Indian Oil Corporation Plans to Buy Ships to Protect Energy Supplies

State-owned Indian Oil Corporation plans to buy its own crude oil and liquefied petroleum gas carriers to strengthen its energy supply chain against shipping disruptions and high freight costs. Director of Finance Anuj Jain stated during a second-quarter earnings call that the board has already approved purchasing a few vessels and issued tenders months ago. Jain noted that the country needs oil sector companies to focus more on shipping and mentioned exploring the possibility of building ships in India under the government Make in India initiative.

Supply and Finances

IOC currently uses three crude oil vessels and nine LPG vessels on time charter, which saved costs during the recent crisis. Time-chartered crude carriers cost about two to two dollars and fifty cents per barrel, while spot-market rates reached eight to ten dollars per barrel. LPG freight rates rose from forty dollars per tonne to one hundred sixty to one hundred eighty dollars per tonne in the spot market. To diversify procurement, IOC sourced fifty-five percent of its crude from Russia, twenty-four percent from the Middle East, ten percent from Africa, seven percent from Brazil, two to five percent from the United States, and three to four percent from Venezuela during the first half of the current financial year. Spot imports grew to eighty-seven percent of crude sourcing, up from about fifty percent last year. The Indian basket crude averaged about one hundred twenty dollars per barrel in October. Despite disruptions, IOC maintained refinery operations and increased crude inventories to thirty-nine days, holding twenty days of LPG inventory and twenty-three to twenty-five days of petrol and diesel stocks. IOC reported a net profit of twenty-one thousand six hundred thirty crore rupees in the September quarter, backed by a gross refining margin of eighteen dollars and fifty-two cents per barrel and an inventory gain of six thousand nine hundred forty-eight crore rupees.

Context

Energy companies often adjust their logistics and supply routes to handle global shipping delays and price swings caused by regional conflicts. Owning transport vessels gives refiners direct control over delivery timelines and helps manage high freight expenses during market volatility.