RIL refinery shutdown to curb supplies

Reliance Industries shut half of the world's third-biggest oil refinery in India, prompting concern that Asian fuel supply will be cut at a time when Indonesia, Vietnam and Sri Lanka are boosting imports.

Reliance last night closed a 330,000 barrel-a-day crude distillation unit at the 660,000 barrel-a-day plant in Jamnagar, Gujarat state.

The unit will be shut for 10 days and supplies to customers won't be affected, spokesman Tushar Pania said by telephone from Mumbai. Diesel has gained 32 per cent in the past year and rose to a record in Singapore today.

The shutdown will cut diesel and jet kerosene supplies by at least 2 million barrels, curbing shipments in November from Asia's biggest export refinery.

At the same time, refiners in North Asia carried out pre-winter maintenance while countries relying on fuel imports step up purchases as economic growth spur consumption.

"This could potentially have a significant impact on the supply of products,'' said Victor Shum, senior principal for Purvin & Gertz . in Singapore. "It's a major supplier of distillates to Europe, and gasoline to the West Asia.''

India may have to increase imports of ultra-low-sulfur gasoil, or diesel, with no more than 50 parts per million sulfur. Reliance is among Asia's most sophisticated refineries, capable of making products that meet clean-air rules on diesel and gasoline in Europe and the US. The plant exports naphtha, gasoline, gasoil and jet fuel to nations as far as Brazil and the US.

"Reliance is a significant supplier of good-quality refined products to various markets,'' Shum said. "The refinery is capable of taking some of the poorest-quality and lowest-priced crude and turning it into good-quality fuels.''

Reliance was awarded a tender to supply Ceylon Petroleum Corp, Sri Lanka's state refiner, with 600,000 barrels of gas oil this month. Ceylon Petroleum hasn't been informed of any changes, said a company official who declined to be named, citing internal policy.

In Indonesia, PT Pertamina, Southeast Asia's largest diesel importer, will boost imports next month because of lower domestic production as it shut a 120,000 barrel-a-day refinery for maintenance. Vietnam National Petroleum Corp, the state fuel company which is responsible for 60 per cent of the country's oil imports, sought to purchase 1.02 million metric tonnes for the fourth quarter, 20 per cent higher than what it purchased in the third quarter.

In South Korea, S-Oil Corp shut 250,000 barrels a day, or 43 per cent, of its Onsan plant from October 8 to October 29. Japan's Nippon Oil Corp closed a 120,000 barrel-a-day unit, or 10 per cent of its total capacity, this month.