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

Spot purchases from the region have reduced to accommodate more Russian supply, Indian Oil Corporation chairman says

An oil depot in New Delhi. India is the world’s third-largest crude importer. Bloomberg

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.

Speaking at the Middle East Petroleum & Gas event in Dubai on Monday, he said: “We have already maintained whatever we have committed from the Middle East and the total energy pie in the country has increased.

“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 third-largest 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 a year earlier, according to VesselsValue, a valuation company.

Russian oil exports reached 8.3 million barrels a day in April, the highest since Moscow’s invasion of Ukraine, the International Energy Agency said in a report last week.

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.

“We see opportunities and partnerships for refining and petrochemicals," he added.

India, which overtook 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 a speech in February.

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

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.

The country’s green transition plan offers another area of opportunity, he added.

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.

As part of the National Green Hydrogen Mission, the South Asian country aims to produce 5 million tonnes of green hydrogen annually by 2030, with the potential to reach 10 million tonnes as export markets grow.