NEW DELHI India's biggest refiner Indian Oil Corp (IOC.NS) will continue to import gasoline until at least December due to a heavy maintenance line-up and the slow start-up of a key unit at a new refinery, sources with direct knowledge of the matter said.
Asia-based traders of the fuel said they had expected IOC to stop importing gasoline and halt naphtha exports once a unit involved in the production of the motor fuel started up at the 300,000 barrel-per-day refinery in Paradip on India's northeast coast.
IOC started up the Paradip plant last year and is still commissioning some units. In March it commissioned Paradip's continuous catalytic reformer (CCR), which uses naphtha as a feedstock to produce reformate, a product used to make gasoline.
"The CCR was functional for a week (and) after that there was a problem with the compressor," said one of the sources.
It is not clear when the CCR will start back up, and IOC did not respond to a request for comment.
The refiner - which has handled most of India's gasoline imports in the surge of shipments that started in April of last year - has kept taking gasoline to fill the domestic supply gap, putting out a recent tender seeking up to 30,000 tonnes (255,000 barrels) of the fuel for an Aug. 5-7 delivery.
India's overall gasoline imports hit a peak in May at 160,000 tonnes, highest since June 2015, before falling to 40,000 tonnes in June of this year, according to official data.
LITTLE IMPACT ON MARKET
India's imported volumes, however, have not had a significant impact on the Asian market, because there have been ample supplies of gasoline since February this year due to high refinery throughput.
One result from the slow refinery start-up is that IOC started exporting naphtha from Paradip in January, starting with a small monthly volume of 17,000 to 19,000 tonnes.
The naphtha export volumes have since grown more than five-fold to about 107,000 tonnes for August loading, adding pressure on a market that is already oversupplied.
That has prompted Indian premiums on naphtha cargoes to flip to discounts and pulled spot prices on a cost-and-freight (C&F) basis to depths not seen in more than a year.
Indian state refiners - which control India's retail oil market - typically buy fuel from private refiners Reliance Industries Ltd (RELI.NS) and Essar Oil ESRO.NS or import them to meet their shortfalls.
India's fuel demand has been surging over the past 1-1/2 year, driven by a growing appetite for gasoline-guzzling vehicles.
Disputes over the terms of purchase, however - such as which party will absorb sales tax and freight costs - often push the state refiners to look for overseas suppliers.
Potentially further boosting IOC's imports of gasoline or other fuels is a long list of maintenance plans or work relating to fuel upgrades stretching from August to early 2017.
(1 tonne gasoline = 8.5 barrels)
(Reporting by Nidhi Verma, with additional reporting by Seng Li Peng in SINGAPORE; Editing by Tom Hogue)
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Published Date: Aug 03, 2016 10:18 pm | Updated Date: Aug 03, 2016 10:18 pm