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| The government may bring in a few changes in the crude oil import policy. This comes as a response to demands from petroleum companies to buy directly from equity holders in oil fields and to allow them to trade in crude en route India.
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| The relaxations are being sought with a view to diversify the source of crude oil supplies and to increase refining margins.
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| At present, Indian oil companies enter into annual or long-term contracts at an official selling price with state-owned companies abroad to meet a large part of their requirement. In addition, crude oil is also bought in the spot markets.
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| The petroleum ministry is in favour of allowing the companies to tie up directly with equity holders in oil fields to procure at the official selling price, as determined by the exporting country.
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| It, however, wants to ensure adequate checks before companies are allowed to enter into contracts at a negotiated price.
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| The ministry felt that trading in crude oil might be speculative and that the Indian companies did not have sufficient expertise at present, officials said.
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| The government has asked the coastal refineries to expand their storage capacity in order to stack up more varieties of crude oil, besides creating single-point mooring.
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| The ministry also wants a higher strategic storage capacity than the proposed 5 million tonnes and intends to involve private companies in the exercise.
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| At a recent meeting on a policy paper for crude imports, attended by petroleum ministry officials and representatives of Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum, it was decided that more consultations were needed on the matter.
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| The ministry had asked oil companies to prepare a detailed proposal in this regard along with a clearly spelt-out policy and safeguards, officials said.
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| Indian Oil, the biggest importer of crude oil with a refining capacity of 48.15 million tonnes, favours contracts not exceeding one year since this assures it of security of supply but did not offer flexibility in procurement or in pricing.
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| Of the 95.86 million tonnes of crude oil - costing Rs 172,326 crore - expected to be imported during 2005-06, Indian Oil will be shipping in about 33 million tonnes.
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The ministry wants oil companies to improve refinery technologies and upgrade them to enable handling of all types of crude oil, particularly heavy and sour crude.
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| CRUDE POLICY
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| MOVE aims to diversify source of crude supplies, increase refining margins
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| OIL FIRMS at present enter into annual contracts at an official selling price with state-owned companies abroad
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| PETROLEUM ministry is in favour of allowing firms to tie up directly with equity holders in oil fields |
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