As Iran and a clutch of influential countries start negotiating a long-term deal on May 13 to curb the Gulf nation?s nuclear activity, India’s Mangalore Refinery and Petrochemicals (MRPL) targets to import 4 million tonne of crude from the sanctions-hit country in FY15. This is the same volume it imported last fiscal.
Also, India and Iran have worked out a payment mechanism, through Oman, to settle about $1.6 billion of pending bills by July.
?We have got the waiver (from sanctions), which will be reviewed in July. We hope we would be able to procure similar volumes of crude from Iran, as much we did in 2013-14,? a senior MRPL official told FE.
The refiner does not want to lose its share of Iranian crude because of technical and commercial advantages that would help it earn better refining margins, which are already under stress.
MRPL reported a gross refining margin (GRM) of $2.42/barrel in the first nine months of FY14 against $2.60/barrel in the same month in FY13. ?The Iranian crude comes at a discount and is good in quality. This certainly improves the GRM,? said a Mumbai-based analyst.
The US and other world powers, such as China, Russia, the UK, Germany and France, have a six-month agreement with Iran ending in July. During these months, the Islamic nation has decided to freeze some of its nuclear programmes.
On May 13, Iran is likely to start negotiations with these countries in Vienna to arrive at a consensus for a long-term deal. Tehran has been asking for lifting sanctions levied by the western countires. Iran’s newly elected President Hassan Rouhani is expected to improve the country’s relationship with the outside world. The energy-rich country has agreed to reach a comprehensive nuclear deal to improve its economy.
MRPL, an ONGC subsidiary, is the biggest Indian buyer of crude from Iran. Others include HPCL, Essar Oil and IOC. India’s pending payment to the Gulf nation for buying crude has touched $ 3 billion. The payments are pending since February 2013, when Turkey denied to route any more payments from India to Iran.
The new mechanism has been worked out to pay via Oman in Omani Rials. India hopes to clear about $1.6 billion payment in tranches over the next three months. A chunk of it is from MRPL. ?We are waiting for the last-minute order to start paying,? said the MRPL official.
The sanctions have impacted India as it has drastically cut down its crude imports, almost by half in FY14 from 21.20 mt in FY10. Less of good quality Iranian crude is flowing to India because refiners are not able to make payments and ships carrying crude can?t get insurance as world powers threaten not to re-insure refineries processing oil from the Islamic nation.
Mangalore-based MRPL has a capacity to process 15 million tonne every year.