India’s Mangalore Refinery and Petrochemicals Ltd said on Monday it expects to receive an Iranian oil cargo by the end of this week, the firm’s first purchase from the sanctions-hit nation since April.
The resumption of shipments by MRPL, Iran’s top Indian client until the firm halted imports in April, will boost India’s flagging Iranian oil imports, which more than halved in June from a year ago.
MRPL and Hindustan Petroleum had stopped purchases due to difficulties getting insurance for refineries processing Iranian oil, forcing New Delhi to look at providing its own reinsurance after European firms backed out over sanctions.
“It (the cargo) was loaded at Kharg (island) on 8th and 9th of this month and is likely to reach Mangalore by the end of this week,” MRPL’s managing director P.P. Upadhya said, adding the firm planned to lift four Iranian oil cargoes this month.
India is thinking of providing a 20 billion rupee ($327 million) state guarantee to back local insurance for plants using Iranian oil, an industry source said last week.
“Regarding the reinsurance issues, GIC (General Insurance Corp) is working out the plan and we hope it will take care of our interest,” Upadhya said, adding MRPL was finding it difficult to replace Iranian crude.
He said Iranian crude was best suited for his refinery but MRPL would also process other crudes once a coker was ready in around two months.
MRPL, a subsidiary of oil and gas producer Oil and Natural Gas Corp, operates a 300,000 barrels-per-day refinery in southern Karnataka state.
Separately an industry source said MRPL planned to lift two aframax cargos in the vessel Abelia, formerly known as Jupiter, and two suezmax cargoes in the oil tanker Lantana.
Sanctions imposed by Washington and the European Union to over Iran’s nuclear program have cost the middle eastern country billions of dollars in revenue since the start of 2012.
Iran’s top four oil clients have cut their imports by more than a fifth in the first six months of the year, but are soon to face increased pressure from the United States to reduce shipments further.
The cuts by China, India, Japan and South Korea point to the United States’ and European Union’s success in reducing Tehran’s vital oil cash flows as they try to force Iran to halt a disputed nuclear program. Oil shipments from Iran are down about 60 percent on average compared to pre-sanction levels.
The U.S. House of Representatives recently passed a bill aiming to cut Iran’s oil exports by another 1 million bpd over a year to near zero.
(Reporting by Nidhi Verma; Additional Reporting by Luke Pachymuthu and Roystone Hua in SINGAPORE; Editing by Ed Davies)
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