First shipment of US crude lands in India

NEW DELHI: The US just became India's latest oil supplier, with the first shipment of crude landing in the country. State-owned IndianOil Corporation's purchase of 1.6 million barrels arrived at Paradip, Odisha, on Monday, and was received by US and Indian officials.
The US had stopped oil exports in 1975, a ban lifted by former US President Barack Obama in 2015. MT New Prosperity, a very large crude carrier (VLCC), with a capacity to haul 2 million barrels, had left the US Gulf Coast on August 19. "IOC will process the crude at its refineries at Paradip, Haldia (in West Bengal), Barauni (in Bihar) and Bongaigaon (in Assam)," an IOC statement said. State-owned Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd have also placed orders for about 2.95 million barrels and 1 million barrels of US crude, respectively, for their Kochi and Vizag refineries. "The total volume of the crude contracted by Indian public sector refineries is, therefore, 7.85 million barrels," the statement said.
US officials estimate the present Indian oil buys could increase bilateral trade by almost $2 billion. The US embassy, in its own statement, said, "During their June 26 meeting in Washington, President Trump and Prime Minister Modi committed to expanding and elevating bilateral energy cooperation through a strategic energy partnership."
Indian companies, both public and private, have invested about $5 billion in US shale assets. They have also contracted 5.8 million tonnes per annum of liquefied natural gas from the US and the first shipment is expected to be delivered to India in January 2018. India has encouraged state-controlled refiners to buy US and Canadian crude from the US Gulf Coast as it looks at cheaper alternatives that have emerged due to a global supply glut.
The second shipment is expected in a month's time. India, the world's third-largest oil importer, joins Asian countries like South Korea, Japan and China, which have been buying US crude after production cuts by oil cartel OPEC drove up prices of West Asian heavy-sour crude, or grades with a high sulphur content.
The important fact about US crude imports is that even after the transport costs, the oil is priced competitively compared to Gulf crude, which India has traditionally been buying.

US crude has become attractive for Indian refiners after the differential between Brent (the benchmark crude or marker crude that serves as a reference price for buyers in the western world) and Dubai (a benchmark for countries in the east) narrowed. India hopes to chip away at the so-called "Asian premium" charged by West Asian exporters by diversifying its oil buys. While in the first purchase, IOC is importing 1.6 million barrels of high-sulphur crude Mars from the US and 400,000 barrels of Western Canadian Select oil, in the second it has bought 1.9 million barrels from the US, half of it shale oil.
MaryKay Carlson, charge d'affaires at the US embassy, termed the imports a significant milestone in the growing partnership between the US and India. "The US and India are elevating our cooperation in the field of energy, including plans for cleaner fossil fuels, renewables, nuclear, and cutting edge storage and energy efficiency technologies. We look forward to working together on further sales of US crude and exploring opportunities to expand the role of natural gas in India," Carlson said.To encourage US crude purchases, the government has allowed refiners to use a foreign rather than an Indian owned vessel for the purchase. Indian refiners typically have to use domestic vessels for their crude imports. The Indian government has also eased the rules for allowing VLCCs into Indian ports.

Crude Oils Exports Imports

India's refined palm oil imports to fall as duty change makes crude palm cheaper

MUMBAI/KUALA LUMPUR: India's refined palm oil imports are likely to plunge in the next marketing year, industry officials said, as changes in trade tariffs make imports of crude palm oil cheaper, a boon for refiners previously hit by cheaper imports of rivals' goods.

Indonesian and Malaysian refiners, which ramped up capacity to cater to India's demand, are likely to come under pressure due to the decision by India, the world's biggest palm oil importer, to widen the import duty gap between refined, bleached and deodorized (RBD) palm olein and crude palm oil (CPO) .
In a move designed to protect domestic farmers, India last week doubled import duty on CPO to 15 percent, and raised the levy on RBD palm olein by 10 percent to 25 percent. The move widened the gap in duties between refined and crude palm oil to 10 percent from 7.5 percent previously.
"We expect a significant shift from imports of RBD palm olein to CPO due to the hike in duty differential," said Dinesh Shahra, managing director of Ruchi Soya IndustriesBSE -0.22 %, a leading Indian refiner. "Share of CPO in total palm imports is expected to rise to over 90 percent from 69 percent last year."
If the change is good news for Indian refiners, reactions among exporters suggest concern.
"It's not going to be easy now, there will be an impact where refiners will be getting a lot of the blow," said an upstream manager with a Malaysian plantations company, speaking on condition of anonymity.
India's imports are traditionally dominated by crude oils which are then refined for the domestic market. But moves by Indonesia and Malaysia to put higher taxes on exports of crude palm oil than refined products - an effort to promote domestic refining industries - made imports of refined products cheaper for India.
The changes allowed refined palm oil to corner 31 percent of India's total palm oil imports in 2015/16 year ended in October, up from 17.4 percent a year ago in 2016/17 and just 3.6 percent in 2006/07.
"We believe that (palm) prices are likely to be more biased towards the downside once...the increase in import duties in an important market like India work its way through," said Sunny Verghese, chief executive of Olam International Ltd..
Since the duty change, some Indian importers have already begun requesting sellers to replace refined palm shipments with CPO, said Sandeep Bajoria, chief executive of the Sunvin group, a Mumbai-based vegetable oil importer.
In the first nine months of the current marketing year started on Nov. 1, India has imported 6.74 million tonnes of palm oil, including 2.2 million tonnes of refined palm oil.
Palm oil's share in India's total edible oil imports has been falling consistently due to competition from rival soyoil and sunflower oil. In 2015/16 palm's share fell to 58 percent from 80 percent in 2012/13.
After the recent duty changes, crude soy oil now attracts 17.5 percent duty, lower than 25 percent for CPO, which could encourage imports of soyoil, dealers said.
"Regular demand will always be there but because soyoil duty is less, buyers may switch to soy," said one Kuala Lumpur trader, who declined to be named.