This story is from July 29, 2005

Flow of oil products not likely to be affected

Samiran Chakrawertti / Jul 29, 2005, 00:52 IST

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NEW DELHI: The fire at Bombay High North - leading to a loss of production of 100,000 barrels a day.

Flow of oil products not likely to be affected

NEW DELHI: The fire at Bombay High North (BHN) �� leading to a loss of production of 100,000 barrels a day �� isn't likely to have any impact on the availability of petroleum products in the market.
Crude oil from the platform accounts for less than 14% of India's crude oil production, and India imports 70% of its crude oil requirements. Effectively, that means that BNH accounts for only 5% of India's crude oil consumption.
Further, ONGC estimates that it could restore 70% of the production from branch lines at Uran in 15 to 30 days time.A senior ONGC official estimated that the total loss of production may be about 25 lakh barrels over this time period.
That isn't as huge an amount as it sounds. RIL's Jamnagar refinery alone, for instance, processes 7 lakh barrels of crude oil every day.

BNH supplies crude oil primarily to the Mumbai refineries of BPCL and HPCL, apart from a small amount to IOC's Mathura and Chennai refineries. Most refineries have a 14-18 day reserve crude stock, so these refineries shouldn't have a problem till the time the branch line at Uran is functional.
Crude oil from BNH, however, is of very high quality with low sulphur content, called sweet crude in the industry.
The BP and HP refineries are geared to process only this sweet crude, rather than normal crude oil which has higher impurity levels. So if the supply line isn't restored in time, they would require imports to supply these refineries.

What this will mean, though, is 25 lakh barrels of delayed production �� the effect would be similar to a cap for 15-30 days on the 15 oil wells that BHN accesses.
That would increase India's import bill for crude oil by about $150 million, assuming that the international price of crude stays in the region of $60 per barrel.
That isn't a significant jump over the present annual crude oil bill of nearly $30 billion. What this will also mean is a loss of revenue for ONGC amounting to $130 million, at the $52 a barrel that ONGC currently gets from the government.
For consumers this temporary disruption of supply won't affect either prices or availability of petroleum products.
Apart from the reserve crude stock at refineries, there is also a 45-day end product stock that refineries maintain to ensure regular supplies to the market, and that should safely tide over temporary disruptions.
(Times Insight Group)

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