India refiners in talks with Iraq on strategic reserves

Updated 03 June 2015

India refiners in talks with Iraq on strategic reserves

NEW DELHI: State refiners Indian Oil Corp. and Hindustan Petroleum Corp. are holding talks with Iraq’s national oil company to buy 4 million barrels of Basra light crude oil for India’s strategic petroleum reserves (SPRs), three sources said.
India in March asked the state refiners to each seek two very large crude carriers (VLCCs) of Iraq’s Basra crude oil for arrival in May-June totalling 8 million barrels for the reserves in the coastal city of Vizag in southern Andhra Pradesh state.
But after being faced with having to pay a premium for spot oil purchases the refiners had decided to directly negotiate with Iraq’s State Oil Marketing Organization (SOMO), said the sources with knowledge of the talks.
So far the indications were that SOMO would supply the refiners with Basra Light crude at the official selling price, said one of the sources, who declined to be identified due to the sensitivity of the issue.
The sources said the refiners were looking for the oil supplies to arrive in the next two to three months.
Hindustan Petroleum Corp. (HPCL) declined to comment.
Indian Oil Corp. (IOC) and SOMO did not immediately respond to e-mails seeking comment.
In a filing to Bombay Stock Exchange IOC clarified that the government has asked it and HPCL to procure crude oil from Iraq for Indian Strategic Petroleum Reserve Ltd.
IOC said it acted as facilitator for imports.
HPCL last month awarded a tender for June loading to European trader BP at $1.40 a barrel above the official selling price (OSP).
IOC, the country’s biggest refiner, agreed to pay a premium of 50-60 cents a barrel to Chinese trader Unipec for a VLCC arriving in mid-June.
“The spot market is getting pricey now,” said an Asian oil trader, highlighting recent spikes in Basra light premiums.
“I think SOMO’s ambition to push the OSP for Basra Light higher is achievable now.”
Spot premiums for Basra light crude hit a multi-year high after Iraq cut supply of the grade to export more of its new heavy grade in June.
In May, Iraq set the price for Basra Light cargoes loading this month at minus $2.55 a barrel against the average of Oman/Dubai quotes, up 25 cents from the previous month.
SOMO is expected to raise the price for July-loading cargoes next week.OSP/
India’s finance ministry has set aside 24 billion rupees (about $375 million) from revised budget estimates for the current fiscal year to pay for filling its first SPR allocation.
The Vizag facility has two compartments of 7.55 million barrels and 2.20 million barrels. The smaller compartment will be used by HPCL for its 166,000 barrel-per-day Vizag refinery.
HPCL is using Nigerian Qua Iboe oil supplied by Unipec for the smaller compartment.
A total of three SPRs in the south of India will hold more than 36 million barrels of oil, enough to meet about 13 days demand in India in case of a supply disruption or extreme price volatility.
The two other SPRs, at Padur and Mangalore in southern Karnataka state, will have a capacity of 29.3 million barrels and are expected to be ready by October.


Dubai port operator DP World suspends staff travel to China

Updated 30 min 58 sec ago

Dubai port operator DP World suspends staff travel to China

  • DP World’s website shows it operates at three ports in mainland China and at another port in Hong Kong

DUBAI: DP World, one of the world’s largest port operators, has suspended all staff travel to China until further notice due to the  Wuhan coronavirus outbreak.

Companies including Facebook, LG Electronics and Standard Chartered are among those restricting travel for employees to China, where the death toll from a flu-like virus rose above 100 on Tuesday.

“All travel to China is suspended until further notice, unless for emergency purposes. We continue to monitor World Health Organization and government advice,” a spokesman at DP World told Reuters on Tuesday.

DP World’s website shows it operates at three ports in mainland China and at another port in Hong Kong.

Chinese nationals, however, would be permitted to travel back to China if they needed to go home, the spokesman added.

“All our ports are complying with the official government health ministry directive for operations, staff health precautions and risk mitigation plans,” he said, adding that ports need to continue to operate for welfare and health purposes, including the import of food and medicine.

Dubai’s Emirates airline has advised its flight crew to stay in their hotels when on a layover in China due to the coronavirus, an internal notice seen by Reuters showed.

The US has warned against travel to China, where the coronavirus outbreak has left millions of Chinese stranded during the country’s biggest holiday of the year.