RPL refinery to begin production in Sept

Reliance Petroleum, a subsidiary of India’s largest private company Reliance Industries (RIL), will begin producing petroleum products from its new refinery in Gujarat early next month, sources said.

The Mukesh Ambani-owned company has started testing in the world’s sixth largest refinery, they said.

The testing process, during which various quantities of crude oil will be processed and petroleum products produced, is expected to take around two months. During this period, production would be increased gradually to reach full production capacity of 5,80,000 barrels per day before December, said analysts who have been tracking the RIL-promoted company.

However, an estimate of how much output would be achieved before the refinery is commissioned is not known.

“The refinery will produce various petroleum products in significant quantities during the testing process itself,” said a Delhi-based analyst who closely tracks the company. The products from the refinery are likely to be exported, another Mumbai-based analyst said.

The 580,000-barrels-per-day refinery at Jamnagar will be commissioned at a time refinery margins in India are almost double the margins in Singapore, the regional benchmark. The early commissioning will also help the refinery beat competition from other refineries being set up in West Asia and China, which are being delayed due to rising expenditure in the face of high steel and cement prices.

At the same time, margins of refineries across the world are starting to fall as the difference between prices of petroleum products and crude oil narrow and demand for petroleum products weaken especially in US and Western Europe, two large consumers of oil, due to high prices and slow economic growth.

Economic slowdown in the US has reduced demand for fuels, while in Europe the demand is growing at less than 1 per cent, down from around 2 per cent last year. “This slowdown in demand may not spare Reliance Petroleum. The bottomline is that its priority markets are not growing,” said a Mumbai-based analyst.

The technical work on the Rs 27,000-crore refinery is already completed.