HPCL seeks 200KT more low-sulphur gas oil

Singapore, June 5: India's Hindustan Petroleum Corp. Ltd. (HPCL) is seeking 2,00,000 tonnes of low-sulphur gas oil for June-July delivery, on top of earlier imports of 2,70,000 tonnes for June-August, to cover for domestic shortfalls, traders said on Tuesday.

HPCL also offered to sell by tender at least 25,000 tonnes of 0.5 percent sulphur gas oil for prompt loading on June 12-17 or June 21-26, traders said on Tuesday.

Price offers for the tender to import 0.05 percent sulphur gas oil must be submitted by June 6, followed by a day of validity, while the export tender closes between June 7 and June 8, they said.

''The supplies are meant to meet farming demand as our market share has gone up,'' said an official from HPCL, who declined to be named.

The surge in imports was to make up for a supply shortfall as one Indian refinery is scheduled to shut for maintenance this month.

Indian Oil Corp. (IOC) is due to shut its 160,000 barrels per day (bpd) Mathura refinery in northern India.

Some traders also fear that HPCL's 150,000-bpd refinery might be facing some hitches, which might have forced the refiner to seek extra prompt supplies.

But other traders said that while HPCL may be looking to buy some barrels via the tender to shore up supplies, it might not eventually award all the cargoes.

''They could be testing the waters (for price levels).

Supplies are definitely tight in India so they need to import gas oil,'' said a trader in New Delhi.

Traders also pointed out to the economics of importing low-sulphur supplies.

''Producing low-sulphur diesel may not be cost-beneficial to HPCL since domestic prices are not competitive. So it's better to import them,'' another trader said.

HPCL last bought 270,000 tonnes of 0.045 percent sulphur gas oil for June and August at a premium of nearly a barrel to Middle East 0.5 percent quotes on a cost-and-freight (C&F) basis.

Reuters >