India's crude oil imports from countries such as the United States and Venezuela are largely determined by prevailing prices, with at least 60 per cent of imports linked to price in the month or the following two months, ONGC chairman Arun Kumar Singh said. He indicated that imports by Mangalore Refinery and Petrochemicals Limited are primarily driven by price apart from term crude contracts. Mr Singh noted that term crudes are gradually reducing while spot purchases are decided on a cargo-to-cargo basis.

He said that because spot decisions depend on price, exact import volumes cannot be predetermined, but that price dynamics account for a significant majority of sourcing decisions. Singh made the remarks after the company’s annual general meeting and in response to questions about the status of imports from the United States and Venezuela. MRPL, a subsidiary of the state-owned Oil and Natural Gas Corporation, was identified as procuring crude for its refinery operations.

Singh described ONGC as fairly balanced against price volatility owing to its integrated model, with 60 per cent constituting exploration and production and 40 per cent comprising non-E&P activities. He explained that one arm of the business can offset pressure on another, so downward movement in crude prices can be cushioned by other units. ONGC stated it was prepared for a dollar range of 60 to 90 per barrel.

He said that he did not foresee a situation in which crude would be unavailable to India and observed that, on a global basis, there was around seven million (mn) barrels a day more crude than required. Singh acknowledged that geopolitical disruptions could affect supplies temporarily but argued that economic considerations would ultimately prevail. He warned that the impact on India’s growth would depend on resultant price levels, noting an oil and gas import bill of roughly 200 billion (bn) dollars and an economy of about four trillion (tn) dollars.