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IOC ties up oil from US, Saudi to make up for Iran shortfall

Press Trust of India  |  New Delhi 

Corp (IOC), the nation's biggest firm, has tied up imports from the US and taken additional volumes from to make up for the bulk of the volumes lost because of sanctions prohibiting buying from Iran, top officials said Friday.

supplied more than a tenth of India's oil needs before the reimposition of US sanctions against the nation stopped supplies this month.

"We have tied up supplies from alternate sources. No single country can make up for the volumes lost, that's why we are keeping our sourcing diversified. We are fairly diversified in our sourcing and we have robust sourcing in place to make up for all of the Iranian oil," IOC told reporters here.

bought close to 24 million tonnes of from in the fiscal ended March 31 (2018-19). Of this, IOC sourced about 9 million tonnes from

IOC and other Indian refiners stopped importing from Iran this month following the US' move to end sanction waivers.

To make up for the shortfall, IOC has used optional volumes available from suppliers such as Also, it has for the first time signed term import contracts with two US suppliers, he said, adding in all 4.6 million tonnes of from the US has been signed up for 2019.

IOC (Finance) A K Sharma said the company has an annual contract to buy 5.6 million tonnes of crude oil from On top of this, it has the option to import an additional 2 million tonnes.

"We have exercised our optional volumes with Saudi Arabia and will be importing 2 million barrels of additional crude oil from Saudi Arabia in six months period beginning July," he said, adding the optional volumes imported from July to December total to about 1.5-1.6 million tonnes.

From the US, IOC has signed a deal with Norwegian oil company for buying 3 million tonnes of crude during the year and an additional 1.6 million tonnes from Algerian national oil company

and produce crude oil in the US.

Singh said from a wide range of sources and have been lining up alternate supplies for the past months.

"The US was to take a decision on waiver extension in April and Indian refineries had prepared plans for all eventualities. We have alternate sources lined up to make up for any shortfall," he said.

US last year withdrew from the 2015 nuclear deal between Iran and world powers and revived a range of sanctions against the nation. It, however, granted a six-month waiver from sanctions to eight -- China, India, Japan, South Korea, Taiwan, Turkey, Italy, and -- but with a condition that they would reduce their purchases of Iranian oil.

The waiver began in November 2018 and expired on May 2.

had agreed to restrict its monthly purchase to 1.25 million tonnes to get the waiver. But since it had made robust purchases in the period prior to November 2018, India's from Iran totalled nearly 24 million tonnes in 2018-19 as compared to 22.6 million tonnes bought in the 2017-18.

"We have optional volumes (over and above the term contracts) from a number of suppliers which we can exercise to make up for any shortfall from Iran," Singh said. "We can also go to the spot (or current) market to source crude."

IOC has the option to take 0.7 million tonnes of crude oil from on top of its committed purchase of 0.7 million tonnes during the year. Similarly, it has optional volumes of 1.5 million tonnes from and another 1 million tonnes from the UAE, Sharma said.

"We have all the supplies tied up and I think globally crude will be readily available but it is difficult to say what the impact will be on price," Singh added.

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

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

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, May 17 2019. 19:11 IST