HPCL slams door on Iran for crude oil imports

In a sign that Western sanctions weigh heavily on it, Hindustan Petroleum Corporation Limited (HPCL) has virtually slammed the door on Iran for crude oil imports during 2013-14 and has instead increased imports from Iraq.

The HPCL’s strategy paper for crude imports during 2013-14 — a copy of which is available with The Hindu — states that because of the sanctions the U.S. and the European Union imposed on Iran, it is proposed to have only an optional contract of one million tonne with the National Iranian Oil Company (NIOC); and it will be used on a need basis, if only there is no negative impact on HPCL business. The existing term contract for April 2012-March 2013 was 2 million tonne (40,000 barrels a day), with an optional contract of 1 million tonne (20,000 barrels a day) for 2013-14. But NIOC turned the proposal down, saying it did not have a policy to make a mere optional contract. “Hence, there is no crude-lifting contract with NIOC for 2013-14. This is due to the ongoing US/EU sanctions on Iran,” the paper says.

The HPCL’s stand runs counter to the Petroleum and Natural Gas Ministry’s stand that it is not guided by the Western sanctions while making crude imports from Iran and that it would follow the sanctions if only they were sponsored by the United Nations.

However, the HPCL has stepped up its engagement with Iraq. The paper says the existing term contract with Iraq’s State Oil Marketing Company (SOMO) for 2.25 million tonne (45,000 barrels a day) of Basra light crude has been revised to 3 million tonne (60,000 barrels a day). It will be in effect till December 2013. Iraq has emerged as the second highest crude oil exporter to India, after Saudi Arabia, which still stands first. The contract for 2013-14 with Saudi Arabian Oil Company (Saudi Aramco) is worth 2.5 million tonne (50,000 barrels a day).

The HPCL’s total crude oil requirement for 2013-14 is estimated at 18 million tonne. The availability of indigenous crude is expected to be 3.75 million tonne (the actual allocation of domestic crude from the Petroleum and Natural Gas Ministry for 2013-14 is 3.93 million tonne, with Mumbai High accounting for 3.24 million tonne and Ravva for 0.69 million tonne). So, 14.25 million tonne of crude will be imported under a combination of term and spot contracts.

Listing strategic objectives, the document says that securing supplies by diversifying the pool of suppliers and insulating consignments against disruption due to geo-political reasons are the factors that will guide the oil purchases during 2013-14.

Indian refiners imported 171.41 million tonne of crude in 2011-12. Of this, 32.63 million tonne came from Saudi Arabia, 24.51 million tonne from Iraq, 17.67 million tonne from Kuwait, and 15.79 million tonne from the UAE. India imported 2,71,200 barrels per day from Iran between April 2012 and February 2013, which was below the government’s target of 3,10,000 barrels per day for the fiscal ended on March 31. Imports from Iran decreased to 7.3 per cent from April last to February 2013, from 11 per cent.

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Printable version | Jan 16, 2021 4:09:20 PM |

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