NEW DELHI: Indian Oil Corp (IOC) will import 4.2 percent more crude oil in term deals for the next fiscal starting April than a year ago, two sources familiar with the plan said, to feed its expanded capacity.
State-run IOC raised capacity of its Panipat plant in northern India by a quarter in 2010, taking total capacity to 1.3 million barrels per day (bpd) and emerging as India's biggest refiner ahead of private sector Reliance Industries.
Reliance's Jamnagar complex, the biggest in the world, has a total capacity to process 1.24 million bpd.
IOC will import 18 percent or 40,000 bpd more crude from Iraq in 2011 than a year ago, the sources said, as it has upgraded secondary units at its plants to enable production of Euro III and Euro IV compliant fuel in 2010.
Euro III and IV are low sulphur content, cleaner fuels.
Iraq's national oil company SOMO would supply 13 million tonnes or 260,000 bpd crude oil in 2011, the sources said, adding estimated total high sulphur crude imports by the company in the next fiscal would be 620,000 bpd.
"IOC has raised imports from Iraq possibly to counter shortfall if any from Iran. Also Basrah is a proven grade and reasonably competitive with respect to other Middle East grades given that IOC has secondary units capable of taking medium-sour oil," said an Asian oil trader.
India and Iran are locked in discussions after Reserve Bank of India said in December that payments to Tehran could no longer be settled using a clearing system run by regional central banks, putting at risk imports of Iranian oil. Oil Minister Jaipal Reddy said earlier this month, New Delhi had paid 1.5 billion euros ($2.08 billion) to clear pending dues for oil imports from Iran, the second-biggest oil supplier to India after Saudi Arabia.
IOC is still planning to keep imports from Iran under term deals unchanged for the next fiscal year at 30,000 bpd.
IOC's low-sulphur crude oil imports through term deals will be reduced by 7.2 percent to 130,000 bpd, as its 10,000-bpd deal to buy Tunisia's Zarzaitine grade from Algeria's Sonatrach has not been renewed for the next fiscal, the sources said.
The Indian refiner regularly buys sweet grades mainly from West Africa through spot tenders while it relies on term volumes to meet its sour grade requirements.
IOC's head of finance and international trade S.V. Narasimhan was not immediately available for comment. IOC buys Girassol, Cabinda and Nemba from Angola, Labuan and Miri Light from Malaysia's Petronas, Seria Light from Brunei Shell Petroleum Co and Upper Zakum grade from the Abu Dhabi National Oil Co. To get Nigerian crude of its choice, it awards a crude swap tender every year.
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