Indian Oil Strike Enters Third Day as Shortages Loom

By Gaurav Singh and Archana Chaudhary

Jan. 9 (Bloomberg) -- A strike by more than 50,000 officers of state oil companies for higher pay entered the third day, cutting fuel and gas production and curbing supplies.

Oil & Natural Gas Corp., India’s biggest exploration company, and Indian Oil Corp. suffered production losses after the strike started Jan. 6, the government said.

“Hopefully, things should get resolved today,” Gyan Chand Daga, marketing director at Indian Oil, said by telephone from Mumbai.

The indefinite strike compounded the impact of a similar nationwide protest by truckers that started this week. Prime Minister Manmohan Singh’s government, which faces national elections by May, is trying to ensure that there is minimal disruption of commodity supplies.

Several fuel stations all over the country, including the capital New Delhi and its suburbs, started shutting yesterday as fuel supplies dried up. In Mumbai, the nation’s financial hub, queues formed at pumps.

“I don’t have exact numbers, but it has been two days, so a large number of our pumps has run dry across the country,” Daga said. “In aviation, although there have been reports of delays, supplies continue.”

At least four refineries of Indian Oil, the nation’s biggest, were affected by the strike, including Koyali in the western state of Gujarat, and the Panipat and Mathura plants in the north.

Law and Order

“We expect 70 percent of all our outlets to go dry today,” said Ashok Badhwar, President of the Federation of All India Petroleum Traders, which represents 38,650 of the almost 40,000 gas stations across India. “Pumps in Delhi, Mumbai, Chennai and Kolkata are expected to shut by evening. This is threatening to become a law and order situation because customers are really angry and we are bearing the brunt.”

ONGC’s production from the Mumbai offshore fields had dropped to 170,000 barrels, or half the normal production, the Press Trust of India reported, without citing anybody.

Bharat Petroleum Corp., the nation’s second-biggest refiner, said both its refineries are operating, although some operations at storage depots have been affected.

“We are managing at the Trombay and Kochi refineries and we have enough people to man our refineries,” R.K. Singh, director of refineries at Bharat Petroleum, said by telephone from Mumbai. “We have even pumped products through pipelines up to our depots. But there’s still a problem when it comes to operating our depots and reaching fuels to petrol stations.”

Indian Oil shares gained 1.9 percent to 429.15 rupees at 10:43 a.m. in Mumbai trading. Bharat Petroleum advanced 3.6 percent to 380.90 rupees, while Hindustan Petroleum Corp., the third-biggest state refiner, climbed 2.3 percent to 271 rupees. ONGC shares gained 1.7 percent to 702 rupees.

The strike by oil officers comes after more than 4 million truckers who haul a majority of India’s goods started their protest on Jan. 5, demanding fuel price cuts and toll charge waivers for six months. The truckers strike may cause shortages and hamper transportation of food and manufactured products.

To contact the reporters on this story: Gaurav Singh in New Delhi at gsingh31@bloommberg.net; Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.