Three leading Indian oil companies have deferred from shutting down some of their refineries to meet local fuel demand. Indian Oil Corporation (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) are struggling to get a good response to their diesel import tenders as traders target lucrative sales to Japan.
Private refiners Essar Oil and Reliance Industries, which prefer to sell diesel to state run firms than make direct sales as they do not get federal compensation for sale of fuel at government capped prices, plan to go ahead with scheduled shutdowns.
IOC, India’s largest refiner, has a capacity to process 1.294 million bpd had planned to shut a hydrocracker and other units at its biggest refinery in Panipat.
BPCL has delayed the planned shutdown of its two units in Mumbai and Kerala. The company operates a 240 000 bpd refinery in Mumbai as well as a 190 000 bpd refinery in Kochi.
Meanwhile, the Valero CEO has stated that excess refining capacity remains in North America, Western Europe and Japan in spite of a recent series of refinery closures.
Bill Kleese noted on 20 March that overcapacity existed even before the events in Japan and predicted that most of the refineries shut in the wake of the earthquake will quickly return to production, with no demand being placed on US West Coast markets.
Supply for Japanese refined products will first come from other Asian refineries and possibly the US Gulf Coast, due to the fact that prices would be more advantageous than the West Coast.
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