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Indian refiners work on alternatives to Iranian crude oil imports

  • Author
  • Charles Newbery
  • Editor
  • Bob Matyi
  • Commodity
  • Oil

New Delhi — Indian refiners have been asked to prepare an alternative crude oilsourcing plan ahead of the snapback of US sanctions on Iran in Novemberwhile a clear response from the Indian government on the US' stance onzero imports from Tehran is expected to emerge in July, government andindustry officials said Friday.

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India's oil ministry has instructed state-run refiners such as Indian OilCorp., Hindustan Petroleum Corp. Ltd. and Bharat Petroleum Corp. Ltd. toscout for alternative sources to Iranian oil.

"Our alternative ready-made preference will be Iraq, Saudi Arabia and theUAE due to proximity. But a reasonable price would be the driving forcewhile striking any new crude import deals," said an official working withone of the refiners.

Official sources said the oil ministry would spell out a crude importroad map based on feedback from domestic refiners to the oil ministryduring the first week of July to take a "pragmatic view" on the importissue with the traditional supplier.

Earlier this week, Nikki Haley, US Ambassador to the United Nations, metIndian Prime Minister Narendra Modi to press the US administration'sstance on zero imports from Iran.

"We will continue to keep the pressure up and we hope that othercountries will join us," Haley said at a public event during herthree-day visit to the South Asian country from Wednesday.

"Because in our eyes, Iran is the next North Korea," she said.

Until the visit of Haley, New Delhi adopted a policy of abiding by UNsanctions on Iran as articulated by foreign minister Sushma Swaraj at amedia conference last month after the announcement of US sanctionsagainst Tehran.

Swaraj had said India only recognized UN sanctions and not any unilateralsanctions against a third country.

Analysts said India would have to adopt a different strategy for thelatest round of US sanctions unlike the previous sanctions on Iran duringthe tenure of Barack Obama when New Delhi continued importing crude fromIran on preferential terms.

Iran had accepted a payment mechanism through the Indian currency viaEuropean banking channel.

"This might not be the case this time," a New Delhi-based analyst said.

India is looking at all options before taking a concrete stand on theIranian crude imports.

"There is not a single oil producing country from where we don't buycrude today," Indian oil minister Dharmendra Pradhan said Thursday,highlighting that the country has even placed a crude import order withBrunei recently.

"There is no threat of supply disruptions because of the latest threat ofUS sanctions," Pradhan said, adding India would go by its own nationalinterest on the issue of Iranian imports.

Currently, Iran is India's third-largest crude supplier after Iraq andSaudi Arabia.

India's crude imports from Iran in May rose by a tenth from April to705,000 b/d, with last month's imports up 45% year on year, according totrade sources.


India is also committed to making Iran's Chabahar port operational by2019 in order to ease trade flow with Afghanistan and Central Asia.

Interestingly, the US administration is keeping the Iranian zero importissue and the Chabahar port development separate as it holds thestrategic Iranian port will help war-ravaged Afghanistan with free flowof trade.

"We know the port has to happen and the US is going to work with India todo that," Haley said after meeting Modi on Wednesday.

In February during Iranian President Hassan Rouhani's visit to New Delhi,Modi committed to supporting the development of Chabahar port forpromoting free trade in Central Asia.

--Ratnajyoti Dutta,

--Edited by Irene Tang,