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APPEC: Asia oil demand approaching pre-pandemic levels as recovery gains steam


Weak jet fuel/kerosene demand keeps refinery runs 'significantly' constrained

Indian refiners operating at 90% run rates

India to reach pre-pandemic oil consumption by 2023

Japanese and Indian refiners said Sept. 28 they were cautiously optimistic about the regional oil demand reaching pre-pandemic levels, as the pace of recovery gains momentum due to lower COVID-19 infections, with India taking slightly longer to get there.

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Higher demand for fossil fuels gasoline and diesel was leading the recovery in Asia, with the consumption in some countries already past the pre-pandemic levels, but weak jet fuel demand was a drag.

"Despite the resurgence of several COVID variants, petroleum demand in Asia and the world is still on the recovery trajectory," Mitsuyasu Kawaguchi, general manager of crude oil and tanker at Japanese refiner Cosmo Oil, said during a session at the S&P Global Platts Asia Pacific Petroleum Conference, or APPEC 2021.

"In lots of Asian countries, gasoline and diesel demand has already reached the pre-COVID level," Kawaguchi said. "Jet [fuel]/kerosene is now only the missing piece in the recovery."

Weak jet fuel demand from the aviation sector amid the coronavirus crisis has kept regional refinery runs "significantly" constrained, but there was gaining optimism from vaccine rollouts despite the varied pace in different countries, Kawaguchi said.

"Overall, I am still optimistic for the jet demand recovery toward next year. We have short-term turns and twists, but continuous vaccine rollouts and development of new medicine will eventually bring us back on airplanes," he said. "I do not think that is in the distant future."

India recovery

India's refineries were currently operating at 90% of their capacity, and processing 4.5 million b/d of crude oil with 5.02 million b/d refining capacity, Debash Patra, executive director Bharat Petroleum Corp. said at the APPEC session, as the country's economy recovers from the pandemic.

"Indian refineries are processing 15% higher than over the same period last year," Patra said.

The country's pre-pandemic oil consumption was still a few years away, as the aviation fuel recovery was primarily lagging, he said.

"The Indian oil consumption as per my estimate is set to bounce back to pre-covid level in second year from now, that is 2023," Patra said.

India was seeing a resurgence of COVID-19 cases in some pockets, but it was not yet severe enough to hurt the overall recovery, analysts told S&P Global Platts.

Click here for our complete APPEC 2021 coverage

India's gasoline demand was 7%-8% above the pre-pandemic levels currently, with diesel demand lower by about 7%-8%, according to Indian Oil Corp. Chairman, Shrikant Madhav Vaidya.

India's oil demand is expected to increase by 170,000 b/d quarter-on-quarter in the third quarter, and as much as 575,000 b/d in the fourth quarter, driven by a broad-based pickup in economic activity and rising COVID-19 vaccinations, according to S&P Global Platts Analytics.

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