The Hindu Business Line : RPL mulls owning VLCCs for crude import

On the block Once the new Rs 27,000-crore refinery starts operations by December 2008, the refining capacity of Reliance will go up from 33 mt to 63 mt of crude per day. At the rate of four VLCC cargoes for one mt, this would require 20 VLCC cargoes in a month.

Bangalore , April 13

Reliance Petroleum Ltd, a subsidiary of Reliance Industries Ltd, is looking at the option of owning very large crude carriers (VLCCs).

This is as part of the company's strategy to insulate it from the volatilities in freight rates in view of the proposed expansion in refining capacity by setting up a 30-million-tonne (5,80,000 barrels per day) export-oriented refinery at Jamnagar in Gujarat, a top official has said.

"We are considering a business model which involves owning ships to move the crude imported for our refinery. Obviously, the entire crude will not be transported on our own ships. What portion of the crude should be hauled on our own ships and what should be transported through a mix of time charters and spot tonnage will have to be decided," Mr K.G. Ramanathan, Advisor, Corporate Development, Reliance Group of Industries, told Business Line here on Wednesday.

Once the new Rs 27,000-crore refinery starts operations by December 2008, the refining capacity of Reliance will go up from 33 mt (6,60,000 barrels per day of crude) to 63 mt or 1.24 million barrels.

This would mean about 5 mtof crude per month. At the rate of four VLCC cargoes for one mt, this would require 20 VLCC cargoes in a month.

In order to optimise on freight, Reliance has been managing its transportation requirements through a judicious mix of time chartered and spot tonnage. Certain portion of the crude are is imported through tankers hired on time charter basis for 1-2 years at a particular charter hire rate. The balance is imported on spot charter basis.

"RPL would follow a strategy similar to the one followed by RIL. The crude cargo would be moved partly on time charter contracts and partly on spot basis," Mr J. Rajaraman, Vice-President, Head, Crude Oil & Feedstock Trading, Reliance Industries, said.Reliance has hired two tankers on time charter basis for $35,000 per day for moving about five VLCC cargoes in a month, whereas the VLCC market is currently hovering in the region of $20,000-22,000 per day.

"The VLCC market is so prone to wild fluctuations that it makes sense for Reliance to have its own tonnage to move the crude,'' an industry official said, adding that the new tonnage tax would be an attraction to buy tankers.

More Stories on : Shipping | Outlook | Petroleum | Reliance Industries Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Jagson Airlines offloads stake to foreign entity

MRO sector braces up for consolidation

Kingfisher Airlines bets on co-branding promos

Air travel: Rich returns on mofussil routes

Air Arabia to fly to Jaipur, Kochi soon

Paramount Air to expand fleet

Top aviation experts on Kingfisher advisory board

RPL mulls owning VLCCs for crude import

Record granular urea discharge at Vizag port

Visakha Container sees long-term biz growth

Panalpina, Logiwiz tie-up to set up logistics centre

Dept of Posts gets nod to invest in markets

Container movement on KDS-Nepal ICD route hit