NEW DELHI: India’s Hindustan Petroleum will resume buying Iranian crude if the government unveils an adequate backup plan for local insurers to provide cover for its refineries, its head of refineries B. K. Namdeo said Monday. HPCL, along with MRPL, had stopped purchases due to difficulties getting insurance for refineries processing Iranian oil, forcing New Delhi to look at providing its own reinsurance after European firms backed out over sanctions.
India is thinking of providing a 20 billion rupee ($327 million) state guarantee to back local insurance for plants using Iranian oil, an industry source said last week.
“We are waiting for a clarification from the Finance Ministry how they are going about it ... If insurance clause comes in our favor then we will process Iranian oil,” Namdeo told a news conference.
He said the firm in its annual strategy for this fiscal year had kept a provision to buy 20,000 bpd Iranian oil.
But a company official said on condition of anonymity the planned 40 billion rupee reinsurance cover was not sufficient as HPCL’s “one time maximum permissible claim under the current policy is about 54 billion rupees.”
But MRPL had resumed Iranian oil imports from this month, its managing director said earlier Tuesday.
To replace the lost Iranian barrels HPCL had lifted intake of Iraqi crude and aimed to buy up to 40,000 bpd of Nigerian oil from the spot market in this fiscal year, slightly more than in 2012/13, Namdeo said.
In this fiscal year it had also lifted a small quantity of oil from Brunei, Namdeo added.
HPCL planned to buy up to 100,000 bpd Basra light in the current fiscal year, he said.
Sanctions imposed by the United States and the European Union on Iran over its nuclear program have cost Tehran billions of dollars in revenue since the start of 2012.
Its top four oil clients have cut their imports by more than a fifth in the first six months of the year, and are soon to face increased pressure from the U.S. to trim shipments further.
HPCL had also partnered SP Ports Pvt Ltd, a unit of Mumbai-based Shapoorji Pallonji group, to build a five-million-tons a year liquefied natural gas terminal in western Gujarat state, according to its head of finance K. V. Rao.
HPCL would have a 50 percent stake in the project, Rao said.