India's MRPL has bought sour crudes from alternative sources to Iran as Western measures against Tehran have forced a cut in those supplies, something that could strengthen New Delhi's case for a renewed waiver from U.S. sanctions, Reuters reported.
Mangalore Refinery and Petrochemicals Ltd bought 1.15 million barrels of sour crude oil through tenders, a trade source privy to the deal said on Friday.
MRPL bought 550,000 barrels of Dubai crude oil from BP for lifting in second half of October at a premium of about $1.25 per barrel to Dubai on an FOB basis, the source said.
MRPL also bought 600,000 barrels of Oman crude oil from Trafigura for November 1-15 loading at a premium of about $2.90 per barrel to Dubai on a delivered basis, the source said.
Previously the refinery bought 600,000 barrels of Omani oil from Itochu at a premium of about $2.50 per barrel to Dubai on a delivered basis for lifting in the first half of October.
MRPL operates a 300,000 barrels per day refinery in southern India.
Indian refiners have struggled to find insurance and shipping for their Iranian oil imports since the European Union brought in sanctions banning most of the world's insurance firms from covering those shipments.
MRPL, which recently conceded its position as Iran's top Indian client to Essar Oil, aims to import 100,000 barrels per day (bpd) from Iran in 2012/13, a third of its annual needs, about 20 percent less than a year ago.
But MRPL is unlikely to meet its reduced target as Iran does not have enough aframaxes to fill the Indian refiner's needs and local infrastructure is not yet ready to allow the state-run refiner to import oil in larger vessels.
Using Indian shippers is also difficult because they feel insurance cover provided by local firms is inadequate, while the freight rate charged by its one domestic shipper was very high.
India is selectively allowing refiners to import oil using Iran's ships and insurance cover because New Delhi wants to protect business for its domestic shippers and insurers.
MRPL's purchases highlights the gradual increase in share of non-Iranian supplies in the world's fourth-biggest oil importer's crude basket and the emergence of new trade routes as Tehran's exports decline.
MRPL has also stepped up intake of oil from Abu Dhabi and Saudi Arabia. The refiner for the first time entered into an annual deal with Iraq and a short-term supply agreement with Azerbaijan's Socar to import oil.
In August it managed to lift only two cargoes, one using an Iranian ship and insurance cover while the other was shipped with an Indian-flagged vessel and insurance. It normally takes between four and six cargoes - all aframaxes - from Iran in a month.
Among other state-run refiners Indian Oil Corp., the country's biggest oil refiner, and Hindustan Petroleum have started buying Azeri Light crude in 2012 while Bharat Petroleum is in an annual deal with Iraq.