Indian state-owned refiners plan to add at least 15 million tons of annual diesel-making capacity, with a surge in exports set to reach global markets next year. The supply could ease a diesel squeeze driven by wars in the Middle East and Ukraine.
India's Oil Minister Hardeep Singh Puri said on Tuesday that state-owned refiners will add at least 15 million tons of annual diesel-making capacity through a new refinery and expansions at existing plants. The extra output is set to reach global markets next year, bringing supply to fuel-starved markets from the US to Europe.
Wars and export bans tightened diesel supply
The Middle East and Russia-Ukraine wars have disrupted crude and fuel flows, tightening global supplies and driving up prices this year. Diesel has been particularly squeezed after Russia halted exports in July to protect domestic supplies following attacks on its refineries and ports.
Diesel's squeeze sent US diesel prices to a record. Washington considered export curbs before President Donald Trump struck a deal with Russian President Vladimir Putin to release more fuel into global markets.
India moves up the exporter ranking
India was already one of the world's biggest diesel suppliers. It overtook Russia this year to become the world's second-biggest diesel exporter, according to Kpler data. Goldman Sachs Group Inc. expects supplies to remain tight through 2027.
Indian Oil Corp. expects to produce as much as 9 million tons more diesel annually from next year, Chairman Arvinder Singh Sahney said. Hindustan Petroleum Corp. will add about 4 million tons as its new 9 million-ton-a-year Rajasthan refinery ramps up. Numaligarh Refinery Ltd. will boost production to about 3 million tons. Bharat Petroleum Corp. expects to add 1.5 million tons from 2028.
Domestic demand leaves room to export
In the first half of the financial year that began in April, Indian refiners produced 59 million tons of the fuel while domestic consumption was about 46 million tons, according to oil ministry data. Puri said overall refining capacity is set to climb to 300 million tons a year from about 267 million tons currently, before reaching 400 million tons in a few years.
XAnalysts founder Mukesh Sahdev said: "India’s scale of refining will become its strategic advantage"
Source: Rigzone
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