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NEW DELHI / SINGAPORE / Reuters
Two of India’s state-owned oil refiners have issued tenders seeking to charter tankers for at least five years while giving preference to Indian companies, tender documents reviewed by Reuters showed, which would boost domestic shipping firms battered by slumping tanker rates.
India’s Ministry of Shipping asked the refiners to issue long-term crude import tenders on a pilot basis and include a right of first refusal for Indian shipping lines, a government source familiar with the matter said on Monday. The shift to the five-year contracts would give millions of dollars in tanker contracts to the Indian carriers, the source said.
This would help companies like Shipping Corp of India (SCI) , Mercator Ltd, Great Eastern Shipping Co and Essar Shipping. The global tanker industry is grappling with an oversupply of ships that has depressed rates, with the benchmark Middle East to Japan route for Very Large Crude Carriers dropping 43 percent since the start of the year.
According to the tender documents sent out by Bharat Petroleum Corp, they are only seeking bids from Indian-flagged Suezmax tankers capable of carrying up to 1 million barrels of oil for a five-year period.
Indian Oil Corp’s (IOC) tender document includes similar language but is seeking global bids for VLCCs capable of carrying Iraqi Basra Light crude for five years and grants Indian shippers the right of first refusal.
The prices for the charters will be linked to the average of the one-year time charter rate published in Clarkson Research’s Shipping Intelligence Weekly, the documents showed. An IOC spokesman confirmed this is the first long-term VLCC tender the company has issued. There was no immediate response from BPCL.
India has in the past two years overtaken Japan to become the world’s third biggest oil consumer.