The Hindu Business Line : SCI begins talks with IOC to transport crude from West Asia

THE Shipping Corporation of India (SCI) has initiated discussion with Indian Oil Corporation (IOC) for entering into a Contract of Affreightment (CoA) for transportation of an estimated nine million tonnes of crude annually from West Asia to both east and west coast ports of India.

Once the contract has been signed, SCI will press two of its VLCCs (very large crude carriers), namely, "Desh Ujala" and "Desh Vaibhav", into the job.

"Desh Ujala", (314,000 dwt), which joined the SCI fleet in January this year, is currently engaged in spot market operation while "Desh Vaibhav" (the same capacity) is to join the fleet in August.

"We will require three sailings a month for transporting the stipulated volume and will, therefore, need two VLCCs," a spokesman for SCI told Business Line, indicating that IOC proposed to import about 18 mt annually from West Asia.

Right now, SCI does not have any CoA with IOC. By virtue of the time charter contract signed with IOC earlier, the shipping line deploys two of its crude carriers, namely, "Jawaharlal Nehru" and "Motilal Nehru" for transportation of crude to Haldia to meet the requirements of both Haldia refinery and Bongaigaon refinery of IOC.

The crude is brought by huge carriers either at the Sandheads (mostly between October and March) or at Visakhapatnam/Kakinada (during the monsoon months) and then unloaded in these two ships by way of ship-to-ship discharge for transportation to Haldia.

SCI, through Transchart, has so far participated in coastal movement of products in which IOC virtually dominates. With Transchart disappearing from the scene, perhaps a new arrangement has to be worked out.

However, SCI has already signed CoAs with Bharat Petroleum Corporation for transporting about 7.5 mt of crude and with Hindustan Petroleum Corporation for another 11 mt or so annually. It has signed CoA with Mangalore Refinery & Petrochemicals Ltd for transportation of Bombay High crude at the rate of three lakh tonnes per month to Mangalore.

Various types of crude carriers such as Suezmax, Aframax and LR I, are deployed for the purpose.

"CoAs do not give us windfall but a steady income and therefore very good cover," the spokesman observed. This also explains why the recent slide in tanker rates, particularly the VLCC rates, has not hit hard the state-owned carrier. "The drop in tanker freight was not unexpected; we were prepared for it and therefore our exposure to market fluctuations was limited," the spokesman said.

Normally, SCI would like to deploy its crude tanker fleet under CoAs and time charter contracts in the ratio of 40 per cent each, with balance 20 going for the spot market.

However, as the spokesman indicated, the exposure to spot market, despite risks, could not be avoided altogether. "It is not a prudent policy either not to participate at all in the spot market operation," he added.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Discounted fares are here to stay' — Mr Sunil Arora, CMD, Indian Airlines

`More competition in cargo handling biz to improve quality of service'

Indus Aviation to open aircraft showroom at Bangalore

Orissa may soon find operator for lighterage port at Gopalpur

SCI begins talks with IOC to transport crude from West Asia