NEW DELHI: State-run refiner Indian Oil Corporation on Monday has signed its first annual deal to buy three million tonnes of crude oil, valuing $1.5 billion to diversify crude sources.
“IOC has finalised a term contract for import of up to three million tonnes of crude oil of US origin grades as a part of its strategy to diversify term crude sources,” the company said in a statement.
IOC chairman Sanjiv Singh confirmed that the annual contract was finalised on February 15 and would be in effect from April. He, however, declined to reveal the name of the seller or pricing details, citing confidentiality.
The term contract, the first for a PSU ever since the country began importing crude oil from the United States in 2017, comes after the oil refiner signed up to buy crude oil from the US through a term-tender deal in August last year. It had, at that time, bought about six million barrels of US crude oil under single tender for delivery between November 2018 and January 2019.
Earlier, IOC and other state-owned oil firms bought crude oil from the US on a spot or current tender basis, which comprises one shipload of oil. However, they couldn’t enter into term or fixed quantity deals without a Board approval, as the present policy does not allow them to enter into such contracts with non-state foreign firms.
Meanwhile, the refiners including IOC, Bharat Petroleum Corp and Hindustan Petroleum Corp enter into annual term import deals with national oil firms of mostly Middle East countries.
To overcome this, IOC last year floated a tender to buy three shiploads of US crude instead of the usual practice of one cargo, an official said. Now, the Board has authorised it to buy crude oil on term basis, he said.