Indian refiners declared force majeure on Friday on crude oil purchases from the Mid-East after fuel demand and supply deflated due to a global shutdown to stop the spread of coronavirus pandemic, and the companies’ tanks are full, news services said.
Prime Minister Narendra Modi has announced India’s population of 1.3 billion people to stay indoors and home quarantine for 21 days in the world’s most massive shutdown, locking down Asia’s third-largest economy and letting billions of economically poor people without jobs.
This has led to a steep decrease in the local crude oil and fuel demand, top leading companies and manufacturers to cut down crude refining as their storage tanks are full to the border.
Indian Oil Corp (IOC), the country’s most finest refiner, has reduced its production of crude oil processing by 30%-40% and shut its naphtha cracker plant in the northern part of India since the demand is falling down and to avoid the situation of tank top up, the manufacturing unit also said in its letter of force majeure to crude suppliers. The news services also noted that the circumstances arising out of the COVID-19 pandemic outbreak are beyond our control system, which adversely impacted the functional performance of their obligation, said in the letter of IOC.
A source familiar with the matter said IOC, which owns about a third of the country’s 6 million barrels per day (BPD) and refining capacity, has sent a force majeure notice to most Mid-Eastern suppliers.
Recently, A news service said that The refiners are yet to decide whether to decrease its crude oil and fuel supplies or cancel lifting of oil cargoes all together in April.
A company source said, South India-based Mangalore Refineries and Petrochemicals Ltd in Karnataka has already shut down a third of its 400,000 barrels per day refining capacity and is preparing to shut down the remainder until the next ten days as demand faced a decline stage.
MRPL said in a letter that operations and functions at its refineries have been totally messed up because of a nationwide shutdown, which is “unpreventable and beyond the control of MRPL.”
Henceforth, MRPL, as a result of this declared force majeure with respect to the deals and contracts with all other suppliers, buyers, customers, dealers, contractors, it said in the letter seen by sources.
However, News services could not reach the companies for replies and statements outside the regular business hours.
Global fuel demand is set to drop by as much as around 21% in the second quarter as an output of the COVID-19 pandemic, which has killed more than 23,000 people, locked down most of the worldwide air travel and has many of the countries imposing shutdowns keeping people at home and out of their cars and supporting self-isolation and home quarantine.