Singapore: Reliance Industries has cancelled a tender offering up to 960,000 tonnes of naphtha for April 2009-March 2010 due to low price bids, trade sources said on Monday.
The private refiner was looking to sell up to 80,000 tonnes of the feedstock every month for the 12-month period for liftings from Sikka, which could include supplies from its new refinery at Jamnagar, traders had said.
“It got cancelled. Prices did not meet Reliance’s expectations,” said one of the sources. Levels of the bids submitted were not immediately known.
The tender closed on 27 February and bids remained valid until 5 March.
Premiums for Asian naphtha have fallen over the last two weeks as robust Chinese demand subsided, although current differentials were still relatively strong.
Formosa bought 75,000 tonnes of spot April naphtha at around $6.00 a tonne above Japan spot quotes, cost-and-freight (C&F) basis, down from premiums above $10.00 fetched two weeks ago.
Reliance’s offer also came after Abu Dhabi National Oil Co (ADNOC) sealed its term export contract with Asian buyers for April-March supplies at sharply higher premiums versus its January-December 2009 prices.
“Premiums are slightly on the high side, and with the volatility in premiums and expected steady supply from Reliance, nobody would want to lock in long-term purchases,” said a trader who participated in the tender.
Reliance recently commissioned its 580,000 barrels per day (bpd) refinery in Jamnagar and had already exported a few parcels from the new facility.
“Indian naphtha supplies are expected to rise substantially in the near future because of Reliance’s east coast gas field,” the trader added.
Reliance is expected to begin supplying gas from its deepwater block in the Krishna Godavari basin off India’s east coast by April, Oil Minister Murli Deora had said last month.
The federal government has allocated an initial 40 million standard cubic metres of gas from Reliance’s D-6 field for gas-based urea plans, liquefied petroleum gas (LPG) plants and power firms, the minister said.
Some Indian naphtha end users such as fertiliser plants use naphtha and gas interchangeably. A switch to gas will free up naphtha supplies for export.