New Delhi: Reliance Industries fuel exports shifted sharply in the second quarter after it doubled the size of its facilities to become the world’s biggest, diverting fuel sales from Asia to the Gulf and Europe.
According to an analysis of detailed shipping data obtained by Reuters, the 1.24 million barrel per day (bpd) refinery complex -- which has gradually commissioned almost all of its major units since late last year -- shipped one-third less petrol and diesel to Asia in April-June this year versus a year ago.
But it increased sales by a quarter to the West Asia, a region increasingly reliant on imports due to petrodollar-fuelled economic growth, while sales to Europe surged six-fold, rising to become it’s second-biggest market as it produced premium fuels to meet higher European environmental standards.
It also sold fuel directly into the US market for the first time, shipping nearly 184,000 tonnes (1.55 million barrels) of gasoline. The cut in supplies to Asia knocked the region from Reliance’s No. 2 to its No. 4 market, as a two-thirds drop in petrol shipments outweighed a rise in diesel.
No comment was available from Reliance.
Since the start of commercial production at its second, 580,000 barrels per day (bpd) plant from mid-March, Reliance has stepped up fuel supplies to the West Asia, Africa and Europe besides venturing into the US.
The majority of the shipments were concluded by independent trading companies who buy directly from Reliance at its Jamnagar terminal with the flexibility to sell anywhere in the world, the data show, but they also reflect Reliance’s desire to shift from traditional markets into either nearby high-growth markets or seek a premium for its ultra-clean production in the West.
Total fuel exports rose 31% in the quarter ending June.
Diesel exports to Europe and the Mediterranean leapt to 1.27 million tonnes (nearly 9.5 million barrels) while shipments to South America nearly halved to 195,600 tonnes.
“In Europe the specs are tighter and prices are better so they want to maximise sales to Europe after start up of the new refinery. Their fuel can now meet specs for the transport sector. Earlier it was used mainly for heating,” said a trade source.
US promise eventually
The data largely confirms initial analyst and trader forecasts on the likely flow of Reliance’s increased fuel supplies, the world’s biggest one-off incremental refinery expansion since the firm fired up its first plant a decade ago.
But the expected rise in sales to the world’s biggest market -- the US -- appears to have been stymied by the onset of the worst recession in decades, although longer-term prospects have grown brighter as the onset of new carbon emission limits may cause already limited US refining capacity to shrink.
In the June quarter, Reliance directly sold about 183,700 tonnes of petrol to the US and Bahamas. It also sold about 66,300 tonnes of 0.10% diesel to Hess Corp in May, which the US company took to the Mediterranean.
“What we know from our records is that this gasoline parcel eventually went to the US,” said the trade source.
Diesel supplies to Petrobras declined about 14% to 293,500 tonnes in the quarter; of this about 100,000 tonnes were shipped to Europe.
“A few years ago they had a deal with Petrobras to buy crude and and sell diesel. But South America is not a natural market for India due to the distance involved unless there are compelling reasons,” said the trade source.
Diesel supplies to the West Asia declined nearly 24% but shipments for Saudi Aramco more than doubled to 464,970 tonnes from 201,550 tonnes in the year ago quarter. Reliance has a term diesel supply contract with Saudi Aramco.
Reliance’s petrol shipments to the West Asia surged nearly five-fold to 592,900 tonnes due to higher supplies to Iran, despite continued political pressure from the US to attempt to limit shipments to the Opec producer, which depends on gasoline imports because of a shortfall in refining capacity.
Reliance did not sell any fuel to Iranian state oil firm NIOC in June but exported a total 251,300 tonnes of petrol in April and May compared to one 31,000 tonne cargo in April-June 2008.