Low sulphur crude oil scarce in IOC term contracts

Vol 7, PW 5 (21 May 03) Midstream & Downstream

IOC IS finding it difficult to buy more low sulphur crude through term contracts.

Nigeria and Libya are its traditional suppliers but supplies from Nigeria are erratic and unreliable. Between October 2000 and September 2001, Nigeria supplied 2m tonnes of crude.

But when IOC extended the contract by another year Nigeria only supplied 250,000 tonnes of 'Brass River' crude. Not only was the quantity low, but 'Brass River' is not the best for IOC's refineries.

Much better is 'Forcados', 'Bonny Light', 'Escravos' or 'Qua Iboe'. Worse, Nigeria is now "unable to confirm" that it can supply IOC's choice of crude this financial year! As for Libya, IOC contracted 300,000 tonnes of 'Essider' last year but this year it is letting the contract lapse because of Libyan intransigence over price.

IOC and its group refineries process a variety of crudes each year. Broadly, they fall into four categories: lube bearing crude oils; non-lube bituminous crude oils; non-lube non-bituminous crude oils; and low sulphur crude.

Low sulphur crude takes the biggest chunk, making up close to 60% of what IOC uses every year. See below: Crude oil type Indian Oil Chennai Petroleum Bongaigaon Refineries Total Lube bearing 3.20m tonnes 2.40m tonnes Nil 5.60m tonnes Non-lube bituminous 8.22m tonnes Nil Nil 8.22m tonnes Non-lube non-bituminous 2.48m tonnes 1.73m tonnes Nil 4.21m tonnes Low sulphur 12.14m tonnes 1.24m tonnes Nil 13.38m tonnes Total 26.04m tonnes 5.37m tonnes Nil 31.41m tonnes