Indian state firms plan to nearly double Iranian oil imports

Indian state refiners plan to almost double oil imports from Iran in 2018/19, drawn by incentives offered by Tehran, sources with knowledge of the matter said, potentially helping Iran increase its share in the world’s third-biggest oil importer, Reuters reports.

Iran is pushing to retain its oil customers in Asia, offering better terms than other Middle Eastern suppliers including Saudi Arabia, even as the threat looms of potential further US sanctions on the OPEC member.

Tehran recently deepened freight discount to firms in India, its second-biggest oil client after China, in return for higher volumes.

In the current fiscal year to March 2019, state refiners Indian Oil Corp, Mangalore Refinery and Petrochemicals Ltd, Bharat Petroleum and Hindustan Petroleum plan to import 396,000 barrels per day (bpd) Iranian oil, according to two sources familiar with the plans who spoke on condition of anonymity.

Four other sources had knowledge of the import plans of some of the refiners.

Indian Oil Corp, Mangalore Refinery and Petrochemicals, Bharat Petroleum and Hindustan Petroleum declined to comment.

All four refiners imported about 205,600 bpd Iranian oil in the previous fiscal year.

Iran, which used to be the second-biggest oil supplier to India before sanctions, has been gradually growing back its market share in New Delhi since the lifting of sanctions against the Islamic state in 2016, becoming the No. 3 supplier to India in 2016/17 after Saudi Arabia and Iraq, government data shows.

Official government data for 2017/18 is not yet available but information from sources showed Iran remained the third-biggest oil exporter to India during April 2017-February 2018, while Iraq replaced Saudi Arabia as top supplier.

State refiners, which account for two-thirds of India’s 5 million bpd refining capacity, last year curbed imports from Iran in protest at Tehran’s move to grant development rights for the giant Farzad B gas field to others.

But Indian oil minister Dharmendra Pradhan in February, after a meeting with his Iranian counterpart Bijan Zanganeh in New Delhi, said state-refiners will boost purchases in the current fiscal year as Iran sweetened terms.

Zanganeh had said Indian refiners - state-owned and private - will buy about 500,000 bpd of Iranian oil in 2018/19.

India’s overall purchase from Iran could cross 600,000 bpd, one of the sources said. “Terms offered by Iranians are better compared to other producers... Iranian crude suits us,” one of the sources said.

Indian refiners usually secure higher volumes than those agreed under term deals, spurred by strong domestic fuel demand.

Also, several private refiners which previously sourced oil from Venezuela have turned to Iran to make up for low supplies from the ailing Latin American nation.