Diesel exporter India buying from offshore before emission rules

[SINGAPORE] India - one of Asia's biggest diesel exporters -- is having to import large quantities of the industrial fuel as its refineries gear up for new emission rules that take effect in April.

The country imported 293,000 tons of diesel in December, a five-fold jump from November, figures from data intelligence firm Kpler show. However, it remained a net exporter of the fuel. Most of the imports are likely to be ultra low-sulfur grades that comply with the Bharat Stage VI standards, which mandate a maximum sulfur content of 0.001 per cent in fuel for road vehicles.

Indian Oil Corp, the country's biggest refiner, imported 120,000 tons of diesel last month, said Rakesh Sehgal, executive director of supplies. It will continue offshore purchases until March as some of its refineries are upgraded to produce lower-emission fuels and is looking to import a further 160,000 tons, he said.

Tanks are being flushed and pipelines and pumps scoured to handle the cleaner diesel, said R Ramachandran, director of refineries at Bharat Petroleum Corp. An increase in diesel demand has added to the need for imports, and several IOC refineries have been shut for maintenance recently, he said.

"There was some prompt shortage of products as maintenance works coincided with a recovery in diesel consumption," said Senthil Kumaran, an analyst at FGE. "We think imports should ease off gradually as refiners will look to run at higher rates in the coming months after the conclusion of planned turnarounds."

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