Mangalore Refinery & Petrochemicals Ltd. purchased its first cargo of Iranian crude since April as India prepared a 20 billion-rupee ($314 million) insurance fund to cover future imports.
The refiner, India’s biggest buyer of Iranian crude, received about 85,000 metric tons on Aug. 17, Managing Director P.P. Upadhya said in a phone interview today from Mangalore. The company has ordered three more shipments of a similar size, he said, without stating delivery schedules.
“This is the first cargo we’ve got from Iran this financial year and we’ll see how many more we can import in the rest of the year,” Upadhya said. “The same ship has returned to Iran and will bring the additional cargoes.”
The purchase follows comments from Finance Minister Palaniappan Chidambaram on Aug. 12 that India plans to import crude from Iran without breaching United Nations sanctions. The U.S. and European Union are seeking to curb global trade with the Persian Gulf nation to halt its nuclear program, which they say is aimed at producing weapons. Iran says the program is for civilian purposes.
India is planning the insurance fund to cover refiners buying crude from Iran, according to Financial Services Secretary Rajiv Takru. It will be managed by General Insurance Co. and an initial amount of 5 billion rupees will be offered soon, he said in an interview yesterday.
Mangalore Refinery, a unit of Oil & Natural Gas Corp., India’s largest oil explorer, and Hindustan Petroleum Corp., the nation’s third-biggest state-refiner, halted crude purchases from Iran in April after Indian insurers declined to cover refineries that process the oil.
“We’ve haven’t started imports from Iran and we won’t until the insurance issue is fully resolved,” said B.K. Namdeo, the director for refineries at Hindustan Petroleum in Mumbai. The company hasn’t bought any of the 1 million tons, or 20,000 barrels a day, it planned to import this year, he said. It purchased 2.2 million tons in the year ended March 31.
Mangalore Refinery’s shares rose 5 percent to 28.55 rupees, the biggest gain since June 28, at the close of trading in Mumbai today. The benchmark S&P BSE Sensex index slid 0.3 percent.
Iran’s Asian customers, including China and South Korea, have won waivers from the U.S. allowing imports of Iranian crude because they were able to show purchases had been curbed. While India has abided by several rounds of UN sanctions on Iran, it has criticized unilateral American penalties as an infringement on the Persian Gulf nation’s sovereignty.
India imports about 80 percent of its oil, swelling the country’s current-account deficit, which in turn is hurting efforts to revive economic growth from its slowest pace in a decade and weakening the rupee. The currency is the worst performer in the Asia-Pacific region this year, according to data compiled by Bloomberg.
India imported about 7.2 percent of its crude from Iran in the past fiscal year, down from about 11 percent in the previous 12-month period, according to the oil ministry.
Iran has dropped to sixth place, from second a year ago, among the largest oil producers in the Organization of Petroleum Exporting Countries. It pumped 2.56 million barrels a day last month, according to data compiled by Bloomberg.