Indian Oil Boosts Energy Security with 10 Aframax Tanker Order

Indian Oil Corporation (IOC) is likely to place a purchase order for a minimum of 10 Aframax oil tankers from a consortium controlled by Shipping Corporation of India (SCI) and an Indian shipyard in all likelihood Cochin Shipyard, according to sources.

The expected action is part of the Indian government's efforts to support indigenous shipbuilding and protect India's energy supply line. India, the world's third-largest oil importer and consumer, has always relied on chartered foreign vessels to transport crude oil.

The Indian government has expressed a keen desire to use indigenous vessels, not just for energy security, but to create jobs as well.  The consideration of cheaper and faster vessels from China was put aside at the insistence of the Modi government, which is keen on building vessels in India, including interest in foreign partnerships for expertise.

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Sources say IOC's order is likely to be confirmed when Prime Minister Narendra Modi throws open India's global shipbuilding initiative on September 20 in Bhavnagar, Gujarat. This will also likely coincide with the official rollout of a reworked Ship Building Financial Assistance (SBFA) scheme, a ₹25,000 crore Maritime Development Fund and ₹20,000 crore clusters in Gujarat, Andhra Pradesh, Odisha and Maharashtra for shipbuilding.

State-run oil companies are forecasted to require 112 crude carriers by 2040, with 79 vessels needed in the first phase, which includes 30 medium-range vessels. The plan is to increase the share of domestically constructed oil tankers from 5% today to 7% by 2030, and almost 70% by 2047 to reduce the more than $100 billion freight bill, mostly paid to foreign operators.