India's HPCL to Double Saudi Crude Oil Imports Amid Iran Sanctions.

Indian state-owned refiner Hindustan Petroleum Corporation Limited said Tuesday it would double its crude oil imports from Saudi Arabia, as part of moves to diversify supplies away from Iran in the wake of intensifying international sanctions against Tehran's nuclear program, the Financial Times reported.

India's other state refiners Indian Oil Corporation and Bharat Petroleum Corporation are also understood to be exploring options to increase their existing term contracts with Saudi Arabia, Kuwait and other Middle Eastern suppliers as a fallback option to cover reduced imports from Iran.

Privately owned Indian Refiner Reliance Industries Limited last April failed to renew an annual term contract for Iran's Soroush and Nowrouz heavy crudes. The company, which had bought 90,000-100,000 b/d of crude for several years prior to 2010, in 2009 halted gasoline sales to Iran and instituted a "destination prohibition" clause into its contracts to prevent buyers from selling on cargoes to Iran.

Indian crude imports from Iran are estimated at around 370,000 b/d, valued at more than $12 billion. Most Indian term contracts for oil supply from Iran run from the beginning to the end of the Indian fiscal year (April-March).

India's oil ministry has held talks with domestic refiners who import crude from Iran about ways of paying for the imports, because mounting pressure for sanctions could scuttle the current payment mechanism routed through Turkish Halkbank, two refinery sources told Platts Monday.

The US has stepped up pressure on Iran by unilaterally imposing additional sanctions that will make it difficult for companies to import Iranian oil. The measures, to be implemented following a warning period of several months, would give President Barack Obama the option to block foreign institutions in violation of the new sanctions from accessing the US financial system.

China, Japan, India and South Korea are Iran's top oil buyers. In the first half of 2011, China imported 543,000 b/d, Japan 341,000 b/d, India 328,000 b/d and South Korea 244,000 b/d, according to a recent analysis by the US Energy Information Administration.

US Treasury Secretary Timothy Geithner arrived in Beijing Tuesday for talks focused on sanctions against Iran, which are opposed by China. Geithner will meet top Chinese leaders including Premier Wen Jiabao on Wednesday before heading on to Tokyo on Thursday, according to the US Treasury.

Indian oil minister Jaipal Reddy said Tuesday that India was facing difficulties from the international sanctions against Iran, according to the Financial Times. But he said India had "lined up other sources of supply" and that disruptions would not hit domestic consumers, the UK-based newspaper reported.

Ranjan Mathai, India's foreign secretary, has said Iran was "crucial" to his country's energy security, telling the Financial Times that this position was understood by Washington.

"A very large amount of India's oil imports do emanate from Iran," the Financial Times reported Mathai as saying last month. "In the current energy market it is not easy to consider that India can ... manage without Iranian oil."

Source : platts.com