Indian Oil, Hindustan Petroleum and Bharat Petroleum are negotiating with Brazilian energy company Petrobras to secure long-term crude oil supply contracts to diversify their energy sources.
 "Indian oil giants and Brazil's Petrobras in talks over long-term crude oil supply")
Vasudha Mukherjee New Delhi
Representatives of IOCL, HPCL and BPCL visited Brazil in April to initiate talks with Petrobras on this matter. The aim of these talks is to secure long-term crude oil supplies. BPCL has already started testing Brazilian crude oil in its refineries and the final contracts will be signed shortly.
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IndianOil had previously signed a long-term oil supply agreement of 1.7 million tonnes per annum (mmtpa) and BPCL signed a memorandum of understanding (MoU) with Petrobras in 2022 amid the Russia-Ukraine war. In addition, BPCL has an interest in a deepwater hydrocarbon block in Brazil through its subsidiary Bharat PetroResource Ltd.
Brazil’s role in India’s energy strategy
Brazil, currently not a major oil supplier to India, is seen as a potential key player in India’s diversified energy strategy. In fiscal year 2023-24, Brazil’s oil exports to India amounted to $1.46 billion, a small fraction of India’s total oil imports of $139.85 billion. Nevertheless, Brazil’s growing oil production, which is expected to reach over 3.4 million barrels per day in 2023, represents a promising opportunity for India.
Consortium approach for crude oil negotiations
The three oil companies are negotiating as a consortium, which could strengthen their bargaining power, Mint said. Although each company will sign separate contracts with Petrobras, the terms are likely to be broadly similar, with only the amount of oil varying. This cooperative approach could also ensure that Indian oil companies receive more favorable terms and credit lines.
Importance of diversifying Indian oil imports
India’s move to diversify its oil imports comes against the backdrop of rising crude oil prices due to geopolitical tensions in West Asia and Ukraine, as well as supply uncertainties in the Strait of Hormuz. Traditionally, India has relied heavily on West Asian countries for oil supplies due to logistical advantages. However, recent production cuts by the OPEC+ group have highlighted the need for diversification.
Petrobras’ diversification and expansion plans
Meanwhile, state-owned Petrobras has been actively seeking international partnerships in various sectors since last year and has faced some upheaval this year. In March, Jean Paul Prates outlined Petrobras’ ambitious investment plans to the Financial Times, highlighting a focus of over $100 billion on offshore oil exploration and production. He explained that Petrobras aims to be one of the last remaining oil producers in the world.
Meanwhile, newly appointed CEO Magda Chambriard expressed strong support for oil and gas exploration in Brazil’s equatorial rim in June, signaling a major development for the state-owned energy company.
