Indian Oil Corp, the country’s top refiner, has signed its first annual deal to purchase U.S. Oil, paying about $1.5 billion for 60, 000 barrels per Day in the year to March 2020 to diversify their oil resources, its president said Monday. IOC is the first Indian country refiner to purchase U.S. Oil under annual contract, in a deal which will also help increase trade between New Delhi and Washington. The company has previously purchased US oil and signed a term deal in August to purchase six million barrels of US oil between Nov and January.
IOC President Sanjiv Singh said the annual contract would start in April. He declined to give the name of the pricing or seller details, citing confidentiality. A trade source, who isn’t authorized to talk to the media, said the IOC signed the agreement with oil firm Equinor that will supply many different US grades. Equinor, that has put up an office in New Delhi to encourage oil marketing and trading, declined to comment. Indian Oil buys about 75% of its oil needs during long term deals, largely with OPEC nations. The term deal will assist cut IOC’s reliance On OPEC crude, said Sri Paravaikkarasu, head of east of Suez oil for advisers FGE in Singapore.
A lot of geopolitical issues are going around. We expect a lot of volume going from Venezuela, West Africa and Iran, so it is sensible to have guaranteed term provides from the U.S., where primitive production is growing, she said. There’s an impetus for diversification everywhere. South Korea is giving a cargo lien for non-Middle Eastern oil imports,” she added. India and the US, that have developed close political and security ties, will also be looking to develop bilateral trade, which stood at $126 billion in 2017 but is seen to be doing well below its potential.
The two nations have set up seven teams of chief executives with top U.S. And Indian firms will stimulate bilateral trade in areas including energy. A week ago India’s top gas importer Petronet LNG signed a preliminary deal to invest and purchase LNG from Tellurian Inc’s projected Driftwood project in Louisiana in the US.