<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[<p>Essar Oil is likely to cease fuel oil exports as early as May after starting a new delayed coker unit (DCU) at its 375,000 barrels per day Vadinar refinery last week, industry sources said on Wednesday.<br><br>"Essar will stop exporting fuel oil, but spot offers may still be made when margins are really good," a source familiar with the matter said.<br><br>"Most of Essar's volumes head into the Middle East bunker market anyways. In terms of impact, the market is not short on supply at the moment," a trader said.<br><br>It was originally expected that fuel oil exports would be halted by the end of 2011, but the new unit had not been stablised by then, sources said.<br><br>Essar's cargoes were on-specificaton 380-centistoke grade and traders were initially worried about the impact that this loss would have on the availability of cargoes that could be sold directly into the marine fuel market.<br><br>However, the sulphur requirement for marine fuel has since changed, with a 3.5 percent limit imposed to meet international requirements under the MARPOL convention.<br><br>"But with the sulphur limit now lowered to 3.5 percent, Essar's cargoes at a maximum guaranteed 4 percent may require some blending as well," another source added.<br><br>The refiner normally offers two spot cargoes of between 60,000-80,000 tonnes of 380-centistoke a month since 2011, which accounts for more than a third of India's total spot exports.<br><br>On top of that, it also has a three-month term offering to provide one cargo monthly since last July.<br><br>Essar was last seen selling an early April loading cargo to U.S.-based trader Cargill, with no new tender offering made since.<br><br>With the addition of the new DCU, the refinery would be able to convert bottom-of-the-barrel vacuum residue into higher value products such as gasoline, gasoil and vacuum gasoil (VGO) instead, the company said in a news release.<br><br>Essar's fuel oil output after the expansion will be "very small", CEO Naresh Nayyar had told Reuters last July.<br><br>The Phase I expansion of its Vadinar refinery included the addition of secondary units as well a revamp of its crude distillation unit (CDU) and fluidised catalytic cracker unit (FCCU).<br><br><br>(Reuters)</p>