Privately owned Essar Oil has offered a rare diesel cargo for export, its first in nearly two years, as domestic demand slows due to monsoon rains, industry sources said on Wednesday.
Essar Oil supplies diesel mainly to public sector refiners and the last time it is known to have exported diesel was in October 2010 when the company shipped out four cargoes of high sulphur and medium sulphur gasoil from India, traders said.
It has now offered 65,000-70,000 tonnes of diesel with 500 parts-per-million (ppm) sulphur for September 22-October 6 loading from Vadinar through a tender which closes on Friday.
A company official declined to comment on why Essar was offering the diesel, but traders said it could possibly be due to a dip in domestic demand from a late revival of the monsoon last week.
Below-average rains had last month curbed hydropower generation, boosting agricultural demand for diesel to power irrigation systems, and prompting imports into the country.
“We recently had a good few weeks of monsoon showers across the nation, so it’s helping push demand down… if they have surplus, there’s no point keeping it,” an India-based industry source said.
Essar Oil usually produces about 700,000 tonnes of diesel every month. Most is sold to Indian state-owned refiners and the rest to Essar’s retail network of 1,400 fuel pumps in India, the source added.
Recent upgrades to its refinery had also boosted diesel supply, traders said.
The company upgraded its refinery to process 405,000 barrels of oil a day, or about 9 percent of India’s refining capacity, and raised complexity to handle cheaper heavy grades in June.
It is unclear if Essar plans to export diesel regularly, but with the company able to produce Euro V-compliant fuel, which includes 10 ppm sulphur diesel which market participants were expecting it to export to Europe and Australia.