MRPL Shifts to Delivered-Basis Crude Oil Purchases
ECONOMY & POLICY

MRPL Shifts to Delivered-Basis Crude Oil Purchases

Mangalore Refinery and Petrochemicals (MRPL) is increasing its purchases of crude oil on a delivered basis to reduce exposure to shipping risks linked to the Iran war and lower freight costs. The Karnataka-based refiner is also diversifying supplies to keep its 300,000-barrels-per-day refinery operating at full capacity.

Attacks on vessels using the Strait of Hormuz during the eight-month conflict have prompted Middle Eastern producers to offer more crude through ship-to-ship transfers outside the waterway. Producers have also offered freight discounts on delivered supplies, under which the supplier remains contractually responsible for transporting the cargo to its destination.

MRPL’s head of finance, Devendra Kumar, said the company would continue to favour delivered-at-port, or DAP, cargoes while assessing purchases primarily on their delivered economics once market conditions stabilised. He indicated that some Middle Eastern producers could offer delivered cargoes under annual supply agreements, representing a potential shift from traditional free-on-board arrangements in which buyers organise shipping.

The company sourced about 20 per cent of its crude requirements from the Middle East and around 33 per cent from Russia during the September quarter, according to Kumar. Domestic crude accounted for about 25 per cent, while the balance came from regions including West Africa and the Americas.

MRPL is prioritising domestic fuel demand as Indian consumption increases. Kumar said the company’s fuel exports could decline over the next couple of months, reflecting the expected focus on meeting local requirements rather than maintaining current overseas sales. The sourcing changes are intended to protect refinery utilisation while limiting exposure to freight disruptions and volatility around the Strait of Hormuz.

Mangalore Refinery and Petrochemicals (MRPL) is increasing its purchases of crude oil on a delivered basis to reduce exposure to shipping risks linked to the Iran war and lower freight costs. The Karnataka-based refiner is also diversifying supplies to keep its 300,000-barrels-per-day refinery operating at full capacity. Attacks on vessels using the Strait of Hormuz during the eight-month conflict have prompted Middle Eastern producers to offer more crude through ship-to-ship transfers outside the waterway. Producers have also offered freight discounts on delivered supplies, under which the supplier remains contractually responsible for transporting the cargo to its destination. MRPL’s head of finance, Devendra Kumar, said the company would continue to favour delivered-at-port, or DAP, cargoes while assessing purchases primarily on their delivered economics once market conditions stabilised. He indicated that some Middle Eastern producers could offer delivered cargoes under annual supply agreements, representing a potential shift from traditional free-on-board arrangements in which buyers organise shipping. The company sourced about 20 per cent of its crude requirements from the Middle East and around 33 per cent from Russia during the September quarter, according to Kumar. Domestic crude accounted for about 25 per cent, while the balance came from regions including West Africa and the Americas. MRPL is prioritising domestic fuel demand as Indian consumption increases. Kumar said the company’s fuel exports could decline over the next couple of months, reflecting the expected focus on meeting local requirements rather than maintaining current overseas sales. The sourcing changes are intended to protect refinery utilisation while limiting exposure to freight disruptions and volatility around the Strait of Hormuz.

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