NEW DELHI: Domestic oil marketing companies (OMCs) should come together and negotiate with oil producing companies for a good discount on long-term contracts, said petroleum minister Hardeep Singh Puri on Wednesday.
Puri, addressing the press, said India holds the most important card—the market card—and since it consumes over 5 million barrels a day. “As far as India is concerned, we are holding one of the most important cards in your hand, which is a market card, which means that 5 million plus barrels a day are consumed in India. Why should the Indian refiners not want to negotiate a good discount on a long-term basis,” said the minister.
In India, state-owned companies such as Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) import the majority of crude oil. Private refiners, Reliance Industries and Nayara Energy, also import a significant amount of crude.
As per the government data, India imported $132.4 billion of crude oil in FY24 as against $157.50 billion spent in FY23. India is believed to have saved $25 billion in foreign exchange in the year ending March 31 as against FY23. This saving is attributed to the discount received on Russian crude oil imports. India has increased its imports from Russia due to the attractive discount offered to refiners.
However, BPCL, during an investor call, indicated that the discount has narrowed recently. They previously received a discount of about $8–$10 per barrel on Russian crude oil last year, but this year’s discount is expected to be lower, potentially in the range of $3–$4 or $3–$6 per barrel.
Therefore, the minister suggested that the Indian refineries come together to negotiate with the oil producing companies for a better discount. He highlighted the example of a coordinated move by OPEC+ (the Organization of Petroleum Exporting Countries), a cartel of oil-producing countries, to cut down 2.2 billion barrels of crude per day to check the global crude price. The cut was what the minister called substantial. He also said that despite ongoing conflicts in the world and the continued production cuts by OPEC, the price of oil is held.