Less than a year after first oil from the US was imported into India, state-owned Indian Oil Corp (IOC) has signed up to buy crude oil from the US through a term-tender deal, a senior company official said.
IOC has signed a contract to buy about 6 million barrels of US crude oil under single tender for delivery in November 2018 to January 2019, he said.
Currently, the company, as well as other state-owned oil firms, buy crude oil from the US on a spot or current tender basis which comprises one shipload of oil. They cannot enter into a term or fixed quantity deals as the government policy does not allow them to enter into such contracts with non-state foreign firms.
IOC and other state firms like Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) enter into annual term import deals with national oil companies of mostly Middle East countries.
To overcome this, IOC floated a tender to buy three shiploads of US crude instead of the usual practice of one cargo, the official said.
The company will receive one very large crude carrier (VLCC) of US oil every month in November, December and January.
It is expecting the first VLCC to be delivered to Vadinar in Gujarat in November and a second cargo at Mundra in the same state in December. A third shipment is to come at Paradip in Odisha in January, he said.
Including these cargoes, the company's US crude purchase amount to 16 million barrels in total since April.
Prior to this deal, IOC had struck deals for importing 10 million barrels from six cargoes in the spot market. "We had been regularly taking spot cargoes but are now also looking at tender-term deals where monthly cargoes can be booked through a tender purchase," he said.
The increased purchase of US oil companies has come ahead of re-imposition of economic sanctions against Iran - India's second-biggest supplier of oil. The sanctions, which would come into force from November 4, are likely to block current payment routes used to pay for Iranian imports.
The US, which in May pulled out of a landmark nuclear deal and said sanctions will be re-imposed on Iran within 180 days, has threatened to cut off access to the American banking system for foreign financial institutions that trade with Tehran.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)