Refiners Delay Shutdowns As LPG Supply Faces Pressure

India’s public sector refiners, such as Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL), have postponed planned maintenance at key units to avoid disruptions to fuel supply.

The decision comes at a time when imports from West Asia are constrained, especially through the Strait of Hormuz.

Nayara Energy will halt operations at its 4,00,000 barrels per day Vadinar refinery for maintenance on 9 April, leading to a tighter supply of liquefied petroleum gas in the country.

Nayara had planned a month-long maintenance shutdown last year but postponed it due to European Union sanctions that made it difficult to obtain key items for the turnaround.

How Are Refiners Managing LPG Shortages?

To manage this, refiners have increased the production of LPG in the country. At times, they have even redirected the raw materials initially planned for petrochemical processes to produce more LPG.

These measures have certainly eased the situation somewhat, but supplies remain quite tight.

Furthermore, the government has stepped in to preserve household consumption by placing restrictions on the commercial use of LPG. The aim is to give priority to essential demands during this limited period.

Almost all refineries in the country are running at full capacity, and some units are even exceeding their rated capacity.

India has also taken steps to secure crude supplies for the coming months. In addition, LPG cargoes have been arranged from countries such as the United States and Russia to offset disruptions from West Asia.

How Are Oil Stocks Reacting To This?

For oil and refining companies, the current phase brings both support and pressure. Higher utilisation supports volumes, which works in favour of companies like Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL).

At the same time, rising crude prices or supply disruptions can tighten margins. Companies with stronger integration across refining are better placed to manage this environment, especially if they can pass on part of the cost increase.

Nayara Energy’s shutdown may lead to short-term supply tightness.

Also Read - Crude Oil Futures Gain As Trump Warns Iran Over Hormuz Deadline

What Investors Can Expect Next?

The next few weeks will be very much influenced by what happens globally. If the Strait of Hormuz is disrupted again or if the West Asia conflict escalates, it may lead to crude prices remaining at elevated levels and also add to the volatility of the market.

Some areas of interest for investors include: trends in crude prices and the resulting changes in refining margins; the duration over which refiners can operate at high utilisation levels without production issues; and governmental policies, especially those related to pricing and supply management.

If the situation stabilises, the industry may return to its regular operating cycles. Until then, changes in oil stocks are likely to be driven by both global and domestic factors.

Source:

The Hindu

The Indian Express