CPCL banks on crude mix flexibility to navigate sanctions on Russian oil

CHENNAI: Chennai Petroleum Corporation Ltd (CPCL), a subsidiary of Indian Oil Corporation Ltd, is banking on a diversified crude sourcing strategy to maintain operational stability amid global volatility and sanctions on Russian oil.

CPCL managing director H Shankar told TOI that the company’s diversified sourcing mix provides the flexibility needed to navigate sharp price swings and evolving geopolitical conditions.

“CPCL sources about 50% of its crude through term contracts, 15% from domestic fields, and 30–35% as opportunity or spot purchases,” he said. “This structure allows us to optimize our crude basket based on prevailing market conditions and product yield potential.”

The company has so far processed more than 160 varieties of crude, continuously testing new blends to enhance output efficiency. “Last quarter, we added three new grades — one each from the US, the Middle East, and West Africa. The West African crude, in particular, proved to be an excellent lube-bearing variety,” Shankar noted.

Commenting on Russian crude, he said its attractiveness has declined as discounts narrowed and availability fell. “It was an opportunity-based crude at one point. But now, with lower discounts and reduced supply, we are seeing more crudes coming in from the US and West Africa,” he said, adding that CPCL does not depend on any single country for sourcing.

With ongoing geopolitical tensions and sanctions on Russian oil, CPCL is closely tracking developments. “If Russian crude is available and there are no sanctions, it’s a different story. As of now, the situation remains uncertain. By November–December, we’ll have a clearer picture of how the opportunity evolves,” he said.

All crude imports for CPCL are routed through its parent company, Indian Oil Corporation (IOCL), which handles large-scale procurement. “IOCL scouts and sources the crudes. We specify the grades we want, and their scale gives us strength and flexibility,” he said.

“Crude prices can swing sharply — from $85–90 to $55–60 a barrel within a year. Predicting them is impossible, so we focus on operational agility. Every dollar, every drop counts,” he pointed out.