Reliance May Start New Refinery by End of November

By Archana Chaudhary

Oct. 8 (Bloomberg) -- Reliance Industries Ltd., India's biggest company, will start operating its new, 580,000 barrel-a- day oil refinery by the end of next month, the government said.

``They have told us that it will happen by end of November, that's when it is tentatively scheduled,'' R.S. Pandey, India's oil secretary, said by telephone from New Delhi today.

The export-oriented plant being built next to a 660,000- barrel-a-day unit at Jamnagar in Gujarat state will be the world's largest refining complex, according to Reliance. Gasoline and diesel margins for refiners in Europe and the U.S. may fall when the refinery starts production, according to a Bernstein research report released in June.

Operations will start in a ``few days,'' P. Raghavendran, president of the group's refinery business, said last week without giving details. The unit will produce 24 million metric tons of diesel and 10 million tons of gasoline a year, he said.

Full capacity at the refinery may be reached by the end of the first quarter next year, adding about 300,000 barrels a day to global diesel supplies, Merrill Lynch & Co. said in a report dated Oct. 1.

Processing capacity to make distillate fuel, which includes heating oil and diesel, is poised to increase by 889,000 barrels a day, followed by gasoline at 727,000 barrels a day, ``in late 2008 and 2009,'' according to Merrill.

The refiner may export gasoline and alkylate to the U.S. West Coast in summer and to Asia in the winter, while supplying low-sulfur, less-polluting diesel to Europe, Bernstein said.

Reliance will consider selling gasoline to Africa, the Middle East and the Far East in case of an economic slowdown in the U.S., Raghavendran said.

The new refinery is being built by Reliance Petroleum Ltd., a unit of Reliance Industries.

To contact the reporter on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.