The Hindu Business Line : HPCL, BPCL may finalise crude import contract with SCI soon

AT least two public sector oil companies, Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL), are likely to import higher volumes of crude under the contract of affreightment (COA).

The import by each oil company, according to informed sources, might be in the region of about 8 million tonnes (mt) under new contracts, as compared to 6.5 mt under the earlier contracts. With the earlier contracts, valid for 18 months, having expired recently, negotiations are on between the oil companies and the Shipping Corporation of India (SCI) for signing fresh contracts. The loading ports, mostly located in West Asia, are likely to remain unchanged. It will be another two weeks or so before the new contracts are finalised.

Understandably, each side is trying to protect its interest as far as possible. The argument of the state-owned oil companies is simple: with the crude prices in the international market having skyrocketed, the additional imports will slap an additional burden on them. Hence, they want the shipping line, also a state-owned company, to fix freights at a reasonable level.

Besides, the public sector shipping line will try to wangle a higher rate on the grounds of higher operation cost, higher port charges and a hefty hike in the bunkering cost — from a low of about $130 per tonne a few months ago to around $190 per tonne now.

Interestingly, the Indian Oil Corporation does not have a COA with SCI; instead, it acquires the vessels on a time charter through Transchart, the chartering wing of the Shipping Ministry, for importing crude.SCI places about 30 per cent of its tanker tonnage under long-term contracts and another 30 per cent on the spot, the balance 40 per cent being under the COA.

Meanwhile, `Lok Manya Tilak,' the last in the series of six World Bank tankers (89,000 dead weight tonnes) of SCI, has been placed for scrapping. The first of the two very large crude carriers (VLCCs) that SCI is acquiring, will join the fleet in end-January and the second one in August next year. Right now, SCI does not have any VLCC. Its earlier VLCCs, `Kanchenjunga' and `Koyali' have already been scrapped.

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