Indian Oil Corp. and two other state-run refiners said they will defer resuming purchases of Iranian crude by at least three months, having failed to get reinsurance for shipments after Europe said it would relax a coverage ban.
Indian Oil, which has an accord to buy 24,000 barrels a day from Iran in the year ending March 31, halted purchases after importing in the first quarter of the fiscal year. The nation’s biggest refiner won’t resume buying until insurance is available, said a person with direct knowledge of the matter, asking not to be identified before an announcement.
Hindustan Petroleum Corp., which planned to import 16,000 barrels a day, will hold back purchases, Refineries Director B.K. Namdeo said in an interview. Chennai Petroleum Corp., which hasn’t bought any oil this year from Iran, will continue to stay away, Managing Director A.S. Basu said.
Curbed shipments from Iran may hamper plans by Indian refiners to benefit from lower prices and freight costs. The South Asian nation planned to buy 11 million tons of Iranian crude this fiscal year after the European Union eased its sanction on insuring cargoes following a six-month accord between the Persian Gulf state, the U.S. and five other nations.
“The benefit of the Iran deal is not percolating down,” Basu said in an interview in New Delhi. “Our insurers are saying foreign reinsurers want to observe the situation for six months before extending any cover.”
European rules have yet to be rewritten, so reinsurers are still unable to provide cover to Indian refineries that purchase cargoes from the Persian Gulf state, Andrew Bardot, executive officer at the international Group of P&I Clubs, said by e-mail today. The organization’s members cover most of the world’s merchant fleet against risks, including oil spills.
State-controlled Indian refiners halted Iranian purchases in May after insurers denied coverage to plants using Iranian crude following growing pressure of sanctions against the Islamic republic from the U.S. and Europe. Mangalore Refinery & Petrochemicals Ltd. , which gets more than a quarter of its crude requirement from the country, resumed purchases in August using tankers underwritten by two Iranian insurers with sovereign guarantees from India.