With New Delhi working on an alternative payment method for shipping in Iranian oil, Indian state-run refiners are hoping that they might have to replace only a part of their Iranian purchases with cargoes from other origins. They may not have to completely stop purchases, when the first six-month waiver expires, wrote spglobal.com.
"The market expects an extension of the US waiver. Let's wait and watch how things turn out at the diplomatic level," Emkay Global Financial Services' senior oil and gas analyst Sabri Hazarika said.
Delegates said that while private refiners Reliance and Nayara had largely stayed away from buying Iranian oil, most Indian state-run refiners were still going ahead with their planned purchases.
"The issue of the next round of waiver is being dealt with at a diplomatic level," a senior Petroleum Ministry official told S&P Global Platts on the sidelines of the Petrotech conference.
While state-run Indian Oil Corp. had plans to ship in up to five million barrels in the first two months of the year, Mangalore Refinery and Petrochemicals Ltd. Is likely to aim for two million barrels in February.
Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. are expected to take one million barrels each in February, Oil Ministry sources said.
"We are discussing the possibility of nominating vessels for Iranian crude for March, before the expiry of the US waiver, but nothing has been finalized," one official at a state-run refiner said.
As US sanctions on Iran came into force in early November 2018, US granted eight key buyers exemptions from its sanctions, enabling China, India, Japan, South Korea, Turkey, Taiwan, Italy and Greece to still purchase some amount of Iranian crude.
Most analysts expect China, India and Turkey to be granted a second round of waivers.
While New Delhi is working on a mechanism to allow a branch of an Iranian bank to carry out oil trade using rupees, the government has given permission to a bank of Iran, Bank Pasargad, to open a branch in Mumbai. It is expected to open in three months.
Indian crude imports from Iran were as low as 200,000-250,000 bpd during the previous sanctions. Nayara Energy, which was then called Essar Oil, used to take half of those total Iranian inflows, while the rest was absorbed by state-owned oil companies.
After the sanctions were lifted in 2016, India witnessed a steep jump in Iranian crude inflows as state-owned refiners stepped up purchases.
Iranian crude exports to India had been robust before the current sanctions were implemented in November 2018. More than 600,000 bpd of Iranian crude was shipped to India in September, while inflows were nearly 500,000 bpd in October, according to analysts and data from cFlow, an S&P Global Platts trade tracking tool.
Analysts expect Indian crude imports from Iran to average about 300,000-350,000 bpd during the first round of waiver. And should India win a second round of waiver, volumes would be even lower.
Iran has recently highlighted to New Delhi that the country was open to Indian investment in the petrochemical sector around the Chabahar port area.
Indian government officials attending Petrotech said they would look to boost collaboration with all major oil producers by looking for other partnership opportunities, in addition to trade.
"We look forward for continuous cooperation and collaboration with other countries to help maintain a stable oil and gas market globally. India has had long standing trade relations with major oil and gas producers in the world," India's Petroleum and Natural Gas Minister Dharmendra Pradhan told delegates at the conference.
"This relations, until recently, was only a buyer-seller relationship. Under the guidance of Prime Minister Narendra Modi, we have been able to convert our traditional buyer-seller engagements into strategic partnerships through bilateral investments," he added.