Will ensure that Indian oil cos get safe shipments of crude oil
India does not intend to halt imports of crude oil from Iran, notwithstanding the tightening of sanctions by the U.S and the European Union (EU).
Instead, the government is working on a scheme to insure oil import shipments from the Islamic nation to maintain smooth supply and to expand trade in other commodities.
Petroleum and Natural Gas Minister Veerappa Moily had, earlier this week, stated that India had no intentions to put a halt to imports from Iran.
Officials in the Petroleum and Natural Gas Ministry said that although imports from Iran had witnessed a dip as compared to last year, there was no move to completely phase out such crude oil imports.
The Petroleum Ministry, the Shipping Ministry and the Finance Ministry are holding consultations on establishing a special fund that would insure oil imports from Iran. It is learnt that the state-run national insurance companies, the Petroleum Ministry and the Oil Industry Development Board (OIDB) are working on a plan for the new fund, which will ensure that Indian oil companies continue to get safe shipments of crude oil from Iran. Mangalore Refinery and Petrochemicals Limited (MRPL) is one of the biggest importers of oil from Iran. “Any kind of permanent halting of oil shipments from Iran is not feasible at this point. The Iran-India trade relations apart from oil are on the rise.
Iranians have shown interest in import of various business commodities, including agricultural products, and any adverse decision on the crude oil front will jeopardise that great opportunity,” a senior Commerce Ministry official stated.
Figures from the Commerce and Industry Ministry show that India’s crude oil imports from Iran have fallen as Indian companies continue to face insecurity on the insurance of shipments from the sanction-hit nation.
The re-insurance issue has come back to haunt refiners who are importing oil from Iran, as insurance companies are reluctant to provide cover for such shipments.
In 2012, when a similar situation arose, the government had stepped in to provide insurance to local ships carrying Iranian oil. India is the second biggest importer of crude from Iran and has imported 271,200 barrels per day (bpd) oil from Iran between April and February 2012-13, which is below the government’s target of 310,000 bpd for this fiscal year.
In order to compensate the decline in crude oil imports from Iran, India has stepped up imports from Latin American countries — more than doubling them in April to February. They now account for about 17.3 percent of overall imports, up from about 9.5 per cent a year ago. The Commerce Ministry has also lined up an “India Show” in Iran during 2013 if all goes well.