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Indian refiners turn to Opec, Mexico, US to make up for Iran oil loss

All four Indian state-owned refiners that buy Iranian oil are confident of securing additional barrels from other producers

Nidhi Verma & Subrat Patnaik | Reuters 

Oil refinery

Indian refiners are increasing their planned purchases from nations, and the United States to make up for any loss of Iranian oil if the enforces sanctions more harshly from next month, sources and company officials said.

All four Indian state-owned refiners that buy Iranian oil are confident of securing additional barrels from other producers, officials from the told Reuters.

The state refiners have not yet placed orders for Iranian oil for May, when the current waiver expires, pending clarity from the United States.

India's (BPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have tapped Iraq to make up for Iranian oil, while (IOC) has signed its first annual contract with suppliers and raised supplies from

"There will be no supply constraints. The supply can come from both and non-nations like the U.S.," said M. K.

Surana, chairman of Hindustan Petroleum Corp, which purchased up to 1.5 million tonnes per year of Iranian crude in 2018/19.

The Organization of the Petroleum Exporting Countries (Opec) and other producers including Russia have gradually tightened supply through 2019 to reduce a global glut. Opec and its partners may not renew the curbs when they expire after June because of the risk of over-tightening the market.

IOC, India's top refiner and Iran's biggest Indian client, will cut Iranian to 6 million tonnes, or about 120,000 barrels per day, in the 2019/20 period from 9 million in 2018/19, and has raised the optional volumes it can buy from other producers to 2 million tonnes, a company official said.

"Our optional quantities under term deals are higher than last year. We have optional contracts with Saudi Arabia, Kuwait and other suppliers... They will supply more if we want," the official said, adding his firm would also buy more U.S. oil if required.

IOC also hopes to buy 1.5 million tonnes of Mexican oil in 2019, compared with 1 million tonnes last year, the source said.

Officials from state-owned did not immediately reply to requests for comment on the Indian refiners' plans to purchase less Iranian crude.

NO WATERTIGHT PLAN

Refinery officials said their 2019/20 crude import strategy was not contingent on Iranian oil, and was more flexible than in previous years.

"We don't have a watertight plan for the year, we have optional quantities so that it is possible to find replacement if any country goes out for any reason," said an MRPL official.

During previous sanctions against Iran, Saudi Arabia and Iraq raised supplies to India to grow market share in the country, the world's third-biggest and importer.

Last year, MRPL signed its first annual deal with Iraq to buy 1.5 million tonnes of Basra oil in 2019.

BPCL has signed a deal to buy 5 million tonnes of Iraqi oil in 2019 compared with 1.5 million tonnes in 2018, its head of refineries R. Ramachandran said, adding his company is considering buying more oil from South America.

BPCL recently bought Brazilian crude and plans to buy Mexican oil as well, he said.

"We have a strategy with and without Iran," he added.

First Published: Wed, April 17 2019. 16:12 IST
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