The government has declined Reliance Petroleum [Get Quote] permission to export LPG from its under- construction only-for-exports refinery at Jamnagar in Gujarat, as the nation continues to face deficit in cooking gas production.

RPL, a unit of Reliance Industries [Get Quote], had sought nod to export the entire liquefied petroleum gas production in the six months to fully commissioning its 580,000-barrels per day refinery in the Jamnagar special economic zone.

"Petroleum ministry, in a letter dated November 11, 2008, declined RPL's request citing prevailing LPG deficit in the country," a government source said.

RPL, in which US energy major Chevron Corp has 5 per cent stake, is likely to start producing fuel from the unit being set up adjacent to parent firm's existing 660,000 bpd refinery at Jamnagar in the next few weeks.

The source said RPL had sought permission to export 30,000 tons a month of LPG from the new unit for first 3-4 months from start. Further, an additional 5,000 tons a day of LPG was sought to be exported after four months from start till all major units are commissioned -- which may take a period of over 3 months.

Petroleum ministry, he said, wants RPL to sell the fuel to state-run retailers to meet domestic demand.

Reliance Industries' existing unit, which was converted into an only-for-export unit last year, too is not allowed to export LPG.

All other products from the refinery as well as the new unit can be shipped to markets overseas.

Reliance Petroleum may fully commission the refinery by March, although trial runs are scheduled to be started in a few weeks.

Currently, pre-commissioning activities at the unit are underway and checks carried out. The crude distillation unit may be ready to receive crude oil by end of third week of December.

The new refinery may initially use lighter sweet crudes (low sulphur) for up to two months, before using higher-sulphur crudes when it becomes fully operational.

Initially, the refinery would produce Euro-IV grade petrol and diesel and will upgrade to Euro-V, once more complicated units like desulfurisation unit are fully operational.

Together with Reliance's existing 660,000-bpd refinery, the new unit will make the Jamnagar complex the world's biggest single location refining facility with a capacity of 1.24 million bpd.

RPL is to export products primarily to the US and Europe, although demand for fuel has slowed in these markets to multi-year lows in the face of an economic crisis.