IOC hopes of US waiver to continue buying oil from Iran

Indian Oil Corp (IOC), the country's biggest buyer of Iranian oil, Friday hoped that the US will give waiver to the company for continuing import of oil from the Persian Gulf nation.

US sanctions on Iran's oil buyers snap back Monday, forcing importing countries to negotiate with the US for waivers by making cuts in purchases or risk getting blocked from the US financial system.

"I can't say there will be a waiver or no waiver, but definitely we are hopeful that we will have some sort of clearance to continue with Iran," IOC Chairman Sanjiv Singh told reporters here.

India, which is the second biggest purchaser of Iranian oil after China, is willing to restrict its monthly purchase to 1.25 million tonnes or 15 million tonnes in a year (300,000 barrels per day), down from 22.6 million tonnes (452,000 barrels per day) bought in 2017-18 financial year, for the waiver.

Earlier in the day, Bloomberg quoted a US official to say that Washington has agreed to let eight countries, including India, keep buying Iranian oil after it reimposes sanctions on Tehran.

IOC, which has contract to buy 9 million tonnes of crude oil from Iran in the fiscal year ending March 31, 2019, has made arrangements to replenish any lost quantity from Iran in case of sanctions, Singh said.

India, the world's third-biggest oil consumer, meets more than 80 per cent of its oil needs through imports. Iran is its third-largest supplier after Iraq and Saudi Arabia and meets about 10 per cent of total needs.

IOC and Mangalore Refinery and Petrochemicals Ltd (MRPL) have ordered to buy 1.25 million tonnes of oil from Iran in November.

IOC Director (Finance) A K Sharma said nominations for December have not yet been made as it will depend on a lot of factors including the US action.

Currently, India pays its third largest oil supplier in euros using European banking channels. These channels would get blocked from November.

Paying Iran in rupees is an option, Sharma said adding the Persian Gulf nation has been taken payments in rupees that it uses to pay for imports from India.

This year, it has taken payments for two-three shiploads of crude oil rupees, he said.

Iran was India's second biggest supplier of crude oil after Saudi Arabia till 2010-11 but Western sanctions over its suspected nuclear programme relegated it to the seventh spot in the subsequent years. In 2013-14 and 2014-15, India bought 11 million tonnes and 10.95 million tonnes respectively from it.

Sourcing from Iran increased to 12.7 million tonnes in 2015-16, giving it the sixth spot. In the following year, the Iranian supplies jumped to 27.2 million tonnes to catapult it to the third spot.

Iranian oil is a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, terms not available from suppliers of substitute crudes -- Saudi Arabia, Kuwait, Iraq, Nigeria, and the US.