| Kippreport.com

India MRPL seeks sour oil to replace Iran crude

August 30, 2012 5:57 by Reuters

India’s Mangalore Refinery and Petrochemicals Ltd is seeking to buy 600,000 barrels of high-sulphur crude oil in the spot market for October and November lifting, tender documents showed, as supplies from Iran are hit by European sanctions.

MRPL in the past rarely tendered for sour crude because it imported oil from Iran under an annual deal. But Indian refiners have struggled to find insurance and shipping for Iranian oil since European Union sanctions took effect from July 1.

The company’s two tenders seeking sour crude for lifting in the second half of October and first half of November will close on Sept. 5, with bids remaining valid until Sept. 7, the tender documents showed on Thursday.

MRPL in July loaded only one cargo of 600,000 barrels from Iran, compared with five such parcels planned for lifting. In August, the company may have lifted only two cargoes. It normally takes between four and six aframax cargoes from Iran in a month.

The refiner earlier this week bought 600,000 barrels of Omani oil from Itochu at a premium of about $2.50 per barrel to Dubai on delivered basis for lifting in the first half of October.

MRPL’s managing director, P.P. Upadhya, recently outlined a plan to make up for Iranian imports hit by the sanctions, including tapping spot markets for more high-sulphur oil.

India is selectively allowing refiners to import oil using Iran’s ships. But Iran does not have enough aframaxes to suit MRPL’s needs, and Indian shippers say the insurance cover provided by local insurance firms is inadequate.