HMEL links Bathinda start-up to crude stability: Sources

Hindustan Mittal Energy Ltd (HMEL) will wait for stability in crude prices before starting up its new 180,000 barrels per day refinery, sources said, a sign that crisis-induced volatility is affecting major projects.

Brent crude oil prices were trading below USD 100 a barrel earlier this year before unrest in the Middle East helped push them to a 2-1/2 year high of USD 120 last month. Prices are currently over USD 114 a barrel.

An earthquake and resulting tsunami in Japan has also added to uncertainty in crude and products markets.

HMEL, a joint venture of state-run Hindustan Petroleum and billionaire Lakshmi Mittal's Mittal Energy, will get a first parcel of 620,000 barrels of Arab Extra Light and Arab Mix this week at Kandla port in western India, these sources said.

They added initial volumes would be used for commissioning pipelines and tanks at the new Bathinda refinery in northern India, which HMEL plans to commission in May and push to full capacity in September.

"The plan is to start crude processing when oil prices stabilise. The market is very volatile and any decline in oil prices means inventory losses," said one of the sources.

HMEL had also booked a 900,000 barrel parcel of Arab Mix for delivery in April but is now in talks to push back delivery to May, the sources said.

They said the two parcels were booked on a spot basis. HMEL is also in talks with Saudi Aramco for a term deal.

No officical comment was available from HMEL.