IOC refuses to renew term contract for Libyan crude
RARELY DO you see the Indian oil ministry intervene in a crude oil import decision by Indian Oil.
But that's exactly what's happened after it heard of IOC's decision to stop importing low sulphur crude from Libya. Late last year IOC's Empowered Standing Committee decided that Libya's Essider grade crude was too expensive compared to low sulphur crude from Nigeria.
Following this, IOC wrote to Libya's National Oil Company in late December declining to renew the term contract. "We regret to advise that due to economical considerations, we shall not be able to renew the contract for the calendar year 2003," read a telex message from IOC's international trade department.
"However, we wish and look forward to renewing our relationship in future." As part of a strategy to diversify crude oil imports, IOC had signed a term contract with the Libyans for 2002. During the year, IOC imported eight cargoes of Essider, each of one million barrels.
Of this, six cargoes were for Hindustan Petroleum's Vizag refinery and the rest for IOC's Gujarat refineries. When informing the Libyans of its decision to cancel the contract, IOC copied the decision to Shastri Bhawan, with unexpected consequences.
Unimpressed oil bureaucrats expressed dismay and asked IOC for details. In particular they wanted to know how much low sulphur crude oil was imported by IOC and from which country during 2001-02.
With this in hand, Shastri Bhawan has told IOC to reconsider its decision and continue to import crude from Libya this year as well.Read on.