India gets its first US oil shipment today

New Delhi joins Asian states like Japan, South Korea and China to buy crude from the US

India will receive its first ever shipment of US crude oil today when a very large crude carrier (VLCC) docks at Paradip port in the eastern state of Odisha. Indian Oil Corp (IOC) in early July booked the first US cargo, opening floodgates that saw other state-owned refiners including Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) rush to buy US crude oil.

“The ship carrying 1.6 million barrels of US crude will reach Paradip sometime around midnight tonight or early tomorrow morning,” IOC Chairman Sanjiv Singh told PTI here.

The Indian government has encouraged state-controlled refiners to buy US and Canadian crude from the US Gulf coast as it looks at cheaper alternatives that have emerged due to global supply glut.

A US energy official had on Friday stated that IOC and BPCL have committed to buy eight shiploads of US oil by March 2018.

“We have booked a second cargo as well for delivery at Vadinar in Gujarat in about a month from now,” Singh said. “We expect to buy one shipload of US crude every month through tenders.”

While in the first purchase IOC is importing 1.6 million barrels of high sulphur crude Mars from the US and 400,000 barrels of Western Canadian Select oil, in the second it has bought 1.9 million barrels of US crude, half of it being shale oil, he said.

India, the world’s thirdlargest oil importer, joins Asian countries like South Korea, Japan and China to buy US crude after production cuts by Opec drove up prices of Middle East heavy-sour crude, or grades with a high sulphur content.

Buying US crude has become attractive for Indian refiners after the differential between Brent and Dubai has narrowed.