Indian refiners may have to stop purchasing crude from Iran as insurance companies have become wary of insuring refineries for fear of violating tightening Western sanctions on Iran's oil sector, International Oil Daily reported.
"The insurers are saying they can't provide cover to refineries using Iran crude. ... If we don't have cover, how are we going to operate?," Mangalore Refinery and Petrochemicals Ltd.'s managing director P.P. Upadhya told International Oil Daily.
MRPL, a unit of India's state-run Oil and Natural Gas Corp., is India's largest importer of Iranian crude.
Upadhya said the refiner is still buying from Iran but couldn't say how long this trade would continue. "Iran is supplying but the question is can I buy? I can't," he said.
Upadhya added they have asked the federal government to step in to help refiners maintain crude purchases from Iran.
Last month, state-run Hindustan Petroleum Corp. Ltd. said it could have to completely halt imports from Iran in the event that insurers refuse to provide cover to its refineries (IOD Feb.13'13).
Earlier Friday, Junior Oil Minister Panabaka Lakshmi told lawmakers in the lower house of parliament that imports from Iran haven't been affected due to sanctions imposed by the United Nations.
However, refiners have been cutting crude oil shipments from Iran to stay in compliance with unilateral US and EU sanctions.
India's official stance remains that it doesn't recognize sanctions imposed by individual countries or regional blocks and follows only those imposed by the UN, but the market realities of sanctions mean that sourcing crude from Iran has become increasingly difficult for Indian refiners.
New US sanctions, which came into effect Feb. 6, have closed the path of settling part of India's oil trade with Iran in euros through Turkey's HalkBank, while EU measures targeting insurance cover for tankers carrying Iranian crude pose another challenge.
India's oil imports from Iran are set to fall sharply in the current financial year that ends on March 31 as the country's refiners sourced 9.69 million tons, or 258,283 barrels per day, in the first nine months of the year, compared with 18.11 million tons, or 362,694 b/d they imported in the previous financial year (IOD Feb.25'13).
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