India's Refinery Output Reaches Six-Month High In January 2023

India’s oil refiners are enjoying a surge in profits due to record imports of Russian crude. As per provisional government data, in January 2023, refinery throughput was at its highest level since 2009. This was largely due to the strong demand for refined products, as well as discounted Russian feedstock.

Oil Imports From Russia Soar

Last week’s trade sources’ data showed that India’s oil imports from Russia were the highest in January 2023. This has made India the key oil client for Russia, and overall crude oil imports rose to a six-month high last month. 

Strong Refinery Margins 

Refinery margins remain strong as refiners can purchase crude at lower prices and sell them at higher prices due to healthy demand. Capacity utilization also jumped to 106.91% in January 2023 from 104.39% in December 2022. Indian Oil Corporation (IOC) operated its directly owned plants at 109.97% capacity.

Increased Natural Gas Output 

While petroleum oil production decreased by 1% to 2.48 million tons, natural gas production increased by nearly 4% to 2.97 billion cubic meters. In February 2023, to reduce its petrochemical imports, Hindustan Petroleum Corporation Limited (HPCL) announced plans to begin construction on the 9 million tons per year Barmer refinery and petrochemical project in Rajasthan state by January 2024.

Insight

India’s oil refiners are reaping the benefits of record oil imports from Russia. The strong demand for refined products, coupled with discounted Russian feedstock, has enabled refiners to enjoy strong margins and increased capacity utilisation. Natural gas output has also increased.

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