This will be India's sixth VLCC in two years. Until 2003, India did not own any VLCC. The VLCC owned by Shipping Corporation of India was sold a few years ago.
The ruling price for a new VLCC with a capacity of 200,000-300,000 dead weight in the international market is around $120 million and a second hand vessel will cost marginally low depending on its condition.
VLCC is preferred over other crude carriers by Indian oil companies because of economies of scale.
ONGC has chosen a VLCC leaving aside options such as the Suezmax, the largest that the Suez Canal can accommodate, the Panamax, the largest the Panama Canal can accommodate, and the Aframax, the largest vessel in London-based AFRA index of vessel size.
ONGC plans to utilise the VLCC to get oil either directly to India or use it for swapping crude with some other country.
Officials said the ONGC board was likely to consider the proposal but said the company would not need government approval since it was part of the 'navratna'. It could seek an informal go-ahead for the purchase though, said an official.
He said buying a VLCC would help ONGC attain flexibility in operations while transporting crude oil. ONGC would especially target to ship in oil from Russia's Sakhalin I and Sudan, he added.
Sakhalin I is expected to start producing crude oil in a year's time from now, while ONGC's Greater Nile Oil Project in Sudan is already producing oil.
ONGC Videsh, the overseas arm of ONGC, has a 25 per cent stake in the Sudan project, which is held through its 100 per cent owned subsidiary ONGBV, registered in the Netherlands. ONGC has 20 per cent equity in Sakhalin I.
So far, four Indian shipping companies own VLCCs. SCI, Essar Shipping and Mercator Lines acquired one VLCC each during the current year. GE Shipping acquired one in 2003-04 and another during the current year.