State owned oil and gas company, Indian Oil Corp, finalises its first annual deal with the US where the refiner can import their oil for $1.5 billion for 60,000 barrels a day in the year to March 2020 in order to diversify its crude sources. The deal is supposed to enhance trade between New Delhi and Washington. This also makes Indian Oil Corp the first Indian state refiner to sign the annual contract of buying US oil.
Earlier, IOC had bought US oil from public spot markets through a mini-term deal that allowed it to buy 6 million barrels of crude oil between the period of November 2018 and January 2019. IOC chairman Sanjiv Singh said that the contract will be in effect in the fiscal year beginning April 1, but he didn’t give any details regarding the seller name and pricing details. However, there are speculations that state that the deal has been signed with Norwegian oil company, Equinor. Equinor has set up an office in New Delhi but did not comment anything about the matter.
Almost 75% of IOC’s oil needs are met from the long-term deals with OPEC nations. After this term deal, the firm won’t be depending on OPEC crude. Sri Paravaikkarasu, head of east of Suez oil for consultants FGE in Singapore said, “Lots of geopolitical issues are going around. We expect lots of volume going away from Venezuela, West Africa and Iran, so it makes sense to have guaranteed term supplies from the US, where crude production is increasing.”
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