India Diesel Export Boom Set to Ease Global Crunch
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A surge in Indian diesel exports is set to hit global markets next year as new refining capacity comes online, bringing much-needed supply to fuel-starved markets from the US to Europe.
State-owned refiners will add at least 15 million tons of annual diesel-making capacity through a new refinery and expansions at existing plants, India’s Oil Minister Hardeep Singh Puri said on Tuesday.
“We’ll be in the happy situation of not only refining for ourselves but for the world,” Puri told reporters on the sidelines of an industry conference in Goa.
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. The crunch sent US diesel prices to a record, prompting Washington to consider export curbs before President Donald Trump struck a deal with Russian President Vladimir Putin to release more fuel into global markets.
The turmoil has created an opportunity for India, already one of the world’s biggest suppliers of diesel, the workhorse fuel that powers farms, factories and heavy transport. The South Asian nation overtook Russia this year to become the world’s second-biggest diesel exporter, according to Kpler data. The refinery expansions could further strengthen India’s global fuel markets share as Goldman Sachs Group Inc. expects supplies to remain tight through 2027.
Indian Oil Corp., the country’s largest refiner, expects to produce as much as 9 million tons more diesel annually from next year after completing expansions that will add more than 17 million tons of crude-processing capacity across three refineries, Chairman Arvinder Singh Sahney said.
Hindustan Petroleum Corp. will add about 4 million tons of diesel output as its new 9 million-ton-a-year Rajasthan refinery ramps up to full capacity, Chairman Vikas Kaushal said. Oil India Ltd.’s unit Numaligarh Refinery Ltd. will boost production of the fuel to about 3 million tons. Meanwhile, Bharat Petroleum Corp. expects to add 1.5 million tons from 2028, Chairman Sanjay Khanna said.
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. Overall refining capacity in the country 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, Puri said.
“India’s scale of refining will become its strategic advantage,” Mukesh Sahdev, founder, CEO, and chief oil analyst at XAnalysts said.
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