India to buy more crude oil from Nigeria

The benefit of a term-contract is that it ensures quantity as well as a stable price

Updated - September 23, 2016 02:26 am IST

Published - January 23, 2016 03:17 am IST - NEW DELHI:

India is set to import more crude oil from Nigeria, already one of the biggest contributors to the country’s oil imports, Oil Minister Dharmendra Pradhan said.

“Nigeria has now agreed to increase the term contract from 1.7 million tonnes per annum to three million tonnes in 2016,” Mr. Pradhan said on the sidelines of the fourth India- Africa Hydrocarbon Summit in New Delhi. Nigeria is the third-largest contributor to India’s oil imports, accounting for 11.59 million tonnes (MT) in the first half of this financial year, behind Saudi Arabia (19.56 MT) and Iraq (17.01 MT). The benefit of a term contract is that not only does it assure a certain quantity to be supplied but also ensures a stable price unlike oil bought from spot markets whose price can fluctuate drastically. Apart from Nigeria, Sudan also wants to increase its engagement with India.

India, on its part, is also keen to diversify its oil import basket as Saudi Arabia’s national oil and gas company recently announced that it would be selling oil to its Asian customers, including India, at a premium of $0.6 a barrel above the prevailing market price in February.

Sudan offer

“They (Sudan) have offered more oil blocks for exploration and asked for Indian companies’ expertise to raise production from existing fields,” he said. Sudan currently owes India $240 million for the oil it consumed from the Greater Nile Oil Project in the country of which OVL owns 25 per cent. The modalities of repayment are being worked out, the Minister added. Sudanese Oil Minister Mohamed Zayed Awad said he had offered Blocks 8, 15 and 24 to OVL for exploration and urged the Indian company to consider buying a stake in Block 17, which reportedly produces 7,000 barrels of oil per day.

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