By DEBJIT CHAKRABORTY and RAKTEEM KATAKEY
Indian Oil Corp. and two other state- run refiners said they
will defer resuming purchases of Iranian crude by at least
three months, having failed to get reinsurance for shipments
after Europe said it would relax a coverage ban.
Indian Oil, which has an accord to buy 24,000 bpd from Iran
in the year ending March 31, halted purchases after importing
in the first quarter of the fiscal year. The nations
biggest refiner wont resume buying until insurance is
available, said a person with direct knowledge of the matter,
asking not to be identified before an announcement.
Hindustan Petroleum Corp., which planned to import 16,000
bpd, will hold back purchases, Refineries Director B.K.
Namdeo said in an interview. Chennai Petroleum Corp., which
hasnt bought any oil this year from Iran, will continue
to stay away, Managing Director A.S. Basu said.
Curbed shipments from Iran may hamper plans by India
n refiners to benefit from
lower prices and freight costs. The South Asian nation
planned to buy 11 million tons of Iranian crude this fiscal
year after the Europe
an Union eased its sanction
on insuring cargoes following a six-month accord between the
Persian Gulf state, the US and five other nations.
The benefit of the Iran deal is not percolating
down, Basu said in an interview in New Delhi. Our
insurers are saying foreign reinsurers want to observe the
situation for six months before extending any cover.
European rules have yet to be rewritten, so reinsurers are
still unable to provide cover to Indian refineries that
purchase cargoes from the Persian Gulf state, Andrew Bardot,
executive officer at the International Group of P&I
Clubs, said. The organizations members cover most of
the worlds merchant fleet against risks, including oil
State-controlled Indian refiners halted Iranian purchases in
May after insurers denied coverage to plants using Iranian
crude following growing pressure of sanctions against the
Islamic republic from the US and Europe
. Mangalore Refinery
Ltd., which gets
more than a quarter of its crude requirement from the
country, resumed purchases in August using tankers
underwritten by two Iranian insurers with sovereign
guarantees from India.
Weve no option but to continue with Iran imports
by taking this calculated risk, Mangalore Refinery
Managing Director P.P. Upadhya said in a phone interview.
is operating its 300,000
bpd plant without any cover, Upadhya said. The company plans
to buy 4 million tons from Iran this financial year and
increase purchases next year, he said.
Moallem Insurance and Kish P&I Club, the two Iranian
insurers, were given a six-month extension effective Dec. 28
to cover foreign ships arriving at India
n ports, Deepak Kapoor,
Indias deputy nautical adviser, said in a phone
interview. India has yet to roll out a proposed 20 billion
rupee ($314 million) insurance fund to cover imports from
India imported 5.82 million tons of Iranian crude during the
first eight months of the year started April 1. Imports were
13.14 million tons the previous year and 18.11 million tons
in the 12 months ended March 2012.
Essar Oil, which operates Indias second-biggest refinery
, also buys crude from
Iran. Essar spokesman Rabin Ghosh declined to comment on the
Some refiners are taking a calculated risk and
importing Iranian crude, Hindustan Petroleums
Namdeo said. Weve decided to refrain from buying
until the insurance issue is fully resolved. The European
insurers are not yet willing to take the Iran clause out of
End of ban
The end of the Europe
an Unions ban on
insuring ships carrying Iranian crude is part of an agreement
that will give the country as much as $7 billion in relief
from economic sanctions over six months in exchange for curbs
on its nuclear program. Irans oil exports will be
limited to about 1 million bpd, or 60% below 2012 levels,
under Western sanctions that remain in force, according to a
Nov. 24 White House statement.
Iran needs to export more oil to increase state revenue.
Sanctions have deprived the nation of more than $80 billion,
US President Barack Obamas administration said in
We dont really know the details of what happened
in that deal between Iran and the US because we havent
been told anything officially, Sunil Thapar, the
director of bulk carriers and tankers at Shipping Corp. of India
said in New Delhi on Jan. 6.
As of today, nothing has changed regarding the
insurance of oil cargoes from what it was before.