Reliance ups India’s reliance on West African crude imports

London: VLCC fixtures reveal that India is turning away from the Middle East Gulf (MEG) as a source for its crude supplies and relying more on imports from West Africa (WAF).

So far this month, Indian importers have fixed nine VLCCs to carry crude from WAF, compared to six in January and February combined, according to research compiled by Splash. 

In contrast, this month has seen only three VLCCs fixed for the MEG to West Coast India run, down from 10 and 12 fixtures in January and February respectively.

Indian independent refiner Reliance is leading the charge. The company hasn’t fixed any VLCCs from the MEG so far this month, compared to four shipments in February and five in January.

WAF has picked up the slack, and in March so far Reliance has chartered five VLCCs to bring 260,000-tonne crude cargoes to West Coast India.

Today, the refiner fixed Maran Tankers’ VLCC Antonis I Angelicoussis (306,300 dwt, built 2000) on subs to carry 260,000 tonnes of crude from West Africa to west coast India for $4m or $15.38/tonne (laycan April 24-25).

This rate is slightly up on the two other VLCCs reported fixed by Reliance this week for the same run, but still down on the spike in WAF freight rates seen in early March, caused by a shortage of tonnage in the face of strong charterer demand.

The Olympic Light (317,200 dwt, built 2011), operated by Onassis-led Olympic Shipping, was fixed to Reliance on subs at a rate of $3.85m or $14.81/tonne (laycan April 15). Desh Vaibhav (316,400 dwt, built 2005) was fixed to the refiner at $3.8m or $14.62/tonne (laycan April 24). The vessel is owned by the Shipping Corporation of India (SCI).

Indian Oil Corp (IOC), the country’s biggest refiner, has also upped its imports from WAF and stoppered those from the MEG. IOC has only fixed one VLCC from the Gulf this month, compared to six in February.

In March so far, four VLCCs have been fixed to take West African crude to West Coast India for IOC, which imports about 80% of its crude requirements.

Traders have speculated that Indian importers are stockpiling oil to fill the country’s new strategic petroleum reserve (SPR), having lost at least 300bn rupees ($4.76bn) on oil inventories when the oil price plunged. IOC’s head of finance, A.K. Sharma, refuted this in an interview with Reuters on March 17, saying: “We are buying oil for our own use and not for the SPR”.

India also aims to eliminate Iranian imports, which has made West African grades more attractive.

Meanwhile, Reliance is under pressure from its investors to continue improving its gross refining margins (GRM). Last year, the refiner turned to West African crude as a cheaper alternative to Middle Eastern oil to help improve its margins, which could explain the same phenomenon this year.

Earlier this month, brokerages Credit Suisse and CLSA predicted higher GRMs for Reliance, which CLSA said could bounce back in fourth quarter 2015 to a six-year high of $10.3/bbl. Credit Suisse is even more optimistic, saying the GRM could reach $11/bbl by the end of this quarter.

This week also saw a fixture for a Venezuelan crude stem heading to India for Reliance. On Tuesday, the company is reported to have fixed Maran Tankers’ Maran Carina (306,300 dwt, built 2003) for a Venezuela to West Coast India run for an unreported rate (laycan April 18-20).

State-owned Petroleos de Venezuela (PDVSA) has a 300,000 to 400,000 bpd oil export deal with Reliance. India has become one of the largest Asian buyers of Venezuelan crude, with average imports in excess of 400,000 bpd.


Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.
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