Reliance ups fuel sales to Africa, cuts Europe

Giant refiner Reliance exported more fuel during July to September versus the second quarter, with Africa racing past Europe as its No 2 market while sales to the United States are set to rise further.

Reliance's 1.24 million barrels per day (bpd) refining complex — the world's largest — exported 6.08 million tonnes of gasoline and diesel in the third quarter from 4.5 million tonnes in the previous quarter and 3.76 million tonnes a year ago, shipping data obtained by Reuters show.

In the third quarter, when all units at its new 580,000-bpd refinery were commissioned, Reliance Industries nearly doubled sales to South America, followed by an 88% jump in exports to the US, where it aims to directly sell diesel and gasoline.

Reliance's gasoline shipments in its own account to the US and Bahamas rose 60% to 197,600 tonnes in the third quarter versus the second. US refiner Hess Corp, with whom the privately run Indian refiner has a term deal, received 145% more gasoline at 148,100 tonnes.

Traders expect fuel supplies to the US to rise further as the onset of new carbon emission limits may offer Reliance an opportunity to fill the demand-supply gap.

The International Energy Agency (IEA) in its latest monthly report has forecast US oil product demand to grow by 0.4% in 2010 from its previous estimate, compared to an expected 3.7% decline this year.

Reliance's supply data largely confirms forecasts by analysts and traders on the likely flow of its fuel output, the world's biggest one-off incremental refinery expansion since the company fired up its first plant a decade ago.

"I believe Reliance has been increasing supplies in its own account to various locations as some of its term lifters prefer to lift volumes from destinations other than Jamnagar port," said a trade source.

Focus on high growth markets

Most of the shipments were concluded by independent trading firms who buy directly from Reliance at its Jamnagar terminal with the flexibility to sell anywhere in the world, the data show.

The exports also reflect Reliance's aim to shift from traditional markets into the nearby high-growth markets, or seek a premium for its ultra-clean production in the West.

The cut in direct supplies to Europe and the Mediterranean knocked the region off Reliance's No 2 spot in the second quarter to No 3. A year earlier, Europe was Reliance's fourth-biggest market.

Asia remained the fourth-largest market, as a three-quarter increase in diesel shipments outweighed a near 18% decline in gasoline supplies.

"Asia is flushed with gas oil especially in East Asia like Korea and Japan. The shipments from Asia must have gone to Middle East or Europe...Some premium fuel matching European standards was shipped to Asia," a trade source said.

Reliance's fuel supplies to Africa rose 57% in third quarter versus the second, and on an annual basis the supplies surged by 136%.

Diesel supplies to Brazil's Petrobras almost doubled in the quarter to 387,000 tonnes but declined 32 percent from a year ago.

Middle East, a region increasingly reliant on imports due to petro dollar-fuelled economic growth, continued to be the top buyer of Reliance's oil products overall.

Reliance's gas oil (diesel) exports to the Middle East in the September quarter declined 17% from a year ago, with the region slipping to No 2 position for the product.

But shipments to Saudi Aramco, with whom the Indian refiner has a term diesel supply contract, more than doubled in the period to 464,970 tonnes.

Reliance's gasoline shipments to the Middle East rose nearly 34% to 823,900 tonnes in the third quarter from a year ago.

This came despite the refiner not exporting directly to Iran, possibly due to Washington's move to limit gasoline exports to put pressure on the OPEC producer for its disputed nuclear programme. Iran depends on gasoline imports because of a shortfall in refining capacity.

In the third quarter of 2008, Reliance directly sold 108,800 tonnes of gasoline to Iran.