RPL - Refinery Completion Speedup!

Reliance Industries Ltd. India's top private firm, is set to finish building the world's sixth-largest refinery in the second quarter of 2008, more than six months ahead of schedule, a top official said on Tuesday.

Hopes for completing the 580,000 barrels per day (bpd) refinery ahead of a December 2008 target sent shares of subsidiary Reliance Petroleum, which is building the plant, up as much as 6.8 percent to a record 107.70 rupees.

P.M.S. Prasad, president and CEO of the petroleum division, also told Reuters in an interview that Reliance was shopping for retail outlets in Europe and the United States in anticipation of booming exports from its massive refining operations on the west coast of India.

"The new refinery is likely to be commissioned in the second quarter of 2008. We are looking at Europe and the U.S.A. for exports," Prasad said in an interview in his top-floor office on the outskirts of Mumbai, to which he often travels by helicopter.

The early commissioning gives Reliance a bigger head start to capitalise on robust refining profits before other export-focused refineries -- the biggest of which are being built in the Middle East -- weaken margins when they launch early next decade.

Reliance Petroleum Ltd., in which Chevron Corp. holds 5 percent, is building the refinery near Reliance Industries' 660,000 bpd plant, at Jamnagar in western Gujarat state. Together they will form the world's biggest refining complex.

Company officials said last year that they were working hard to bring forward the launch data to June 2008, but Prasad's comments were the first in months to confirm the target despite industry-wide contractor delays and cost escalation.

Prasad said Reliance, which is already exporting gasoline to Iran, Kuwait, Saudi Arabia and UAE, sees a good market for diesel with very low sulphur content in Europe and expects some buyers to blend it with lower quality fuel to meet specifications.

He also said Reliance had an eye on overseas retail assets.

The company's network of petrol stations in India had captured 15 percent of the market last year but subsidised sales by state-run Indian Oil Corp., Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. hurt its operations.

"Our experience in India has given us expertise and understanding of the situation in a developing country," he said.

GAS HOPES

Reliance is also optimistic about a steady start for gas production in its deep-sea field in the Krishna-Godavari basin off India's east coast.

The field, which will double India's natural gas output when it starts pumping 80 million cubic metres a day next year, is being developed at a cost of $5.2 billion.

Prasad said Reliance had obtained government approval to spend another $3.6 billion to maintain the field after it starts production.

Only a handful of towns and cities in India have gas distribution networks and millions of households use cylinder gas for cooking. Gas finds off the east coast, including Reliance's, are expected to boost natural gas use around the country.

Reliance was in talks with state-run Indian Oil Corp. and GAIL (India) Ltd. for city gas distribution projects, Prasad said.

Britain's BG Group is also keen to distribute gas in Indian cities.

Reliance was also in talks with Chinese firms to introduce gas-based home appliances in India, he said, adding that another group company, Reliance Retail Ltd., would also be involved in this. He did not give more details.

The Indian rupee has appreciated about 8 percent against the dollar since the start of the year and Prasad said its strength would help the firm as a large component of its capital expenditure, about $20 billion, was in dollars. This includes the new refinery, a new cracker project and exploration and production expenditure.

However, the company also has strong dollar earnings from exports, which accounted for 61 percent of its revenue in the January-March quarter.

Shares in Reliance Industries closed 0.15 percent lower at 1,703.50 rupees, while Reliance Petroleum closed 5.85 percent up at 106.75 rupees in a flat Mumbai market.