Mumbai, Dec. 25: Reliance Petroleum (RPL) today commissioned its export-oriented refinery at Jamnagar in Gujarat.

The refinery has capacity to process 580,000 barrels of crude oil per day, or 29 million tonnes annually. However, it will take at least eight days before the plant is ready to make its first product delivery.

Industry circles say petrol, diesel and liquefied petroleum gas (LPG) will be among the first products that will come out of the refinery.

RPL said it had commenced the processing of crude oil from today. It added that the entire refinery complex was expected to attain full capacity shortly though the company did not set a specific date.

“The secondary processing units are now under synchronisation and commissioning,” the company said in a press statement. Analysts expect the refinery to be fully operational by early next year.

RPL has been able to stick to its deadline to start operations by this month. The release said the unit had been completed in 36 months from concept to commission — which set a new global benchmark for building a grassroots refinery.

“I am extremely proud of the entire team at Reliance which has worked together and commissioned this large and complex refinery in record time, which yet again demonstrates the strength of our project management skills,” RPL chairman Mukesh Ambani said.

The new refinery will be the sixth largest in the world and will place Reliance firmly in the pantheon of the world’s largest oil refiners, both in terms of complex refining capacity and earnings potential. Jamnagar will also emerge as the refining hub of the world, having the largest refining complex with an aggregate refining capacity of 1.24 million barrels of oil per day in any single location in the world.

RPL claimed the refinery had been built with a significant capital cost competitive advantage. It was commissioned at a time when a significant shortfall in engineering and construction resources had impacted most global refinery projects.

The RPL refinery is said to be among the world’s most complex refineries with a Nelson Complexity index (the value-addition potential of a refinery) of 14.0. This will enable the refinery to process heavy-crude varieties and produce superior quality products that meet stringent specifications even beyond the forthcoming Euro IV norms.

According to RPL, there are other advantages with the refinery. The high complexity is expected to also present a major competitive advantage given the current trend of increasingly heavy and sour new crude discoveries.

Moreover, it is located adjacent to RIL’s existing refinery and petrochemicals complex. It’s felt that by sharing best practices and leveraging the existing infrastructure, RPL will gain in the areas of operational efficiency, logistics, crude sourcing, product placement and risk management.

The refinery is located on the west coast of India which is in close proximity to West Asia, the largest crude oil producing region in the world. This is expected to result in lower ship turnaround time and reduced crude freight costs.

Ambani added: “We, at Reliance, continue to be committed to the long-term potential of the refining sector. We will leverage our competitive advantages of scale, complexity and capability to process a wide range of crude oils and flexibility to produce high quality transportation fuels and create significant value for all its stakeholders.”

However, observers reckon that the new refinery will have to grapple with the prospect of lower gross refining margins (GRMs) arising from the global economic slowdown. GRM is the difference between the value of petroleum products produced and crude oil price.

During the second quarter ended September 30, Reliance Industries Ltd (RIL), the parent of RPL, recorded a GRM of $13.4 per barrel. Analysts fear this figure can dip to single digits over the next two quarters.