IOC declares force majeure on oil purchases from Saudi Arabia, UAE, Iraq, Kuwait

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Published: April 1, 2020 5:46:53 PM

A force majeure event refers to the occurrence of an event that is outside the reasonable control of a party and which prevents that party from performing its obligations under a contract.

Sources said IOC has asked the four suppliers to defer some of the volumes they were to deliver in April.Sources said IOC has asked the four suppliers to defer some of the volumes they were to deliver in April.

India’s top oil firm IOC has declared force majeure on crude purchases from four of its biggest suppliers – Saudi Arabia, Iraq, UAE and Kuwait – as refinery run rates have been cut down in view of plummeting fuel demand following a nationwide lockdown.

Sources said IOC has asked the four suppliers to defer some of the volumes they were to deliver in April.

The company has reduced processing at its refineries by at least one-fourth as shutting down of businesses, suspension of flights and most vehicles staying off road due to the 21-day nationwide lockdown has led to drastic fall in demand.

A force majeure event refers to the occurrence of an event that is outside the reasonable control of a party and which prevents that party from performing its obligations under a contract.

The sources said petrol sales fell 8 per cent in March compared to February, while diesel demand was down 16 per cent. Aviation turbine fuel (ATF) sales fell 20 per cent.

The government declared a 21-day nationwide lockdown beginning March 25 to curb spread of coronavirus.

The sources said with demand falling, crude intake at refineries has been cut.

Both crude and finished petroleum product tanks are full to the brim and refineries cannot take more crude.

While Adnoc of UAE has shown favourable intent to defer supplies, Saudi Arabia and Iraq are yet to respond to IOC request, they said.

Besides IOC, Hindustan Petroleum Corp Ltd (HPCL) too has declared force majeure on Iraqi supplies.

Also, Mangalore Refinery and Petrochemicals Ltd (MRPL) has shut a third of its 15 million tonnes a year refinery and has declared force majeure with all suppliers.

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