OREANDA-NEWS. March 29, 2011. Essar Group has deferred a shutdown of its 280,000 barrels per day (bpd) domestic refinery to help out state-run customers running short of diesel as Japan's crisis and Middle East unrest spike global prices and tighten supplies. Essar Energy said in a statement on Monday its Vadinar refinery in western India would now shut for 35 days in September-October instead of an earlier May-June closure at the request of state refiners that buy its products.

"Events in the Middle East and Japan have impacted the availability of petroleum products in the Asian region, particularly middle distillates such as gasoil," Essar Chief Executive Naresh Nayyar said in the statement. "We are working ... to ensure the continued availability of petroleum products during this period of tightness," he added.

State-run Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) have already deferred their shutdown plans, while Indian Oil (IOC) is willing to do so to meet local fuel demand. Asia gasoil cracks on March 17 surged to a two-and-half year high of USD 24.01 a barrel as traders anticipated higher diesel demand in post-quake Japan. The cracks have eased since then and are seen holding in the range of USD 22- USD 23 a barrel premium to Dubai crude.

Nayyar said the deferral would not impact the timing of its expansion of the refinery. The shutdown of the Vadinar refinery is aimed at raising capacity to 360,000 barrels per day from around 280,000 bpd and increasing the complexity of the plant to process more ultra heavy and heavy crude oil and to produce Euro V-compliant fuel for exports. The firm also plans to carry out routine maintenance work during the shutdown.