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Govt disallows import of crude oil by Iranian ships - 2012-07-30

The Government has withdrawn the permission granted to Indian oil companies to import crude from Iran on c.i.f (cost insurance and freight basis). The permission was granted from July 1, when Indian ships were not able to carry Iranian oil following the European insurers’ decision to cut off cover to ships on Iranian voyages.

When import is made on c.i.f basis, it is the responsibility of the oil supplier to make the shipping arrangements. This enabled Indian oil importers to bring oil by Iranian ships, which were not insured by European insurers. According to an official, the permission for c.i.f import was revoked following a representation made by domestic shipping companies. They said that with Indian insurance companies agreeing to provide insurance to ships on Iranian voyages, Indian tankers will be able to carry Iranian oil. This means, oil companies can now import only on f.o.b basis, ie; by Indian ships. United India Insurance Company has finalised a $50 million P& I cover for Indian ships carrying Iranian cargo. Mangalore Refinery and Petrochemicals Ltd (MRPL), the largest importer of oil from Iran, had contracted for import of four parcels on c.i.f basis from Iran.

However, it received only a one cargo so far. But, its refinery operations are not impacted as shortfall is met through inventory and spot supplies, said MRPL officials. Each parcel carries nearly 90,000 tonnes of crude oil. The shortfall in supplies have been met through inventory available with the refinery and spot cargoes, MRPL Managing Director, Mr P P Upadhya, told newsperson here toddy. MRPL expects to get nearly seven Iranian cargoes in August; three left-over from July and four new orders.

“Things are not that bad that crude oil supplies will stop tomorrow. We are in discussions with various agencies including shipping companies,” said MRPL Chairman, Mr Sudhir Vasudeva. Mr Upadhya said that the discussion for insurance from GIC is going on for past two weeks. As soon as it is sorted out, MRPL would start getting crude oil from Iran. “We have not taken a crude cut,” he asserted.

In 2012-13, MRPL have contracted 5 million tonnes from Iran. Till now, it has imported 1.2 million tonnes. Currently, there is no backlog on payments to Iran. The last payment was made on July 20 of nearly €63 million. The rupee-mode of payments for Iranian crude oil is yet to be in-place.

Source : Hindu Business Line