By Nidhi Verma
NEW DELHI, Feb 5 (Reuters) - State-owned Indian Oil Corp IOC.NS , India's top refiner, has signed a deal with Russian oil major Rosneft ROSN.MM that gives it an option to buy up to 2 million tonnes, or 40,000 barrels per day (bpd) of crude in 2020, the Indian oil minister said on Wednesday.
"This is just the beginning," Dharmendra Pradhan said, after meeting with Rosneft Chairman Igor Sechin in New Delhi.
India has been diversifying the sources of its crude oil imports to hedge geopolitical risks that have the potential to choke supplies from a particular region or country.
The refiner will exercise its option to buy Urals crude under this first annual deal with Rosneft whenever the price is low enough to compensate for freight costs, an IOC source said.
Under the contract, IOC has the option to take as much as 40,000 bpd of oil this year, said the source, who declined to be named as he is not authorised to speak to the media.
Indian state refiners typically buy Russian oil via the spot market rather than under contract. The nation's crude imports from Russia have typically been low since the freight costs tend to be higher than for supplies from the Middle East.
India, the world's third-biggest oil consumer and importer, ships in more than 80% of its crude needs, usually relying on the Middle East for most of its supply. However, its imports from that region slid to a four-year low last year. Middle East's share of India's crude imports shrank to 60% last year - down from 65% in 2018 and lowest since 2015 - as record output from the United States and countries like Russia offered opportunities for importers to tap into other supplies.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
What type of action can be in the market on this news.Like 0