IOC inks $1.5-bn deal to buy US crude

In the first-ever deal by an Indian company, Indian Oil Corp (IOC) on Monday said it has signed an annual deal worth $1.5 billion to import 3 million tonnes of crude oil in the fiscal year beginning April 1.

This is the first time any Indian refiner has signed an annual contract since the country in 2017 began importing crude oil from the US.

"IOC has finalised a term contract for import of up to 3 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.

The contract was finalised on February 15. The term contract follows IOC signing up to buy crude oil from the US through a term-tender deal in August last year. It had at that time bought about 6 million barrels of US crude oil under single tender for delivery between November 2018 and January 2019.

"The approximate value of the contract works out to $1.5 billion," the IOC statement said. "This is the first term contract finalised by any Indian PSU oil company for import of US origin crude oil grades." Prior to this, 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.

They cannot 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 nonstate foreign firms.

IOC and other state firms like Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) enter into annual term import deals with national oil companies of mostly Middle East countries.