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Reliance pipeline woes force Indian Oil to buy more gas oil

Having already bought six cargoes of gas oil for July delivery, Indian Oil Corporation is about to buy more gas oil through an additional tender. The first tender was issued late Wednesday.

Some traders expect that IOC may buy as many as ten more cargoes for July.

IOC's miscalculation of its July requirements came as a result of a pipeline problem at the Reliance Single Point Mooring or SPM facility at Reliance Petroleum's refinery -- from which IOC is scheduled to buy 50 per cent of its output of oil products -- when it starts up.

As India's largest private crude oil refiner, Reliance had originally planned to begin to test-run its 27 million-tonne-per-year refinery at Jamnagar, in Gujarat in western India, as early as in July. But many market participants now doubt whether Reliance would be able to start on the scheduled date.

The leaking pipeline at the Reliance SPM facility has prevented two Very Large Crude Carriers from discharging their crude to the Reliance refinery. The two VLCCs reportedly have been waiting to offload since April 16 and April 20 respectively.

The VLCCs -- believed to be carrying Nigerian crude supplied by Shell -- were apparently to be used for the test-run at Reliance.

UNI/Bridge News

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