India’s Iran oil purchases to fade ahead of US sanctions
NEW DELHI: Indian refiners will cut their monthly crude loadings from
Iran for September and October by nearly half from earlier this year as
New Delhi works to win waivers on the oil export sanctions Washington
plans to reimpose on Tehran in November.
India’s loadings from Iran for this month and next will drop to less
than 12 million barrels each, after purchases over April-August had been
boosted in anticipation of the reductions.
The US is renewing sanctions on Iran after withdrawing from a 2015
nuclear deal. Washington reimposed some of the financial sanctions from
Aug. 6, while those affecting Iran’s petroleum sector will come into
force from Nov. 4.
India, Iran’s No.2 oil client behind top buyer China, does not recognize
the reimposed US sanctions, but winning a waiver from the restrictions
is a must for New Delhi to protect its wider exposure to the US
financial system.
India’s Oil Ministry in June told refiners to prepare for a “drastic reduction or zero” imports from Iran from November.
“Some refiners have either already exhausted or front-loaded their term
contract to a large extent, which allows them the flexibility to go to
zero if required, or until clarity on the waivers emerge,” Amrita Sen,
chief oil analyst at Energy Aspect, told Reuters.
Washington will consider waivers for Iranian oil buyers such as India
but they must eventually halt crude imports from Tehran, US Secretary of
State Mike Pompeo said last week in New Delhi after a meeting of high
level officials.
The Indian government, already facing a backlash over a falling rupee
and record high fuel prices, does not want to halt the oil imports from
Iran as the Islamic republic offers a discount on oil sales to India.
NEW DELHI: Government sources said India made this point clear in last
week’s meetings with US officials and remains engaged with Washington to
work out waivers on its oil purchases from Iran.
“We have a special relationship with both the US and Iran, and we are
seeing how to balance this all, and also to balance out the interest of
the refiners and end-consumers,” said one government official.
But if Washington adopts a tough line, India would have no choice but to end imports from Iran, they said.
India lifted about 658,000 barrel of oil per day (bpd) from Iran in
April-August, according to data obtained from trade sources by Reuters,
and the cuts projected for September and October would drop the daily
average over those two months by about 45 percent to 360,000-370,000
bpd.
Indian oil refiners have already given the October loading plans to the
National Iranian Oil Co. (NIOC), sources familiar with the loading
schedule said.
Top refiner Indian Oil Corp. wants to lift 6 million barrels each in
September and October, while Mangalore Refinery and Petrochemicals would
load 3 million barrels each for those two months, the sources said.
IOC would also lift 1 million barrels for its subsidiary Chennai Petroleum Corp. in October, they said.
Bharat Petroleum Corp. would lift 1 million barrels in September and
skip purchases in October, a company source said on Tuesday.
Bharat Petroleum has already drawn more than its fixed volumes — the
amount it is obligated to purchase — that were contracted for 2018/19,
its chairman said on Tuesday.
Nayara Energy, part owned by Russian oil giant Rosneft, plans to lift 1
million barrels each in September and October, the sources said. But the
refiner began reducing its oil imports from Iran in June and aims to
completely halt purchases from November.
Hindustan Petroleum, Reliance Industries and HPCL Mittal Energy (HMEL)
have no plans to buy from Iran in September and October, they said.
Indian refiners — excluding Reliance and HMEL, which do not have term
contracts with Iran — will together lift about 73 percent of their fixed
contract volumes from Iran by end-October, the loading data showed.
IOC, Nayara and MRPL did not respond to requests for comment.
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