India's crude oil processing last month registered it first year-on-year gain since February 2020, driven by a surge in demand for fuels as economic activity continued to pick up from a coronavirus-induced slump.
Crude oil throughput in December rose 0.9% year on year to 21.02 million tonnes (4.97 million barrels per day), provisional government data showed on Thursday.
India's year-on-year crude oil processing rate https://graphics.reuters.com/INDIA-REFINERY/OUTPUT/qmyvmybxdvr/chart.png
At the heart of the pick-up in crude oil processing, fuel consumption rose 4.1% to 18.6 million tonnes in December, its highest since January 2020.
With gasoline and diesel demand in India increasing year on year, refiners have to boost runs to meet growing demand, said Refinitiv analyst Ehsan Ul Haq, adding that COVID-19 vaccinations should encourage people to travel more and support high refinery runs.
Asia's third-largest economy began its vaccination programme last week, aiming to inoculate 300 million people considered at highest risk over the next six to eight months.
India's crude oil imports in December soared to their highest in nearly three years, according to trade sources, highlighting the need for increased supplies for refiners seeking to meet the surge in fuel consumption.
"With the rest of Asia also showing increasing demand, there will be enough opportunities for refiners to send their extra production to other destinations within Asia," Refinitiv's Ul Haq added.
Indian refiners operated at an average rate of 99.1% in December, up from 98.6% in the same month last year but below November's 101.2%, the government data showed.
India's refinery capacity utilization through 2020 https://graphics.reuters.com/INDIA-REFINERY/OUTPUT/bdwvkykqbvm/chart.png
Refineries can operate at more than their usual capacity through technical alterations.
Top refiner Indian Oil Corp (IOC) last month operated its directly owned plants at 101.1% capacity.
Reliance, owner of the world's biggest refining complex, operated its plants at 98.2% capacity in December.
On an annual basis, India's crude oil production fell by 3.4% to 2.56 million tonnes (610,000 barrels per day) while natural gas output fell 7.1% to 2.42 billion cubic metres.