In July, Pakistan announced expanding bilateral trade with India by allowing more imports, including diesel and fuel oil.
Reliance is likely to commission its 29 million tons a year export-oriented unit by October and Pakistan will be one of the destinations besides the US and Europe of the high value fuel it will produce, industry sources said.
The company has been trying to get an entry into Pakistan for the past four years, which imports 7-8 million tonnes of diesel a year to meet its domestic needs and it is only now that the neighbouring country has allowed import of fuel from India.
Its existing 33 million tonnes a year Jamnagar refinery in Gujarat and the upcoming unit adjacent to it offer the cheapest option for Pakistan but the Islamic nation has been getting fuel from countries like Kuwait at a heavy discount and Reliance has to better that price.
Importing diesel from India will be cheaper for Pakistan due to the difference in transportation cost but Islamabad has traditionally relied on the Gulf nations for its oil needs.
Sources said Jamnagar is less than a day from the Karachi port against over three days distance from Kuwait. But the discounts and easier payment terms like Kuwait Petroleum Corporation's 180-day credit line make importing fuel from the Gulf nations more attractive.
Besides Jamnagar, only Essar's Vadinar refinery can offer a similar freight advantage.
Also, Indian Oil Corporation's Panipat refinery can export to Pakistan via rail but the state-run refinery has no surplus diesel to export after meeting a galloping domestic demand.
Besides discounts from Gulf nations, the only other roadblock for Reliance is the fact that Pakistan has not graduated to using high specimen clean fuels (Euro-III and IV grade), the kind Jamnagar will produce, sources said.
While Reliance's first refinery already produces mainly for export, the second will be devoted entirely to foreign customers.
High-value fuels are exclusively for export to the West, primarily to Europe and the United States. It will soak up excess heavy Middle East crude supplies and export high-quality gasoline, diesel and jet fuel to markets around the world.
The new plant - the most sophisticated in the world for its size - has a low cost base and high complexity offering it unrivalled global reach for its fuel, allowing it to shift exports to the highest-priced market. It will play a swing supply role that will redraw traditional trade flows, and has already embarked on a robust marketing campaign in Europe, Mexico and East Africa, capitalizing on delays and cost overruns faced by other big refinery projects. - PTI
