India’s state refiners halt crude oil purchases from Chinese firms

Indian state refiners have stopped buying crude oil from China-linked companies, three sources said, after New Delhi’s recent regulation aimed at restricting imports from countries that it shares a border with.

The new regulation, put in place on July 23, comes after a border clash between India and China that killed 20 Indian soldiers and soured relations between the two neighbours.

Since the new order was issued, state refiners have been inserting a clause in their import tenders on new rules restricting dealings with companies from countries sharing a border with India, the sources said and the tender documents showed.

Last week, Indian state refiners decided to stop sending crude import tenders to Chinese trading firms including CNOOC Ltd., Unipec and PetroChina, one of the sources said.

To participate in Indian tenders, the July 23 order makes registration with a department in the Commerce Ministry ‘mandatory’ for any bidders from nations sharing a border with India.

India shares borders with China, Pakistan, Bangladesh, Myanmar, Nepal and Bhutan, but the government statement did not name any specific country.

State refiners, which control 60% of India’s 5 million barrels-per-day refining capacity, regularly tap spot markets for crude.

India is the world’s third biggest oil consumer and importer and imports almost 84% of its oil needs.

China does not export crude to India but Chinese firms are major traders of the commodity globally.

Chinese companies also hold equity stakes in many oilfields across the globe ranging from the Middle East to Africa and the Americas and often submit competitive bids in crude import tenders by Indian state refiners.