Friday, July 22, 2011
Indian Oil Supply Has Been Stopped By Iran
Iran has upped the ante in an oil payments row with India and halted crude supplies in August, company sources said on Thursday, forcing Indian refiners to seek shipments from alternative suppliers including top exporter Saudi Arabia.
Since December, India and Iran have struggled to find ways for New Delhi to pay for 400,000 barrels per day or 12 percent of its oil demand after the Reserve Bank of India halted a clearing mechanism under US pressure.
That move won praise from Washington, which is using sanctions in a bid to get Tehran to halt its nuclear programme.
Indian firms Mangalore Refinery and Petrochemicals Ltd , Iran’s biggest Indian client, BPCL , IOC , HPCL and Essar buy crude from the Islamic Republic and their collective debt to Iran since the crisis broke out has risen to more than $5 billion.
None of the five refiners have received a crude supply plan from Iran for August loading cargoes, officials and executives at the companies said on condition of anonymity.
Iran has told BPCL, HPCL and Essar that they will receive no supply in August, said a source at Saudi Aramco, which has been approached by these companies for extra volumes. IOC and MRPL have so far not asked for additional Saudi oil. MRPL is still hopeful it will get a late allocation from Iran, a company source said.
“BPCL, HPCL and Essar have told us that they have not received allocation (from Iran for August). They did not get a response from Iran and they want to secure supplies,” an executive with Saudi Aramco, who declined to be named, said.
Iran sent refiners a letter on June 27 threatening to halt supplies and has followed through on its threat. Iran refused to sell crude to India’s second-largest refiner BPCL in August because it could not pay, a BPCL source said. BPCL has secured oil from Saudi Arabia instead, the source added.
“So there will be no supplies from Iran in August but we have arranged volumes from Saudi Arabia,” the source said.
Iran is India’s second-biggest supplier and refiners had already turned to the world's top exporter Saudi Arabia and other Middle East producers the United Arab Emirates, Kuwait and Iraq for extra barrels to replace those at stake.