Iran halts oil supply, but India sees no shortages.
NEW DELHI -- India has a back-up plan to cope with a halt to crude supplies from Iran, its oil minister said, as the Islamic republic upped the ante in an oil payments row and Indian refiners rushed to secure alternative supplies, including from Saudi Arabia.
Since December, India and Iran have struggled to find ways for New Delhi to pay for imports of 400,000 barrels per day or 12 per cent of its oil demand after the Reserve Bank of India halted a clearing mechanism under US pressure.
That move won praise from Washington, which is using sanctions in a bid to get Teheran to halt its nuclear programme.
Indian firms Mangalore Refinery and Petrochemicals Ltd, Iran's biggest Indian client, BPCL, IOC, HPCL and Essar buy crude from the Gulf country, and their collective debt to Iran since the crisis broke out has risen to more than $5 billion.
None of the five refiners have received a crude supply plan from Iran for August loading cargoes, officials and executives at the companies said on condition of anonymity.
But Indian Oil Minister S. Jaipal Reddy said on Thursday no oil shortages would result from Iran's halting supplies in August.
"No. There will not be any shortage or problem. We have a back-up plan," Reddy told Reuters when asked if Asia's third-largest oil consumer would face problems now that Teheran has decided against supplying oil in August.
Iran has told BPCL, HPCL and Essar that they will receive no supply in August, said a source at Saudi Aramco, which has been approached by these companies for extra volumes.
IOC and MRPL have so far not asked for additional Saudi oil. MRPL is still hopeful it will get a late allocation from Iran, a company source said.
"BPCL, HPCL and Essar have told us that they have not received allocation [from Iran for August]. They did not get a response from Iran and they want to secure supplies," said an executive with Saudi Aramco, who declined to be named.
Iran sent refiners a letter on June 27 threatening to halt supplies and has followed through on its threat. Iran refused to sell crude to India's second-largest refiner BPCL in August, because it could not pay, a BPCL source said. BPCL has secured oil from Saudi Arabia instead, the source added. "So there will be no supplies from Iran in August, but we have arranged volumes from Saudi Arabia," the source said.
Iran is India's second-biggest supplier. Refiners had already turned to top world exporter Saudi Arabia and other Middle East producers the UAE, Kuwait and Iraq for extra barrels to replace those at stake. Saudi Arabia said it would boost supply unilaterally to meet rising global demand after an OPEC meeting in June failed to agree to raise output, with opposition led by Iran.
MRPL had already flagged that Teheran supplies were vulnerable in the long term. --
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