| NEW DELHI
NEW DELHI Feb 12 HPCL, India's
third-biggest buyer of Iranian crude in the current fiscal year,
plans to slash its purchases and replace them with Iraqi oil as
sanctions on Tehran bite harder, a source with direct knowledge
of the refiner's plans said.
The move is in line with a broader goal set by India, the
world's fourth-largest oil importer and Iran's second-biggest
client after China, to cut deliveries from Tehran, and comes as
a tough new U.S. condition on funding such purchases has been
State-run Hindustan Petroleum Corp Ltd (HPCL) had an annual
deal with Iran to buy 40,000 barrels per day (bpd) and an option
for another 20,000 bpd for the year ending March 31. It has
lifted about 44,000-46,000 bpd in the current year.
HPCL aims to have a contract for only token volumes from
Iran in the year that starts in April, the source said, partly
because of growing concerns insurance for installations,
including refineries, handling Iranian crude might be hard to
find because of the tighter sanctions.
"Volumes from Iran depend on the impact of sanctions. If
sanctions are eased or if the government helps on the insurance
issue, then Iran imports may go up. But at this moment no one
wants to take the risk," the source, who is not authorised to
speak to the media, told Reuters.
HPCL wants to increase its annual deal with Iraq's State Oil
Marketing Organisation (SOMO) to about 60,000 bpd in the year
starting in April from 45,000 bpd in the current year, the
HPCL may buy some Basrah crude volumes through stakeholders
other than SOMO, the source added.
ALTERNATIVE SUPPLY SOURCES
Indian refiners have been compensating for lost Iranian
volumes with crude from Iraq and Latin America. Iraq replaced
Iran as the country's No. 2 supplier after Saudi Arabia in the
year that ended in March 2012, as Tehran ceded a position it had
held for five years.
Sanctions on Tehran aimed at curbing its nuclear program
have also prompted its other major Asian clients -- China, Japan
and South Korea -- to cut imports and secure a waiver which
allows them continued access to the U.S. financial system. Iran
says its nuclear programme is entirely for peaceful purposes.
Refiners are already finding it difficult to import because
of an EU ban on insuring vessels carrying Iranian oil. Moreover,
under new U.S. sanctions from Feb. 6, payments for Iranian crude
must be held in a bank account in India in rupees, which
are not freely traded on international markets.
India is aiming to cut deliveries from Tehran by 10-15
percent in the year beginning in April after reductions of about
15 percent in the current year.
Indian refiners, both private and state-run, have already
cut imports by about 19 percent in April-December 2012 to around
270,700 bpd. HPCL shipped in about 17 percent of that, with
fellow state-run refiner MRPL and privately-owned
Essar the top buyers.