State-run refiners scale down crude oil imports from Iran.

NEW DELHI: India's imports of Iranian crude oil are expected to fall further as state refiners reduce their exposure to the country facing US sanctions, even as the shift is being officially explained as a drive to diversify the country's crude basket to avoid offending major oil suppliers such as Iran.

India maintains its declared policy that it will keep buying crude from Iran and maintain friendly relations with it unless there are UN sanctions against the country. But the oil ministry is quietly nudging state refiners to explore new grades of crude oil from Africa and Latin America, which are cheaper and can improve refining margins of complex refineries.

State firms said import of Iranian crude oil from term contracts has fallen to 13.1 million tonnes in the current fiscal from about 22 million tonnes in 2008-09, and is expected to decline further in 2012-13 as refiners gradually buy more barrels from other regions.

"Diversification of crude basket is must for India's energy security and it is an ongoing thing. We can't put all eggs in one basket," said a government official who did not wish to be identified.

The biggest buyer of Iranian crude, state-run MRPL, is also courting new suppliers. "We are talking to various suppliers in Africa and Latin America for long-term supply of crude," a company executive said.

Government and industry officials say recent developments in the Middle-East are a matter of concern for a country that imports 80% of its oil requirements. The Middle-East supplied 65% of the 163.6 million tonnes of crude India imported in 2010-11, making the country vulnerable to supply shocks if cargo movement in the region is blocked.

"So far, turmoil in Libya, Syria, Iran, Iraq and Egypt has not adversely affected India. While Libya, Syria and Egypt constituted only about 2% of our total imports, there is no supply disruption from Iran or Iraq," another government official said.

State-run refiners are also taking steps to equip their plants to process new grades of crude oil. "We have already started processing high-sulphur crude and are now preparing to process heavier oil sourced from Latin America and Africa," IndianOil Chairman RS Butola told ET.

Source : economictimes.indiatimes.com