New Delhi/Mumbai: India will not share the limited supply of Iranian crude allowed under a US waiver from sanctions with private refiners, according to people with knowledge of the matter. That is a departure from the earlier practice of splitting exempted volumes.
The government has asked its four state refiners led by Indian Oil Corp. to share the entire 9 millions barrels of Iranian oil available every month under a 180-day waiver from US sanctions, the people said, asking not to be identified. Private refiner Essar Oil, now rechristened Nayara Energy after it was acquired by Rosneft PJSC and partners, was allowed to buy about half of the Iran volumes when a similar curbs were imposed in 2012.
Indian refiners — state-run or private — scramble for Iranian crude because it is less expensive and offers a longer credit cycle, apart from savings in freight cost. Iranian shipments to India jumped 2.5 times in about a year after the economic curbs on the Persian Gulf nation were lifted under a 2015 accord.
Reserving Iranian crude for state-run refiners will deprive the private processors of these benefits, forcing them to look for costlier alternatives. An Indian oil ministry spokesman couldn’t immediately comment.
Private refiners such as billionaire Mukesh Ambani’s Reliance Industries Ltd. have greater agility to source and process cheaper crude than the state-run refiners and should not be allowed to eat into the Iranian barrels, especially when there isn’t scarcity of supply in the global oil market, said an oil ministry official.
Reliance and Nayara Energy together imported close to a third of India’s total oil imports from Iran last year, according to shipping data compiled by Bloomberg. That’s despite both halting Iranian purchases months before U.S. restrictions against oil dealings with Iran went back into effect in early November.
India plans to continue with this strategy to protect Iran oil supplies only for its state-run refiners if waivers are extended beyond April, as it continues talking to the Trump administration for the rollover, according to people with knowledge of the matter.