New Delhi, April 12: Call it the petro paradox: even as the war raged in Iraq, purchases of crude from the Persian Gulf had actually been stepped up to fill the gap caused by the disruption in Nigerian supplies.
Sources disclose that Indian Oil Corporation (IOC) normally buys around 0.5 million tonnes of oil every month from Kuwait.
However, during March this year, the company picked up one million tonnes of crude from the Kuwaiti port of Mina Al Ahmedi, which is a stone’s throw from Iraq’s Umm Qasr port.
In fact, while British troops were fighting a fierce battle for the control of Basra, Indian ships were loading crude oil and LPG in nearby Mina Al Ahmedi.
Four very large crude carriers (VLCCs) were chartered to bring crude from the Persian Gulf to Indian shores at the normal market-related freight. “There was no extra war premium paid on the freight charges,” a senior IOC official said.
IOC also bought a cargo of LPG from Kuwait during March. Another three cargoes were picked up from Saudi Arabia and two from Abu Dhabi. Each LPG cargo weighs 13,000 tonnes.
Sources say that some consignments of crude to be picked up from Nigeria in March had to be cancelled due to the bloody tribal strife that disrupted crude production in that country.
Similarly, the initial purchases scheduled from Nigeria for April have also been scaled down as production has yet to pick up to normal levels.
The purchases of LPG from the Gulf during April will also be higher as nine ship-loads of the gas are being imported. With the exception of one ship-load from Malaysia, the other eight cargoes will be coming from the Gulf.
Nigeria has emerged as the single largest source of crude supplies for India. Reliable sources disclose that during the current financial year, India has imported more crude from Nigeria than even Saudi Arabia.
Statistics for the seven-month period between April to October, 2002 reveal that 6.8 million tonnes of crude was imported from Nigeria compared with 5.1 million tonnes bought from Saudi Arabia, which was the second largest supplier.
Oil industry specialists attribute the spurt in crude prices preceding the Iraq war, to vested interests which deliberately exaggerated the fallout of the war. This enabled them to make a fast buck through speculation. The ground realities are quite different since the war as expected has been “contained” within Iraq’s border.
The alarmist picture of prices spinning out of control was not supported by the Gulf war experience in 1991 either. At that time, Saddam Hussein’s military machine was intact and Kuwaiti oil fields were also set ablaze by the retreating Iraqis.
Yet prices had come down suddenly after a short spurt. Similarly, during the Iraq-Iran war, ships were sailing normally to Gulf ports.