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India looks eastward for selling refined fuels

India looks eastward for selling refined fuels
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First Published: Thu, Jun 21 2007. 12 05 AM IST
Updated: Thu, Jun 21 2007. 12 05 AM IST
New Delhi: India wants to add energy to its basket of traded goods with East Asia, seeking to develop the region as a market for auto fuels and as a source for gas and crude-oil supplies.
India’s merchandise trade, traditionally focused on Europe and the US, is increasing with countries such as China, Singapore, Malaysia and Indonesia. Energy ties will help deepen the relations, external affairs minister Pranab Mukherjee said.
“Energy cooperation, with particular emphasis on supply and distribution in the long term,” is an important part of India’s relationship with its eastern neighbours, Mukherjee said in the Indonesian capital Jakarta on Tuesday, according to the copy of his speech made available in Delhi. “In this context, East and Southeast Asia have come to assume an important place in our policy priorities.”
India wants gas from Myanmar and Bangladesh to run its factories, which face a shortage of the fuel. At the same time, India wants to export more petrol and diesel to East Asia, a region that may emerge as a viable market for local refiners producing more fuel than needed at home.
Capacity addition is outstripping local fuel demand and the country is expected to be an exporter of refined products, S. Thangapandian, head of marketing at Essar Oil Ltd, said in an interview on 7 June. Overseas shipments of Reliance Industries Ltd, the nation’s most valuable company, may rise 17% to 20 million tonnes (mt) of fuel this year, according to a 31 May Bloomberg News survey.
India’s refining capacity is currently about 150mt a year, according to the petroleum and natural gas ministry. Indian Oil Corp., the nation’s biggest refiner, and its counterparts sold 111.7mt of fuel in the year ended 31 March, up from 106.7mt a year ago, led by the highest growth in sales of diesel in 10 years and petrol in four years, the ministry said on 13 April. Sales of diesel, which makes up 40% of the total, rose 7% to 42.9mt.
While India’s refining capacity is more than what’s required at present, gas supplies are about half of what factories need to rein in energy costs.
Daewoo International Corp., a South Korean trading company, is in talks with the government of Myanmar to sell natural gas from the South-East Asian country, where utility company Gail and Oil and Natural Gas Corp. hold stakes in gas blocks.
China, Thailand and India have submitted bids to buy the gas through pipelines, while South Korea and Japan are interested in buying the fuel as liquefied natural gas, Cho Sang Yeon, a spokesman at Daewoo International, said on 21 March.
India’s gas supply of 85 million cubic metres (mcm) a day, including imported liquefied natural gas, falls short of potential demand of 170mcm, according to the ministry estimates.
Gas demand may rise to 400mcm a day by 2025 if the economy grows at the projected rate of 7-8% a year.
The deficiency of gas is forcing India to keep power plants idle even as Asia’s fourth-largest economy has a 13% shortage of electricity during peak hours, according to power ministry estimates.
About 5,000MW of gas-fired power plant capacity, built at a cost of Rs20,000 crore ($4.9 billion), is lying unused for want of the fuel, R.V. Shahi, former secretary to the ministry of power, had said on 12 October.
The shortage of gas has also prompted India to lower its dependence on the fuel for new plants. India has set a target of expanding generation capacity by 65,000MW in the 11th Five-Year Plan that started in April.
Of the total, 43,000MW will be based on coal, 17,000MW on hydropower, 3,000MW on nuclear and 2,000MW on gas, Shahi said at the time.
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First Published: Thu, Jun 21 2007. 12 05 AM IST
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