* Iran imports seen at 190,000 bpd in year to end-March 2014
* New insurance fund may not spark import resurgence
* Iran 9th biggest oil supplier in Aug versus 15th in July
By Nidhi Verma
NEW DELHI, Sept 20 India's imports of Iranian
oil shot up in August to more than four times the volume taken
in July as one refiner resumed purchases after a four-month
break, but the average annual pace of shipments is still far
below last year's levels.
India's intake of Iranian oil to date in 2013 is down over
40 percent on the year because international sanctions aimed at
curbing Tehran's nuclear programme have made it difficult to
insure refineries and ships involved in the trade and forced
some oil payments to be made in rupee.
Even though Indian oil minister M. Veerappa Moily says he
wants Iranian oil imports near last fiscal year's rate of
260,000 barrels per day (bpd) - which he says would save $8.5
billion in foreign exchange and help curtail India's current
account deficit - daily shipment rates are much lower than that.
Industry sources also told Reuters there would likely be no
great import resurgence despite the government putting together
a new reinsurance package for refineries processing Iranian oil.
India imported 151,000 bpd of Iranian crude in August versus
35,500 bpd in July, when only Essar Oil bought from
Tehran, data compiled by Reuters from trade sources shows.
Iranian oil imports in August were about a fifth less than
last year's 192,000 bpd, the tanker arrival data shows. Imports
for January-August dropped about 44 percent from a year ago.
Other data provided by industry sources and Reuters
calculations indicated that Indian imports from Iran will run
about 190,000 bpd in the year to end-March 2014.
The U.S. and EU sanctions aimed at forcing Tehran to
negotiate an end to its nuclear programme have more than halved
its oil exports from about 2.2 million bpd and cost it billions
of dollars a month in lost oil revenue.
Western powers believe Iran is developing nuclear weapons,
while Iran says its programme is for power generation.
U.S. President Barack Obama may meet with Iranian President
Hassan Rouhani next week after a "change in tone" between Iran
and the West since Rouhani took office.
MRPL RESUMES SHIPMENTS
Only two refiners - Essar Oil and state-owned Mangalore
Refinery and Petrochemical Ltd - bought Iranian oil in
MRPL, which used to be Iran's top Indian client, bought its
first oil from the sanctions-hit nation since April, the data
shows. MRPL resumed the imports after securing local reinsurance
for claims up to 5 billion rupee ($79 million).
In addition, India is planning to provide a 10 billion rupee
sovereign guarantee to back local insurance for refineries using
Iranian oil, according to government sources.
The government guarantee is half of a package that would
assure refiners running Iranian oil of about 20 billion rupee in
An earlier plan of twice the amount had been considered, but
a finance ministry official said the government felt the smaller
package was adequate, declining to give further details.
With the new fund, local insurers will remove the sanctions
clause from the policies covering the refiners.
MRPL and another state refiner, Hindustan Petroleum Corp Ltd
, had halted Iranian oil imports in April, primarily
over the insurance issue.
However, as they waited for the government plan to shore up
the local insurers, some refiners determined that there are
suitable substitutes for Iranian crude.
HPCL, for instance, has significantly raised imports of
Iraq's Basrah oil to replace its lost Iranian barrels, and is
not switching back this fiscal year.
"In our crude import strategy for this year we have not
factored in Iranian oil imports," said an HPCL source.
Iran was ninth biggest crude oil supplier to India in
August, improving its ranking from 15th place in July, but that
was still down from sixth a year ago.
India imported about 52 percent more oil from Latin America
in the first eight months of the year as its Iranian shipments
dropped. Crude imports from Iraq over the same period increased
nearly a quarter.
Overall, Asia's third-largest economy shipped in 26 percent
more oil in August than a year ago, while imports for the
January-August period rose about 12.4 percent, the data showed.
India and other buyers of Iranian oil - including China,
Japan and South Korea - can win exemptions from U.S. sanctions
by continually lowering their purchase volumes. India will be up
for review of its six-month exemption in December.
($1 = 63.2650 Indian rupees)
(Editing by Tom Hogue)