalize until the end of this year. “Unlocking process has started and a lot of economic activities are going on for more than one-and-a-half months,” the minister said. “Petrol, diesel, LPG and other commercial fuels are coming back to original demand. We are a little bit apprehensive about aviation fuel.”
Asia, the demand center for oil, experienced an uneven recovery across the region, led by a strong rebound in China, but a second wave of infections is threatening to put the brakes on its positive trajectory. Pradhan expects India’s energy demand to grow multifold over the next decade upon emerging from the pandemic and is looking at all energy sources to meet the expanding appetite. The country would need refining capacity of 439 million tons a year by 2030 and 533 million tons by 2040 from about 250 million tons now, he said.
“We import 85% of our energy, and we will continue to import,” Pradhan said, adding the country is boosting output of energy from alternative and renewable resources to move toward the goal of becoming self-reliant. Expanding fuel demand is attracting oil suppliers such as Saudi Aramco to target refining deals in India. The government is offering state-run refiner Bharat Petroleum Corp. to global investors.
Pradhan said the pandemic hasn’t changed the government’s plan on privatization of BPCL and the finance ministry will decide on the timing of the sale. The government, meanwhile, has deferred the deadline for submitting initial bids for the company twice to July 31 now. “They will take an appropriate decision looking at the market scenario,” the minister said. “But the primary decision of disinvestment of BPCL stands.”