India's state oil refiners may order tankers worth $600 mn for domestic use

By Rakesh Sharma and Weilun Soon

   

India’s state-run refiners are planning to order 10 domestically-built vessels to transport fuels around the country as the government pushes ahead with its ambition to expand the shipbuilding industry.

 

Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. plan to jointly issue a tender later this year for the medium-range tankers, according to people familiar with the matter who asked not to be identified because the information isn’t yet public. The proposal could be valued at as much as $600 million, and will require delivery to start by 2028, they said. 

 

The South Asian nation is seeking to bolster its domestic building capacity, with ships increasingly viewed globally as national strategic resources for energy, trade and defense. India currently has at least 40 yards, but only four have the ability to make vessels that are bigger than the medium-range tankers. 

 

Still, refiners are lukewarm to the idea of owning and operating tankers, and have approached the government for financial support, according to the people. It’s more economical for the processors to charter ships, they said.

 

Indian Oil Corp., BPCL and HPCL didn’t reply to emails seeking comment.

 

The medium-range tankers will be in the range of 50,000 to 60,000 deadweight tons, and the tender could price the ships at $55 million to $60 million each, the people said. Indian Oil Corp. is expected to own six of the vessels, while BPCL and HPCL will each own two, they said. 

 

Pursuing locally built ships could come at a higher cost for the refiners. The average price for a South Korean-built medium-range tanker — often viewed as top of the range — was about $50 million last month, while China-made vessels came in about $7 million cheaper, according to Braemar Plc. 

 

About 13% of India’s petroleum products are transported over coastal routes, while more than half of the nation’s domestically produced fuels are moved via pipelines, according to the oil industry’s downstream regulator.