Singapore: India’s Mangalore Refinery and Petrochemicals Ltd is in talks with Colombia’s Ecopetrol to buy term crude oil and is exploring purchases of Iraq’s Basra Heavy grade to diversify supplies and improve margins, its managing director said.

The state-run refiner is aiming to get its first cargo of Colombia’s Castilla crude by November, H. Kumar told Reuters in an interview on Wednesday.

Kumar declined to reveal the size of any term deal with state-owned Ecopetrol, but another company executive had earlier said MRPL could buy as much as 30,000 barrels per day (bpd) of Latin American oil.

MRPL currently relies on the Middle East for most of its heavy crude needs. In a typical month it also buys about a million barrels of heavy oil via tenders, and these spot deals could be replaced with term supplies from Colombia and Iraq.

MRPL meets about 80% its oil needs through heavy crude and the remainder through light oil.

“We have a 20% cushion within our heavy crude purchases so we will procure that from new suppliers," Kumar said, adding that ample crude and several new grades are available in the market.

MRPL has already processed Argentina’s Escalante grade and will get its first parcel of Brazilian Ostra grade this month.

The refiner, majority owned by India’s biggest explorer Oil and Natural Gas Corp, would prefer to buy Basra Heavy from Iraq’s national oil company SOMO, he said.

MRPL, a key Indian client of Iranian oil, is also aiming to retain its imports from Iran in 2015/2016 at about 92,000 bpd, same as the previous fiscal year, Kumar said.

The refiner plans to invest Rs4,500 crore ($680 million) to raise capacity of its coastal plant in southern Karnataka state by 20% to 360,000 bpd in 2019.

By then, MRPL also plans to have upgraded its refinery to produce Euro V compliant fuels, Kumar said.

In need of heavy naphtha

MRPL also owns a majority stake in an aromatic complex run by ONGC Mangalore Petrochemicals Ltd (OMPL), which at full capacity will produces more than 900,000 tonnes a year of paraxylene and over 280,000 tonnes of benzene.

The plant feeds on heavy naphtha and is expected to operate at 95-100% capacity by end-December, up from 65-70%.

Due to a heavy naphtha shortage, OMPL buys some of the grade from state refiner Hindustan Petroleum Corp Ltd and imports would likely rise with the plant’s run rate. Reuters