Indian Oil Corporation looking at importing Russian crude to meet demand

State-owned refiner imports close to 65 million tonnes of crude oil annually

India is looking to import Russian crude to meet growing demand. Reuters

State-owned Indian Oil Corporation, the biggest refiner in India, is looking at importing Russian crude to meet growing demand in one of Asia’s fastest growing economies, its chairman said.

“When it comes into buying options, we would prefer to have as wide options as possible. Our existing suppliers are GCC countries and Iraq, but we are also trying to look into getting Russian crude,” said Sanjiv Singh.

The company is also importing a significant quantity of low-sulphur crude from West Africa and has entered into a term contract for American crude, Mr Singh told reporters on the sidelines of the Abu Dhabi International Petroleum Exhibition and Conference.

“We have been keeping a lot flexibility in our overall system, so that we have diversified sources in case of any restrictions not only from Iran but any other source so that we have options available.”

India is the world's third-largest consumer of crude and one of the biggest drivers for oil demand growth globally thanks to an increasing population of middle class consumers. The country gets much of its fuel from the Middle East, with Iraq currently its top source for imports. However, New Delhi looked at increasing imports from Russia after prices surged following the September 14 attacks on facilities in Saudi Arabia.

Russian firm Rosneft bought India's privately owned Essar Oil in 2017 for $12.9 billion, giving it control over its refinery at Vadinar. The company has since been renamed Nayara and imports crude sourced by Rosneft from a variety of markets, including Venezuela.

Indian Oil Corporation imports close to 65 million tonnes of crude oil annually, Mr Singh added.

Demand for diesel fell in the second quarter of this fiscal year due to a slowdown in the economy as well as the monsoon season, he said, but expressed optimism that demand for diesel would grow in the next six to 12 months on growing consumption.

“Diesel demand is growing 1.5 per cent year-on-year, which I won’t say [is] very good but is positive,” he said.

As a result of the slowdown in its economic growth, India has recently become a source of diesel exports after consumption of the widely-used fuel slumped to its lowest level since the start of 2017.

IOC offered as much as 130,000 tonnes of October-leading diesel last month, with the slowdown in demand prompting the refiner to shut down at least two refineries in September.