Indian Oil Corp became India's first state-refiner to buy Canadian oil, further evidence that trade routes have been redrawn by the U.S. shale oil boom.
IOC joined private Indian refiners Reliance Industries and Essar Oil in buying Canadian oil. Rising U.S. shale oil output is re-routing the flow of Algerian, Canadian and West African crudes, which used to flow regularly to the United States.
India's biggest refiner bought one million barrels of the Canadian White Rose light, sweet crude through a tender from trader Glencore, trade sources said.
"The U.S. is not buying, so they have to find alternatives," said a Singapore-based trader. "The U.S. is full of light, sweet crude, so they have to find a home for their crude elsewhere."
IOC also bought a very large crude carrier of West African oil - containing a million barrels each of Nigerian Bonga and Bonny Light crude - from Vitol for January loading, they said.
Reliance, owner of the world's biggest refining complex and widely known for testing new varieties of oil, in October last year imported a parcel of Canadian heavy oil Cold Lake.
Essar imported the Cold Lake grade in January.
"U.S. refiners are now processing more tight oil so some volumes of regional crudes like that from Canada are displaced and finding markets like China and India," said one of the trade sources.
IOC has been diversifying its oil sourcing ahead of the start-up of its 300,000 barrels per day (bpd) Paradip refinery on the east coast next year.
Diversification of oil sources has become more urgent as Western sanctions over Tehran's nuclear programme squeeze imports from Iran, once India's second-biggest supplier. Supplies from Libya and Sudan have also been disrupted.
This year IOC added Dubai and Qatar to its term oil suppliers' list for the first time. It is also in talks with Colombia, Venezuela and Brazil for term deals.
In September, IOC received a trial cargo of Colombia's Castilla and Vasconia grades through private negotiations with Ecopetrol.
IOC, which along with subsidiary Chennai Petroleum controls about 31 percent of India's oil refining capacity of 4.3 million bpd, aims to buy a trial cargo of Brazil's Marlim grade in the fiscal year ending in March.