Public sector company Indian Oil Corporation (IOC) has entered into an annual agreement with the US to buy 3 million tonnes of crude oil. From April 1 this year, they’ll start importing oil from there. The IOC will cost $ 1.5 billion on this. India has started importing crude oil from the US since 2017, but for the first time, an Indian refining company has made an annual upgrade with the US.
IOC said, “We have entered into an agreement to purchase 3 million tonnes of crude oil with America under the policy of buying crude oil from different countries.” This contract was finalized on February 15th. Earlier, the IOC had signed a term-tender deal with the US in August last year to buy crude oil. At that time, with the promise of delivery between November 2018 and January 2019, the company had entered into an agreement to purchase 60 million barrels of crude oil. This deal was done through a single tender.
The company said, “The purchase of 30 million tonnes of crude oil will cost about $ 1.5 billion. IOC is the first PSU, which has filed a contract for US Origin Crude Oil grade. Earlier, IOC and other government refinery companies were buying crude oil from the US through the spot market. This purchase was on a tender basis. Companies can not compromise on buying a special term or quantity of oil without the permission of the board. Now they are not allowed to do such contracts with foreign companies.
Government companies, such as IOC and BPCL-HPCL, typically enter into an agreement to buy oil with the national oil companies of West Asia. Breaking down this tradition last year, the IOC had tender for a cargo crude oil from the US. An official of the company said that now the board has allowed the United States to buy oil on the basis of annual agreement.
India had first bought American crude oil in October 2017. Since then Indian companies are buying oil from there on the basis of a tender. Within a few months of re-imposing economic sanctions on Iran, India has increased the purchase of oil from the US. Iran is India’s third-largest oil supplier. The US economic sanctions on Iran came into effect from November 4, 2018, after which India has reduced the purchase of oil.