India’s top refiner committed to long-term crude import contracts with Middle East

Indian Oil Corporation, the country’s largest refiner, is committed to long-term oil and gas contracts with the Middle East, its chairman Shrikant Vaidya has said.

“We have already maintained whatever we have committed from the Middle East and the total energy pie in the country has increased,” Mr Vaidya told the Middle East Petroleum and Gas event in Dubai.

“Though I might have taken oil from the other geographies, my continued relations with the Middle East in terms of the oil supply remains intact.”

However, spot purchases from the region have gone down to accommodate more Russian crude, Mr Vaidya said.

India, the world’s thirdlargest crude importer, has increased imports of discounted Russian oil since the start of the Ukraine war last February.

Russian oil cargoes to India rose to 44 million tonnes last year, from 6.5 million tonnes in 2021, according to VesselsValue, a valuation company.

Russian oil exports reached 8.3 million barrels a day last month, the highest since the invasion of Ukraine, the International Energy Agency said.

The lack of global investment in new oil and gas projects is a “cause of worry” for large energy importers such as India, Mr Vaidya said.

The IOC chairman also said an ageing fleet of crude tankers could result in a bottleneck. Nearly 28 per cent of the crude carriers will be retired in a few years and the order book for new vessels is “practically zero”, Mr Vaidya said. IOC aims to sign more long-term crude oil contracts, backed by “robust” demand in India for the next two decades, he said.

India, which replaced the UK as the world’s fifth-largest economy last year, has been focusing on diversifying its crude supply while increasing domestic production.

The country is currently working on increasing its refining capacity to 450 million tonnes a year, from 250 currently, Indian Prime Minister Narendra Modi said in February.

The country’s liquefied natural gas importing capacity nearly doubled last year, from 21 million tonnes a year in 2014, Mr Modi said.

India’s plan to increase the share of natural gas in its energy mix to 15 per cent from the current 6.5 per cent has created “enormous” potential for investment and future energy agreements, Mr Vaidya said.

India, which has a target of reaching net-zero emissions by 2070, aims to produce 500 gigawatts of non-fossil fuel capacity by 2030 to meet half of its energy demand through renewables.