India cuts oil imports from Iran hoping for US waiver

Indian refiners cut imports from Iran by 38 percent in May from a year ago, tanker discharge data showed, in a second month of steep reductions as they switch suppliers to cushion the impact of new US sanctions on Tehran.

The cutbacks raise India’s chances of winning a waiver similar to that granted by the US to Japan and some European countries after “substantial” reductions in their imports.

India is discussing an exemption from the sanctions with US, which focus on banking and which are imposed over Iran’s disputed nuclear programme, a source said.

[caption id=“attachment_335455” align=“alignleft” width=“380” caption=“China and India are Iran’s biggest crude clients . Reuters”]  [/caption]

China and India are Iran’s biggest crude clients and reductions in their purchases are crucial to Western attempts to crank up the pressure on Tehran. Neither have officially sought a waiver, although both have cut volumes.

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India imported about 243,000 barrels per day (bpd) from Iran in May, down about 10 percent from April and about 38 percent from a year ago, the data showed. In April- the first month of new contracts- imports from Iran slid nearly 40 percent from a year ago.

Falling imports from the OPEC member have pushed Iran to fifth position in the list of India’s crude suppliers in April-May, compared with the third position it enjoyed a year ago and second in the first quarter of 2012.

Refiners are expected to cut volumes they ink under term deals that started April 1 by more than 20 percent, according to estimates, while the government says it aims for imports to be down 11 percent from 2011/12 liftings to about 310,000 bpd.

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Indian refiners may lift significantly lower volumes out of Iran from July, when European sanctions will severely reduce the availability of insurance cover for cargoes and vessels.

Among Iran’s other Asian buyers, South Korea plans to halt all imports by the time the European measures hit, industry sources have said, and Japan could follow suit unless Tokyo provides a sovereign insurance guarantee for oil tankers.

Indian refiners have been asked privately by the government to cut Iranian oil imports by at least 15 percent, even though publicly India does not support unilateral sanctions, according to government officials.

The refiners are making up for the shortfall in Iranian cargoes by raising imports from the world’s biggest exporter, Saudi Arabia, as well as fellow OPEC member Iraq.

The 12-member Organization of the Petroleum Exporting Countries (OPEC) pumped 31.80 million bpd in May, up from 31.75 million bpd in April, an OPEC official and analysts found.

India’s overall oil imports in January-May rose about 11 percent from a year ago to 3.6 million bpd as the country expanded its refining capacity.

With some of that capacity in maintenance in May, however, total oil imports in the month declined 3.6 percent from April. They were up 14.5 percent from a year ago, the data showed.

Essar Replacing MRPL

Essar Oil , which raised Iranian imports in January-March to stock up and meet last fiscal year’s commitments, bought about 33,000 bpd in May, down more than 70 percent both from April and a year ago, as it turned to Latin America.

But overall during January-May, Essar was the top Indian client of Tehran, ousting state-run Mangalore Refinery and Petrochemicals Ltd.

MRPL nearly halved annual imports from Iran in January-May to about 80,800 bpd. It bought about 52 percent less oil in May from Iran compared with April at 43,000 bpd, data showed, due to a full shutdown of its refinery during the month.

State-run Hindustan Petroleum Corp emerged as the biggest buyer of Iranian oil in May, importing 99,000 bpd, up 66 percent from April and about 1.4 percent more than a year ago.

“May volumes are higher as HPCL took delayed delivery of an April cargo,” said a source privy to HPCL’s imports.

Essar has renewed its annual deal of 100,000 bpd with Iran for this fiscal year starting April 1 but aims to lift 15 percent less oil from there, while MRPL has reduced the size of its deal to 100,000 bpd compared with 142,000 bpd in 2011/12.

HPCL aims to buy 60,000 bpd oil from Iran compared with 70,000 bpd in 2011/12.

Indian Oil Corp , the country’s biggest refiner, bought 67,600 bpd oil from Iran while Bharat Petroleum Corp. Ltd. did not buy any Iranian oil since February.

Reuters