New confidence at BPCL and HPCL on crude imports

Vol 4, PW 1 (16 Feb 00) Midstream & Downstream

For as long as anyone can remember, Bharat Petroleum and Hindustan Petroleum have imported their crude through Indian Oil Corporation (IOC).

Now, there are growing signs they want to break free. This report learns BPCL and HPCL last month wrote to the oil ministry, demanding they be allowed to issue crude tenders independent of IOC.

In India, IOC is the sole canalising agency for crude to all except private-run refineries. Evidence of the new confidence came at a meeting on (Monday) 1st February at IOCs Mumbai office.

The three companies met to finalise the Contract of Affreightment and Procurement of Crude 2000-01, until now exclusively the preserve of IOC. An insider tells this report that BPCL and HPCL were unusually robust, even questioning IOCs authority to issue tenders on their behalf.

In the past, he said, they would meekly accept the conditions laid down by IOC. Such meetings used to be a formality, he said, If we told IOC we wanted a particular grade of crude, they would turn around and tell us it was not available, when we knew it was.

At this meeting, however, BPCL and HPCL set the agenda. A 10-man committee was set up with representatives from all three companies to work out the modalities of transporting crude from overseas to India.

As Petrowatch goes to press, IOC was poised to sign individual crude oil procurement MOUs with BPCL and HPCL on 15th February for the year to March 2001. A Contract of Affreightment was also to be signed between IOC and the Shipping Corporation of India (SCI).

It was agreed each company would work out its own tonnage. The possibility of replacing SCI with a cheaper liner was also floated.

This is the first time questions such as these are being raised, said a source.