State-owned oil and gas company Indian Oil Corporation (IOC) has signed a $1.5bn deal with the US to import crude oil.
As part of the deal, the company will buy three million metric tonnes of crude oil from the US to diversify crude sources. The supply will be effective for FY 2019-2020.
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The agreement represents the first annual contract signed by any Indian public sector undertaking (PSU) oil company since India began importing crude from the US in 2017.
IOC did not reveal the identity of the seller of crude oil.
Last August, the company agreed to import US crude oil through a term-tender deal, buying six million barrels of under single tender for delivery between November 2018 and January 2019.
State-run refiners have previously bought US oil in the spot market or on a current tender basis, which comprises one shipload of oil. India’s traditional suppliers include Saudi Arabia, Kuwait and Iraq.
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By GlobalDataWhile negotiating with Indian firms, the US is offering terms to address its locational disadvantage with respect to its Middle-Eastern rivals, economictimes.indiatimes.com reported.
India is increasing the purchase of US crude oil in the aftermath of the reintroduction of sanctions on Iran by the Trump administration.
The sanctions became effective on 4 November last year, and as a result, India has been forced to reduce oil purchases from the sanctioned country.
According to a BusinessLine report, India’s oil and gas imports from the US in 2018 are valued at more than $3bn.
The report added that the country committed to buying $5bn worth of oil and gas from the US a year.
Meanwhile, IOC has reportedly purchased a commissioning cargo of liquefied natural gas (LNG) for its new Ennore terminal in south India.
The cargo for delivery on 25 February was bought from commodities trader Gunvor, Reuters reported citing three industry sources.
