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Massive LPG shortfall on cards

india Updated: Oct 25, 2006 16:02 IST
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Cooking gas supplies may be affected in India after a major fire broke out on Wednesday at the Jamnagar refinery of Mukesh Ambani's Reliance Industries, injuring one person. The fire was contained soon after.

"One Reliance employee was seriously injured. There are no other casualties," a company statement said.

The company's refinery is located in Gujarat, close to the Arabian Sea, some 300 kilometres south of Ahmedabad.

"The fire broke out at the hydro-treater unit number two of the refinery at around 11 am. It has since been contained. The unit was immediately evacuated," a company official said. "We are still assessing the damage," he added.

The refinery - the world's third-largest at a single location - has a primary refining capacity of 6,60,00 barrels of crude per day and accounts for close to 25 per cent of the country's production of petroleum products such as diesel and gasoline.

"We expect a shortfall of around 1,20,000 tonnes of LPG (liquefied petroleum gas), but necessary alternate arrangements are being made to ensure that supplies are not affected," Petroleum Secretary MS Srinivasan said in New Delhi.

For Reliance, the shutdown of the unit could result in losses of between Rs 80-Rs 120 million ($1.7-$2.6 million) per day, experts said.

According to city officials, a loud explosion was heard at the refinery a little before 11 am, after which high flames were seen leaping out from the site. Fire tenders at the unit and from the city doused the flames in two hours.

The hydro-treater unit that caught fire processes 16 per cent of the company's production capacity of 33 million tonnes, company officials said.

"As a pre-cautionary measure, the neighbouring Diesel Hydrotreating Unit - II has been shut down safely. We expect to restart the same shortly," the Reliance statement said.

"All other refinery units, including both the crude units and petrochemical units, are operating normally."

Experts said the unit is critical to the 7,500-acre petrochemicals complex since it removes impurities from products so that they have a higher-octane value and fetch a much better price.

It may take at least a week to restart the unit, they said.

The company's shares were not trading on Wednesday since the markets were closed on account of Eid-ul-Fitr. The company's market capitalisation, at $36.73 billion, is the largest for any listed company in the country.

Reliance Industries had recently reported a turnover of $12.132 billion and net profit of $1.14 billion for the half-year that ended on September 30. Its refinery operated at 94.9 per cent capacity during the period and processed 15.7 million tonnes of crude.

Its Jamnagar unit had faced a major natural disaster in 2001, when a devastating earthquake had damaged pipelines, equipment and civil work, resulting in a loss of production for several weeks.

The company had claimed an insurance of Rs 1.2 billion ($22 million) thereafter.

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