BPCL explores buying Gulf oil on FOB basis, lifts Iraqi oil

New Delhi: India's Bharat Petroleum Corp will receive its first Iraqi oil cargo of this fiscal year in the next few days and is willing to lift more oil from suppliers in the Gulf on a free-on-board basis if ships are available, its head of finance said on Thursday.

"Fortunately, we got the vessel. One vessel owner was ready to take the product and move to Fujairah and do the ‌STS (ship-to-ship) transfer," Vetsa ⁠Ramakrishna ⁠Gupta told a news conference after the company's annual shareholders' meeting.

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Iraq has been among the countries most affected by the closure of the Strait of Hormuz due to the Iran war and attacks on ships crossing the key waterway, through which about a fifth of global energy supplies pass.

BPCL typically needs 2 million barrels of Iraqi oil every month, Gupta said, adding that the vessel has crossed the Strait of Hormuz and crude is expected to reach refineries in the next few ⁠days. He ‌did not give the name of the vessel. Iraq offered a steep discount of about $25 to $30 per barrel to Dubai benchmarks on its August-loading Basrah oil to entice buyers ⁠to lift cargoes from terminals inside the Strait of Hormuz, a document seen by Reuters showed.

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Gupta said his company is willing to ​lift cargoes from inside the Strait of Hormuz if insurance costs are reasonable and the ship owner is willing to take the risk. "Even if we take 30 to 45 days of cargo demurrage, if it is still commercially viable, then we are looking at and exploring those cargoes," he said.

Impact of new US bill

The US Senate passed a bill this month allowing the US president ‌to impose tariffs of up to 100% on major buyers of Russian oil and gas, including India, stepping up economic pressure on Moscow over its 2022 invasion ​of Ukraine. A ​US senator sponsoring a bill ⁠for wide-ranging sanctions on Russia said on Wednesday he was hopeful it would pass the House of Representatives next month.

Gupta said BPCL has made crude arrangements for September and is procuring supplies for ​October.

Russia is the largest oil supplier to India.

"A ban on that quantity, with the Strait of Hormuz under pressure, will definitely make it a huge challenge for oil companies to secure crude and meet national demand," chairman Sanjay Khanna said.

He said Russian oil on average meets about 35% to 45% of India's oil needs.

"It is a very uncertain situation. Nobody knows how it will unfold next week," Khanna said.