India to stop oil imports from Iran

NEW DELHI – Reuters

REUTERS Photo

India is set to halt all crude imports from Iran because insurance companies in the country have said refineries processing the oil will no longer be covered due to Western sanctions, the head of an Indian refiner firm said on March 8.

“If cover is not available then all Indian refiners will have to halt imports from Iran or else they will have to take a huge risk,” P.P. Upadhya, managing director of Mangalore Refinery and Petrochemicals Ltd, said in a phone interview. MRPL is India’s biggest buyer of Iran crude. “Insurance companies said if I buy Iranian crude my refinery’s insurance cover will be cancelled ... If we don’t get insurance for the refinery then we will stop buying Iranian crude.”

India is Iran’s second-largest buyer, taking around a quarter of its oil exports worth around $1 billion a month. India has come to edge of stopping oil imports from Iran, several months after Europe and the U.S. introduced tough sanctions aimed at Iran’s oil trade to force Tehran to the negotiating table over its nuclear program.

The General Insurance Corp of India, the national reinsurer, told the General Insurance Council, an industry group, that it had “dawned” on insurers that cover and losses on processing the crude would not be payable by reinsurers due to existing sanctions.

A source at another refiner that buys Iranian crude, Hindustan Petroleum Corp (HPCL), Iran’s third-biggest Indian buyer, also said imports were threatened by the insurance problems. “Iran imports will be stopped soon,” the HPCL source told.

MRPL’s Upadhya declined to say how soon the company would have to stop Iranian imports. But MRPL has issued tenders to buy three cargoes of 650,000 barrels of crude to load in April, according to documents seen by Reuters. Two of the cargoes are high sulphur and could be used to replace Iranian oil.

Oil is Iran’s biggest income generator so a halt in sales to India would be a heavy blow for Tehran.

Sanctions more than halved the country’s crude exports in 2012.