The Indian cabinet on Wednesday gave state-owned refiners the freedom to formulate their own crude import policies, meaning they will now be allowed to make spot purchases, a government press release said.
The government said spot purchases needed be adopted to compete effectively in the market. The previous tender policy had certain limitations, it said.
Developing their own policies would help oil companies adopt a dynamic, flexible policy for crude procurement, eventually benefiting consumers, the press release said.
While the press release did not give any details, the refiners earlier mentioned the possibility of either setting up their own trading desks or joint trading desks initially for spot purchases.
India's state-owned refiners typically bought 80% of their total crude requirements through term contracts and rest through tenders but stepped up their tender purchases last year when crude prices nose-dived.
India imports 80% of its crude requirements, and in 2015 crude imports surged 4.6% year on year to 197.43 million mt. This year crude imports are expected to climb, with the fully commissioned 15 million mt/year greenfield Paradip Refinery on the east coast aiming to run at 80% capacity.
