Recovery in Petro Products Demand Falters

‘Stagnation’ Attributed to Partial Lockdowns in Parts of the Country

The recovery of demand for petroleum products is stagnating in July after a steep rise from March-end lows induced by the Covid-19 lockdown. The demand growth stagnation can be attributed to partial lockdowns still in place across the country.

“The demand for petroleum products has stagnated in the last couple of weeks at around 90 per cent of last year’s levels, after a smart recovery from March-end lows. This could be because of continuing contraction of the services sector, particularly in urban India and lockdowns coming back in certain pockets in the South and East India. The same trend is being observed in electricity demand as well,” said Debasish Mishra, Partner at Deloitte.

Production data

Domestic crude oil production during June 2020 stood at 2.53 million tonnes, 5.99 per cent lower than June 2019 levels. Same was the case with domestic natural gas production that stood at 2,323.82 million standard cubic meters, during June 2020, 11.85 per cent lower compared with June 2019.

“Natural gas production was hit due to the closure of offshore gas wells due to lower offtake due to the Covid-19 lockdown,” an official statement said.

Reflecting the stagnation in demand growth, crude oil processed during June 2020 was at 17.54 million tonnes, down 13.62 per cent compared with June 2019. Production of petroleum products during June 2020 was 18.72 million tonnes, down 8.89 per cent compared with June 2019.

The major reason for lower crude oil processed is subdued demand due to the impact of the lockdown, the official statement said.

TABLE: Refinery production of petroleum products

Year	April	May	June
2019	20.70 million tonnes	21.95 million tonnes	20.55 million tonnes
2020	14.75 million tonnes	17.28 million tonnes	18.72 million tonnes
Production in 2020 over 2019	71.22 per cent	78.74 per cent	91.11 per cent

Source: Ministry of Petroleum and Natural Gas