India firm plans hefty cut in Iran oil imports
Mumbai, March 5, 2012
Iran's biggest Indian oil client, Mangalore Refinery and Petrochemicals (MRPL) , plans to cut its annual import deal with Tehran by as much as 44 percent to 80,000 barrels per day (bpd) in 2012/13, two sources said.
The cuts in oil imports from Iran by MRPL would imply a reduction of more than 20 percent in India's total purchases of Iranian oil in the next fiscal year, according to Reuters' estimates.
MRPL plans a hefty cut in imports of Iranian oil in the next fiscal year beginning April, said the sources, who are both familiar with the company's crude import plans.
"There will be a drastic reduction in volumes from Iran," said one of the sources. That would come as China and Japan, Iran's other leading Asian buyers, make similar reductions in imports from Tehran.
Iran is India's second-biggest oil supplier after Saudi Arabia. For a factbox on Iran's crude oil buyers in Asia and Europe, see
US and European sanctions, aimed at forcing Iran to halt suspected development of nuclear weapons, are hampering Iran's ability to sell its crude oil, which generates most of the country's foreign exchange.
Washington will impose sanctions from June 28 on companies facilitating Iran's oil trade, but many firms are already preparing for the deadline. Japan is in final talks with Washington on an agreement on cuts in Iranian crude oil imports that could amount to 20 percent or more a year, a newspaper reported last month, as Tokyo seeks to win waivers from the US sanctions.
"For the next (fiscal) year, MRPL plans to restrict its term deal to 80,000-100,000 bpd, but imports could rise if the new payment mechanism operates smoothly," said one of the sources, adding talks were taking place with National Iran Oil Co (NIOC) to finalise the deal.
The second source said the refiner plans to commit to a deal for 80,000 bpd and keep an option to buy more.
MRPL agreed a deal to import 142,000 bpd oil in 2011/12, but the state-run firm's actual imports during the year, which ends on March 31, 2012, will be 120,000-122,000 bpd, the sources said, because there have been difficulties in payment.
"As was the case in 2010/11, MRPL was hoping to take 150,000 bpd against a term deal of 7.1 million tonnes, but supplies were hit due to payment problems," said the second sources. No comment was available from MRPL, and NIOC could not be reached for comment.
The Indian refiner, whose coastal refinery is configured to run Iranian crude, will discuss its annual crude import plan this week, sources said.
Indian companies are currently paying for Iranian oil via a bank in Turkey, after a long-standing Asian clearing mechanism was scrapped under pressure from Washington in December 2010. India and Iran have agreed that 45 percent of oil payments should be made in the rupee, which is not freely tradeable. - Reuters