India has a back-up plan to cope with a halt to crude supplies from Iran, its oil minister said, as Tehran upped the ante in an oil payments row and Indian refiners rushed to secure alternative supplies, including from Saudi Arabia.
Since December, India and Iran have struggled to find ways for New Delhi to pay for imports of 400,000 barrels per day, 12 percent of its oil demand, after the Reserve Bank of India halted a clearing mechanism under US pressure. That move won praise from Washington, which is using sanctions in a bid to get Tehran to halt its nuclear programme.
Indian firms Mangalore Refinery and Petrochemicals Ltd , Iran''s biggest Indian client, BPCL , IOC , HPCL and Essar buy crude from the Islamic Republic, and their collective debt to Iran since the crisis broke out has risen to more than $5 billion. None of the five refiners have received a crude supply plan from Iran for August loading cargoes, officials and executives at the companies said on condition of anonymity.
But Indian Oil Minister S. Jaipal Reddy said on Thursday no oil shortages would result from Iran''s halting supplies in August. "No. There will not be any shortage or problem. We have a back-up plan," Reddy told Reuters.
Iran has told BPCL, HPCL and Essar that they will receive no supply in August, said a source at Saudi Aramco, which has been approached by these companies for extra volumes.
IOC and MRPL have so far not asked for additional Saudi oil. MRPL is still hopeful it will get a late allocation from Iran, a company source said.
SAUDI VOLUMES
"BPCL, HPCL and Essar have told us that they have not received allocation (from Iran for August). They did not get a response from Iran and they want to secure supplies," said an executive with Saudi Aramco, who declined to be named.
Iran sent refiners a letter on June 27 threatening to halt supplies and has followed through on its threat.
A top HPCL officials confirmed that the firm will not get oil supplies from Iran in August after Tehran insisted on resolving the seven-month-old payment row.
"We will draw more from other suppliers with whom we have term deals. The year has just begun," K. Murali, HPCL''s head of refineries and international trade, told Reuters, adding his firm had sought an extra one million barrels for August from top producer Saudi Aramco.
"Saudi Arabia has made it clear that we are ready to meet any extra demand, and if India makes orders we will meet them," a Gulf industry source told Reuters.
"We can even supply them with blended crude that would be close to their requirements." Iran is India''s second-biggest supplier.
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