By Jessica Jaganathan
SINGAPORE (Reuters) - Bharat Petroleum Corp Ltd (BPCL) has offered its first Euro III diesel cargoes for export, as domestic inventory stands at high levels due to weak demand, trade sources said on Friday.
The rare exports are expected to weigh on an already oversupplied diesel market in Asia as refineries expand capacity and demand slows amid weaker economies, possibly dragging down refinery margins, they added.
BPCL has only occasionally exported high sulphur gasoil, which it uses as feedstock for secondary units, when there is unit maintenance but has not exported an Indian diesel grade, traders said.
"The refinery is holding high stocks, so thought of trying this out," a source close to the matter said.
India's monsoon rains were 64 percent above average in the week to Sept. 10, the heaviest rainfall so far seen in this year's patchy season, dampening agricultural demand for diesel to power irrigation systems which will use hydropower instead. [ID:nD8N0RB00C]
Diesel, a heavily subsidised fuel in India that accounts for a third of the country's fuel use, powers small to medium-sized generators to run air-conditioners and make up for low hydro power output in summer. It also is used to pump water from wells to irrigate fields in the dry season.
In its tender, BPCL offered three cargoes of 35,000 tonnes each of 350 ppm sulphur diesel for loading from Mumbai and Kochi, a tender document showed.
One cargo is to be loaded from Mumbai Oct. 10 to 12 and one from Kochi Oct. 14 to 16. The third cargo can be loaded from either Mumbai Oct. 10 to 12 or Kochi in mid-October, according to the document. The tender will close on Sept. 15 and is valid until Sept. 17.
Indian state-owned companies were regular importers of diesel until 2010 and have generally been able to meet domestic demand since then from their own capacity, unless there is any refinery maintenance.
Only private exporters Essar Oil and Reliance Industries and state-owned Mangalore Refinery and Petrochemicals Corp export diesel on a regular basis.
It is unclear if BPCL plans to export diesel on a regular basis but the refiner is expanding the capacity of its 190,000 bpd Kochi plant and will likely have more diesel production as a result, traders said.
(Reporting by Jessica Jaganathan; Editing by Himani Sarkar and Michael Perry)
