Wires

India's MRPL sells first lower sulphur gasoil cargo in a year

* MRPL sells 0.25% sulphur gasoil 1st time since Oct 2011

* Expected to move away from high sulphur grade exports from2013

* Secondary units to be fully commissioned by December

SINGAPORE, Oct 8 (Reuters) - India's Mangalore Refinery andPetrochemicals Ltd sold a lower sulphur gasoil cargoand offered another, its first such cargoes in more than a year,as it moves away from exporting the polluting high sulphurgrade, traders said on Monday.

The state-run refiner sold a gasoil cargo with a low 2500parts-per-million, or 0.25 percent, sulphur content for loadingfrom New Mangalore over Nov. 1-3 to BP at premiums of about$2.75 a barrel above Middle East quotes.

This is $1.25 a barrel, or about 83 percent, higher than asimilar cargo sold a year ago.

MRPL also offered a low sulphur gasoil cargo for Nov. 6-8loading.

MRPL normally offers high sulphur gasoil every month and isone of most regular exporters of the grade, so any cutbacks willlikely push up prices of the grade, the traders added.

Refineries around Asia have been upgrading facilities toproduce cleaner-burning fuels, restricting the supply of thehigh sulphur gasoil which is still in demand from developingAsian nations like Indonesia, Vietnam, Pakistan and Bangladesh.

Demand for the fuel also remains robust from Middle Easternand African countries like Egypt, Yemen, Jordan and Sudan.

Gasoil is often a heavily subsidised fuel in many countries,and so switching to cleaner gasoil could mean an increasedstrain on government budgets, especially when underlying crudeoil prices remain high.

MRPL has largely been expected to move away from exportingthe high sulphur gasoil grade from 2013 after the commissioningof secondary units including a diesel hydrotreater by December.

A diesel hydrotreater unit removes sulphur fromdiesel.

It has not been decided if the company plans to permanentlyoffer gasoil with 0.25 percent sulphur or a lower sulphurcontent instead of its regular 0.5 percent sulphur, a sourceclose to the matter said, adding that it will depend oneconomics for now.

MRPL's diesel output is expected to increase once its newsecondary units are fully operational, but this may not meanmore exports as domestic demand continues to grow steadily withsales of diesel-powered cars rising because of a widening gapbetween retail prices of gasoline and diesel.

MRPL is currently forced to export diesel with high sulphurcontent because India's emission standards cap the sulphurcontent at 350 ppm and 50 ppm.

But once it is able to produce more low sulphur diesel withthe new hydrotreater unit, MRPL might be able to divert some ofthe cargoes to the domestic market, traders said.

"They will probably keep the option and export whichevergrade gives them better economics," an India-based trader said.

(Reporting by Jessica Jaganathan; Editing by Himani Sarkar)

((Jessica.Jaganathan@thomsonreuters.com)(+65 6870 3822)(ReutersMessaging: jessica.jaganathan.thomsonreuters.com@reuters.net))

Keywords: INDIA MRPL/DIESEL