News ID: 235408
Published: 0338 GMT December 07, 2018

HPCL to buy Iranian oil in Jan. after six-month gap

HPCL to buy Iranian oil in Jan. after six-month gap

State-run Indian oil refiner Hindustan Petroleum Corp will buy Iranian crude in January after a gap of six months, with the nation’s overall purchases from Tehran at 9 million barrels in the month, four industry sources said.

The United States in early November granted India a six-month waiver from sanctions against Iran’s oil exports, Reuters reported.

Under the agreement, New Delhi can buy purchases to 1.25 million tons of Iranian crude oil, or 9 million barrels.

As part of the deal, HPCL will lift 1 million barrels of Iranian crude oil in January, one source with knowledge of the matter said, asking not to be named due to the political sensitivity of Iran sanctions.

HPCL had halted Iranian oil purchases in July after its insurance company refused to provide coverage for the crude because of US sanctions, although its chairman said last month that HPCL may resume buying Iranian oil under sanctions waivers.

Indian Oil Corp, the country’s top refiner, will lift 5 million barrels of Iranian oil in January compared to 6 million this month, while Mangalore Petrochemicals Ltd. will buy 3 million barrels, another source said, also asking not to be identified.

It was unclear whether HPCL would continue to buy Iranian oil on a regular basis during the waiver period.

HPCL had halted Iranian oil purchases in July after its insurance company refused to provide coverage for the crude because of US sanctions, although its chairman said last month that HPCL may resume buying Iranian oil under sanctions waivers.

Indian Oil Corp, the country’s top refiner, will lift 5 million barrels of Iranian oil in January compared to 6 million this month, while Mangalore Petrochemicals Ltd will buy 3 million barrels, another source said, also asking not to be identified.

Meanwhile, China’s Iranian oil imports are set to rebound in December after two state-owned refiners in the world’s largest oil importer began using the nation’s waiver from US sanctions on Iran, according to industry sources and data on Refinitiv Eikon.

Sinopec resumed Iran oil imports shortly after Tehran’s biggest crude buyer received its waiver in November, while China National Petroleum Corp (CNPC) will restart lifting from its own Iranian production in December, three sources with knowledge of the matter told Reuters.

Reuters reported in November that China’s waiver on US sanctions allows it to buy 360,000 barrels per day (bpd) of oil for 180 days.

Top Chinese energy group CNPC, which has invested billions of dollars in Iranian oilfields, is ready to load its full share of production from December, said an oil executive with direct knowledge of CNPC’s Iran activities.

The executive, who asked not to be named, estimated CNPC will load at least two million barrels a month from December, doubling previous levels to help compensate for cuts made before sanctions on Iran’s oil exports went into effect on Nov 5.

Before the waivers had been announced, Sinopec, Asia’s largest oil refiner, had planned to stop loading Iran oil in November, but resumed imports within days of getting the exemption, a second source said, also asking to remain unnamed.

“We continued lifting Iranian oil in November because we received the waiver,” the second source said.

Sinopec and CNPC will likely use up the 360,000 bpd of Iranian oil imports allowed to China under the waiver.

Another source said Iranian oil is “attractively priced” versus rival supplies from the Middle East.

For November and December, Iranian Heavy crude sold to Asia has been priced at $1.25 a barrel below Saudi’s Arab Medium, a discount not seen since 2004.

The source also said many Chinese refiners were geared toward processing Iranian crude grades.

The rise in Iranian oil supply and surging production from the United States, Russia and OPEC countries has pulled down crude oil prices by almost a third since October.

Ahead of the sanctions being implemented in early November, China’s crude oil imports from Iran fell to 1.05 million tons (247,260 bpd) in October, the lowest since May 2010, Chinese customs data shows.

Data from Refinitiv Eikon, however, shows that 2.77 million tons of Iranian crude were discharged into Chinese ports in October, including into bonded storage tanks in Dalian.

By December, China’s Iran oil imports could reach almost 3 million tons, the Eikon data showed.

A total 2.51 million tons of Iranian crude were discharged into Dalian in October and November, according to the data.

Other major Iranian oil buyers, including India, South Korea and Japan, are also increasing or resuming orders.

   
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