Mangalore Plans To Cut Iran Crude Imports By 19%

NEW DELHI – Mangalore Refinery & Petrochemicals Ltd. (500109.BY) said Wednesday it plans to cut crude imports from Iran by about 19% this financial year, underlining the success of U.S. efforts in cajoling the South Asian nation to substantially reduce purchases from the Islamic republic.

The refiner--India's largest crude oil importer from Iran--expects to buy 5.0 million metric tons, or 100,000 barrels a day, from Tehran in the year that began April 1, compared with 6.2 million tons, or 124,000 barrels a day, last year, Managing Director Uttam Kumar Basu said.

"We are anticipating problems in supply with effect from July. So we are reducing exposure to Iran," Basu told reporters at a news conference held to announce the quarterly results of the Oil & Natural Gas Corp. (500312.BY) unit.

Importing crude oil from Iran is set to become complicated and difficult from July 1 when the European Union's ban on the International Group of P&I Clubs from providing cover to tankers carrying Iran crude comes into effect.

Mangalore Refinery's plans to cut imports from Iran are part of India's strategy to reduce dependence on the Islamic republic in the wake of U.S. and EU sanctions aimed at forcing Tehran to abandon its alleged nuclear weapons program. Iran, however, says its nuclear program is for civilian purposes.

India denies that its efforts to reduce purchases from Iran are because of U.S. pressure, but says the planned cut in imports by local refiners is part of their plan to diversify their crude oil sources.

Basu also said that talks are on with the Indian government on getting insurance for cargoes from Iran. The company recently got a cargo insured by an Iranian firm, Basu said, adding that the "stopgap" arrangement wasn't permanent.

The Mangalore, south India-based refiner will raise imports from Saudi Arabia, Abu Dhabi National Oil Company, Kuwait and Iraq to meet its expanded refining capacity and compensate for the loss of Iran volumes, he said. The company also plans to buy 1.0 million tons of crude from the spot market this year.

Iraq replaced Iran as India's second-largest crude oil supplier in the year ended March 31. Shipments to India from Iran fell 5.7% in the last financial year to 17.44 million tons, or 349,300 barrels a day, according to oil ministry data.

Indian refiners have targeted to import about 15.5 million tons of crude oil from Iran in the current financial year, junior Oil Minister R.P.N. Singh said last week.

Meanwhile, Mangalore Refinery said its net profit for the fourth quarter through March rose 8.9% to INR6.02 billion from INR5.53 billion a year earlier. Revenue increased 23% to INR166.46 billion.

Copyright © 2012 Dow Jones Newswires