India’s Hindustan Petroleum Corp plans to buy low-sulphur oil from the United States, replacing Nigeria’s sweet crude in the next few months for its 166,000 barrel per day (bpd) Vizag refinery in southern India, company executives said on Friday.
HPCL’s finance chief J. Ramaswamy said the company is evaluating if Nigerian sweet oil can be replaced with U.S. oil. He said HPCL has the appetite to import a very large crude carrier containing 2 million barrels of U.S. oil every month.
We are also going to buy in the near future, in some months. There are certain grades which we found suitable for us,” Chairman M.K. Surana said at a news conference.
“We should have a wider basket and more options. U.S. crude is an additional option for us,” he said.
India is the latest Asian country to buy U.S. crude, following South Korea, Japan, China, Thailand, Australia and Taiwan, after OPEC cuts drove up prices of Middle East heavy-sour crude, or grades with a high sulphur content.
Indian refiners stepped up purchases of U.S. oil after Indian Prime Minister Narendra Modi’s visit to the Washington in June when President Donald Trump said the United States looked forward to exporting more energy products to the world’s third-biggest oil buyer.
Since then, state-run Indian Oil Corp and Bharat Petroleum Corp have bought U.S. oil, as Indian refiners seek to diversify their crude import sources as arbitrage opens due to global oil supply cuts.
HPCL reported a 56 percent drop in net profit for the fiscal first quarter on Friday, as inventory losses dragged down its refining margins.
Net profit for the quarter ended June 30 came in at 9.25 billion rupees ($145.26 million), from 20.98 billion rupees a year earlier.
HPCL suffered an inventory loss of 15.95 billion rupees in the June quarter compared to a gain of 19.35 billion rupees a year ago, Surana said.
Gross refining margins, or profit earned on each barrel of crude processed, dropped to $5.86 per barrel, compared to $6.83 per barrel in the same period last year.
The Indian government has decided to sell its 51.1 percent stake in HPCL to state explorer Oil and Natural Gas Corp .
Surana said HPCL’s investment plans will not be hit by its integration with ONGC. HPCL aims to invest 71 billion rupees in this fiscal year to expand its refining capacity and strengthen its marketing and pipeline network.
HPCL plans to boost the capacity of its Mumbai refinery to 190,000 bpd by July 2019 from 130,000 bpd while its Vizag refinery will be ramped up to 300,000 bpd by July 2020.