India seeks more crude oil, fields from Venezuela
Hauling charge for crude oil from Latin America to India is nearly seven times than shipping it from West Asia. But, despite higher transportation costs, Indian refiners are increasingly going in for the heavier crude from Latin America , as they see more economic gains through this route.
While private sectors refiners Essar and Reliance source crude from Latin America regularly as they operate complex refineries that can crack the sourer crude, State-owned companies such as Indian Oil Corporation are injecting technologies to process this crude and thus enlarge their oil sources.
While it takes between 30-35 days to ship crude from Latin America to India, the same can be brought from West Asia in just four to five days. Given that the spot market prices touched between $8,000 and $9,000 a day for a very large crude carrier towards the end of May, the difference in shipping costs from the two sources can be significant.
“We are getting competitive prices for crude from Latin America. We source about 30-40 per cent of our crude requirement of 145 million barrels a year from this market. What makes import of such crude attractive is that they are priced at a discount to the benchmark crude,” L. K. Gupta, Managing Director of Essar Oil, told Business Line.
In fact, Essar set the trend for higher imports from Latin America when it it signed a one-year contract last year to buy 12 million barrels from Ecopetrol of Colombia — it has also been getting oil supplies from Venezuela, Mexico and Brazil.
Reliance has also signed similar contracts with Venezuela, Colombia and Ecuador. IOC also plans to add at least three Latin American countries to its annual oil purchase deals this fiscal. The refiner is negotiating with State-owned companies of Colombia, Venezuela and Brazil.
“Not all refiners can process the heavier crude from these countries. Our refinery has the configuration to crack these crudes and hence we will continue to look at these sources for our imports,” Gupta said.
Last fiscal, it optimised its crude mix, processing 86 per cent ultra heavy and heavy crudes, against 72 per cent in the previous year.
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