SINGAPORE, Jan 5 Essar Oil Ltd. ESRO.BO sold a January naphtha cargo at narrower

SINGAPORE, Jan 5 (Reuters) Essar Oil Ltd. sold a January naphtha cargo at narrower discounts than the level the refiner received from the sales of two cargoes for December loading, traders said on Friday.

The private refiner, which began operations last November, sold 28,000-30,000 tonnes of naphtha, which contains a minimum 60 percent of paraffinics, for Jan. 3-4 loading.

The price was $2-$3 a tonne below Middle East spot quotes, on a free-on-board (FOB) basis, and the cargo was sold to Vitol via private negotiation, traders said.

Essar Oil sold a similar naphtha cargo last month for end-December loading at $4-$5 a tonne below Middle East spot quotes, FOB, after its first 30,000-to-40,000-tonne parcel was sold at a $7-to-8 discount, FOB, for mid-December loading.

Traders said Essar's naphtha had been traded at discounts because the market was still assessing its quality.

Essar Oil said in November that its $2.4 billion-refinery, located in Vadinar, Gujarat, had started operations and would be gradually ramped up to a capacity of 150,000 barrels per day (bpd).

An industry source said in September that Essar Oil intended to export naphtha, reformate, diesel and jet-kerosene in December by initially producing about 10 percent gas oil, 25 percent naphtha, 15 percent jet-kerosene, 15 percent gasoline and 30 percent vacuum gas oil, which would later be processed by a fluid catalytic cracker (FCC).

Essar Oil's refinery is the second such project by a private firm in oil sector, with top private company Reliance Industries Ltd.

running a 660,000-bpd unit in Jamnagar.

REUTERS CS SSC1126