seems to be in the making in the Centre, according to sources, that will go a
long way in helping the domestic shipowners hit by poor business scenario; it
is likely that public sector oil refineries may be asked to give long-term
crude shipment contracts to them.
As such the
initiative is said to be from the PMO, the domestic shipping companies will
have a say in getting committed business from PSU refiners Indian Oil
Corporation, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation.
With a firm
commitment to port-led development which naturally involves shipping being
given priority of significance on possible opportunities, the Centre does not
lose sight of any opportunity that might boost the shipping, particularly the
local shipping industry.
percent of India’s crude requirements are met through imports. According to the
Petroleum Planning and Analysis Cell snapshot of Indian oil and gas data for
June 2017, the crude oil import bill is estimated to increase 23 per cent from
$70 billion in FY17 to $86 billion in FY18, taking the price at which Indian
refiners buy crude at $55 a barrel, and the rupee at 65 versus the dollar.
refiners now can source crude oil from the spot market, long-term purchase
still seems to be their choice. Indian Oil still procurers about 70 percent of
its crude through long-term contracts only.
said IndianOil and BPCL are likely to hire an oil supertanker and a Suezmax
carrier respectively on a long-term charter of as many as five years from
Indian fleet owners. This would mark the first such policy designed to provide
cargo support to local shipowners and help boost Indian tonnage in the carriage
of crude oil.
to two officials who spoke on anonymity, Indian Oil and BPCL will float tenders
to hire an Indian-flagged very large crude carrier (VLCC) and a Suezmax tanker
and the rates will be benchmarked to the Clarkson index. London-based Clarkson
Plc is the world’s biggest ship broker.
offering the highest discount on the Clarkson rate will win the deal, which may
also have a floor and a ceiling rate; the floor rate is the minimum rate that
will not bring loss to the shipowner and the ceiling rate is the maximum rate
at which the charterers will not incur loss.
will be open to shipowners who already have VLCC and Suezmax tankers on their
fleet, as well as to those who don’t have them on their fleet. Newcomers, though, will have to show MoUs to
purchase such foreign-flagged tankers which should be converted into Indian
flags within six months of winning the contract.
tenders for long-term hiring of Indian flag ships is a pilot project before the
policy can be implemented on a full scale, said an official.
Interestingly, the Shipping Ministry has granted a so-called no objection
certificate (NOC) to the PSU refiners to buy crude from the US on a cost,
insurance and freight (CIF) basis, wherein the responsibility of shipping the
cargo rests with the seller. The NOC was necessary because it deviated from a
government policy that mandates all government-owned/controlled cargo to be
purchased on a freight-on-board (FoB) basis, in which the Indian buyer will
have to finalise the shipping arrangements.
refiners have to extend right of first refusal to Indian shipowners — if
domestic firms are not the lowest bidders, they are offered an opportunity to
match the lowest rate quoted by a foreign shipowner and take the contract.