Reliance Industries Ltd (RIL) has increased LPG supplies to Indian Oil, Bharat Petroleum and Hindustan Petroleum from its twin refineries at Jamnagar, forcing state-run firms to sell cooking fuel cargoes that they had contracted from overseas suppliers. RIL’s production has to be necessarily sold to state-run firms and is not allowed to export LPG.
At the beginning of 2009 calendar year, RIL had indicated availability of 2.7 million tonnes of LPG from its Jamnagar refineries, but in May the company indicated that an additional 700,000 tonnes was available, a government official said.
“The increase in LPG availability forced cancellation or re-export of planned imports,” he said. “Till now, 200,000 to 300,000 tonnes of contracted LPG has either been re-exported or cancelled. RIL is helping dispose of the contracted cargoes.”
India’s total LPG requirement is around 13 million tonnes but state-run refiners do not produce adequate quantities to meet this demand. RIL supplies 2.7 million and the balance is imported.
RIL spokesperson could not be reached for comments.
The official said RIL had last year told the petroleum ministry and the three fuel retailers that it would cut LPG supplies by up to 1 million tonne to 1.7 million tonne from March 2009. It wanted to crack LPG to produce gasoline (petrol) for export to the US and Europe. Accordingly, the oil firms contracted term supplies of LPG from companies like Saudi Aramco.
But the economic downturn and slowdown in fuel demand in the US and Europe led to reversal of plans to produce more gasoline and instead RIL restored the original LPG production.
The official said RIL’s second refinery at Jamnagar had added to the LPG production and the company had indicated availability of around 3,80,000 tonnes a month of the fuel from June to August.
“The PSUs had to cancel or re-export their contracted LPG cargoes as RIL is not allowed to export the cooking fuel and all of the quantity they produce has to be necessarily sold to the state firms,” the official said.
Reliance Petroleum, a subsidiary of RIL, commissioned its new 580,000 barrels per day refinery in December, adjacent to the parent company’s 660,000 plant, making it the world’s biggest refining complex.
RIL had at the beginning of 2009 said it would supply 2.693 million tonnes of LPG to state refiners, but shortly thereafter raised the volumes to 2.965 milllion tonnes, including supplies from the new refinery. It plans to build a 85,000 bpd alkylation unit that will process butane to produce alkylates with a high octane number. That should enable the firm to produce superior quality gasoline to tap US and European markets.
