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India's top buyer of Iran oil turns to Azeri, Saudi
July 16, 2012 / 1:12 PM / 5 years ago

India's top buyer of Iran oil turns to Azeri, Saudi

* MRPL signs deal to buy Azeri crude
    * MRPL to buy extra oil in July from Saudi Arabia, UAE

    By Nidhi Verma
    NEW DELHI, July 16 (Reuters) - India's biggest buyer of
Iranian oil, MRPL, has bought Azeri, Saudi and Emirati crude to
replace imports from Iran in July and it may halt purchases from
Tehran altogether as sanctions make shipments more difficult,
industry sources said on Monday.
    Loss of exports to Mangalore Refinery and Petrochemicals
(MRPL) would be a blow to Iran, which has seen
overseas sales decline by more than half from a year ago due to
U.S. and European Union sanctions.
    The sanctions against Iran's nuclear programme, which the
West thinks is aimed at making weapons, are meant to cut the
country's oil revenues.
    "MRPL has initiated steps to halt its imports from Iran. It
is facing problems on a daily basis ... government pressure,
sanctions and the latest is Iran's threat to shut the Strait of
Hormuz," said one of the sources,
    The source declined to detail the steps MRPL was taking.
    The refiner has been forced to restrict its lifting from
Iran to a fifth of the planned 3.3 million barrels per day (bpd)
in July.
    Iran over the weekend renewed its threat to close the Strait
of Hormuz unless sanctions against it were revoked. Flows
through the Strait last year accounted for about 35 percent of
all sea-borne traded oil, or almost 20 percent of oil traded
worldwide.
    
    ALTERNATIVES
    MRPL has signed a two-month deal with Azerbaijan after
shipments from Tehran were hit in July, besides buying an
additional cargo each from its existing suppliers United Arab
Emirates and Saudi Arabia, to offset Iranian supply cuts.
    The Indian refiner has an annual deal to lift 40,000 bpd
from the UAE and 49,000 bpd from Saudi Aramco.
    MRPL's move highlights the gradual increase in share of
non-Iranian supplies in the world's fourth-biggest oil
importer's crude basket and the emergence of new trade routes as
Tehran's exports decline.
    MRPL may import only one of its planned five Iran oil
cargoes in July after its shippers Great Eastern Shipping
Co.(GESCO) refused to carry Iranian crude and New Delhi
scrapped an order permitting use of Iranian tankers and
insurance. 
    "Because of shipping problems with GESCO, MRPL had signed a
two-month deal with Azerbaijan and it may renew this deal
depending on the need," said one of the sources, all of whom
have knowledge of the matter.
    MRPL had lifted three cargoes in February-April from
Azerbaijan under a short term deal, the sources said.
    Indian Oil Corp., the country's biggest oil
refiner, has been lifting 20,000 bpd of Azeri Light crude in
2012 under an annual contract while Hindustan Petroleum will
soon start buying 10,000 bpd from Azerbaijan's national oil
company SOCAR.
 
    
    DIFFICULT SITUATION
    MRPL, which has cut the size of its annual oil import deal
with Iran by about 30 percent to 100,000 barrels per day (bpd),
relies on Tehran for about a third of its annual oil needs.
    "It makes sense to renew the Azerbaijan contract or look at
alternatives rather than dealing with Iran-related problems on a
daily basis. If they shut the Strait of Hormuz then MRPL will be
in a difficult situation," said the second source.
    MRPL Managing Director P. P. Upadhya declined to comment.
    India, Iran's second-biggest customer, has got a waiver from
tough U.S. sanctions after reducing imports from Tehran and
pledging a further cut of at least 11 percent in the current
fiscal year ending March.
     EU sanctions from July 1 ban insurers and reinsurers from
covering Iran oil shipments.
    Alarmed by the Iranian threats concerning the Strait of
Hormuz, the UAE has begun loading cargoes through its
long-awaited oil export terminal on the Gulf of Oman. The Gulf
OPEC member hopes to increase exports from the new facility to
around 1.5 million bpd. 
    Saudi Arabia too has opened a bypass in the last few months,
giving Riyadh scope to export more of its crude from Red Sea
terminals should Iran try to block the Strait of Hormuz.
 

 (Editing by Anthony Barker)

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