India’s oxygen shortage slowing down industrial production

Author: Priya Jestin

2021/05/06

MUMBAI (ICIS)--As India diverts industrial oxygen for medical requirements to battle the second COVID-19 surge, industries including some petrochemical plants dependent on industrial oxygen are facing a slowdown, or are shutting down facilities in some cases.

To meet the rising demand for medical purposes the Indian government banned supply of oxygen for industrial use from 22 April.

Steel companies and oil refineries have now diverted large amounts of their oxygen production for medical relief.

These two sectors account for more than 60% of the country's 7,000 tonnes/day oxygen production capacity currently.

State-owned refineries such as Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL), Hindustan Petroleum Corp Ltd (HPCL) have diverted the industrial oxygen they produce for medical use.

A few state-owned firms have cut down routine production operations to make available additional oxygen for medical use, said a source in the Ministry of Petroleum and Natural Gas.

“The government has asked the public sector companies to increase output of medical grade oxygen even if it means cutting down their production for some time,” he added.

Since 20 April, IOC has scaled down production at its 330,000 tonnes/year monoethylene glycol (MEG) plant in the Panipat refinery to divert oxygen for medical purposes, the government source said.

The Panipat refinery has been supplying 150 tonnes/day of medical-grade liquid oxygen to hospitals in Delhi, Haryana and Punjab, he added.

Meanwhile, Reliance Industries Ltd (RIL) has ramped up production of medical-grade oxygen from 700 tonnes/day to 1,000 tonnes/day at its refinery complex in western Gujarat state, the company said in a statement on 1 May.

“At its refinery-cum-petrochemical complex in Jamnagar and other facilities, RIL now produces over 1,000 tonnes/day of medical grade liquid oxygen - or over 11% of India's total production," the RIL statement said.

Reliance has “refocused several industrial processes at Jamnagar and other facilities for rapid scale-up in production of medical grade liquid oxygen,” the statement said, adding that in April, RIL supplied over 15,000 tonnes of medical-grade liquid oxygen.

While the diversion of oxygen away from industries does not impact large companies much, it is having an impact on production in the small and medium sectors forcing many companies to scale down or temporarily stop operations.

The auto industry, a large consumer of petrochemicals does not use a lot of oxygen in the manufacturing process.

However, auto components manufactures, many of which are small to medium scale operators require oxygen for their production process.

Along with slowing demand, the oxygen shortage affecting suppliers has forced many auto companies to bring forward maintenance shutdowns.

“We ourselves do not use oxygen so much in our factories. But our component suppliers are big consumers. Production can only happen when all of us are able to work to our capacities,” RC Bhargava, chairman of India’s largest car manufacturer Maruti Suzuki, said while announcing the company’s annual results on 27 April.

Maruti Suzuki has advanced its annual maintenance shutdown to early May.

The company also plans to divert all the oxygen it produces for medical, it said in a regulatory filing to the Bombay Stock Exchange on 28 April.

Other auto companies that have announced shutdowns or reduced working days for the month of May include Honda Motorcycle & Scooter India (HMSI), Hero MotoCorp, Ashok Leyland and Toyota Kirloskar.

Specialty chemicals firms, especially companies producing pharmaceutical intermediaries and products are also facing production issues due to oxygen shortage.

The Indian Drug Manufacturers Association (IDMA) has alerted the government regarding the reduced output of many pharmaceutical raw materials and intermediates, as per local media reports. One of the reasons cited was the shortage of oxygen availability.

On 28 April, specialty chemicals producer Paushak which specializes in phosgene-based specialty chemicals and intermediates, announced that it was temporarily suspending manufacturing operations due to non-availability of industrial oxygen, which is a key raw material in the company's manufacturing process.

"The company will decide on resumption of operations upon availability of supply of industrial oxygen," it said in its statement to the BSE.

On Wednesday, India recorded 382,315 new cases of new coronavirus infections taking the country’s total number of cases to over 20m.

The country recorded nearly 4,000 fatalities on Wednesday some of which were due to non-availability of adequate oxygen at hospitals.

Focus article by Priya Jestin

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