New Delhi: India has added Italy’s ENI to a list of foreign firms that can sell crude oil at official prices to state refiners, sources said, in the first such revision to the list since 2001.
The move comes as India expands its sources for oil to meet soaring energy demand. The country’s procurement choices are widening as a shale boom in the United States has led to suppliers scrambling to tap alternative Asian markets such as China and India.
A government committee in May called for revising the list of companies that can sell oil to state refiners in view of the changing market scenario and due to mergers and acquisitions.
State refiners together account for about 56 per cent of India’s overall 4.3 million barrels per day (bpd) refining capacity and follow the government policy on oil imports, unlike private refiners such as Reliance Industries, Essar Oil, Bharat Oman Refineries Ltd and HPCL-Mittal Energy Ltd.
Economic growth and rising middle-class numbers are driving the demand for fuel. To cater to that demand, refineries are expanding.
Indian Oil Corp, the country’s biggest refiner, will commission the 300,000 bpd Paradip refinery in the east coast next year and Bharat Petroleum is expanding the capacity of its Kochi refinery in southern India by 120,000 bpd.
Select companies
The state refiners buy the bulk of their oil needs from national oil companies. However, the rules permit imports from select companies if the companies own equity oil or have a swap arrangement with the equity oil holder or have a term deal with the national oil company of the producer country for sourcing the desired grade.
“We created this list in 2001 but it was hardly used. Now crude market dynamics are changing and more and more suppliers are looking at Asian markets like India and China,” said G.P. Aggarwal, former general manager of international trade at IOC.
The revised list retains ExxonMobil, Royal Dutch Shell, BP, Chevron and Total, industry sources said.
“There was a need to revise the list as some companies have ceased to exist and some have been merged, like Elf Aquitaine and Texaco. From 10 companies the list has been revised to six now,” said an industry source.
One oil company each from Japan, South Korea and Spain are no longer part of the list, the source said.
“These companies have hardly shown any interest in supplying oil at the official selling price,” the source added.
