Indian Oil Corp Enhances Energy Security with VLCC Purchase Plans

India’s largest oil refiner, Indian Oil Corp (IOC), is making efforts to enhance the country’s energy security by considering the purchase or leasing of Very Large Crude Carriers (VLCCs) for long-term use. The VLCCs can transport around two million barrels of crude oil per trip and come at a cost of approximately $125 million in the current market. This initiative by IOC aims to hedge against energy security risks for the country.

IOC’s wholly-owned subsidiary, Global Capital Management IFSC Ltd, has been established to support the company’s energy security and transition goals by facilitating the flow of funds at favorable terms. The plan involves the purchasing or leasing of two VLCCs over time, with discussions underway to structure a deal that overcomes restrictions set by government agencies on leasing ships for more than five years.

The company is aiming to expedite the process by looking into the used VLCC market due to demand for newbuilds and shipyard capacity constraints. Ownership or leasing of barges for supporting its single-point mooring (SPM) operations is also being considered by IOC. Additionally, the preference for Indian-flagged ships is being evaluated to potentially benefit from the government’s right of first refusal (RoFR) policy in public tenders. IOC is also exploring the possibility of setting up a joint venture in the shipping business, potentially with another state-owned company as a partner.

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