May 2, 2017 / 12:25 PM / 3 months ago

India cuts oil import plans from Iran by a quarter over gas field row

4 Min Read

    By Nidhi Verma
    NEW DELHI, May 2 (Reuters) - India plans to order about a
quarter less Iranian crude oil than it bought last year, people
familiar with the matter said, as state refiners cut term
purchase deals over a row between New Delhi and Tehran on
development of a natural gas field. 
    The drop in volumes follows India's threat to order state
refiners - Hindustan Petroleum, Bharat Petroleum
, Mangalore Refinery and Petrochemicals Ltd,
and Indian Oil Corp - to reduce purchases from Iran if
an Indian consortium is not awarded the rights to develop Iran's
huge Farzad B natural gas field. 
    The volume cuts would put India's imports of Iranian crude
for this fiscal year at 370,000 barrels per day (bpd), according
to the sources with knowledge of the planned deals. 
    India is Iran's top oil client after China, and last year
imported about 510,000 bpd of crude from the country, according
to shipping data in Thomson Reuters Eikon. 
    The reduced 2017/2018 imports include 199,000 bpd by state
refiners, a decline of about a third from last year, the sources
said. Private refiners Essar and HPCL-Mittal Energy
Ltd (HMEL) have renewed last year's term contracts to
buy 120,000 bpd and 20,000 bpd, respectively, they said.     
    Most of the state refiners did not respond to queries on the
matter, while Essar Oil, MRPL and HMEL declined comment. 
    India's oil ministry also said it had no immediate comment.
    Analysts said apart from the gas-field row, India is also
taking advantage of a narrow price spread between European oil
benchmark Brent and Middle East price-setter Dubai crude, which
makes it attractive to bring more oil from Europe into Asia.

    "Brent-related crudes are cheaper and sweeter than medium to
heavy grades from Middle East," said Ehsan ul Haq of KBC Energy
Economics. 
    Also, Russia's Rosneft may start bringing more
non-Iranian crude, likely from Venezuela, to India after buying
Essar Oil's Vadinar refinery. 
    Not all of India's refiners plan to scale back orders from
Iran, though. Private refiner Reliance Industries
signed its first Iranian deal in seven years to buy 30,000 bpd
of heavy Forozan crude oil, one of the sources said. 
    India's overall crude demand is around 4.6 million bpd,
third highest in the world behind the United States and China.
It was one of the few countries that continued to deal with Iran
despite international sanctions that were in place until 2016.
    Following are the details of India's planned imports from
Iran in 2017/18. Volumes are in '000 bpd and do not include
condensate.  

 Company                    Import Plan      Actual   Term Deal
                                2017/18     2016/17    2016/17 
 Essar                              120         165         120
                                                               
                                                               
 Reliance                            30          32          --
 (from Jan. 1, 2017)                                           
                                                               
 HMEL                                20          17          20
                                                               
                                                               
 BPCL                                10          19          20
                                                               
 IOC                                 80         119         120
                                                               
 MRPL                                99         129         120
                                                               
 HPCL                                10          29          20
                                                     
 TOTAL                              369         511         420
 Note: The total does not include about 30,000 bpd of condensate
imported from Iran by Reliance and Essar. 


 (Reporting by Nidhi Verma; Editing by Henning Gloystein and Tom
Hogue)
  

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