India's Mangalore Refineries and Petrochemicals Limited (MRPL) is close to signing a deal to sell 1.32 million tonnes of oil products to Emirates National Oil Company (Enoc) from March to December, trade sources said on Thursday.

MRPL, which depends heavily on Iran for crude purchases, last week said it will export diesel through spot tenders as its term deal to supply the fuel to Iran has not been renewed.

The India refiner plans to supply 120,000 tonnes of jet fuel, 400,000 tonnes of gas oil with 1 percent sulphur content, and 800,000 tonnes of fuel oil, a trade source said.

He said the contracts for sale of the three products would run from March-December. Another trade source said this was the first time that MRPL would be selling fuel oil on a term basis to Enoc.

MRPL would sell jet fuel at a premium of $3.60-$3.80 a barrel to the average of monthly Platts Middle East Quotes for jet kerosene and gas oil at a premium of about $2.25 a barrel to average of monthly Platts gasoil regular quotes.

The refiner would ship out ten 80,000-tonne fuel oil cargoes at a discount of $2.85 a tonne to the monthly average of Platts Singapore high sulphur fuel oil quotes.

'It seems MRPL is not bullish on the fuel oil sale, that's why it is selling fuel oil at a deeper discount to its previous spot sale, which was at a discount of $2 a tonne,' the second trade source said.

MRPL managing director UK Basu declined comment on the new deal. MRPL plans to end fuel oil exports after expansion of its existing 194,000 bpd refinery in southern India to 300,000 bpd.

The expansion, scheduled to be completed by March 2012, will change its crude and product slate and enable it to convert fuel oil into distillates like diesel and propylene.

Post-expansion the refinery would be able to process cheaper and more acidic crudes. Currently 75-80 percent of the oil it processes is high sulphur crude.-Reuters