This Article is From Jul 02, 2014

State Refiners Import Petrol on Refinery Outages: Report

State-refiners have taken the unusual step of importing petrol as maintenance outages at some plants have created shortages of refined products in a number of regions, industry sources said.

Hindustan Petroleum Corp Ltd (HPCL)and Indian Oil Corp (IOC) have so far bought a total of around 65,000 tonnes of petrol for prompt July delivery through tenders. The pair aim to import at least another 100,000 tonnes for July to August delivery.

India is generally self-sufficient in petrol, but is sometimes forced to import additional due to refinery outages and increased demand over summer.

HPCL has bought 35,000 tonnes petrol from Gunvor for July 15-19 deliveries, a source familiar with the matter said.

The refiner has also reissued a tender to import a similar size cargo for July 3-10 delivery on the east coast, as it did not receive any offers in its previous tender, the source said.

HPCL's imports have been triggered by a cut in supplies from its private joint-venture refinery HPCL-Mittal Energy Ltd (HMEL), which has been operating its 180,000 barrels per day (bpd) Bathinda refinery at a reduced capacity following a fire.

HMEL will shut the refinery for four to six weeks from this weekend for planned maintenance, two sources said. HMEL supplies about 120,000-130,000 tonnes of gasoline a month to HPCL for local sales.

An HMEL spokeswoman declined to comment, saying the company did not disclose operational details.

IOC PURCHASES

Fuel supplies from HMEL mainly meet demand in north India, where supplies are already under pressure due to a delay in the start-up of a hydrocracker and continuous catalytic reformer at Indian Oil Corp's (IOC) 300,000 bpd Panipat refinery.

India's buying interest coincides with demand for the Muslim fasting month, which has boosted the Asian petrol crack - the premium for refining crude into motor fuel - to an 11-1/2 month high on Tuesday at $13.58 a barrel.

IOC has already bought 33,000 tonnes of gasoline via tenders for deliveries this month and is in the market seeking similar volumes for July 20-22 deliveries, traders said.

"IOC may float another tender seeking supply of another 30,000-33,000 tonnes of gasoline for end-July to early August deliveries," said a source familiar with the matter.

"Demand for the fuel has not risen but availability is not there in some parts, mainly in north India," the source said.

Sources said supply in northern India will come under pressure this month as BORL plans to shut the hydrogen unit for 7-10 days at it 120,000 Bina refinery in central India.

State refiners, which have nation-wide fuel stations, swap refined products to cut transport costs. They also buy fuel from private players like Reliance Industries, Essar Oil, HMEL and Bharat Oman Refineries Ltd (BORL).

The refiners may also have to import gasoil in anticipation of a possible drought that would boost demand for the fuel from the farm sector to run diesel-fired gensets for irrigation, a source at a private refiner said.

"Indian state refiners are running low stocks of gasoil... they approached us for additional gasoline and gasoil supplies but we cannot fully meet their demand as we have export commitments too," he said.

Copyright: Thomson Reuters 2014

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