Indian refiners turn to OPEC, Mexico, U.S. to make up Iran oil gap

Whatapp News

New Delhi – Indian refiners are increasing their planned purchases from OPEC nations, Mexico and
the United States to make up for any loss of Iranian oil if the U.S. enforces sanctions more harshly from next month, sources
and company officials said.

All four Indian state-owned refiners that buy Iranian oil are confident of securing additional barrels from other producers, officials from
the companies told Reuters.

The state refiners have not yet placed orders for Iranian oil for May, when the current waiver expires, pending clarity from the United States.

India’s Bharat Petroleum Corp (BPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have tapped Iraq to make up for Iranian oil,
while Indian Oil Corp (IOC) has signed its first annual contract with U.S. suppliers and raised supplies from Mexico.

“There will be no supply constraints. The supply can come from both OPEC and non-OPEC nations like the U.S.,” said M. K. Surana, Chairman
of Hindustan Petroleum Corp, which purchased up to 1.5 million tonnes per year of Iranian crude in 2018 and 2019.

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The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia have gradually tightened supply
through 2019 to reduce a global glut.

OPEC and its partners may not renew the curbs when they expire after June because of the risk of over-tightening the market.

IOC, India’s top refiner and Iran’s biggest Indian client, will cut Iranian oil imports to 6 million tonnes, or about 120,000 barrels
per day in the 2019 and 2020 period from 9 million in 2018 and 2019, and has raised the optional volumes it can buy from
other producers to 2 million tonnes, a company official said.

“Our optional quantities under term deals are higher than last year. We have optional contracts with Saudi Arabia, Kuwait and
other suppliers… They will supply more if we want,” the official said, adding his firm would also buy more U.S. oil if required.

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IOC also hopes to buy 1.5 million tonnes of Mexican oil in 2019, compared with 1 million tonnes last year, the source said.

Officials from state-owned National Iranian Oil Co did not immediately reply to requests for comment on the Indian refiners’ plans
to purchase less Iranian crude.

Refinery officials said their 2019 and 2020 crude import strategy was not contingent on Iranian oil, and was more flexible than in previous years.

“We don’t have a watertight plan for the year, we have optional quantities so that it is possible to find replacement if any country goes
out for any reason,” said an MRPL official.

During previous sanctions against Iran, Saudi Arabia and Iraq raised supplies to India to grow market share in the country, the
world’s third-biggest oil consumer and importer.

Last year, MRPL signed its first annual deal with Iraq to buy 1.5 million tonnes of Basra oil in 2019.

BPCL has signed a deal to buy 5 million tonnes of Iraqi oil in 2019 compared with 1.5 million tonnes in 2018, its head of
refineries R. Ramachandran said, adding his company is considering buying more oil from South America.

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BPCL recently bought Brazilian crude and plans to buy Mexican oil as well, he said.

“We have a strategy with and without Iran,” he added.

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