Start up of Reliance's new refinery increase naphtha exports from India next month

14-Nov-08

Reliance Petroleum's 580,000 bpd (29 million ton) refinery at Jamnagar, built at an investment of US$6 bln, is scheduled to come ontream next month. Start up of the new refinery will increase naphtha exports from India for the month of December. Exports are estimated to increase at least 800,000 tons, higher than this months' 700,000 tons, but lower than the country's record exports of around 1 mln tons in few months of 2007. When output at the refinery reaches full throttle, monthly exports will rise to 300,000 tons. With the additional capacities coming onstream, will the output create a supply glut in the petrochemical markets of Asia; at a time when a decline in markets, is generating new stockpiles faster than demand. Indian majors, in a bid to benefit from the fiscal export incentives the government offers, export naphtha production. They also import naphtha as feedstock rather than buy from the more cost prohibitive domestic market. In this way, imports of naphtha turn out cheaper despite a 5% import tax on naphtha.