Source: Indian Oil and Vitol to join forces in global trading, says source
By Nidhi Verma
HYDERABAD (India) Oct 29 -
Indian Oil is planning to sign a contract early next year with the global trader Vitol to form a joint-venture as it seeks to increase its presence in the international crude and fuel markets. This comes after the state-run refiner sought to expand their footprint.
This move represents a major strategic shift by India's biggest refiner. It is attempting to emulate global oil giants such as Exxon Mobil, Shell and others through Vitol’s global trading network and expertise.
Source: The joint venture will operate initially for five to seven year, with an exit clause for both partners.
Indian Oil and its subsidiary Chennai Petroleum control about 31% (or 5,17 million barrels a day) of India's refining capacity. Source: The company trades fuel and oil primarily to support its refineries, but wants to be a global player. Source did not wish to be named due to the sensitive nature of the subject.
Sources said that the partnership with Vitol would help Indian Oil reduce crude procurement costs on spot markets, and improve margins by gaining access to new customers.
The joint venture also helps the global fuel trader to strengthen its position in India, as it seeks a position as a global refinery hub. India is the third largest oil importer and consumer in the world.
Hardeep Singh puri, the oil minister, said that India's crude-refining capability will increase to 6.2 million barrels per day (bpd) by 2030. Long-term plans include increasing this to 8 to 9 millions bpd.
According to him, the expansion of India's refining capacities will cement India's place among the top three global refining hubs. Around 20% of the current global refining capability - around 100 refineries – could be closed by 2035.
Sources claim that Indian Oil had discussions with several companies, including BP, Trafigura and TotalEnergies before partnering with Vitol.
The refiner imports the majority of crude that is processed in its 10 facilities. These have a combined processing capacity of 1,62 million bpd. The venture will help Indian Oil to export refined fuels, and access Vitol distribution channels. (Reporting and editing by Thomas Derpinghaus; Nidhh Verma)
(source: Reuters)