Essar Oil, the only private refiner in India that buys Iranian oil, imported about 40 percent less crude from the sanctions-hit nation in August compared with July as it has stepped up processing of heavy grades from Latin America, according to tanker discharge data made available to Reuters.
Essar has renewed its term deal with Iran to buy 100,000 barrels per day (bpd) in the financial year ending March 31, 2013, but company sources said the refiner plans to cut purchases by 15 percent after a verbal directive from the government. However, the refiner has shipped in an average 101,600 bpd since April.
In August 2011, Essar did not import oil from Iran, as the Islamic nation had temporarily cut supplies to most Indian clients over payment issues, triggered after New Delhi ended a long-standing clearing mechanism at the end of 2010 under pressure from the United States.
Essar, which earlier this year expanded its Vadinar oil refinery in western Gujarat state to process 400,000 bpd, has significantly raised processing of heavy and ultra-heavy grades, including those from Latin America, to improve refining margins.
The company began replacing Latin American crudes with locally produced Mangala oil in 2010, but has now turned back to the region to feed its expanded c apacity. It has an annual deal with
Colombia's Ecopetrol to import 12 million barrels of Castilla crude oil.
Essar aims to buy 15-20 percent of its crude oil needs from the domestic market, 35-40 percent from Latin American sources, and 30-40 percent from the Middle East, it said in May.
The refiner imported about 91,800 bpd oil in three Iranian tankers -- the Castor, Gardenia
and Magnolia - becoming the biggest Indian buyer from Iran in August.
It took the top slot from Mangalore Refineries and Petrochemicals Ltd (MRPL), whose imports were hit as Iran does not have enough aframaxes to suit the Indian firm's needs and European sanctions have hit availability of vessels from others.
Essar got nearly 43 percent of its crude imports from Iran in January-August. Overall imports by Essar rose over 42 percent during January-August to 290,200 bpd, the data shows.
Total Indian oil imports from Iran declined nearly 5 percent in August from July, tanker discharge data made available to Reuters showed on Thursday, the third straight monthly cut and helping its case for renewal of a waiver from U.S. sanctions.
Edited by: S. Isayev