The situation is actually pretty fucked up right now. Russia normally has around 6.5m bpd refining capacity and their refinery runs dropped to something like 3.8m bpd in June, lowest in more than 20 years. Diesel output itself is down nearly 30%. Ukraine is blowing up oil storage tanks, they’re hitting FCCs, hydrocrackers, reformers, hydrotreaters etc. Basically the actual guts of the refineries and some of these things can take months to replace. By late August apparently only 5 major Russian refineries had escaped strikes and now Moscow refinery got hit too.
Saudi East-West pipeline also got knocked out after 3 pumping stations were damaged. They restarted it but at reduced flow and full recovery could still take 6-8 weeks.
Then look at the US. Exxon’s 275k bpd Joliet refinery went offline and US diesel stocks in September apparently went down to the lowest since 1982. There are media reports about diesel tightness can continue into 2027.
So, India is sitting in a very interesting place. We have around 267m tonnes/year refining capacity and petroleum exports are already up something like 46% this FY. In August India apparently supplied around 60% of the diesel moving through Bab-el-Mandeb towards Europe, roughly 200k bpd. So Indian refineries are already picking up some of the missing supply. This isn’t some hypothetical thing that may happen 5 years later.
Problem is how the hell do you move all of it?
Indian ships carried barely 6% of our overseas cargo in FY25. Containers are even more ridiculous, around 2.7%. We pay something like $75bn every year to foreign shipping companies for freight. So we can make the stuff, refine the oil and get the export orders but then we’re still looking around for foreign container ship to ferry it
And right now even that is becoming a headache. Tankers are getting tangled in sanctions, insurance and compliance issues, freight costs are all over the place, Singapore and Colombo have congestion and Chinese exporters are soaking up containers and vessel space whenever China-US traffic jumps. Indian exporters then have to fight for whatever space is left.
This is exactly why India needs to go nuts on commercial shipbuilding now. Not only Navy ships. Tankers, bulk carriers, LNG carriers and especially big container ships. In actual numbers, not 10 ships here and 15 ships there.
At least some groundwork is finally happening. Cochin Shipyard already got those 6 LNG powered container ships from CMA CGM. Their new 310m dry dock can take Suezmax tankers, large container ships and Capesize bulkers. They’re also setting up around 120,000 tonnes/year block fabrication capacity. Then you have the ₹25,000 crore Maritime Development Fund, ₹24,736 crore shipbuilding assistance and another ₹10,000 crore for domestic container manufacturing with something like 7.5 lakh TEU/year capacity being targeted.
We’re finally trying to build the shipyard + ship + container side together.
Otherwise there’s a stupid mismatch here. India can have 267m tonnes of refining capacity, engineering exports can keep growing, factories can keep coming up and ports can keep expanding but if 94% of your overseas cargo and 97% of your containers are still moving on foreign flagged ships.
