Iran oil row: Refiners look for new suppliers

Impasse over payments affecting crude supplies.

Iran has stepped up pressure on India to resolve the crude oil payment crisis by threatening not to supply oil in August,forcing Indian refiners MRPL,Essar Oil,HPCL,IOC and BPCL to search for new suppliers.

Petroleum Minister S Jaipal Reddy,however,played down the possibility of crude supplies drying up,saying the country has a back-up plan. Reddy,however,declined to give details of the plan. Company sources said they are looking for other suppliers such as Saudi Arabia and other Middle-Eastern producers including Kuwait,UAE and Iraq.

India imports 4 lakh barrels per day (bpd) 12 per cent of its daily requirement from Iran. Import of crude from that country ran into problems after the RBI said in December that payments to Iran can no longer be settled using a clearing system of regional central banks.

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This has created uncertainty on the availability of crude to companies,particularly the Mangalore Refinery and Petrochemicals Ltd,that imports about 1.8 lakh tonne of crude from Iran every day.

India has to now find ways to clear pending payments of around $5 billion. Company sources said they have not received any information on August supplies from the National Iranian Oil Company (NIOC).

Iran has sent refiners a letter on June 27 threatening to halt supplies and has refused to sell crude to BPCL in August because it could not pay. BPCL has now secured oil from Saudi Arabia instead,said a company source.

Saudi Arabia has said recently it would boost supply unilaterally to meet rising global demand after an OPEC meeting in June failed to agree to raise output,overseas reports said. US Treasury officials are discussing the payment issue with India to end the impasse and a solution is in sight,a US official said on Wednesday as Secretary of State Hillary Clinton visited India.

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