Indian Oil plans a Singapore-based joint venture with Vitol to expand global crude and gasoline trading, aiming to increase margins and international presence.

A person with firsthand knowledge of the situation claims that Indian Oil intends to enter into an agreement with multinational trader Vitol to establish a joint venture early next year in an effort to increase its presence in the global crude and gasoline trading market.

This is a strategic change for India’s biggest refiner, which is trying to imitate major oil companies like Exxon Mobil and Shell by using Vitol’s worldwide network and trading experience.

The source stated that an exit provision will be provided for both partners and that the joint venture, which will have its headquarters in Singapore, will initially run for five to seven years.

About 31% of India’s 5.17 million barrels per day (bpd) of refining capacity is controlled by Indian Oil and its subsidiary Chennai Petroleum. The insider claimed that although the corporation already trades fuel and oil mostly for its own refineries, it now aspires to be a worldwide player. Because of how sensitive the subject was, the source did not want to be named.

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According to the source, Indian Oil would use the collaboration with Vitol to reduce the cost of acquiring oil from spot markets and increase margins by gaining access to new consumers.

Additionally, the joint venture will assist the international petroleum trader in solidifying its position in India as it aims to establish itself as a global center for refining. India ranks third globally in terms of both oil imports and consumption.

According to Hardeep Singh Puri, India’s oil minister, the country would increase its crude-refining capacity to approximately 6.2 million barrels per day by 2030, with long-term plans to scale further to 8 to 9 million barrels per day.

Due to the possibility of closing about 20% of the world’s current refining capacity, or about 100 refineries, by 2035, he claimed the development of refining capacity will solidify India’s place among the top three refining hubs worldwide.

BP, Trafigura, and TotalEnergies were among the companies Indian Oil had discussions with before to partnering with Vitol, the person stated.

Trafigura denied that these discussions took place.

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“No such discussions have taken place,” said the statement.

The refiner has ten facilities with a combined capacity of 1.62 million barrels per day, and the majority of the petroleum processed there is imported. According to the plan, Indian Oil will be able to use Vitol’s distribution networks and export refined fuels.