22-11-2017

IOC to export jet fuel to Myanmar, explore LPG marketing deal

Indian Oil Corporation (IOC) will start exporting aviation turbine fuel (ATF) to Myanmar from next month. The State-owned oil major is also exploring the prospects of LPG exports and will open an office in Yangon.

According to IOC sources, the company will export 12,000-14,000 tonnes of ATF and an equivalent amount of diesel to Myanmar for the next three months from Paradip Refinery on the Odisha coast to a joint venture of State-owned Myanmar Petroleum Enterprise (MPE) and Puma Energy.

Diesel is added to the consignment to ensure critical volume and optimise shipping costs.

Myanmar is interested in a long-term contract to meet its 15,000 tonnes a month ATF requirement. A team from the joint venture will visit the IOC facilities in India soon to discuss the long-term business prospects.

Meanwhile, the Myanmar government approved a proposal from IOC to open office in Yangon. The oil major is also exploring the possibility of getting comprehensive licence for end-to-end LPG distribution in Myanmar. A company delegation visited prospective partners in Yangon in October.

Parami Energy Group of Myanmar, which is already pursuing a joint venture with Numaligarh Refinery (NRL) for sourcing petroleum products through the More-Tamu land border, has expressed interest in participating with IOC in LPG distribution. Parami was recently awarded the LPG import and distribution licence. In a recent interview to BusinessLine in Yangon, the company chairman and CEO, Ken Tun, said, he was negotiating with IOC and Shell for sourcing LPG.

According to a recent presentation by MPE, Myanmar produces barely 10,000 tonnes of LPG and imports approximately 50,000 tonnes a year. This is sufficient to cater to barely five per cent of the population. With barely 30 per cent people having access to electricity, roughly 80 per cent Myanmarese use wood-based fuel like firewood, charcoal and fuel bars for cooking. In Yangon, majority use subsidised electricity (three cents per kilo-watt/hour) burning a hole in the government coffers.

According to Tun, a mere four-day direct sail from Paradip to Yangon makes IOC an attractive choice.

His company plans to import upto 400,000 tonnes of LPG a year.

Meanwhile, NRL is gearing up to seek the permission of the Union Petroleum Ministry to enter into a joint venture with Parami to market petroleum products in Northern and Western Myanmar regions closer to the land border.

Storage capacities

The company’s diesel sales through Moreh border is temporarily suspended for want of storage capacities. Parami has already approached the Sagaing divisional authority for necessary permission to build storage facilities at Tamu and Kalay. Till the facilities are ready, Parami started importing paraffin through the Moreh border. Myanmar consumes 500 tonnes of wax a month, mostly for making candles, which is a popular source of lighting in rural Myanmar.

Tun says paraffin import through the land route has also opened the prospect for Myanmar to export pulses as return cargo to North-Eastern States of India that do not share import restrictions imposed by India.

Source: The Hindu Business Line

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