UPDATE 1-India's Reliance eyes direct fuel sales in U.S.

*Reliance source says co. plans direct fuel sales in US

*American Petroleum Institute says Reliance will do well

*Reliance has revived Singapore trade desk

(Adds details, quotes from American Petroleum Institute)

By Nidhi Verma

NEW DELHI, July 14 (Reuters) - India's Reliance Industries (RELI.BO), owner of world's biggest oil complex, aims to directly sell fuel in the United States, the world's biggest oil consumer, a top company official said on Tuesday.

Reliance recently commissioned a second crude unit at its 580,000 barrels per day refinery. [ID:nDEL357811]

Full scale commissioning of the new plant, sited next to the group's existing 660,000 bpd refinery, will turn Jamnagar into the world's biggest complex processing 1.24 million bpd of crude.

When asked if Reliance has initiated the process for direct sale of its fuel in the U.S., the official, who did not wish to be identified, said: "Not yet, but the objective is always there."

The official, however, did not specify any timeline for the planned move.

U.S.-based refiners have been concerned that a raft of new federal environmental regulations could make it easier for overseas competitors to take a larger share of the U.S. fuel market.

The top U.S. energy lobby group, the American Petroleum Institute, said Reliance would do well in the U.S. because American refiners are bound by tough federal environmental regulations, based on the climate bill that just passed in the House of Representatives.

"As U.S. refiners are penalized by the inequitable provisions of the proposed climate legislation, the U.S. will actually be more reliant on fuel imports from places like India where refiners will not be under the same restrictions," said API spokeswomen Karen Matusic.

"The international protections in the House climate bill for energy-intensive, trade-exposed industries specifically exclude U.S. refiners," she said.

Reliance's new refinery is configured to produce fuel that meets stringent U.S. specifications.

"Reliance will try and have the flexibility to sell both directly in the U.S. and through third parties. We hear in the past they had tried to acquire a relatively small fuel retail chain in (the) U.S.," a trade source said.

The Reliance official said his firm had started supplying fuel to the U.S. refiner Hess Corp (HES.N).

Trade sources said Reliance had sold a 66,000 tonnes cargo of 10 ppm diesel to Hess in May and about 60,000 tonnes of 90 RON petrol to the the U.S. refiner in June.

Reuters in March reported that the Indian refiner had signed its first-ever term contract with Hess for sale of at least 4 diesel cargoes of 65,000 tonnes.[ID:nSP446760]

"We are selling in the U.S. market and we intend to continue doing that," the official, who could not be named told reporters.

Reliance has already leased product storage from Hess, the official said, but he did not specify the volumes.

To market its products, the firm has opened trading desks in Singapore, London and the U.S. In February, its Singapore trade team left the firm. But Reliance has revived its trading desk by internally transferring 3-4 officials to Singapore.

Reliance also owns trading firms in Dubai. It manages trading operations through its Mumbai office. (Additional reporting by Thomas Doggett in Washington; Editing by Bryson Hull and Peter Blackburn)