Essar Oil signs Rs 6,660-crore oil deal with Colombian firm

Colombia's Ecopetrol will sell 12 million barrels of its Castilla crude oil to India's Essar Oil over a year, in a deal worth around $1.2 billion, the Bogota-based company and a source said.

The Andean nation's largest oil producer said it sent the first shipment of 2 million barrels of oil in a Very Large Crude Carrier on July 29 and it would take 35 days to arrive in India.

An Ecopetrol source said that the oil would be sent to a refinery of India's Essar, but the source did not have information on the sale price per barrel.

The crude will go from Colombia's Covenas port, the main oil harbor, to Vadinar in western India.

Essar has significantly boosted processing of heavy and ultra heavy crudes at its Vadinar refinery in the western Gujarat state to improve refining margins, the company's managing director said on Tuesday.

Essar aims to buy 15-20 per cent of its crude oil needs from the domestic market, 35-40 per cent from Latin American sources, and 30-40 per cent from the Middle East, it said in May.

In 2010, the company began replacing Latin American crudes with locally produced Mangala oil but has now turned back to the region to feed its expanding capacity. In April-June, it shipped in oil from Venezuela, Mexico, Colombia, and Brazil.