New Delhi: Mangalore Refinery and Petrochemicals Ltd is in talks to increase oil supplies from Saudi Arabia and the UAE besides planning imports from further afield, to hedge against potential supply disruption from Iran.
“These will reduce the dependency on few sources of supply and reduce the crude supply risk,” the company said in its annual report posted on its website, adding it plans to finalise its crude import strategy for 2012-13 by September 2011.
MRPL is among five local firms that are facing difficulty in paying for Iran oil imports due to global sanctions and the end of a long-standing clearing house mechanism by the Indian central bank in late December , it said.
MRPL, Iran’s biggest Indian oil consumer buying about 150,000 barrels per day (bpd), has already started diversifying its crude basket.
For the first time it has signed a deal with Kuwait to buy 20,000 bpd of oil in this fiscal and has bought extra barrels from Saudi Arabia for July.
“Considering the enhanced level of sanctions against Iran in future, non-resolution of current (payment) crisis, the availability of Iranian crude may be difficult,” it said, adding supply may not continue indefinitely.
Iran has warned India that it would stop exporting oil to India from August 1 if a financial dispute over payment was not resolved, Fars news agency reported on Monday.
India is Iran’s second biggest oil consumer after China while Tehran is New Delhi’s second biggest source of oil after Saudi Arabia. Over $5 billion is outstanding for oil imports.
MRPL is raising the capacity of its southern India refinery by 27% to 300,000 bpd at an investment of Rs 121.60 billion ($2.73 billion) to process more cheaper heavy-sour and high acid grades to lift profitability and improve yield.
To improve yields at its existing refinery it plans to shut one of the crude unit there in September-October.
It also aims to build a single point mooring facility by April 2012 to source cheaper crudes from further afield in very large crude carriers with a freight advantage, it said.
MRPL plans to tie-up with its parent firm Oil and Natural Gas Corp for overseas investment and has agreed to lift 110,000 bpd oil from Carabobo Block 1 North and Block 1 Central in Venezuela by 2017, it said.
ONGC has an 11% stake in the joint venture developing the two blocks in the Orinoco heavy oil belt of Venezuela.
MRPL, which has slowed its local retail expansion plans as it is not entitled to government compensation on the sale of diesel at subsidised rates, is scouting for downstream opportunities in Africa, it said.