Naphtha exports from India will see a 50% cut in the first part of 2008, as the naphtha will get diverted to being used as a substitute for natural gas supplies affceted by an output problem. Oil and Natural Gas Corp and top refiner Indian Oil Corp will possibly halt naphtha exports for Jan/Feb loading, after ONGC shut a platform at its No.1 gas field for an upgrade. The shutdown has reduced output by around 26% until the unit reopens on January 25.
ONGC produces naphtha from natural gas, which it is obliged to supply as feedstock to fertiliser plants, along with IOC. Several fertiliser plants have recently switched to using gas and are currently faced with a supply paucity due to the upgrade shutdown at ONGC.
However, prices in the Asian markets may not spike proportionatley on pessimistic demand outlook and possibility of increased naphtha exports from Japan, as Mitsubishi is reselling naphtha cargoes after a fire at its Kashima plant