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Indian Oil Corporation Ltd (IOC), India’s largest public-sector oil refiner, has purchased one million barrels of Brent crude from Sterling Oil (Seepco)’s Nigerian fields, top officials said. This is for the first time that an Indian public sector company has purchased OKwuibome crude oil from Nigerian fields owned by Indian corporate Sandesara Group.
The latest buy is a part of the total five million barrels of crude purchase by IOC from West African fields. The move is aimed at exploring diversified oil sources amid Western sanctions over imports from Iran.
The public sector refiner and oil marketing company (OMC) is also understood to have purchased two very large crude carrier cargos of each Nigerian EA, Qua Iboe and Usan grades and Angola's Palanca oil from the trader Vitol.
“IOC has purchased one million barrels of Seepco’s OKwuibome grade crude oil through our trading partner Glencore for December lifting. With this, Seepco’s Nigerian fields have started contributing towards India’s energy security,” said Chetan Sandesara, director, Sterling Oil Exploration & Production Co Ltd (Seepco).
The crude will be processed at the refinery owned by IOC’s subsidiary Chennai Petroleum.
While the exact price details are not revealed, the deal is understood to be in the range of Rs 660-700 crore according to the prevailing prices of Brent Crude at around $110-111 a barrel.Led by Nitin Sandesara, Seepco is the only Indian oil producer having presence in an OPEC (Organization of the Petroleum Exporting Countries) region with 100 per cent equity and operating interest in four oil blocks in Nigeria.Nigeria is increasingly becoming a focus region for refiners to meet their short-term spot requirements of sweet grades.
“Most of the OPEC countries have either monarchy or social uncertainty. Unlike countries like Iraq, Kuwait, Libya and Sudan, where supplies are continuously disrupted, Nigeria is a safer place to source oil from,” said an energy analyst at a brokerage firm in Mumbai.
Seepco has been producing Okwuibome grade of crude oil for over past two years. Okwuibome crude is an established Brent crude oil grade, which is popular amongst north American and western European refineries because of its low sulfur and sweet crude quality.
“Currently, Okwuibome grade commands premium of $ 2 over Brent price because of its superior quality which fetches high value products of petrol, diesel and aircraft fuel for refiners. So it is beneficial to refiners as well as for producer like us,” said Sandesara.
Seepco has oil acreage of more than 2000 square miles in Niger Delta, considered to be one of the most oil prolific zones. The company has more than 250 million barrels of certified oil reserves and 1 trillion cubic feet (tcf) of natural gas reserves at the field.
“Currently, we are producing 10,000 barrels a day. After delivery to IOC, we will also explore other Indian oil PSUs and private players for supply of this low sulfur and sweet crude,” said Sandesara.
Meanwhile, Seepco is also considering to sell 25 per cent of its stake in the Nigerian oil fields to suitable bidders. India’s Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) are learnt to be among a few global energy majors competing Sterling Oil Resources Ltd’s stake in the Nigerian oil fields.
