As the EU sanctions on Iran?s oil trade came into force on July 1, Indian refiners have cut their crude oil imports from the West Asian nation by as much as a quarter of their total purchase from the country a year ago and have firmed up alternative arrangements to feed their refineries.
Largest buyers of Iranian crude Mangalore Refinery and Petrochemicals (MRPL) and Essar Oil have separately confirmed to FE their plans to cut purchases.
India?s largest buyer of Iran crude oil, MRPL has reduced its oil imports from Iran by nearly 25% to 5 million tonne this fiscal from 6.2 million tonnes in 2011-12. MRPL had bought around 7.1 million tonne of crude from Iran in 2010-11, which accounted for roughly 12% of the firm?s total crude oil buys from overseas. Essar Oil, the second largest buyer of Iranian crude, has also reduced imports by 15% from 5 million tonnes and have already entered into oil import contracts with the national oil companies in Columbia and Mexico.
India?s oil imports from Iran have seen a steady decline over the past few years to 15.5 million tonne in 2012-13 from about 22 million tonne in 2008-09. India bought 17.44 million tonne of crude from the country in 2011-12 and 18.49 million tonne in the previous fiscal (see chart).
EU sanctions that include a ban on import of Iranian oil by its member states and other measures that make it difficult for countries to trade with Iran – were legislated earlier this year, but came into force on July 1.
?The growing tensions over Iran have forced us to gradually reduce our oil dependency on Iran. We are planning to reduce it further as we are in talks with several other countries. As of now, we are making 45% of our payments to Iran in Indian currency,? a senior MRPL official said on condition of anonymity.
?Our refining complexity has gone up to 11.8 from 6.1 enabling us to process tougher crude. Iran crude is lighter crude and contains less sulphur,? said an Essar Oil spokesperson. Firms go for heavy and high sulphur crude, which are cheaper, in order to boost their refining margins.
Meanwhile, the petroleum ministry is talking to other ministries to ensure insurance cover for ships ferrying crude oil from Iran to India. ?We have sought a relaxation from the ministry of shipping, that we should be allowed to ferry our crude through Iranian carriers, because they would be bringing it up to the Indian shore. It is considering our proposal,? oil secretary GC Chaturvedi said on June 22. India?s oil minister S Jaipal Reddy has also sought an additional 5 million tonne of crude oil and 1.5 million tonne of LPG from Saudi Arabia to reduce dependency on Iranian oil.