Refinery Output Reduced (Folo) Reliance Industries Charts Overseas Goals Price Controls Constrain Indian Market BUSINESS ASIA By Bloomberg

Reliance Industries shut half of the world’s third-biggest oil refinery, prompting concern that Asian fuel supply will be cut at a time when Indonesia, Vietnam and Sri Lanka are buying increasing imports.

Reliance closed a 330,000 barrel-a-day crude distillation unit at the 660,000 barrel-a-day plant in Jamnagar, Gujarat State, in India on Thursday. The unit will be shut for 10 days, but supplies to customers won’t be affected, Tushar Pania, a Reliance spokesman, said by telephone from Mumbai. Diesel has gained 32 percent in the past year and rose to a record in Singapore on Friday.

The shutdown will cut diesel and jet kerosene supplies by at least 2 million barrels, curbing shipments in November from the biggest Asian export refinery. At the same time, refiners in North Asia carried out pre-winter maintenance while countries relying on fuel imports step up purchases as economic growth spurred consumption.

“This could potentially have a significant impact on the supply of products,” said Victor Shum, senior principal for Purvin & Gertz in Singapore. “It’s a major supplier of distillates to Europe, and gasoline to the Middle East.”

India may have to increase imports of ultralow-sulfur gasoil, or diesel, with a sulfur content of no more than 50 parts per million. Reliance is among the most sophisticated refineries in Asia, capable of making products that meet clean-air rules on diesel and gasoline in Europe and the United States. The plant exports naphtha, gasoline, gasoil and jet fuel to nations as far away as Brazil and the United States.

“Reliance is a significant supplier of good-quality refined products to various markets,” Shum said. “The refinery is capable of taking some of the poorest-quality and lowest-priced crude and turning it into good-quality fuels.”

Reliance was awarded a tender this month to supply Ceylon Petroleum, the Sri Lankan state refiner, with 600,000 barrels of gasoil. Ceylon Petroleum has not been informed of any changes, said a company official who declined to be named, citing internal policy.

In Indonesia, Pertamina, the largest Southeast Asian diesel importer, will increase imports next month because of lower domestic production as it shut a 120,000 barrel-a-day refinery for maintenance.

Vietnam National Petroleum, the state fuel company which is responsible for 60 percent of Vietnamese oil imports, sought to purchase 1.02 million metric tons for the fourth quarter, 20 percent higher than what it purchased in the third quarter.

In South Korea, S-Oil is reducing 250,000 barrels a day, or 43 percent, of its Onsan plant from Oct. 8 to Oct. 29. Nippon Oil, of Japan, closed a 120,000 barrel-a-day unit, or 10 percent of its total capacity, this month.

Originally published by Bloomberg News.

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