Indian Oil Corporation Limited (IndianOil) has commenced resumption of stalled activities on the projects front and is fully geared to ramp up operations towards normalcy for the post-lockdown scenario.
At the same time, the Corporation is monitoring the situation on a continuous basis to ensure that the supply lines of essential petroleum products are maintained across the country, with all necessary safety protocols in place for its field force.
While global cues and the changing market scenario will guide its future strategy, the Corporation has already built up stocks of finished products, including petrochemicals, at its upcountry locations for future-readiness once the countrywide lockdown is lifted and the demand picks up again with resumption of economic activity. Its refineries continue to operate at optimised capacity utilisation to cater to the needs of households and essential/emergency services. IndianOil refineries and pipelines networks are in full readiness to ramp up production and transport with rise in demand.
All critical locations of the Corporation continued operating during the lockdown period. 420 of its 423 supply & distribution locations, including bulk storage terminals & depots, LPG bottling plants, aviation fuel stations, lube blending plants, etc., are functioning with optimised manpower under the advisories of their respective State Governments & local administrations.
The Corporation's workforce in non-critical administrative locations, who were rendering backend support working-from-home, have also begun attending office on a strict rota basis from 20th April, with stringent social distancing protocols and detailed health & hygiene advisories in place.
The Corporation's LPG sale during April 1-20, 2020 was 696.6 thousand metric tonnes (TMT), up by over 19.6% compared to the same period last year. To meet this rise in demand, IndianOil has tied up additional LPG imports by almost 50%, and its 98 LPG bottling plants are working extended hours, operating night shifts and on public holidays/Sundays. With its LPG distribution channels, particularly the delivery staff, working round-the-clock, IndianOil teams have been delivering on an average 26 lakh cylinders every day to the doorsteps of customers in spite of the lockdown. Additionally, the Corporation has ensured delivery of LPG cylinders to 1.1 Cr. families who are Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries, during this period.
Resumption of projects
IndianOil has taken up resumption of work on 64 select projects with a combined allocation of about Rs. 21,375 crore, of which work has commenced on 29 projects on 20th April, 2020. Wherever needed, the Corporation is seeking the necessary permissions of State and district administrations for mobilisation of manpower and resumption of work.
Major projects on which work has resumed include the Rs. 3,338-crore Paradip-Hyderabad products pipeline, which traverses 1,212-km through Odisha, Andhra Pradesh and Telangana; the Rs. 3,028 crore augmentation of Paradip-Haldia-Durgapur LPG pipeline and its extension to Patna and Muzaffarpur, which traverses 678-km through Odisha, Jharkhand, West Bengal and Bihar; the Rs. 6,025 crore Ennore-Tiruvallur-Bangalore-Pondicherry-Nagapattinam-Madurai-Tuticorin R-LNG pipeline, which traverses 1,170-km through Tamil Nadu, Andhra Pradesh, Puducherry and Karnataka.
Work has also restarted on other projects like grassroots LPG bottling plants, bulk storage terminals/depots, city gas distribution projects and additional facilities/tankage at existing locations. The Corporation has recently completed a massive exercise of BS-VI fuel quality upgradation projects at all its refineries at a combined cost of Rs. 17,000 crore.
The Corporation's CAPEX plan for 2020-21 majorly includes projects in refineries, pipelines and marketing segments, followed by petrochemicals. Among these, there are 188 major projects above Rs. 25 crore, which include some pipeline projects that were underway even during the lockdown period.
IndianOil's CAPEX plans are based on long-term demand potential in the country. Over the long-term, India is expected to be one of the fastest growing oil & gas markets in the world and the current setback in demand is only temporary before the oil & gas demand growth in the country picks up again. These projects are crucial from the perspective of addressing future energy demands as well as employment generation.
WTI: The sharp decline in crude oil prices, ultimately plunging WTI into a historic minus $37.63 a barrel level yesterday, was a result of panic selling of May-20 delivery contracts a day before its expiry date, failing which the delivery would have been necessary amidst COVID-19 related demand destruction and the storage constraints at Cushing, Oklahoma. However, WTI futures for June-20 as well as ICE Brent for May-20 are still trading at around $16/bbl and $21/bbl respectively.
John Prasad K.
Chief General Manager
Indian Oil Corporation Ltd.