India's oil imports from Iran fell 18.2 percent in June from a year earlier in a third straight monthly decline, although the pace slowed as refiners built stocks ahead of Western sanctions against Tehran's nuclear programme that took effect by July, Reuters reported.
The sanctions are designed to restrict the flow of funds to Iran because the West believes the Islamic Republic is trying to build nuclear weapons, but Tehran says its nuclear program is for civilian purposes.
India, one of the biggest buyers of crude from OPEC's second largest producer, last month secured a waiver from U.S. sanctions by reducing imports by more than 20 percent.
In June, refiners imported about 346,600 barrels per day (bpd) of Iranian oil, up 42.5 percent from May, tanker discharge data made available to Reuters showed.
Monthly imports from Iran may fall 13 percent to 300,650 bpd in July, when the OPEC member's daily oil exports could decline to a maximum of 1.1 million bpd, about half of the 2011 average, industry sources told Reuters.
In April and May India imported about 40 percent less oil from Iran than in corresponding period a year earlier.
IRAN PUSHED TO FIFTH POSITION
Energy-hungry India, which imports about 80 percent of its oil needs, has allowed state refiners to buy oil using Iranian ships and insurance cover to lock in supplies from its third biggest source for a period of six months.
Falling imports have pushed Iran down to fifth position in the list of India's biggest crude oil suppliers in the second quarter, compared with the third position it enjoyed a year ago and second in the first quarter of 2011.
In the January-June period, India's oil imports from Iran rose 4 percent to 367,800 bpd form a year ago, the data showed.
Refiners are expected to cut volumes by more than 20 percent under the term deals they started inking on April 1, according to Reuters' calculations, while the government says it aims for imports to be down 11 percent from 2011/12, to about 310,000 bpd.
India is making up for the shortfall in Iranian cargoes by raising imports from the world's largest exporter, Saudi Arabia, and fellow OPEC member Iraq, which emerged as the second biggest oil supplier to New Delhi, replacing Tehran.
The 12-member Organization of the Petroleum Exporting Countries (OPEC) pumped 31.63 million bpd in June, almost steady with May, a Reuters survey of sources at oil companies, OPEC officials and analysts found.
India's overall oil imports in the January-June period rose about 11.7 percent from a year ago to 3.6 million bpd as the country expanded its refining capacity.
MRPL TOP CLIENT
State-run Mangalore Refinery and Petrochemicals Ltd was the biggest Indian client of Iran in June, shipping in 160,000 bpd, a jump of more than 270 percent from May and about 40 percent from a year ago.
June volumes are higher as MRPL took delayed delivery of its cargoes scheduled for May, when its refinery was shut.
MRPL's annual imports from Iran between January and June declined about 38 percent to 93,800 bpd.
In the January-June period, Essar Oil was the top Indian client of Tehran, buying 126,900 bpd of oil, nearly 25 percent more than a year ago.
Essar, which raised Iranian imports in the January-March period to stock up and meet last fiscal year's commitments, bought about 116,300 bpd in June, a significant rise from about 33,000 bpd in May.
The private refiner is expected to raise monthly purchases by about 8 percent to 125,800 bpd in July, an industry source said on Thursday.
State-run Hindustan Petroleum, which was the biggest Indian importer of Iranian oil in May, bought about 70,300 bpd in June, down 29 percent from May. June volumes are, however, 3.2 percent more than a year ago.
Essar has renewed its annual deal of 100,000 bpd with Iran for this fiscal year starting April 1 but aims to lift 15 percent less oil, while MRPL has cut the size of its deal to 100,000 bpd versus 142,000 bpd in 2011/12.
HPCL aims to buy 60,000 bpd oil from Iran compared with 70,000 bpd in 2011/12.
Indian Oil Corp, the country's biggest refiner, did not ship in Iranian oil in June.
Bharat Petroleum, which recently settled its backlog of payment to Iran using rupees through India's UCO Bank , last received an oil cargo from Tehran in January.