Barely into the third year of its operations in 2002-03, the Reliance Industries' refinery at Jamnagar has surpassed all public sector refining companies in the export of petroleum products.

In the first year after the dismantling of the administered pricing mechanism in the oil sector, the 27 million tonne Reliance refinery exported 6.5 million tonnes of petroleum products. The joint sector Mangalore Refinery and Petrochemicals Limited (MRPL) emerged a distant second with 1.9 million tonnes of exports.

While Hindustan Petroleum Corporation Limited (HPCL) came third with 5,96,000 tonnes of exports, Bharat Petroleum Corporation Limited exported 4,83,000 tonnes. Indian Oil Corporation was fifth with 3,96,000 tonnes.

With the increase in the domestic refining capacity, the country has been witnessing a jump in petroleum product exports. In 2000-01, the exports, at Rs 7,672 crore (Rs 76.72 billion), were 999 per cent higher than in the previous year.

In the following year, at Rs 8,285 crore (Rs 82.85 billion), the country became a net exporter of petroleum products for the first time.

This was possible partially because of the refining capacity, which jumped from around 85 million tonnes in 1998-99 to 116.07 million tonnes now, and partially because of the less-than-expected growth in the demand for petroleum products.

The latter moved up barely 2.8 per cent from 1 million tonnes in 2001-02 to 1.03 million tonnes in 2002-03 against an anticipated growth of 6 per cent per annum during the Tenth Plan period.

Among the products exported in 2002-03, diesel accounted for the biggest chunk at 3.1 million tonnes, followed by petrol (2.3 million tonnes), naphtha (2.06 million tonnes), fuel oil (1.12 million tonnes) coke (7,00,000 tonnes), and aviation turbine fuel (697,000 tonnes).

Indian refining and marketing companies have been undertaking simultaneous import and export of petroleum products because of certain sales tax benefits, logistics issues and specific quality requirements for R&D, trials and specific needs.

Since direct imports do not suffer sales tax, some bulk consumers prefer imports to domestic purchases. Regarding exports, some of the coastal refineries prefer to export certain products than move them inland for domestic sales.

This is especially the case with products carrying nil or negative duty protection like naphtha and fuel oil for fertilisers.