Indian Oil has approval to buy vessels as freight costs rise

Indian Oil Corporation has board approval to acquire a few vessels and issued tenders months before its October 31 earnings call, as higher shipping costs have increased the expense of moving crude oil and liquefied petroleum gas. The company has not disclosed how many ships it intends to buy, their cost or when they would be delivered.

Finance director Anuj Jain said Indian Oil had three crude-oil vessels and nine LPG vessels on time charter at the time of the call. He said the company was reviewing its shipping operations, including existing charter arrangements, vessel purchases and the possibility of building ships in India. Indian Oil is exploring shipbuilding options with Indian shipyards under the government’s Make in India initiative, but the company has not announced an order.

Jain said crude transport under time charters cost about $2 to $2.50 a barrel, compared with spot-market rates reaching $8 to $10 a barrel. For LPG, he cited spot freight of $160 to $180 per tonne, against a usual rate of about $40. The comparisons were not broken down by route or contract terms.

The company’s plans come amid shipping disruption near the Strait of Hormuz and increased freight and...