Reliance Pet may begin fuel exports in April

Reliance Petroleum may start exports from its new 580,000 bpd refinery in April although the plant is likely to begin trial runs near to its end-December target, analysts and trade sources said.

The export-focused refinery is entitled to a five-year tax holiday, but if commercial production were to start in December or January, the firms would only receive tax breaks for three months in the first year.

India's fiscal years run from April to March.

Analysts say the new refinery may be started and stabilised in phases over the first quarter of 2009.

Reliance Chairman Mukesh Ambani in June told shareholders revenue from the new refinery would begin from this year.

But since then, slowing demand has hit the outlook for refineries, prompting firms like Total and Petroplus to consider cutting back runs on unprofitable products like gasoline.

Refinery margins for complex Asian refiners in October were about $6.34 a barrel while those for simple refiners were about $2.29 a barrel.

Reliance commissioned its existing 660,000 barrels per day (bpd) refinery six months ahead of schedule but only announced commercial operations six to eight months after trial runs.

Earlier this year, Reliance sold several cargoes of diesel under term contracts to various trading houses, including its first ever advance term sale of 0.005 percent sulphur diesel, which will be produced at the new refinery.

The sales were an attempt to lock in customers before the plant comes online. A trade source, who could not be named, said Reliance had not yet signalled when supplies of ultra-low sulphur diesel would begin.