India to Export Petro Products to Pakistan

Petrol, diesel exports to fuel-starved neighbour will open up new markets for Reliance, Essar refineries

The thaw in relations between India and Pakistan, which started with cricket diplomacy at Mohali last month, could soon see India exporting petroleum products to its neighbour. 
India, which has surplus refining capacity, has agreed to export fuels such as petrol and diesel to Pakistan to help the neighbouring country meet its fuel shortfall and open up a new market for large refineries of Reliance Industries, Essar Oil and a new unit in which the LN Mittal Group is a co-promoter, government officials said. 
"Pakistan is keen to import refined petroleum products from across the border to save cost. The Indian side will firm up the proposal in an internal meeting on Monday before the bilateral meeting," one of the officials, with direct knowledge of the matter, said. 
India imports about three quarters of the oil it consumes, but its refining capacity has expanded rapidly, making it a key player in the international market. Exports of refined products have risen to 51 million tonnes in 2009-10 from 746,000 tonnes in 1999-2000 according to government data. Commerce secretaries of the two sides are meeting in Islamabad on April 27-28 to renew trade ties between the two countries, which have been at a standstill since November 2008 after the Mumbai terrorist attack. The acrimonious relations between the two neighbours eased last month when Prime Minister Manmohan Singh and his Pakistani counterpart Yusuf Raza Gilani watched the India-Pakistan World Cup semi-final together at Mohali. The two countries have fought three wars since both attained independence in 1947, besides a major skirmish in Kargil between May and July 1999. 
Indian officials said increased trade inter-dependence would force the two nations to keep friendly relations, and India was in a position to meet Pakistan's fuel demand. Pakistan has about 12-milliontonne refining capacity, which meets only half of its annual requirements, while India exports about 25% of its 185-million-tonne refining capacity. Talks Initiated in 2005 
India's exports of refined products are poised to jump further with expected addition of 30-milliontonne new capacities by March 2012 when the Bathinda, Bina and Paradeep refineries are commissioned. 
The 9-million-tonne Bathinda refinery near the Indo-Pak border is expected to be commissioned this year. Co-promoted by the LN Mittal Group and HPCL, the refinery has been eyeing the Pakistan market for its products, officials in the oil ministry said. 
Talks between India and Pakistan to start trade of petroleum products were initiated in 2005 by the then oil minister, Mani Shankar Aiyar, who favoured diesel supply to the neighbour. India had exported some petrochemicals such as PTA and LOBS to Pakistan through the sea route.

HAND OF FRIENDSHIP: Manmohan Singh with Yusuf Raza Gilani at Mohali