Indian oil refiners defer shutdowns as workers flee amid Covid resurgence

Bharat Petroleum and Indian Oil have deferred planned shutdowns due a shortage of contract workers.

Topics

BPCL | Indian Oil Corp | Oil refineries

Indian oil refiners are being forced to postpone maintenance at some plants as technicians and workers are either fleeing to their hometowns or falling ill amid a rapid resurgence of the Covid-19 pandemic.

Bharat Petroleum Corp. and Indian Oil Corp. have deferred planned shutdowns due a shortage of contract workers, said company officials with knowledge of the matter. The refiners will need to keep operating these units, reassess their feedstock plans and possibly reduce overall run rates, they said.

The country’s health-care system is being overwhelmed as infections spike and oxygen remains in short supply. Major Indian motorways were deserted earlier this month as lockdowns and curfews were rolled out across major cities. The move prompted a slump in fuel sales as police patrols were stepped up to keep people off the streets and stalls rolled down their shutters.

Bharat Petroleum has pushed back a scheduled shutdown at its Mumbai plant and plans to defer work at its Bina facility that was planned for June, according to the officials who asked not to be identified as the information isn’t public. IOC, India’s biggest refiner, also postponed maintenance at its Paradip plant scheduled for August indefinitely, they said.

The rising infections are causing a manpower crunch that’s threatening to disrupt labor-intensive sectors across the country of 1.4 billion people. While essential services such as port and terminal operations remain in operation for now, the continuation of these is increasing the risk that the virus will spread even more quickly.

Migrant workers have fled major cities in recent weeks amid fears of a repeat of last year’s national lockdown that left millions displaced and without jobs. Refiners are wary of maintenance that requires thousands of odd-job laborers and temporary workers to travel from various parts of the country and stay together for several weeks, the officials said.

Any decision to defer scheduled work would force refiners to adjust their crude import plans, which could result to some tweaks in refiners’ spot and term purchases, they added. Separately, a weak outlook for fuel demand could prompt a flood of oil-product exports from India, a prospect that Asian traders are looking out for.

IOC offered gasoline for May in a rare tender this week, a move that could be indicative of plunging fuel consumption due to lockdowns and curfews. Overall, India’s daily demand for gasoline and diesel in April is expected to fall by at least 110,000 barrels and 200,000 barrels, respectively, said Juan Carlos Rodriguez, an analyst with data analytics firm OilX.

Indian processors will need to coordinate future maintenance and closures going forward so as not to disrupt the nation’s supply chain, the officials said. Several refiners had planned to conduct work and inspections this summer after delaying them in 2020 due to the first wave of coronavirus infections.

Mangalore Refinery & Petrochemicals Ltd. cut run rates at its plant in southern India earlier this month due to a drop in demand for fuels. The company plans to further reduce crude processing next month. IOC is currently operating at less than 100% capacity and may consider lower runs, one of the officials said.

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