NEW DELHI: State-run Indian Oil Corp. Ltd (IOC) will source an additional 250,000 tonnes (mt) of crude oil per month from the world’s biggest oil producer, Saudi Arabian Oil Co. (Saudi Aramco), as India tries to line up supply alternatives in the wake of US sanctions on Iran.
In a first, the country’s largest refiner has also inked two term contracts totalling 4.6mt of US crude oil for 2019-20 from Norway’s Equinor ASA and Algerian state energy company Sonatrach. IOC is also in talks with Abu Dhabi National Oil Co. (Adnoc), the state-run oil company of the UAE, for additional supplies.
“The additional supplies from Saudi Arabia are over and above the 5.6mt annual term contracts with them. We are also talking to Adnoc. These additional supplies combined with the new ones from the US will help us tide over any supply shortfall on account of import constraints on Iranian oil. We don’t have any supply concerns," said A.K. Sharma, director (finance), Indian Oil.
Mint had reported on 24 April about India trying to leverage its robust ties with West Asian crude oil producers, such as Saudi Arabia, Kuwait and the UAE, to source additional volumes at terms similar to those of its annual contracts in a bid to avert any sharp rise in its domestic oil prices.
India has been a major importer of Iranian oil with imports of 23.5 million tonnes in 2018-19. Saudi Arabia is the second-largest supplier of crude and cooking gas to India.
It had also sourced 2.75% of its total oil requirements from the US between April 2018 and January 2019.
A six-month sanctions waiver for India and seven other countries to continue importing oil from Iran expired on 2 May, effectively shutting out Iranian crude.
Indian Oil’s move comes against India’s requirement to procure about 12 million tonnes of extra crude to urgently bridge the supply gap caused by the exit of Iran from its energy basket. Besides, the Donald Trump administration has also imposed sanctions on Venezuela’s state-owned oil firm Petróleos de Venezuela SA. India has kept its option open to purchase oil from Iran, with foreign minister Sushma Swaraj informing her visiting Iranian counterpart, Javad Zarif, that New Delhi will take a decision after the national polls come to an end on 23 May.
“Issues like this involve nations. It is beyond IOC," said chairman Sanjiv Singh.
In another development, Indian Oil on Friday said its fourth-quarter profit surged 17% to ₹6,099 crore on a revenue of ₹1.44 trillion, driven by higher exchange gains.
Indian Oil had reported a profit of ₹5,218 crore in the year-ago period.