NEW DELHI:MangaloreRefinery and Petrochemicals (MRPL) plans to begin processing oil from Iraq andLatin Americafrom next year, helping the state-owned refiner to partly offset Iranian supplies choked off by pressure from western sanctions.MRPL, Iran's top Indian client till about a year ago, halted imports from Tehran in April after local insurers said they will not settle claims at plants using the oil as sanctions against Iran's disputed nuclear programme discourageglobal reinsurersfrom taking on the risk.
The refiner aims to commission a 2.2-million-tonnes-a-year (mtpa) petrochemical fluidised catalyticcracker(PFCC) by August and a 3 mtpa unit which converts heavy residue into products - called a coker - a month after that,MRPLManaging DirectorP.P. Upadhyatold Reuters on Tuesday.
"Once the coker stabilizes we plan to process Iraq oil and Latin America oil," Upadhya said. He said the new units will help MRPL's 300,000 barrels per day (bpd) coastal refinery in southern Karnataka state process as much as 70 percent of heavy oil in 2014/15 (April-March) from 10-15 percent now.
MRPL initiated talks for importing oil fromSouth Americain 2011 and planned to lift 11,000 barrels per day (bpd) oil from Iraq in 2012/13 but could not ship it as the coker was not ready.
The refiner is also scouting for high-sulphur oil at official selling price (OSP), Upadhya said. "If somebody gives Omani oil or any other high-sulphur oil under a year-long contract or so at OSP, I may consider," he said.
Traders say MRPL, a subsidiary of top Indian oil and gas producer Oil &Natural Gas Corp, has placed an inquiry to buy a 650,000-barrel Oman oil parcel a month in the current fiscal year.
India imported 26.5 percent less oil fromIranin the fiscal year ended on March 31, 2013.
Ripples in fueloil market
MRPL will boost middle distillate output after the start-up of the two units and may cease exports of vacuum gas oil, a feedstock for PFCC, and fuel oil, Upadhya said.
"Fuel oil production will be linked to margins. If I get good margins on fuel oil I will produce, otherwise LPG (liquefied petroleum gas) production will rise," he added.
MRPL exported an average 153,330 tonnes of fuel oil a month in 2013, according to data fromThomson ReutersOil Analytics.
The loss of fuel oil exports from MRPL is critical to the market, traders said, because of its low-density quality.
"This is especially critical when you need quality blending materials and you have heavy Western arbitrage flows," a Singapore-based trader said.
"And if there is limited Iranian fuel oil in the market, then the MRPL cargo becomes even more valuable and will have an impact on the market," the trader said.
By The Economic Times
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