Indian Oil Corporation (IOC) is set to sign a joint venture agreement with global energy trader Vitol early next year, marking a major step towards expanding its presence in international crude and fuel trading, according to a source familiar with the development.

The joint venture, to be based in Singapore, will initially run for five to seven years and include an exit clause for both partners. The partnership aims to replicate the strategies of global oil majors such as ExxonMobil and Shell, leveraging Vitol’s extensive trading expertise and global network.

Expanding global ambitions

IOC, together with its subsidiary Chennai Petroleum, controls about 31 per cent of India’s 5.17 million barrels per day (bpd) refining capacity. So far, the company has traded oil and fuel mainly for its own refineries but now plans to emerge as a global trading player.

The collaboration is expected to cut crude procurement costs from spot markets and improve profit margins by enabling IOC to access new international buyers, the source said.

For Vitol, one of the world’s leading energy traders, the deal will strengthen its foothold in India, a nation that is already the third-largest oil consumer and importer globally.

Refining expansion and global strategy

Oil Minister Hardeep Singh Puri recently announced that India will increase its refining capacity to about 6.2 million bpd by 2030, with long-term plans to expand further to 8–9 million bpd. This growth will help India consolidate its position among the top three global refining hubs, especially as nearly 20 per cent of global refining capacity — around 100 refineries — faces possible closure by 2035.

Background and partner selection

Before finalising Vitol as a partner, Indian Oil held exploratory talks with BP, Trafigura, and TotalEnergies, the source said. However, Trafigura denied participating in any such discussions.

IOC currently operates 10 refineries with a combined capacity of 1.62 million bpd, importing most of its crude oil. Through this venture, the company intends to export refined fuels and use Vitol’s global distribution network to reach new markets.

The move represents a strategic shift for India’s largest refiner, aligning its ambitions with global trading practices and positioning it as a key player in the international oil market.