New Delhi: Vedanta has cut oil production at its prolific Rajasthan block by a tenth as refiners, faced with deep demand destruction due to nationwide lockdown, have reduced intake, India’s largest private sector oil producer has said.

The production has fallen to 160,000 barrels of oil equivalent per day (boepd) from 180-190,000 barrels, Vedanta said. “Some oil customers are taking at reduced rates due to demand issues and maintenance activities. Gas customers have declared force majeure on partial volumes with the corresponding impact on gas and associated oil production,” the company said.

Vedanta didn’t name customers who have cut intake. Indian Oil, Nayara Energy and a couple of other refiners are Vedanta’s key oil customers. Vedanta produces a small quantity of gas and sells mainly to GSPC.

Most Indian refiners have served force majeure notices on their foreign crude suppliers as they have to cut production to match dropping demand and are running short on storages. Vedanta is perhaps the first local oil producer to be hit by this. Refiners are taking contracted volumes and have not yet reduced their crude intake from ONGC, an executive at the state-run firm said. ONGC’s gas output, however, has fallen by almost a fifth due to customers’ reluctance to pick gas in the face of falling demand.

“Had it not been for the Covid-19 hit, we were expecting to reach 200-210,000 barrels per day. This was on the back of a few projects coming to completion in January-February, which have not concluded because the material is stuck since January at ports in Italy and China,” the company said.

Several countries have imposed lockdown or severely restricted mobility to stem the spread of Coronavirus, hurting the pace of upstream projects across the globe. Oil producers are facing twin shock of demand destruction due to coronavirus and supply glut because of the price war between key global producers.

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