State-run Indian Oil Corporation is diversifying crude oil sourcing across geographies amid heightened geopolitical volatility, while also preparing to list its green energy subsidiary Terra Clean Ltd by 2027-28, chairman and managing director Arvinder Singh Sahney told the Financial Express in an interview.
Sahney said crude procurement decisions are being taken purely on commercial considerations using optimisation models, even as the company evaluates opportunities in nuclear power, LPG diversification and LNG sourcing.
Edited excerpts:
Q1: How is Indian Oil navigating crude sourcing amid geopolitical uncertainty and sanctions-related disruptions?
We are procuring crude on purely commercial considerations. Whichever crude is commercially beneficial for us, we will go for that. It has been our constant endeavour to expand the crude basket.
Till about five years back, we were procuring crude from around 27 geographies. Today, we are procuring from 41 geographies. This is a continuous effort and we will continue to expand our crude basket.
Anybody is welcome if crude is available. Several of our refineries, including some in the private sector and some in the PSU space, are capable of processing all kinds of crude.
Q2: With volatility in global markets, is IOCL planning to reduce sourcing from Russia and move towards more stable regions?
What we are doing is working on economic models. If they are beneficial for us, we will take them; if they are not beneficial, we will not. It is not only about discounts. The crude has to be processed in our refineries and converted into products. Each crude has a different processing cost and a different product mix.
This entire optimisation is done through complex, AI-driven models. Based on the outcome, we decide the kind of crude we should go for. Prices keep changing. Today crude is around $68 per barrel, while a couple of months back it was closer to $58. In such an environment, decisions have to be dynamic, prudent and commercially beneficial.
Q3: What are Indian Oil’s plans in renewable energy, and how does the proposed listing of Terra Clean fit into this strategy?
In renewables, we are doing everything. We are doing solar, wind, compressed biogas, second- and third-generation ethanol, sustainable aviation fuel and green hydrogen. We are setting up the largest green hydrogen plant in the country with a capacity of 10,000 tonnes per annum, which will be ready by December 2027.
On sustainable aviation fuel, we are the only company in the country that has got the licence to produce and dispense SAF. This will be ready for dispensing by June 2026.
Meanwhile, our renewable energy target is 18 GW by 2030. As far as the listing is concerned, Indian Oil plans to list its green energy subsidiary, Terra Clean Ltd by 2027-28, by which time the renewable portfolio is expected to reach a meaningful scale.
Q4: What is the company’s approach towards LPG sourcing? What is Indian Oil’s outlook on LNG sourcing?
LPG is primarily available from two regions — the US and the Gulf. We have taken a conscious decision to diversify to a certain extent. The US LPG supply will start from April. Meanwhile, we will always be on the lookout for good LNG deals.
Q6: Does Indian Oil plan to enter the nuclear power segment?
We are evaluating it. We are one of the only two companies in the country that have a long-standing joint venture with NPCIL, the other being NTPC. NTPC has already gone ahead with some of its projects. We are evaluating how to move forward — where we will get the land and facilities.
In light of the proposed SHANTI Bill and the regulations that will follow, we expect more competitive offers from foreign technology providers and collaborators. We have identified certain states and are in discussions with them.
Q7: What are Indian Oil’s capital expenditure plans going forward?
We have been doing a capital expenditure of ₹35,000-40,000 crore per year. It will be in the same range for FY27 as well.