Emerging Opportunities in India’s Seaborne Oil Tanker Trade: Mr. Rajeev Kumar


The last quarter of 2019 proved to be a favorite amongst shipowners across the world, but especially in India. This has given rise to numerous opportunities and challenges. In his talk on “Emerging Opportunities in India’s Seaborne Oil Tanker Trade”, Mr. Rajeev Kumar, Deputy General Manager of Shipping, Hindustan Petroleum Corporation Ltd, covered the most essential prospects to look out for. He delivered the talk during the “India Tanker Shipping & Trade Summit 2020” organized by The Shipping Tribune at Holiday Inn, Mumbai.

* Info sourced from PPAC, Clarksons’ SIN and INSA’s Annual Report 2019                                             

The graph above, described by Mr. Kumar as, “the favourite picture of shipowners worldwide” clearly represents a favorable growth in the earnings of VLCC, Suezmax and Aframax containers.

The following graphs were presented to draw a comparison between Indian fixtures and the Baltic TD-3C index,

“The year has been a bumper year for the shipping industry worldwide. But if we look at the Indian market, there was an icing on the cake. The blue lines (in the graph) are Indian fixtures, run by Indian ship owners or foreign ship owners and the red line is the Baltic TD-3C index. Therefore, Indian fixtures were commanding more freight rates than TD-3C.”

“Looking at the Suezmax vessels, the same scenario is repeated here. We have a Clarkson’s assessment of Suezmax port from Arabian Gulf to India. But if we look at the figures here, the actual fixtures are above that. Indian fixtures have reprimanded more freight rates over here as well.”

Talking about opportunity in terms of Worldwide Oil Tanker availability, “The order book shows a certain number of ships. Most of them are being delivered, other than Aframaxes, in 2020. However, in 2021, there is less supply, less delivery of the vessels, indicating the chance for an opportunity.”

Coming to Indian oil sector fundamentals, which are very strong and growing, other than the slowdown which didn’t have much effect on the industry. POL demand is currently at 245 MMT per annum. The demand is increasing at more than 5% p.a.

LPG’s current growth rate is 8.8% p.a. and it bodes well for crude, as well as, product and LPG vessels. This demand is here to stay.

Crude oil imports are currently at 227 MMT per annum with a current Growth Rate of 2.75% The Average Growth Rate is 6.66% p.a. This will further increase with Refineries expansions, New Refineries and with the decline in production of indigenous crude.

Indigenous Crude Production is currently at 34 MMT per annum. It is on the decline in the absence of new major discoveries. However, around 500 TMT indigenous Crude Oil moves coastally every year.

Crude Processing in India. This is the import plus indigenous crude, which is currently at 257MMT per annum. “Refineries Expansions are taking place. HPCL’s Mumbai refinery will move from 7.5 MMT to 9.5 MMT this year, and Vizag refinery from 9 MMT to 15 MMT next year. A new refinery in Rajasthan is coming up which will be completed in 2022/2023 with the capacity of 9 MMT. This means more imports, and more business for shipowners.”

Products Imports in India. “As India’s refinery capacity is growing, in the last two years, there has been an upgrade to BS VI and other parameters, hence imports are also increasing. Currently, there are 33 MMT and LPG is the main component which mostly comes from abroad. It mainly consists of LPG, MS, Naphtha, ATF, HSD, LOBS, Fuel Oil, Bitumen, etc.

This comes to India, mostly on CIF basis.” It is expected to come down with Refineries additions and expansions.

Exports is a bright prospect for Indian shipowners because they are going to increase with the increase in the refining capacity in India. It is currently at 61 MMT per annum and mainly consists of MS, Naphtha, ATF, HSD, Fuel Oil, etc. This too, is expected to further increase with refineries expansions and additions.

Coastal Movement of Products in India. It is at around 14 MMT CPP every year; MS, HSD, Naphtha, ATF, LOBS, and around 2 MMT DPP every year; FO, Bitumen. It is within the coast and between WCI and ECI.

Growth in Indian Tanker Tonnage                                                                                                                                                                                                                                                                                                                                        As the chart above indicates, 2017 was a good year where there was a 12% increase in the Indian tonnage, but 2018 was low with only 2.1% growth.

Are we ready to take the business which is available?

India’s share in world’s seaborne Oil and Gas EXIM trade is 8.89% (2018-19) and India’s share in world’s Oil and Gas Tanker Tonnage is 1.83% (2019). There is a wide gap here.

Indian ships’ share in Indian overseas trade in POL / Products and Other Liquids in 2017-18 was 49 MMT (13.2%) out of 371 MMT. There is immense Scope to Scoop-up all the business and grow around 8 times more.

Emerging Opportunities Summarized,

With a positive end of the year 2019, shipowners were left with better financials compared to any other year in the last ten years.

A brighter outlook will be helpful for shipowners in obtaining loans. It could pull in interest from financial institutions and banks.

The right of first refusal, which is available to Indian ship owners. Any business which is pertaining to India has this right.

IMO 2020 effect and US sanctions are also helpful to shipowners.

There has been lower growth in world tonnage, the deliveries are less. Freight markets are now cooling down which may lead to the tanker prices falling, shipowners can time their entry for buying vessels now.

In India, Competent technical management, is doing very well. Skilled and experienced manpower is available in abundance and India is one of the biggest suppliers of manpower on ships in the world.

International Oil companies are visiting India more often, soliciting more business, they have opened offices in India. “If Indian ship owners are in touch with and are coordinating with them, they can get more business there.”

Increasing product exports and healthy LPG growth are also opportunities to be mindful of.


The blooming privatization of BPC. The way they procure the vessels now may change if they become private.

CIF/ DAF cargoes are increasing. That business does not go to Indian ship owners.

Geo- Political factors. Attack on Saudi installations, tensions between Iran, The USA and Iraq, keep affecting shipping business.


Higher bunker costs because of low sulfur. 

Bunker regulations. It is difficult to get the bunker of exact specifications. “There is always a race if you’re buying bunkers from somebody being strict.”

In light of the challenges and opportunities, Mr. Rajeev Kumar ended the talk on an encouraging note, “These challenges are present, and they are to be faced. And I’m sure the shipowners will be able to overcome them.”

Source: Kavita Mishra / TST Newsdesk 

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