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India BPCL makes its first U.S. oil purchase, buys Mars, Poseidon

Reuters  |  NEW DELHI 

By Nidhi Verma

(Reuters) - India's Petroleum Corp has made its first purchase of U.S. oil, buying high sulphur crudes Mars and Poseidon in a tender, its head of refineries R. Ramachandran said.

is the second Indian refiner to buy U.S. Gulf crude after Prime Minister Narendra Modi's visit to Washington last month when President Donald Trump said the United States looked forward to exporting more energy products to the world's third-biggest buyer.

has bought a cargo containing 500,000 barrels each of Mars and Poseidon for delivery from Sept. 26 to Oct. 10.

Ramachandran said the landed price of the American cargo would be "reasonably competitive" to the delivered price of the high sulphur from the Middle East.

Earlier this month Indian Corp, the nation's top refiner, bought 1.6 million barrels of Mars.

A trade source said has bought the cargo from Shell.

Refiners in India, the world's third biggest consumer, are diversifying crude imports as cheaper alternatives have emerged due to a global supply glut despite OPEC and some non-OPEC producers cutting output to jack up prices.

Share of Middle Eastern crude in India's imports shrank in June to the smallest since October 2015, while that from south America, Africa and Central Asia including Russia rose.

Current market dynamics are also helping India's plan to deepen energy ties with the United States.

West Texas Intermediate prices are depressed relative to Middle East benchmark Dubai because of rising U.S. shale production and as the OPEC cuts have reduced the amount of Middle East medium, sour crude.

Global output in June is 1.2 million barrels per day above a year ago, the International Energy Agency said on Thursday in its latest monthly report.

"We are also looking at buying low sulphur from America if priced competitively. Our refineries need both low sulphur and high sulphur oil," he said, adding the latest purchase was a trial cargo.

aims to operate its Kochi refinery in Southern at expanded capacity of 310,000 barrels per day (bpd) from September, he added.

is the latest Asian country to buy U.S. crude after South Korea, Japan, China, Thailand, Australia and Taiwan after the OPEC cuts drove up prices of Middle East heavy-sour crude, or grades with a high sulphur content.

(Reporting by Nidhi Verma, editing by David Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)