Reliance may win S.Lanka tender

SINGAPORE, Jan 24 (Reuters) Sri Lanka's Ceylon Petroleum Corp. (Ceypetco) is likely to award its spot import tender for up to 1.9 million barrels of crude to Reliance, a Ceypetco source said on Wednesday, which would make it a rare sale by the Indian refiner.

Reliance offered two cargoes. The first, a 1 million-barrel parcel of Oman crude oil was offered at 55 cents a barrel premium to Oman quotes, or 10 cents above Dubai/Oman spot average, the source said.

A second cargo of 900,000 barrels was offered at 60 cents above Oman quotes, or a 15-cent premium to Dubai/Oman spot average, the source added.

The Indian firm topped other offers, because it was the only one able to deliver the cargoes in February. It offered to deliver the cargoes in the first half of next month.

As a refiner, Reliance rarely resells crude. But it has close relations with Ceypetco, whose product import tenders it regularly wins.

It is not yet clear whether Reliance's possible sale of crude to Ceypetco means the Indian refiner is planning to run at lower rates in February, or that it had purchased enough crude for next month to allow for the resale of one or two cargoes.

Reliance's refinery has a 660,000 barrels per day (bpd) capacity, though it has been running well above capacity over the past few months, meaning that each cargo would represent about one day of input.

Reliance purchases mainly low-quality South American and Middle East crude through term contracts, and occasionally buys spot heavy sweet West African crude.

DESPERATE ''It depends on Reliance's stocks, runs and availability of other barrels. I bet they took some South American crude instead,'' a Singapore-based trader said, while another expressed surprise that Reliance was holding Oman crude.

The tender called for offers of different Middle Eastern grades, such as Iranian Light, Arab Light, Abu Dhabi's Upper Zakum and Murban, Iraqi Basra Light, Oman, Egypt's Gulf of Suez and Qatar Marine crude.

''Ceypetco is a very small hydroskimming refinery. Oman is a terrible grade for that. They must have been desperate,'' the trader added.

Ceypetco usually buys all its crude via term contracts. It deferred signing the contracts because it had initially scheduled to shut down its refinery in the middle of January.

But Ceypetco postponed the bi-annual maintenance of its 50,000 barrels per day (bpd) refinery to June, which led to the demand for prompt crude supply this month.

Ceypetco had trouble filling its requirements on the spot market as Middle East crude is normally traded two months forward, with March cargoes now being discussed and January and February crude already sold out, traders said.

Moreover, Iranian Light and Arab Light grades are usually not freely tradeable on the spot market, especially in Asia.

Last year, Sri Lanka concluded term crude deals with Saudi Arabia, Iran and Malaysia to import 2 million tonnes, or 40,000 barrels per day (bpd).

Ceypetco likely imported 1.4 million tonnes of Iranian Light sour crude, 120,000 tonnes of Arab Light sour crude and 480,000 tonnes of Malaysian light sweet Miri crude.

REUTERS SRS HS1653