Refineries to increase oil import; global prices may soar

New Delhi: Indian oil refineries are increasing oil imports, aiming to meet annual production targets. The move might accelerate the surge in oil prices, which is nearing 100 US dollars a barrel, Bloomberg reported.

Last month, 18 of 23 Indian refineries operated at more than 100% nameplate capacity, while it was only eight refineries doing the same in August. The average run rates in the facilities were 101% last month while it was 87 per cent in August, officials from the sector informed.

The three state-run players in the sector, Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp., are planning for extra barrels from term-contract suppliers like Saudi Arabia and Iraq or purchase from the spot market. The three state-owned plus the Mangalore Refinery & Petrochemicals Ltd contributes 65 per cent of India's oil processing capacity. All are aiming to level their output with annual production goals, which was derailed by the second wave of the pandemic, which stamped down oil demand. However, oil processing touched the highest in a year in December, though Omicron rage is around.

Indian Oil, India's biggest refiner, has been stepping up its term volumes with spot purchases for March and April. Hindustan Petroleum has done an expansion in its Mumbai facility for its 40,000-barrels-a-day, and it has to buy more crude oil, according to Chairman Mukesh Kumar Surana.

The most desirable fuel in India, diesel, has churned out profits up to the highest in two years in Asia and the US. Also, exports are expected from India for the region since China has reduced theirs. If local demand declines, state-run refineries might turn to the export possibilities, though they ship their products overseas occasionally.