Tata Power seeks 30KT LSFO/LSWR

SINGAPORE, May 2 (Reuters) India's largest private utility, Tata Power Co., has issued a tender seeking 30,000 tonnes of low-sulphur fuel oil (LSFO) or low-sulphur waxy residue (LSWR) for end-May delivery, industry sources said on Wednesday.

The cargo, of either 0.3 percent sulphur for LSFO and 0.2 percent sulphur for LSWR, is for May 21-30 delivery to its power station in Mumbai, on a cost-and-freight (C&F) basis.

The tender closes late on Monday and will remain valid till two days later.

This is the first time Tata Power is seeking to buy fuel oil directly on its own this year, after it had contracted state refiner Bharat Petroleum Corp. Ltd. (BPCL) to do so twice earlier.

When contacted, a company official said the switch was due to tax implications -- Tata would have had to pay more taxes if BPCL had bought on its behalf.

Traders said LSFO premiums are on the rise after being in the doldrums for two months since February due to sudden spot demand from swing buyers such as Taiwan, Thailand, the Philippines and now, India.

Philippine refiner Petron Corp. last bought a 1.0 percent sulphur lot, for mid-May delivery, at higher premiums of - a tonne to Singapore spot quotes, C&F, up from market - previously.

''The problem is that there are not much supplies in the market, so fulfilling any incremental demand is going to be a problem even if the volumes are not that large,'' a Singapore-based LSFO trader said.

The firming demand is partly offset by higher allocation volumes for LSWR in May by Indonesia, the product's largest supplier in the region.

State refiner Pertamina has allotted above-average LSWR volumes for export in May and June, with year-high volumes totalling 2.29 million barrels for this month and 2.08 million barrels for June.

Tata is expected to import more LSFO/LSWR volumes this year, above last year's total of 200,000 tonnes, because Indian refiners are increasingly turning to sour crude as feedstock and reducing their LSFO yield, the official said.

If the current tender is completed successfully, Tata's imports for 2007 will total 60,000 tonnes.

It has earlier bought a similar LSWR parcel, its first this year, via BPCL, about a month ago. The refiner cancelled a second tender request, for four April-June delivery cargoes, totalling 120,000 tonnes.

REUTERS SR BD1342