State-run refiner Indian Oil Corporation (IOC) has made its first purchase of Norway’s Johan Sverdrup crude, buying four million barrels via a tender as it speeds up diversification of crude imports, two trade sources told Reuters on Monday.
IOC will take delivery of two million barrels of the North Sea crude in each of May and June, one of the sources said. Further details on the trades were not yet clear.
The move follows the Indian government’s call to cut dependence on crude from the Middle East in an escalating stand-off between India, the world’s third-largest crude importer, and Saudi Arabia, the de-facto leader of the Organization of Petroleum Exporting Countries (OPEC).
India complains that long-running OPEC production cuts have created uncertainty for customers and led to a surge in prices, creating fiscal challenges for a country where heavily-taxed retail fuel prices recently touched record highs, threatening an economic recovery.
State refiners – top refiner IOC, Bharat Petroleum Corp, Hindustan Petroleum Corp and Mangalore Refinery and Petrochemicals Ltd – are planning to cut oil imports from Saudi Arabia by about a quarter in May, Reuters reported in March.
Oil from Johan Sverdrup, the largest North Sea discovery in more than three decades, started to flow to Asia’s top oil importers in late 2019, with India’s Reliance Industries Ltd among its first takers.
While the grade has gained popularity among Chinese independent refineries, it has rarely been supplied to India, trade flows data on Refinitiv Eikon show.
India last discharged a 1-million-barrel cargo of Johan Sverdrup crude in September 2020, the data show.
Chinese refiners have slowed crude purchases in the spot market amid seasonal refinery maintenance and a large influx of Iranian oil, pressuring global oil sellers.
Indian refiners, meanwhile, are looking at crude from the United States, West Africa, South America and the Mediterranean as alternative options as they diversify away from Middle Eastern oil, trade sources say.
Last month, HPCL-Mittal Energy loaded India’s first cargo of Guyana’s Liza light sweet crude.
Another state refiner, BPCL, bought three million barrels of U.S. light sweet grades, including West Texas Intermediate Midland and Eagle Ford, for arrival in May, a trade source said.