UPDATE 1-India May refinery output down 4.3 pct y/y- govt

* May refinery output growth slows 4.3 percent

* Reliance's May output down 6.9 pct yr/yr, better than Apr

* Crude oil production slips 4.3 pct, natgas up 18.3 pct

* Find past stories click [O/INDIA1]; for data: [nDEL477799]

By Nidhi Verma

NEW DELHI, June 26 (Reuters) - Indian refiners processed 4.3 percent less crude in May than a year earlier due to planned maintenance work at some refineries and shrinking margins, official data showed on Friday.

Combined crude processing at Reliance Industries' (RELI.BO) two export-focused plants at Jamnagar in western Gujarat state fell 6.9 percent from a year ago, smaller than an annual decline of 9 percent in April.

Indian refiners processed 3.02 million barrels per day (bpd) of crude in May, as margins for simple Asian refiners shrank to 82 cents from $1.57 a barrel in April. <REF/MARGIN1>

Crude oil output in May fell an annual 4.3 percent to 658,000 bpd, the data showed, while natural gas output grew 18.3 percent to 3.41 billion cubic metres from a year ago as Reliance stepped up supplies from its D-6 block in the east coast.

Essar Oil (ESRO.BO), another private refiner, processed 3.4 percent less crude than a year earlier at its Vadinar refinery, which was upgraded in April to process 280,000 bpd. The refinery was restarted on May 3 after a planned 17-day shutdown.

Maintenance work at refineries reduced throughput of plants owned by Indian Oil Corp (IOC.BO), the country's biggest state-run refiner, by 8 percent and that of Bharat Petroleum Corp (BPCL.BO) units by 19.1 percent.

Crude processing at Hindustan Petroleum Corp's (HPCL.BO) two refineries rose 56.3 percent in May from a year earlier.

The International Energy Agency (IEA) in its latest report said world oil demand would contract by less than previously expected in 2009, and raised its 2009 forecast for the first time in almost a year. [ID:nLB402541]

The agency, which advises 28 industrialised countries, has not changed its Indian oil demand forecast of 3.2 million bpd this year.

Crude processing at state refiners, which meet local demand, declined 3 percent in May.

Overall, production at Indian refineries in May stood at 102.5 percent of installed capacity. (Editing by John Mair)