New Delhi: HPCL-Mittal Energy Ltd (HMEL), part-owned by steel tycoon Lakshmi Mittal, plans to stop importing oil from Iran, a company spokesman said, in a move that could hurt Iran and help New Delhi secure a waiver renewal from US sanctions.
The news agency earlier reported that HMEL had emerged as a new client for Tehran and had bought two million barrels oil between the start of September and mid-October.
HMEL has since bought another two million barrels of oil, for its 180,000 barrels per day (bpd) Bathinda refinery in northern Punjab state, which was delivered at end-October by Iranian very large crude carrier Majestic, formerly known as Glory, sources privy to the development said.
“While it is a stated policy of the company not to discuss its crude procurement plan, the recent crude purchased from Iran by HMEL was based on operational requirements during stabilization of the refinery. HMEL does not plan to buy any more crude from Iran,” an HMEL spokesman said in an emailed response to questions from the news agency.
In June Washington granted India a 180-day waiver from sanctions, which would have cut it off from the US financial system, because it had reduced its purchases of the OPEC nation’s oil.
India’s waiver from the sanctions will be renewed in December if imports have been cut further.
HMEL’s decision to discontinue buying Iranian oil will be a blow to Tehran, whose exports have already declined sharply under the pressure of sanctions. India is Tehran’s second-biggest crude customer.
The US wants its allies to cut oil imports from Iran to pressure Tehran over its nuclear development programme. The West says it is aimed at building atomic weapons, while Iran says it is for peaceful uses.
In the six months to end-September, India’s oil imports from Iran declined 19% from a year ago to about 257,000 bpd, well below the targeted 310,000 bpd.
State-run refiner Hindustan Petroleum Corp and Mittal each own 49% in the joint venture HMEL.
Mittal heads ArcelorMittal, the world’s largest steel maker, which produces 35% of its steel in the Americas and 47% in Europe, according to its website.
HMEL began buying Iranian oil without having a banking mechanism in place to settle Iran payment. The company is now trying to open an account with Turkey’s Halkbank to pay for Iranian oil, two industry sources said.
Indian customers of Iranian oil currently settle 45% of their trade in euros through Halkbank and pay the remainder in rupees through an Indian bank.
“They are also exploring a payment route through Russia,” one of the two sources said.
A second source said HMEL may resume imports in the January-March quarter after India gets its waiver renewed. Reuters