India's State Refiners Shift to CIF Crude Purchases Amid Freight Cost Volatility
Cubierto por 3 fuentesPublicado
- Hellenics Shipping newsIndian refiners favor delivered crude in procurement shift as shipping costs mount
- Baird MaritimeIndian refiner hedges Iran conflict freight risks with delivered crude
- jornal portuarioIndia: MRPL aumenta compras de crudo con entrega en destino ante riesgos derivados de guerra en Irán
India's state-run refiners are increasingly opting to buy crude on delivered terms—that is, CIF (cost, insurance and freight) or DAP—rather than under the FOB terms that were previously standard. According to oil ministry officials and refinery sources consulted by Platts on October 26, the shift aims to avoid exposure to sudden spikes in freight and insurance costs, which have surged amid disruptions and attacks on vessels in the Gulf region.
HPCL Drops the 50-50 Scheme
Vikas Kaushal, Chairman and Managing Director of Hindustan Petroleum Corp. Ltd. (HPCL), said in an investor call on October 23 that the state refiner is favoring delivered-basis purchases, except when it can send its own vessel to fetch cargoes at a relatively lower cost. Kaushal also noted that HPCL has dropped the fixed 50-50 split between term contracts and spot purchases, as geopolitical conditions have substantially altered the economics of crude sourcing.
MRPL Hedges Against the Iran Conflict
Mangalore Refinery and Petrochemicals Ltd. (MRPL), another Indian state refiner, is also increasing its delivered crude purchases to reduce its exposure to shipping risks stemming from the conflict involving Iran and to lower freight costs, according to its Chief Financial Officer, Devendra Kumar, speaking at an analyst meeting. Kumar said the company will continue to require cargoes under DAP agreements as long as instability persists, and that in the September quarter the 300,000 b/d refinery in the state of Karnataka sourced around a fifth of its crude from the Middle East, a third from Russia, a quarter domestically, and the remainder from West Africa and the Americas.
BPCL Sticks with Russian Crude
Bharat Petroleum Corp. Ltd. (BPCL) is also adjusting its crude slate based on the delivered economics of different suppliers. According to the company's Chief Financial Officer, V. R. Gupta, BPCL plans to increase its Russian crude purchases for December delivery despite elevated freight costs, after Russian crude processing held steady at around 37% between July and September, in line with the previous quarter. Gupta noted that freight and insurance rates remain high, even as global crude markets continue to see ample supply.
Growing Interest in Venezuelan Crude
Meanwhile, HPCL is advancing technical initiatives to synchronize its operations so it can process Venezuelan heavy crudes in the near term, although logistics still need to be worked out. According to CAS data cited by Platts, 12.6 million barrels of Venezuelan-origin crude, including volumes in transit, are expected to be discharged at Indian ports during October, up from 10.2 million barrels in May, with average intake running at 214,000 b/d so far this year, of which 82% arrived at the port of Sikka.
