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India’s biggest refiner, Indian Oil Corp, has secured government permission to import one very large crude carrier (VCCC) of U.S. crude oil every month this year, as Indian firms started buying American crude for the first time.
India allows oil imports only on Indian carriers, but U.S. crude transportation needs VLCCs, which can be done by foreign shipping companies. India’s shipping ministry has allowed Indian Oil to import one cargo from the U.S. every month in foreign carriers, Indian media report, quoting a senior official at the oil ministry.
Last month, Indian Oil became the first Indian company to buy U.S. crude oil, purchasing 1.6 million barrels of Mars crude. A week later, Bharat Petroleum became the second Indian refiner to start buying U.S. crude oil, after Bharat purchased 500,000 bpd each of Mars and Poseidon crude, to be delivered between late September and early October.
Just a few days ago, Bharat Petroleum bought 1 million barrels of U.S. WTI Midland sweet crude for October delivery—its first purchase of the sweet variety from the U.S, according to Indian media.
India is the latest addition to Asian customers for U.S. crude, after OPEC’s production cuts pushed prices up for the heavy sour crude oil from the Middle East.
According to India’s oil ministry official, even after shipping costs are added, Indian refiners find U.S. crude cost competitive now.
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Indian Oil is now increasing imports from the U.S. and is tendering for a second purchase, according to India’s oil ministry official.
“Going forward, the company feels it can import one VLCC a month and so has obtained the permission,” the official said.
Hindustan Petroleum Corporation Limited (HPCL) also plans to buy U.S. crude oil in coming months for its 166,000-bpd refinery in southern India, according to company executives, which would add yet another Indian customer for U.S. crude.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.