Indian Oil Corp. will take delivery of more than a million barrels of U.S. heavy crude in October—the first U.S. crude oil purchase by an Indian energy company, IOC’s finance chief told Reuters, and certainly not the last one.
The deal includes 1.6 million barrels of Mars crude plus 400,000 barrels of Western Canadian Select, to be shipped to by PetroChina. The price, IOC’s A.K. Sharma said, was “very competitive” to Iraq’s Basra Light, and as long as it stays that way, more U.S. oil will ship to India.
Heavier crude blends, Reuters notes, are a new favorite for Indian refineries, which recently underwent large-scale modifications, and they sell more cheaply than lighter blends. India joins Taiwan, Japan, South Korea, China, Thailand, and Australia as a U.S. oil importer as the Asian-Pacific nations seek to diversify their import sources.
U.S. crude oil exports have been on the rise, hitting a record-high 1.3 million bpd in the last week of May, with the average for that month at 1.02 million bpd. Besides Asian nations, European countries and a few South American ones were among the importers of American crude. Canada was the top importer, buying 372,000 bpd from its southern neighbor in May.
Restrictions on exporting U.S. produced crude oil were lifted in December 2015, and last year the United States exported an average of 520,000 bpd of crude, EIA data shows. While Canada remains the largest destination for U.S. crude oil exports, Canada’s share of U.S. crude oil exports has declined sharply, from 92 percent in 2015 to 58 percent in 2016, the EIA said last month.
India is the world’s third-largest crude oil importer and last August, daily import rates hit a historic high, at 4.45 million bpd. As much as 80 percent of the country’s crude oil needs are being satisfied by imports, which makes diversification a particularly pressing matter. The matter has become even more pressing recently, after a spat with Iran over the development of the Farzad-B gas field, which Tehran recently awarded to Russia’s Gazprom, instead of Indian ONGC and partners.