July 5, 2017 / 5:35 AM / 19 days ago

HPCL-Mittal Energy delays full start of Bathinda oil refinery to end-July: sources

SINGAPORE/NEW DELHI (Reuters) - India's HPCL-Mittal Energy Ltd (HMEL), part-owned by steel tycoon L N Mittal, has delayed the full-scale start-up of its Bathinda oil refinery in northern Punjab state to the end of July, four sources familiar with the matter said.

The refinery was shut on April 30 for about 45 days to raise capacity by about 28 percent to 230,000 barrels per day. The start-up was first delayed to late June.

It may only be fully operational in late July, the sources said.

HMEL's chief executive Prabh Das declined to comment.

State-owned refiner Hindustan Petroleum Corp (HPCL) and Mittal Energy Investments Pvt Ltd each own a 49 percent stake in the project.

HMEL recently began operating some secondary units at Bathinda and despatched a small quantity of diesel for HPCL, two of the sources said, adding the crude distillation unit at the plant is not yet functional. The plant has one crude unit.

The Bathinda delay along with heavy maintenance work planned by Indian Oil Corp at its plants has prompted HPCL to enter the spot market to buy diesel, one of the sources said.

It has either bought or is seeking 455,000 tonnes of diesel for July delivery and is expected to buy another 130,000 tonnes of the fuel in the next two to three weeks, the source added.

HPCL bought 250,000 tonnes of diesel for May and June and was largely absent from the spot market before that.

India's imports of diesel drove the profit margin for the fuel in Asia to a two-and-a-half month high of $12.14 a barrel above Dubai crude on Wednesday, Reuters data showed.

During the shutdown, HMEL plans to raise the capacity of its sulphur recovery unit to 700 tonnes a day from 600 tonnes to better process high-sulphur crude grades.

The refiner will also increase its vacuum gasoil hydrotreater capacity to 3.5 million tonnes a year from 3 million tonnes and build a bitumen blowing unit.

The company will also convert the refinery's power plant that currently runs on diesel and gas from the refinery to petroleum coke.

Reporting by Jessica Jaganathan in SINGAPORE and Nidhi Verma in NEW DELHI; Editing by Christian Schmollinger

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