State Refiners In India Will Purchase More Light Crude To Boost Gasoline Production

According to corporate executives and analysts, Indian refiners are preparing to change their crude oil import mix in favour of lighter grades that yield more gasoline to satisfy a jump in demand for the motor fuel in Asia's third-largest economy.

Refiners in the world's No. 3 oil importer and consumer will increase imports of gasoline-yielding crudes from the United States and West Africa, while cutting heavier sour grades from the Middle East that yield more middle distillates like diesel and kerosene, they said.

The move dovetails with an earlier push to reduce India's reliance on Middle Eastcrudes to enhance energy security.

"The gasoline demand is very, very strong, whereas diesel is lagging behind right now," said Amrita Sen, head of research at Energy Aspects.

"Refiners are shifting yields further to gasoline ... I would expect more West African, gasoline-rich crude to flow into India, less sour crude to go in there."

Indian refineries are designed to maximise diesel production mostly from Middle Eastern oil, as government-controlled prices made the middle distillate the preferred fuel for industries and trucking firms.

However, since the commencement of the coronavirus, the price gap between gasoline and diesel has narrowed, and consumers have shifted to personal vehicles rather than diesel-powered public transportation, which is helping to boost gasoline use.

"Demand growth in gasoline is much higher compared to diesel due to changing consumer preference on personal use vehicles ... and better power supply reducing use of diesel gensets," said M.K. Surana, chairman of Hindustan Petroleum Corp.

India's gasoline consumption is expected to rise 14% to a record 31.9 million tonnes (739,000 bpd) in the fiscal year ending March 2022, according to credit rating agency Moody's India unit ICRA, while diesel consumption is expected to take well into the fourth quarter or even next year to recover pre-pandemic levels.

Tarun Kapoor, the top bureaucrat in the oil ministry, earlier this month said India's refining system configuration would be different going forward, focusing on higher output of gasoline and liquefied petroleum gas.

Improved road infrastructure has also cut distances and travel times for heavy vehicles, reducing diesel consumption.

Indian Railways, a major buyer of gasoil, is also reducing diesel consumption as part of a goal to electrify the entire broad-gauge network by 2023.

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