Local Refiners Not Dependent on Iranian Crude Claims Indian Oil Corporation

Just ahead of a crucial bilateral meeting between India and Iran, which is to take a final call on continuing crude oil trade against the backdrop of impending US sanctions, the European Union’s decision to set up a legal entity to facilitate legitimate financial transactions with Iran has raised the hopes of Indian refiners.

New Delhi (Sputnik): India's biggest oil refiner Indian Oil has claimed it is capable of managing a crude shortfall from Iran in case the US does not provide a waiver on the impending sanctions that are to kick in from November 4.  Partha Ghosh, an executive director at the Indian Oil Corporation, said that it will have to scout for oil from other countries in such a scenario.

"We'll have to increase buying from other resources…. Indian refineries are quite versatile. They're not dependent on any particular type of crude. So, it's possible to manage with alternative sources," Ghosh said during the Asia Pacific Petroleum Conference (APPEC) on Tuesday.

READ MORE: India Reportedly Readying to Terminate Iran Oil Imports Amid US Sanctions Threat

In the first week of September, during the 2+2 ministerial meet, India told the US foreign and defense secretaries that it would take time, effort and resources for India's refineries to make the necessary adjustments in order to process different kinds of crude oil. Most of India's refineries use sour Iranian crude oil, according to government sources. 

Meanwhile, the Indian government has been chalking out a strategy that would enable the country's oil refiners to skirt US sanctions on Iran if the waiver is not granted. Last Friday, the Indian government decided to settle payments for Iranian oil in rupees through the Mumbai branch of Iran's Pasargad Bank. At present, Indian oil refiners are using a euro payment mechanism of the State Bank of India and Germany-based Europaeisch-Iranische Handelsbank AG. Meanwhile, on the sidelines of the United Nations General Assembly, a ministerial meeting of the [foreign] ministers of China, France, Germany, the Russian Federation and the United Kingdom, with Iran was held wherein it was decided that the EU member states would set up a legal entity to facilitate legitimate financial transactions with Iran which would allow European companies to continue trade with Iran, in accordance with European Union law, and could be opened to India as well. 

READ MORE: India, Afghanistan Seek Ways to Obtain US Waiver on Trade Via Iranian Port

Meanwhile, India has promised to increase its crude oil imports from Iran from 205,000 barrels per day in 2017-18 to 396,000 barrels per day (bpd) in 2018-19. Presently, India consumes around 4.7 million bpd. Indian refiners are currently importing crude from Iran at 90 cents per barrel less than Arabian and Saudi crude.

India's crude oil demand is expected to reach around 500 million tonnes per year, or around 10 million bpd by the year 2040.