MRPL buys extra Saudi oil in July: Sources
Saturday, 30 June 2012 | 00:00
Mangalore Refinery and Petrochemicals Ltd has bought an extra 600,000 barrels of crude from top exporter Saudi Arabia in July, two industry sources said on Friday, to partly offset a fall in Iranian oil supplies due to a tanker shortage.
Indian refiners are buying less Iranian crude as they comply with U.S. sanctions and struggle to get it delivered due to European sanctions.
India has asked Iran to deliver the crude, but refiners say Tehran may not have enough of the right kind of vessels needed to carry the crude.
"Iran does not have adequate Aframaxes to meet MRPL's demand," said one of the sources, regarding the reason for the additional purchase from Saudi Arabia.
The Iranian tanker fleet consists mostly of Very Large Crude Carriers (VLCC), whose draught is too deep for Indian ports.
Indian state-refiners buy Iranian oil in smaller Aframax and Suezmax tankers.
MRPL aims to buy 100,000 barrels per day (bpd) oil from Iran in the current fiscal year that began on April 1.
The refiner has a term deal to buy 49,000 bpd oil from Saudi Aramco in 2012.
They have sought an "additional 600,000 barrels (which) include 430,000 barrels of Arab Extra Light and 170,000 barrels of Arab Light," said a second source.
Around 90 percent of the world's tanker fleet is covered by Western-based protection and indemnity (P&I) clubs, which insure against personal injury and environmental clean-up claims.
This has dried up as a result of the European sanctions that come into effect from July 1.
All top Asian buyers of Iranian oil have cut purchases from the Islamic Republic this year as tightening sanctions from Europe and United States make it difficult to finance the oil deals, not just find insurance cover for tankers.
The sanctions are designed to restrict the flow of funds to Iran because Western governments believe the country is working on building nuclear weapons, although Tehran has maintained its nuclear program is strictly for civilian purposes.
MRPL planned to buy five Aframax cargoes from Iran in July, sources had said earlier.
Iran is currently using most of its vessels for storing crude as exports decline ahead of the new sanctions. The International Energy Agency estimates Tehran's exports have fallen 40 percent since the start of the year.
The state-run refiner shipped in 124,000 bpd in the last fiscal year versus a contracted 142,000 bpd as payment problems hit supplies.
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